How can I choose the best health insurance for me?
There are numerous factors to take into consideration when you’re shopping for health insurance
9 strategies when choosing coverage
- Check provider networks and covered drug lists
- Determine your worst-case scenario
- Make some back-of-the-envelope comparisons
- But don’t focus entirely on the cost of claims
- Consider Silver plans’ cost-sharing subsidies
- Gold plans may be a better value in some areas
- Look at Quality Ratings & check with state regulators
- Remember: one size does not fit all
- Your subsidy eligibility may be better than in previous years
When it comes to selecting a health insurance plan, the premium is the most important factor for many shoppers – especially those who are currently healthy. But price shouldn’t be the only factor upon which you base your selection, even if your primary concern is financial (as opposed to factors such as provider networks, drug formularies, and quality ratings).
9 strategies when choosing coverage
1. Check provider networks and covered drug lists
If you have preferred medical providers and/or take any prescription medications, those factors will likely be among the first that you should consider when you’re shopping for health coverage.
Each health plan creates its own provider network and drug formulary (covered drug list), so there’s a lot of variation from one plan to another in terms of which providers will be in-network and which drugs will be covered.
Some plans have tiered networks, which have lower copays and deductibles as long as you go to doctors and hospitals in the top tier. And even if two plans both have the same drug in their formulary, they may cover it differently (in a different tier, for example, with different out-of-pocket costs).
If you’re transitioning from an employer-sponsored health plan to the individual market, keep in mind that the provider networks and drug formularies can be very different in the two markets, even if the same health insurance company offers the plans. Don’t assume that a plan will cover your drugs and include your doctors in its network just because of the experience you’ve had with another plan from that same insurer in the recent past.
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2. Determine your worst-case scenario
To determine your “worst-case scenario,” just add a plan’s total annual premiums plus the maximum out-of-pocket for each plan, and see how they stack up. If you qualify for a premium subsidy, be sure to use the after-subsidy premium for each plan when you’re calculating how much the coverage will cost. And keep in mind that the out-of-pocket maximum is only applicable as long as you use in-network providers.
You can find the premium and maximum out-of-pocket details even before you create an account with your state’s exchange, by using the exchange’s plan browsing tool. It only takes a minute or two and doesn’t need any identifying data.
The ACA’s limit on out-of-pocket maximums makes this sort of financial comparison easier than it was in the past. In 2025, ACA-compliant plans will have a maximum out-of-pocket of no more than $9,200 for an individual or $18,400 for a family.1 (Again, this only applies to in-network care. If your plan covers out-of-network care the out-of-pocket costs for that can be much higher.)
And as has been the case since 2016, all family plans are required to have embedded individual out-of-pocket maximums.2 That means no single individual on a family plan will be required to pay more than $9,200 in out-of-pocket costs for in-network care in 2025, even if the family deductible has not yet been met.
But some plans – especially at the Gold and Platinum levels, plus Silver-level plans for people who qualify for cost-sharing reductions – have maximum out-of-pocket limits significantly lower than those amounts. And they also cover more expenses before the out-of-pocket maximum is reached. Those factors are important to consider when you’re comparing the overall cost of various plans.
3. Make some back-of-the-envelope comparisons
Let’s look at a hypothetical example for Kelly, a single 35-year-old applicant who doesn’t qualify for subsidies. She’s considering three different plans – one Bronze, one Silver, and one Gold. All of them cover preventive care at no charge, as required by the ACA.
For this comparison, we’re assuming the Gold plan is more expensive than the Silver plan. But since 2018, that hasn’t always been the case, due to the cost of cost-sharing reductions (CSR) being added to Silver plan premiums in many states.
The following plan descriptions are hypothetical and overly simplified in order to make the math easy. Although Bronze, Silver, and Gold plans pay an average of 60, 70, and 80% of average total healthcare costs, respectively, their plan structure varies significantly from one policy to another, even within the same metal level.
Standardized health plans are available in most states. But other than California (where all plans are standardized), non-standardized plans are also available. So it can be difficult to make an apples-to-apples comparison of plans, even within the same metal level. Some plans have separate deductibles for services like hospitalizations and prescription drugs, some have copays for office visits while others count office visits towards the deductible. There’s no way to really compare plans without reading at least some of the fine print. But for the sake of our back-of-the-envelope comparison, we’ll just look at deductibles, coinsurance, and maximum out-of-pocket exposure.
- The Bronze plan is $300/month, and has a $9,000 deductible with all claims applied to the deductible. After the deductible, Kelly would pay 40% of her claims until she reaches a $9,200 maximum out-of-pocket.
