More than half of the people who have health insurance coverage through an individual insurance plan are enrolled in plans that won't meet minimum coverage requirements for plans sold in 2014 as defined by the Affordable Care Act, according to research supported by The Commonwealth Fund.
The study, published in the May issue of Health Affairs sought to quantify the number of individual health plans sold today that fail to an actuarial value of 60 percent, the bare minimum for plans that will be sold at the “bronze” level on the health insurance exchanges starting in 2014.
According to the findings the average actuarial value for all health plans sold on the individual market was 60 percent and among that group 51 percent of the plans provided an actuarial value below 60 percent. These so-called “tin” plans see the insurance companies responsible for less than 60 percent of total healthcare costs, and the individual members responsible for more than 40 percent due to deductibles, co-payments and other out-of-pocket expenses.
Under the ACA the exchanges will sell individual policies providing different levels of actuarial value: platinum (90 percent or greater), gold (80 percent to 89 percent), silver (70 percent to 79 percent) and bronze (60 percent to 69).
Using these standards, the research showed that in the individual insurance market, no plans were offered at the platinum level; 2 percent were gold; 14 percent were silver; and 33 percent fell in the bronze range.
By contrast, among enrollees in group plans, 24 percent were enrolled in platinum plans; 41 percent in gold level plans; 28 percent in silver; 6 percent in bronze plans; and only 0.5 percent in the so-called tin plans.
People enrolled in individual plans paid a much larger piece of their healthcare costs out of their own pockets. According to the research, the average out-of-pocket costs for people enrolled in these plans was $4,127 for a family of four. The average out-of-pocket costs for a family of four with group coverage was $1,765.
“Our findings have notable policy implications,” the report authors noted. “First, the majority of Americans with individual insurance coverage today are enrolled in a plan whose actuarial value is too low to qualify for a state-based exchange. Second, about two-thirds of today’s employees are enrolled in a gold or platinum plan. Families with coverage through the exchanges are likely to have less financial protection than employees with employer-based coverage enjoy today.”
The report also noted that those people who are very sick and enrolled in individual insurance plans face medical bills that could be financially catastrophic. A family in the top 1 percent of medical spenders currently enrolled in a tin policy incurs annual out-of-pocket expenditures of more than $27,000.