10 Things to Do When Choosing an Obamacare Health Plan

Teresa Mears

Americans who get their health insurance through the Affordable Care Act federal exchange will soon find out what plans will be available, and at what cost, in 2016. Some residents of the states that run their own health care exchanges have already gotten a look at their plan options for next year.

Even if you like your current plan, it's important to re-evaluate that plan and look at the options for next year. Your plan may have changed its providers or the drugs it covers. Or, new plans may have become available that would suit your situation better. Plus, your health care subsidy amount, the amount of help you get to pay for your premium, may change even if your income doesn't because the subsidy is based on the cost of plans in your area.

"It's a good idea to shop around even if you like your plan and everything that's in it," says Karen Pollitz, senior fellow at the Kaiser Family Foundation, which has a large database of questions and answers about health care options.

Open enrollment begins Nov. 1, and consumers need to choose a plan by Dec. 15 if they want coverage to take effect Jan. 1. If you don't choose a new plan, your existing plan may continue your coverage, but don't assume that will happen because not all plans continue year to year.

Choosing a health plan can be complicated. In urban areas, residents may have as many as 100 plans to choose from. The average number of choices is about 40, Pollitz says. In evaluating plans, you need to look at provider lists, drug coverage, deductibles, copays and coinsurance.

Once you winnow down your list of prospective plans, you will need to click through on the exchange website to view provider lists, drug formularies and other details.

"Plans are getting much more complex and getting harder for consumers to understand," says JoAnn Volk, a senior research professor at the Georgetown University Center on Health Insurance Reforms.

But users of the federal exchange website may have some new tools to help their search this year. The federal government is testing a feature that will allow consumers to enter their preferred doctors, hospitals and drugs and then find matching plans that include them. Another tool would estimate out-of-pocket costs for consumers with various plans, The Associated Press reports.

"Nobody can compare dozens of plans," Pollitz says. "It's just crazy."

The Affordable Care Act states that those with pre-existing conditions can't be denied coverage or charged more, but rates do vary by age and location, and smokers are charged 50 percent more on the federal exchange and in most states. And if you are one of the more than 80 percent of marketplace users who get a subsidy to help you pay your premium, you may also need to update your income information.

In evaluating which plan to choose, you need to estimate how much you are likely to spend on medical care next year, taking into account regular prescriptions, treatment for chronic conditions and how you will pay if you are in an accident or contract a serious illness.

"Don't just price shop," Pollitz says. "If you just pick the plan with the cheapest premium ... it could cost you way more in medical bills than you saved in your premium." Medical bills for her son's broken wrist from skateboarding, she notes, came to more than $15,000.

Here are 10 things to do when choosing a health care plan from the federal or state exchange:

Find out which plans include your doctors. If you have doctors you like and want to continue seeing, check provider lists. Don't assume that because your plan included those doctors this year it will include them next year. Call the doctors to verify their participation before you finalize your selection.

Compare the Summary of Benefits and Coverage. This federally mandated standard form makes it easier to compare plans by listing copays, deductibles, tiers of drugs and providers and other information.

See how your drugs are covered. Some plans have a separate drug deductible, and some don't pay for any drugs until you meet your entire deductible. Some plans charge a copay for drugs, and others require you to pay a percentage of the drug cost. The same drug may be in different tiers in different plans, so if you take an expensive drug, do some research. Also check for rules requiring you to try other drugs before you can use the one your doctor prescribes.

Evaluate whether to choose an HMO, a PPO or other option. Most marketplace plans are either health maintenance organizations or preferred provider organizations, though there may be other options in some communities. With an HMO, only in-network care is covered, and you usually need a referral before you can see a specialist. Most PPOs let you visit any doctor in their network, and some provide some coverage for out-of-network care.

File updated income information. If your income is between 100 and 400 percent of the federal poverty level ($11,670 to $46,680 for a single person and $15,730 to $62,920 for two people in 2015), you're eligible for a subsidy to help pay your premiums. If your income is between 100 and 250 percent of poverty level, you're also eligible for cost-sharing reductions, which means lower copays and deductibles on a silver plan. When you apply for a plan, you must estimate your 2016 income. The marketplace may ask you to verify the income information you report, and officials will check it against documents such as tax returns.

Evaluate copays, coinsurance, deductibles and premiums together. If you visit doctors frequently, you may be better off paying a higher premium that gives you lower copays. Someone who rarely visits a doctor may prefer high copays and deductibles in exchange for lower premiums. "Each individual consumer is different," says Jessica Kendall, director of the Enrollment Assister Network at Families USA, a consumer health care policy and advocacy organization.

Be prepared to pay a penalty if you don't have health insurance. For 2016, the penalty for not having a qualifying health insurance policy will be $695 per adult and $347.50 per child or 2.5 percent of your income, whichever is greater. There are some hardship exemptions.

Stay on top of your income if you're self-employed. Using the marketplace is tricky for self-employed people with variable incomes. Eligibility for subsidies is based on modified adjusted gross income, which for most people is the adjusted gross income on your tax return. If you guess wrong and stay below 400 percent of the poverty line, you can either get a tax credit or pay more at tax time. But if your income goes above that limit, you have to pay back your entire subsidy. However, if you take the cost-sharing reduction plan and guess wrong, you don't have to pay it back. If your income changes during the year, you can go in and make adjustments.

Search both inside and outside the marketplace if you don't qualify for a subsidy. Exactly what's available will vary by location. In some areas, you may have additional options as a small business in addition to those provided for individuals. If you buy from the marketplace and your income drops, you can get a subsidy midyear. But if you're outside the marketplace, you can't join the marketplace midyear unless you experience a qualifying event such as the loss of a job.

Get in-person help. Nonprofit organizations have trained navigators who will help consumers and small business owners evaluate plans. You can find a local navigator here: localhelp.healthcare.gov. "You have people who are on the ground helping people figure out what plans is best for them," Kendall says. "They will help you sort through what are the questions, what are the things to look at."

Teresa Mears writes about personal finance, real estate and retirement for U.S. News and other publications. She's also written for MSN Money, The Miami Herald, The New York Times and The Boston Globe. She publishes Living on the Cheap and Miami on the Cheap. Follow her on Twitter @TeresaMears.