- The Silver plan is $400/month, has a $3,500 deductible, and Kelly will be responsible for 30% of the claim after the deductible, until she reaches a $9,000 maximum out-of-pocket (If Kelly qualifies for cost-sharing reductions, her out-of-pocket costs on a Silver plan will be lower. This is discussed in more detail below).
- The Gold plan is $480/month, has a $1,000 deductible, and Kelly will pay 20% of her claims after the deductible until she reaches the maximum out-of-pocket of $8,000.
(Note that these are just examples. In the real world, pricing and coverage vary significantly depending on the plan, the area, and the person’s age, and most people qualify for subsidies that offset some of the cost.)
We can easily calculate the worst-case scenario for the three plans: Multiply the premium by 12 months, and add it to the maximum out-of-pocket to see the total financial exposure for each plan:
- Bronze: $3,600 + $9,200 = $12,800
- Silver: $4,800 + $9,000 = $13,800
- Gold: $5,760 + $8,000 = $13,760
But for most people, large claims don’t happen very often. And although some people may not use their coverage at all during the year, most people fall somewhere in the middle. Especially if you have a pre-existing condition, you can be relatively sure that you’ll incur at least some claims during the coming year. That’s where it’s helpful to judge each plan based on how it would perform in the event of relatively minor – but still expensive – claims.
What if Kelly breaks her arm and incurs a claim that totals $4,200 after the network-negotiated discount? Here’s her total expense for the year (premiums + out-of-pocket costs) with each plan:
- Bronze: $3,600 + $4,200 (total claim applied to the deductible) = $7,800
- Silver: $4,800 + $3,500 (deductible) + $210 (30% of the remaining $700) = $8,510
- Gold: $5,760 + $1,000 (deductible) + $640 (20% of the remaining $3,200) = $7,400
If the only health insurance claims you make are for covered preventive care, a Bronze plan is going to end up being the least expensive option, because the premiums are lowest and certain preventive care is covered 100% on all plans. But if you have other claims, a plan with a higher metal level might save you money over the course of the year, even though the premiums are higher. So even if price is the most significant factor in your decision, it’s important to remember to include the cost of a claim as well as the cost of the plan itself.
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4. But don’t focus entirely on the cost of claims
On the other hand, don’t let yourself get so enamored with the low out-of-pocket expenses on the more robust plans that you inadvertently end up paying more than you need to. We often see plan comparisons where the difference in premium is greater than the difference in potential out-of-pocket savings.
For example: a plan with a deductible that is $1,000 lower than a competing plan, but that costs $100 more per month and offers similar coverage after the deductible. Buying it would mean that you’d spend an extra $1,200 in premiums, to possibly save $1,000 if you have a significant claim. That’s why it’s important to spend a little time crunching numbers before you select a plan.
And if one of the plans you’re considering is HSA-qualified, don’t forget to account for the potential tax savings if you were to contribute to an HSA during the year. Assuming you’d be willing and able to contribute to an HSA, you’d want to subtract the tax savings from the total amount that each plan is going to cost you, so that you can get an accurate overall picture of how each plan would affect your finances. You may want to speak with a tax professional to understand exactly how HSA contributions would affect your overall tax burden.
5. Consider Silver plans’ cost-sharing subsidies
Silver plans have proven to be by far the most popular choice in the exchanges, accounting for well over half of all enrollments in the first nine years of ACA implementation. For 2024 coverage, 54% of exchange enrollees picked Silver plans.3
One reason for the popularity of Silver plans – and the high percentage of Silver plan enrollees who received premium subsidies – is cost-sharing reductions, or CSR (also known as cost-sharing subsidies). If your household income does not exceed 250% of the federal poverty level (FPL), you’re eligible for cost-sharing subsidies in addition to premium subsidies.
During the open enrollment period for 2024 health plans, more than 21.4 million people enrolled in plans through the exchanges nationwide. More than half of them — nearly 11.7 million people — selected Silver plans. And nearly all of those Silver plan enrollees — more than 10.6 million — enrolled in plans with built-in CSR benefits.4
For 2025 coverage, 250% of FPL is $37,650 for a single individual in the continental United States, and $78,000 for a family of four. The CSR benefits are strongest, however, for people with income that doesn’t exceed 200% of FPL, which is $30,120 for a single person, and $62,400 for a family of four. (This is all based on the 2024 poverty level numbers, which are used to determine Marketplace subsidy eligibility for 2025 coverage.)
