In this post, we explain how to select among the metallic Bronze, Silver, Gold and Platinum health plans and describe the various insurance coverage levels.
Welcome To The Federal Marketplace
The Affordable Care Act As part of the Affordable Care Act, a new Health Insurance Market (or Exchange) opened for business on Oct. 1, 2013.
The Federal Exchange or Marketplace, which is Healthcare.gov, is an online one-stop shopping portal for health coverage. It was created to allow it to be simple for families and people to compare and buy insurance.
Some states also offer their own on-line Market, selling various state-special plans from health insurance businesses. In states that don’t offer a state exchange, like Florida, Healthcare.gov is the only online marketplace.
Along with discovering health coverage, you can use Healthcare.gov to learn if you qualify for subsidies, including:
- Health Insurance Subsidies, which can lower your out-of-pocket costs
- Advanced Premium Tax Credits, which reduce your federal tax expense.
These subsidies can make an important difference in the kinds of coverage you get and are only accessible on Healthcare.gov. An authorized insurance agent may also browse you through these choices if you prefer.
During open enrollment, you’ll set up an account and complete the online application on the Marketplace to find the health coverage choices available to you, in your state. You’ll also use Healthcare.gov to see if you qualify for tax credit or a subsidy.
No matter your geographical area, all insurance plans in the Marketplace are divided into 4 “metallic” amounts – Bronze, Silver, Gold, and Platinum-based upon how you and your insurance provider will share in your healthcare expenses.
The sum you pay per month is called your premium. You pay this whether you go to the physician, purchase prescription drugs or see the hospital.
When and if health care is received by you, your prices – above and beyond the premium – are based in your plan’s deductible, copayment, coinsurance and out of pocket maximum. It’s vital that you comprehend what these terms mean, to be able to make educated choices when comparing and buying health care plans.
Your deductible is the amount of money you must pay for covered services before your insurance begins to pay. For example, if you’ve got a $2,000 deductible, you’ll pay 100% of your health care expenses until the sum you’ve paid reaches $2,000. After you meet your deductible, some services may be covered at 100% while others will require you to pay coinsurance (more on that below).
A copayment (“copay”) is a fixed dollar amount that you pay for specific healthcare services. Generally speaking, you are going to have distinct copayment amounts for various kinds of service, including a $150 copayment for an emergency room visit or a $25 copayment for a physician’s office visit. Copayments don’t usually count toward your deductible.
Your share of the cost for a healthcare service is called coinsurance. Usually, this is determined as a fixed percentage of the overall cost for a service, such as 20% or 35%. Coinsurance kicks-in after you have satisfied your deductible. By way of example, suppose you’ve already matched your $2,000 deductible and the coinsurance of your plan is 25%. If you’ve got a hospital cost of $2,000, your share of the prices would be $500 (25% of $2,000). Your share would be $600 if your coinsurance was 30%.
An insurance plan’s out of pocket maximum is the most you will pay during a coverage period (usually 1 year) before your plan begins to pay 100% of the amount that is permitted. The cash you pay for premiums and health care your plan does not ensure doesn’t count towards your out of pocket maximum. Set by your insurance plan, your deductible, copayments, and coinsurance may be applied towards the out of pocket maximum. Health care insurance plans have specific out of pocket maximums; under health care reform, the 2018 limitations are $14,700 for families and $7,350 per person.
The Essential Health Benefits
For an insurance company to participate in the Market, it must offer Silver and Gold level plans at the very least. The following Essential Health Benefits must be included in every plan:
- Alcohol and Drug treatment
- Ambulatory patient services
- Care for children
- Chronic disease treatment (including asthma and diabetes)
- Emergency services
- Lab services
- Pregnancy care
- Mental health services
- Occupational and physical treatment
- Prescription drugs
- Wellness and preventive services (including cancer screenings and vaccines)
- Speech therapy
Covered benefits are the healthcare services your insurance company pays for under your strategy. You may have to pay a copayment or coinsurance, but your strategy recognizes the service. By comparison, if a service isn’t insured – like acupuncture or an elective surgery – you’ll be responsible for 100% of the costs.
