When shopping for an individual health plan, determining which policy will meet your needs can be challenging. Luckily, all health plans on the federal or state-based marketplaces cover basic healthcare services. These plans are known as qualified health plans (QHPs).
QHPs are health insurance policies that comply with Affordable Care Act (ACA) requirements. These types of plans must meet specific standards to be certified as “qualified” on the individual market. They must also cover essential services that most people rely on for their health.
Below, we’ll walk you through the ins and outs of QHPs, including how they’re categorized and how you can enroll in one.
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What is a qualified health plan?
A QHP is a health insurance plan that meets the requirements established by the ACA. The Health Insurance Marketplace certifies these plans to ensure they provide minimum essential coverage (MEC). Some coverage options include benefits beyond the essentials, such as dental coverage.
According to the ACA, a typical Marketplace plan that’s considered a QHP must follow these basic rules:
- The plan must cover the ten essential health benefits, such as primary care, mental health services, behavioral health treatment, prescription drugs, and emergency care.
- It must limit the amount qualified individuals spend on deductibles, copays, annual out-of-pocket maximum amounts, and other healthcare expenses.
- It must prohibit lifetime benefit limits.
- Plans should include a reasonable number of in-network providers determined by each state.
- Plans need to meet other requirements of the ACA.
QHPs are certified by public health exchanges, like the federal and state-based marketplaces. The certification process happens each year before the marketplaces’ open enrollment. Insurers submit applications from April through June on the qualified health plan website1 the Centers for Medicare & Medicaid Services (CMS) runs. CMS finalizes certification by October in time for open enrollment.
How are qualified health plans categorized?
The public exchanges organize QHPs by metallic tier levels: bronze, silver, gold, and platinum. The tiers make it easier for qualified individuals to compare health plans with similar health insurance premiums and out-of-pocket medical costs. All plan types sold on the public health exchanges, regardless of their metal level, are QHPs.
Insurers assign Marketplace plans to a metal level based on actuarial value. While all QHPs pay for the same type of coverage, including the essential health benefits, a lower metal level policy, like a bronze plan, has cheaper premiums and more expensive out-of-pocket costs.
In contrast, a higher metal level policy, like a gold plan, means you’ll pay a higher monthly premium but less for out-of-pocket medical expenses.
In addition to the four metallic tiers, catastrophic plans meet QHP requirements because they cover essential health benefits. However, these plans are only available to those under age 30 or those older than 30 with hardship exemptions based on income and other circumstances.
To break it down simply, the chart below outlines the four metallic tiers’ level of health coverage, plus catastrophic plans:
|
Plan type |
Level of coverage |
Who’s it for? |
|
Bronze level |
60% of expected costs for the average individual. |
This plan is the most affordable way to protect yourself from major medical situations like severe sickness or injury. Health insurance premiums will be low, but you’ll have to pay for most routine medical services yourself instead before you meet your deductible. |
|
Silver level |
70% of expected costs for the average individual. |
A silver level plan may provide the best overall value if you qualify for cost-sharing reductions. This plan is also a good choice if you can pay a slightly higher monthly premium rate than the bronze plan for a higher level of coverage for routine medical services. |
|
Gold level |
80% of expected costs for the average individual. |
A gold level plan could be a good value if you receive a lot of medical care, have pre-existing conditions, or have a chronic illness. But, your insurance company will charge you a higher monthly premium rate to cover more out-of-pocket medical costs when you get medical treatment. |
|
Platinum |
90% of expected costs for the average individual. |
This plan is best for qualified individuals who use a lot of medical care or have a chronic condition. Participants will pay a high monthly premium rate for a greater level of coverage. |
|
Catastrophic |
In addition to the essential benefits, these plans cover major accidents or illnesses. |
Catastrophic plans are only for qualified individuals under 30 who don’t need much medical care. Those older than 30 can qualify if they meet the government’s criteria for a hardship exemption. This level of coverage has low monthly premiums but high deductibles and out-of-pocket maximums. |
As with most medical plans, you’ll pay a monthly insurance premium whether or not you use healthcare services. Premium costs are typically higher for plans that pay more of your medical expenses, such as platinum plans. Health insurance premiums are also usually higher for plans with lower deductibles and coinsurance amounts.
Do qualified health plans work with Medicare?
QHPs are typically not for people who qualify for Medicare. QHPs are ACA-specific and apply to people not enrolled in job-based coverage and who don’t meet eligibility requirements for Medicare or Medicaid. In fact, it’s illegal2 for someone to sell you qualified health insurance coverage if they know you have a Medicare Part A or B plan.
In most cases, if you currently have a QHP and are becoming eligible for Medicare, you should drop your QHP and enroll in Medicare. If you’re switching from a QHP to Medicare, follow your open enrollment guidelines to avoid a gap in coverage and late enrollment penalties.
If you have a QHP and become eligible for Medicare, you can keep both plans. Still, dropping your QHP for Medicare is generally cheaper as you’d be paying for both premiums. If you choose to keep both for the year, Medicare will pay for your insurance claims first. You’ll also no longer be eligible for any subsidies on your QHP.
How to purchase a qualified health plan
You can enroll in a QHP on the federal or a state-based marketplace. Qualified individuals can shop for coverage online or over the phone with a health insurance marketplace representative. Depending on your household income, premium tax credits and cost-sharing reductions can be used to purchase a QHP.
Plans sold off-exchange as ACA-compliant health insurance follow the same basic rules as QHPs, but they aren’t certified by an exchange, nor are they eligible to be purchased with a premium tax credit. You also can’t use premium tax credit subsidies to buy catastrophic plans.
To enroll in health insurance coverage on a public exchange, you’ll need the following information:
- Personal information, such as your name, address, email address, Social Security number, date of birth, and citizenship status.
- Your household size and income if you plan to apply for premium tax credits or cost-sharing reductions.
- A variety of documentation to prove your income, including pay stubs, Form W-2s, your most recent tax return, etc.
- Health insurance coverage details for any employer-sponsored health plan available to you (regardless of whether you participate in it or not).
- Hardship exemption notice if you want to purchase a catastrophic plan and you’re 30 or older.
You can also speak directly with your health insurance broker or agent to enroll in a QHP. They can help you find a plan at an insurance company that fits your needs and budget. They can search for QHPs on private exchanges, help you find supplemental insurance, like a vision or dental plan, and answer any questions you may have along the way.
Conclusion
When it comes to healthcare, consumers need reassurance that their health insurance policy will provide adequate coverage for routine check-ups, chronic conditions, out-of-pocket costs, and everything in between.
Having a QHP can help you manage your essential healthcare needs and, depending on your plan type, your health insurance premiums. No one plans to get sick or hurt, but having a QHP for preventive care or in case of emergency can cover the costs so you and your family can stay healthy at an affordable price.
This article was originally published on June 24, 2022. It was last updated on September 22, 2023.
