How More Expensive Health Insurance Might Actually Save You Money

By Michelle Andrews, NPR and Kaiser Health News

One of the most far-reaching provisions of the federal health overhaul prohibits insurers from refusing to cover people who are sick or charging them more for policies.

Still, for people with serious medical conditions, the online health insurance marketplaces present new wrinkles that could have significant financial impact.

Obviously, premium costs will be an important consideration for consumers. But just as important will be a realistic assessment of what kinds of out-of-pocket costs they could expect with different types of policies and what subsidies they will be eligible for.

The law requires new individual and small group plans sold on the online marketplaces, also called exchanges, and on the private market to cover a comprehensive set of 10 essential health benefits, including prescription drugs, hospitalization and doctor visits. The benefits covered will be similar in all plans, but the proportion of the costs that a consumer pays will vary.

There will be four different levels of plan coverage. Platinum plans will pay 90 percent of covered expenses, on average; gold plans will pay 80 percent; silver plans 70 percent; and bronze plans 60 percent.

Tax credits to help cover the cost of the premiums for plans sold on the exchanges will be available to people with incomes up to 400 percent of the federal poverty level (about $46,000 for an individual; $94,000 for a family of four ), and cost-sharing subsidies will reduce out-of-pocket costs for people with incomes up to 250 percent of poverty ($28,725 for an individual).

The maximum amount that consumers will owe out of pocket for in-network medical claims will generally be capped at about $6,400 for individuals and $12,700 for families in 2014. (Note that those figures don't include money spent on premiums.)

How all those variables come together can have a big effect on people with high medical expenses.

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For example, even though the premium for a platinum plan will generally be higher, the out-of-pocket spending cap may be significantly lower than other coverage levels since platinum plans must cover 90 percent of expenses. In California, for example, the out-of-pocket spending limit on a platinum plan is $4,000, compared with $6,400 for other plans.

For people who expect to hit their spending cap, buying a pricier platinum plan may actually result in lower total spending, says Marc Boutin, executive vice president and chief operating officer at the National Health Council, a patient advocacy organization.

"It's counterintuitive," he says.

Insurers anticipate that people with high medical costs will gravitate toward platinum and, to a lesser extent, gold plans, and they're pricing those plans accordingly, say experts.

If only one member of a family has high medical expenses, families may want to consider splitting coverage between different plans.

"Many insurers are expecting that savvy families will enroll a sick family member in a platinum plan and the rest in lower level plans," says Jennifer Tolbert, director of state health reform with the Kaiser Family Foundation.