Cost-sharing subsidies are automatically included in Silver plans for enrollees whose income makes them eligible to receive cost-sharing subsidies. Cost-sharing subsidies are not available at the other metal levels, and do not show up among the available plan selections for people with income too high for CSR eligibility. These plans have lower out-of-pocket maximums and higher actuarial value than a regular Silver plan – they’ll save you money when you need to use your health coverage. And you can apply your premium subsidy towards their purchase price.
Cost-sharing subsidies are not always as well understood as premium subsidies, but as long as applicants are actively comparing the nuts and bolts of each available plan – as opposed to just looking at premiums – the Silver plans that include cost-sharing subsidies will stand out as options that offer exceptional value. For most applicants, they will be more expensive than Bronze plans, but will provide significantly better coverage. Their out-of-pocket maximums will be lower than that of comparably priced plans, and they will also cover more medical expenses before the out-of-pocket maximum is reached.
6. Understand why Gold plans may be a better value in some areas
You might find that there are some Gold plans in your area that cost less than Silver plans. In some areas, we’ve even seen $0-premium Gold plans for some enrollees over the last few years. If you’re not eligible for cost-sharing reductions, and there are low-priced Gold plans available in your area, these might present the best value.
Now for the how and why: Although the Trump administration eliminated funding for CSR in late 2017, CSR benefits continue to be available to eligible enrollees. The Congressional Budget Office estimated that the elimination of CSR funding would increase average Silver plan premiums by about 20% in 2018, and most insurers did add the cost of CSR to their Silver plan premiums.5 (This is referred to as “Silver loading.”) Indiana and Mississippi are the only states where Silver loading isn’t allowed. (In those two states, the cost of CSR is spread across all plans — broad loading — instead of only being added to Silver plan premiums.)
Because premium subsidies are based on the cost of Silver plans, the majority of the premium increase to cover the cost of CSR is ultimately still being paid by the federal government, in the form of larger premium subsidies.
But due to the CSR funding cut, Silver plans in some areas now actually cost more than Gold plans, and some enrollees can qualify for premium-free Gold plans after their subsidy is applied. For people with income below 200% of FPL (about $30,120 for a single individual in 2025), the best choice is probably a Silver plan. This is because the out-of-pocket costs are much lower due to CSR, and the ARP/Inflation Reduction Act’s enhanced premium subsidies will offset much of the higher premiums.
But people with income above 200% of FPL might be better off with a Gold plan instead of a Silver plan if the premiums are quite similar. (CSR is available up to 250% of FPL, but its effects are much less significant once you exceed 200% of FPL , unless you’re in a state that has its own additional CSR benefits).
Because the cost of CSR is now being added to Silver plan premiums in most areas, there continue to be Gold plans that are less expensive than Silver plans in some areas. Consumers should shop carefully and look at all available options before making a decision – don’t assume that pricing will follow the patterns we saw pre-2018, when premiums generally rose consistently from one metal level to the next.
Although premium subsidies offset the increased cost of Silver plans for most people, Silver plans are disproportionately expensive in most areas for people who aren’t eligible for premium subsidies. If they buy a Silver plan, they’re paying not only for the regular cost of the coverage, but also for the cost of CSR, since that cost is baked into the premiums for Silver plans in most areas.
This is a part of the reason Silver plan selections have dropped off since 2017; people who don’t get premium subsidies are generally better off with a plan at a different metal level. But again, premium subsidy eligibility has been expanded under the ARP and Inflation Reduction Act, so there aren’t as many people who don’t qualify for subsidies.
7. Look at Quality Ratings and check with your state’s insurance department
After you’ve narrowed down the options based on premiums, out-of-pocket costs, how the available plans will cover your prescriptions, and which plans have your preferred medical providers in-network, you might also want to consider Quality Ratings. Many of the Marketplace plans available in your area will have star ratings under the Quality Rating System.
This is another piece of the puzzle, but for most people, it should be a way to narrow down the options after you’ve considered the other points described above, rather than a starting point.
Keep in mind that not all plans have star ratings; if a plan is too new or doesn’t have a large enrollment, it may just say that it’s not rated. That’s not a reason to avoid a plan, as it may be an excellent plan that’s simply new to the market.
You can also contact your state’s insurance department, which regulates all of the health insurers that offer Marketplace coverage in the state. In some states, the insurance department publishes overviews of the complaints they’ve received about insurers operating in the state, including ratios that make it easier to compare complaints across a market in which insurers may have very different market shares. (Michigan and Colorado are examples.) And some states provide very detailed complaint reports, including specifics of what triggered the complaints and how they were resolved. (New York is an example.)
