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ACA: More options, but some out-of-pocket costs up

A week before the Dec. 15 deadline to buy individual health insurance, Michael Ferguson hadn't even looked at plans on the Affordable Care Act marketplace.

A week before the Dec. 15 deadline to buy individual health insurance, Michael Ferguson hadn't even looked at plans on the Affordable Care Act marketplace.

But he needs to, because his current plan is being ended, and Ferguson, the owner of J&M Meats in the Flourtown Farmers Market in Montgomery County, doesn't want to be uninsured come Jan. 1.

It's early, and the market is quiet, so the 46-year-old takes his breakfast - a perfectly grilled strip steak - to a counter behind the display cases, grabs his iPad, and plops into the address bar.

Within a minute, the Birdsboro man is in shopping mode, scrolling through a list of five silver-tier plans. Not exactly a rah-rah supporter of the ACA, he's surprised at how "easy" it is to move around the site and how "self-explanatory" the plans are.

"The confusing part is figuring out whether your doctor is going to be part of the plan," he says. Another worry is coinsurance, the percentage he pays for some covered services. "The coinsurance should be spelled out more clearly," he said. "I got nailed by coinsurance on my current plan."

Many people may also be surprised by increases in out-of-pocket charges that many 2015 plans carry. Still, overall, navigators agree that this year's market for Philadelphia and the surrounding counties offers consumers more options.

"It is a better landscape for Philadelphia this year," says Emily Van Yuga, who oversees navigators for the Health Federation of Philadelphia. With two new insurers in the market and with more competitive prices, "it is easier to make a choice that will suit your needs."

Another piece of good news is that plan benefits have remained fairly consistent. "The changes in benefits for the plans that we dealt with last year that are on the marketplace this year are nominal, really minor in nature," says Ted Trevorrow, a certified application counselor.

In the weeks since the marketplace opened Nov. 15, 2.5 million people have submitted applications on the federal marketplace, according to the government. Of those, 1.3 million have selected plans. Statistics for Pennsylvania and New Jersey are not available.

Before choosing coverage, whether you're a first-time buyer or renewing your current plan, it's wise to consider how higher out-of-pocket costs - premiums, co-payments, and coinsurance - might affect you. More competition this year hasn't led to lower overall plan costs.

"We are seeing more variety in out-of-pocket costs for consumers," Van Yuga says. "Sometimes, deductibles are applied to prescriptions. Sometimes, it's out-of-pocket costs until you meet the deductible, and after you meet the deductible, it turns to a coinsurance percentage."

Compounding the rise in out-of-pocket costs is the shrinking subsidy amounts. "The change is really significant," Van Yuga says. "People who were paying monthly premiums of 30 or 40 cents last year have plans that are $50 to $75."

Premium rises are, in part, responsible. But it's also how tax-credit subsidies are calculated. Subsidies are determined based on the cost of the second-lowest silver-tier plan in the market. When the price of that plan drops - as the Philadelphia market became more competitive this year - the subsidy also falls.

There is another reason for the vanishing 30-cent premiums: The people receiving them now qualify for Healthy Pennsylvania, the state's Medicaid-expansion plan.

Last year, Pennsylvanians with an income at 100 percent of the Federal Poverty Level ($11,500) qualified for a tax-credit subsidy to buy health insurance on the marketplace. Those people also received the tax-credit subsidies that caught everyone's attention.

This year, people making 100 percent to 138 percent ($16,105) of the FPL don't qualify for a tax-credit subsidy. Instead, they are eligible for Medicaid expansion.

There is, however, a problem. People with a subsidized marketplace plan must make sure their old plan doesn't automatically renew. If it does, they will owe the IRS the amount of their subsidy come tax time.

Turns out Ferguson won't be "nailed" again by coinsurance. He qualified for Medicaid.