Understanding Premiums and Out-of-pocket Costs

Under the Affordable Care Act, all plans offered the Marketplace must provide a set of essential health benefits including free preventive services and coverage for pre-existing conditions. When you offer SHOP coverage, the plan’s category has nothing to do with the quality of care it provides. It does affect how much your employees are paying for things such as deductibles, copays, premiums, and out-of-pocket costs.

Here’s some guidance that small business owners should be aware of:

  • For plans that pay a smaller share of medical costs when employees get care, premiums are usually *lower. For instance, a bronze plan has lower monthly premiums than for a gold plan but your employees will probably pay more when they use medical services.
  • Platinum plans have the lowest out-of-pocket costs for services and highest monthly premiums. If your employees use a lot of services or experience a health crisis, these plans will likely provide better financial protection.
  • As a general rule, the lower the premium, the higher the out-of-pocket costs. The higher the premium, the lower the out-of-pocket costs.
  • If you offer one health plan, you’ll set a fixed percentage that you would like to contribute toward premiums for employee-only coverage. This applies to all employees who accept your offer of coverage.
  • After you select a plan for dependent coverage, your percentage contribution will be calculated based on the individual plan premium for each employee and dependent which varies based on age.

For more details on SHOP eligibility, click here. If you have more questions, contact your IBG agent today.


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