The Essential Health Benefits are a minimum requirement for all plans in the Marketplace; specific plans will offer additional coverage, but no plan can offer less.
The four levels of health plans – Bronze, Silver, Gold, and Platinum – are priced based on their actuarial value: the typical percent healthcare expenses which are paid by the strategy.
The higher the plan’s value (i.e. Gold and Platinum), the more the insurance company will pay towards your health care expenses and, consequently, the lower your out-of-pocket costs for things such as:
- Deductibles – the sum you owe for covered services before insurance kicks in;
- Copayments – a set sum you pay for a covered health care service
- Coinsurance – your share of the prices of a healthcare service that is covered.
On average, Gold plans pay 80% of your costs and Platinum plans to pay 90%. The primary drawback to high-tier plans that provide more coverage is you will pay a higher premium every month.
On the other end of the spectrum, a low-tier Bronze plan will cover just 60% of covered medical expenses, and your share will be the remaining 40%. Silver plans pay 70%.
Your share of costs may come in the form of a substantial deductible with coinsurance that is low once you have satisfied your deductible. Another plan might offer a deductible that is low with higher coinsurance. For instance, Silver Plan A (which usually pays 70% of your healthcare expenses) offers a low 15% coinsurance and a high $2,000 deductible. Silver Plan B, on the other hand, has a higher 30% coinsurance although a low $250 deductible.
How Much will My Plan Cost?
Your monthly premium will be based on several variables including:
- Your age, DOB
- Whether you smoke
- Where you reside, zip code
- How many individuals are registering (family members)
- The insurance company selling the plan
The insurance market is still a private, competitive market. This means costs will vary and you need to shop around to get the best price. A Silver plan from one firm may cost more or less than the same plan offered by another insurance company. Plans offered by the exact same firm, nevertheless, will grow in cost as the actuarial value and the amount the plan pays out to go up.
Beginning in 2018, the national limitation for yearly out-of-pocket expense for people (not including monthly premiums) is limited at $7,350; the family limitation is $14,700. Specific plans may have lower out of pocket limits.
How To Determine The Best Plan for You
Determining which plan is best for you or your family can be a complex challenge.
You’ll first need to consider your fiscal situation and your health as you compare plans. Generally speaking, if you expect to have lots of healthcare visits or to require routine prescriptions, then you may be better off with a Platinum or Gold policy that pays a higher percentage of the prices.
If on the other hand, you do not expect to have many health care issues and are healthy, you may be happy selecting a Silver or Bronze plan. Needless to say, even healthy individuals can have accidents or become ill and wind up with tons of medical bills, so you’ve got to factor in your risk tolerance, too.
If your income drops between 100% and 250% of the national poverty level ($12,060 to $29,700 for a single person), you may be eligible for a Cost-Sharing subsidy to help with co-payments and co-insurance. To get a Cost-Sharing Subsidy, you must buy a Silver plan on the Market. You’ll have a number of plans from which to pick, but it must be Silver in order to make the most of the Cost-Sharing subsidy.
Premium Tax Credits, a kind of tax refund will also be used by many people. You may qualify for this if your income drops to $45,960 for a single person or between 100 and 400% of the national poverty level.
The Bottom Line
When selecting a plan, it’s helpful not to forget that all plans insure for the same Essential Health Benefits.
Your monthly health insurance premium will be higher if you select a higher level plan, for example, Platinum or Gold. However, you’ll pay less each time you see a doctor or get a prescription. Your monthly premium will be lower if you select a Silver or Bronze plan, but more will be paid by you for each physician visit, prescription or healthcare service.
Finding a balance between prices and coverage can be challenging. When Enrollment reopens on November 1st, you’ll have the ability to compare plans to get the coverage that you need and the best fit for your financial situation. You’ll also have the ability to apply for subsidies and tax credits which can help reduce your healthcare prices.
Working with a licensed health insurance agent can make your plan selection and application process easier. Even better, working with an agent costs you nothing extra.