You may find this information on your state’s insurance department website; if not, you can call them to ask whether it’s information that they can share with you.
8. Remember: one size does not fit all
If your household income doesn’t exceed 200% of FPL (this amounts to $51,640 for a family of three enrolling in 2025 coverage), a Silver plan with integrated cost-sharing subsidies will likely be the best choice for you, and will likely provide a better overall value than the Bronze, Gold, or Platinum plans.
This might also be true for people with income between 200 and 250% of FPL , but as noted above, a Gold plan might be a better value in some areas, due to the way some states and insurers are adding the cost of CSR to premiums.
People who have moderate pre-existing conditions and expect to file claims during the upcoming year will probably be better served by a higher-level plan (or a cost-sharing Silver plan if they qualify for it), regardless of premiums.
But very healthy applicants may find that they prefer the lower premiums of a Bronze plan, despite the potential for higher costs if they do need to file a claim. And enrollees with very serious medical conditions, who know they will meet their plan’s maximum out-of-pocket no matter what plan they select, might find that they’re also better off with a lower-cost Bronze plan (or an HSA-qualified plan at any metal level), since the combined total cost of the premiums and out-of-pocket exposure might end up being lower.
There’s no one-size-fits-all when it comes to health coverage; each person’s health history, risk tolerance, and budget have to be taken into consideration when selecting a plan.
Personal assistance from a navigator or broker will be invaluable if you’re struggling to compare the various options available to you. (You can call one of healthinsurance.org’s partners at 866-553-3223 to talk with a licensed, exchange-certified broker who can enroll you in an ACA-compliant plan.)
9. See why your subsidy eligibility may be better than in previous years
The temporary subsidy enhancements created by the American Rescue Plan (ARP) and extended by the Inflation Reduction Act (IRA) make it more important than ever for people to actively consider their coverage options, to ensure that they’re getting the best possible value from their health coverage.
If you’re currently enrolled in an off-exchange plan (because you weren’t previously eligible for subsidies and haven’t double-checked that since 2021) or you’ve got a Bronze plan because it was the option that fit your budget under the previous subsidy rules, you’ll want to be sure to compare all of the options that are available in your area during open enrollment or a special enrollment period.
Even if your income was too high to be subsidy-eligible prior to mid-2021, you might find that you’re eligible for a subsidy now, or that you qualify for a larger subsidy that makes a more robust plan fit into your budget (this will continue to be the case through 2025, but it would require another act of Congress to extend the ARP’s subsidy enhancements past the end of 2025).
It’s important to make sure you’re enrolled in a health insurance Marketplace plan (and the option that best fits your needs and budget) to take advantage of the enhanced subsidies, since they aren’t available outside the exchange.
If you’re currently enrolled in something like a short-term plan or a health care sharing ministry plan, you’ll want to reconsider your options during open enrollment, which runs from November 1 through January 15 in most states. You may be pleasantly surprised to see how affordable the coverage is, and how many options you have.
And keep in mind that the rules have changed for short-term plans: For policies issued starting in September 2024, the total duration of the policy can’t be more than four months, including renewal. So these plans can no longer serve as a year-round coverage option. If you’ve been using them that way and your current plan will expire sometime in late 2024 or in 2025, you’ll want to consider replacement options in the health insurance Marketplace during the open enrollment period for 2025 coverage (starting November 1, 2024). The termination of a short-term policy mid-year will not trigger a special enrollment period allowing you to sign up for a Marketplace plan at that point.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
Footnotes
- “Premium Adjustment Percentage, Maximum Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on Cost Sharing, and Required Contribution Percentage for the 2025 Benefit Year” Centers for Medicare & Medicaid Services. Nov. 15, 2023 ⤶
- “The Embedded Out-of-Pocket Maximum is Here for Family Group Health Insurance Coverage” HNI.com. Accessed Sept. 18, 2024 ⤶
- “2024 Marketplace Open Enrollment Period Public Use Files” CMS.gov. Accessed Sept. 18, 2024 ⤶
- “2024 Marketplace Open Enrollment Period Public Use Files” CMS.gov, March 22, 2024 ⤶
- ”Silver Loading (§ 156.80)” — Part of the HHS Proposed Notice of Benefit and Payment Parameters for 2026. U.S. Department of Health & Human Services. Oct. 10, 2024 ⤶
