Three years after opening their online doors, the health insurance marketplaces remain under intense scrutiny, but individual health plans that are not sold through these exchanges have largely escaped attention. New research sheds some light on what these plans are like and how they fit into the overall individual market.
The analysis by the Robert Wood Johnson Foundation found that the mix of 2016 plans sold outside the exchange by brokers or insurers is very different from those sold on the marketplace. On the marketplace, silver plans, which pay for 70% of covered expenses on average, are by far the most popular, comprising about two-thirds of all plans. Bronze plans make up 16% and gold and platinum plans 12% of marketplace offerings.
Off the marketplace, only about a third of plans available are silver. Another third of plans are bronze offerings that pay for 60% of expenses on average, while 25% are gold plans that pay for 80% of expenses or platinum plans that cover 90%.
In addition, more than half of plans sold off the exchange offered some sort of out-of-network coverage, compared with 36% of plans sold on the exchange.
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Premiums and deductibles were higher in off-exchange plans, the analysis found. The average monthly silver premium was $314 compared with $279 for marketplace plans, while off-exchange silver plan deductibles were more than $1,200 higher on average, $3,273 versus $2,053.
“Off-exchange plans may offer out-of-network benefits and other features that are more useful to people,” said Katherine Hempstead, who directs the health insurance research work for the foundation.
People who are interested in off-exchange plans might have family members who are being treated for a medical condition and want access to a broader provider network or to out-of-network providers, for example, she said.
Though provider networks may be more extensive off the exchange and coverage details may vary, plans sold on and off the exchange must be similar in many ways. The health law created standards that all individual plans must meet, no matter where they’re sold. They must all cover essential health benefits, including hospitalization, prescription drugs and doctor visits, for example. They also all have to fit into the four metal coverage tiers that reflect the varying percentages of overall health care expenses they cover.
The obvious advantage to buying a plan on the marketplace is that people can receive premium tax credits that make coverage more affordable only if they buy a plan there. About 85% of marketplace customers qualify for the subsidies that are available to people with incomes up to 400% of the federal poverty level (about $47,000 for one person). The federal government recently reported that an estimated 2.5 million people may eligible for subsidized coverage but are paying full price for coverage off the exchange.
But for people whose income is too high to qualify for subsidies, there’s less reason to limit their shopping to the marketplace.
Off-exchange plans make up about a quarter of all individual market offerings, the analysis found. But while it’s easy to compare marketplace plans, there’s no easy way to do that with plans sold off the marketplace, Hempstead said.
“Right now the off-exchange market is kind of the Wild West in terms of how consumers know what’s available,” she said.