Understanding health insurance

Health insurance 101

What is health insurance?

It’s a way to pay for health and medical care. Health insurance is also known as a health plan or “benefit program.” You pay a monthly fee or a “premium” to keep your health insurance.

Why have health insurance?

Health insurance protects you from unexpected and high costs due to a hospital stay or treatment for an injury or when you are sick. Your health insurance plan could help pay for some or even all of these costs.

What type of services does health insurance pay for?

Insurance pays for covered services. Your benefit plan documents will show the services your insurance carrier will pay for or “cover.” There are also “non-covered services” or services that your insurance carrier will not pay. 

How does health insurance work?

The insurance carrier pays a portion of your medical costs with the premium money from all the people they insure. In the same way, your premium helps pay medical costs for others when they need it. You lose your insurance if you do not pay your premium.

What other costs, besides premium, could I have with my health plan?

Additional costs outside of the premium are called out-of-pocket costs. Below are some kinds of out-of-pocket.

You may have to pay a “deductible.” A deductible is the amount you pay each year toward health care costs before the insurance company pays. When you meet your deductible, your insurance begins to cover a portion of costs. Example: Your deductible is $500. Your insurance pays for your claims after you have paid the first $500 in medical costs. Some services will be paid even though you have not met your deductible. Preventive and other wellness screenings may be covered before you meet your deductible.

A “copayment” or “copay” is another out-of-pocket cost you may need to pay. The copay is the fee that you pay at the doctor or facility office.

You may also have “coinsurance” or “cost-sharing” costs. Coinsurance is the cost you pay for a medical service when you get it. Coinsurance applies after you reach your deductible. For example, if your health plan has a 20% coinsurance, you pay $20 of a $100 doctor bill. The insurer pays the remaining $80.

What is medical loss ratio (MLR)?

The medical loss ratio (MLR) requires that insurance companies spend a certain percentage of premium dollars on medical claims and activities to improve care quality. Rebates are due to members if an insurer fails to meet minimum loss ratios of 80 percent in the individual and small group markets. For each calendar year, Capital Blue Cross and its affiliates will calculate and issue payments, if required, to eligible policyholders by September 30th of the following calendar year.

Capital Blue Cross
Medical loss ratio summary
January 1 – December 31, 2019

  Individual Small group Large group
MLR Standard 80.0% 80.0% 85.0%
CBC Not Credible Not Credible 99.7%
CAIC Not Credible Not Credible 106.9%
CAAC 71.7% 82.9% 90.5%
KHP 86.4% 111.0% 85.6%

What are the types of plans?

We offer a variety of plan types. View our plan types page for more complete details.

Exchange and metal levels

Why are exchange health plans named by color?

Each health plan group is named for a color of metal, called “metal level.” The colors also signify the level of coverage they give: Bronze, Silver, Gold and Platinum. Metal levels show the amount of cost you pay under your health plan and the amount of cost the insurer pays. Your cost is in addition to your premium.

Bronze Silver Gold Platinum Catastrophic
Actuarial value of 60%. This means it's designed to pay 60% of essential health benefits across all the people covered by this type of plan. Members as a whole pay 40%. Lowest monthly premium of all metal levels; least generous cost coverage Actuarial value of 70%. This means that it's designed to pay 70% of essential health benefits across all the people covered by this type of plan. Members as a whole pay 30%. Actuarial value of 80%. This means that it's designed to pay 80% of essential health benefits across all the people covered by this type of plan. Members as a whole pay 20%. Actuarial value of 90%. This means that it's designed to pay 90% of essential health benefits across all the people covered by this type of plan. Members as a whole pay 10%. Highest monthly premium of all metal levels; most generous cost coverage. Requires you to pay all medical costs up to a specific limit before insurance company begins payment of your covered services. The specified limit is usually several thousand dollars. Low monthly premium.

How to understand exchange plans:

Compare metal levels.

Think about the premium price that will work best for your budget. Your premium will be lower if you choose to pay more when you go for doctor visits or medications. The premium will be higher if you choose to pay less at the time of a doctor visit or for medicine.

Health insurance exchange subsidy

Do I qualify for lower costs?

The government has different guidelines for different levels of income. If you are eligible, you must buy a Pennie qualified health plan to get the subsidy. To determine and confirm a subsidy, also called APTC, please visit Pennie's financial assistance page.

What if I’m not eligible?

Your income determines eligibility. If you aren’t eligible, you’ll need to pay the whole cost of the premium.

Will I get a big or small premium tax credit?

A subsidy might pay all, most or only part of the premium cost for a health plan.

How do I get my tax credit?

The exact amount of subsidy is determined by the government. For an estimate of the subsidy you are eligible to receive, please visit our subsidy estimator.