Bronze, silver, gold or platinum? Understanding the new coverage levels under health care reform
When the federal health insurance mandate goes into effect, most Americans will be required to get health insurance. Yet those shopping in the individual market will have a choice of what kind of plan they get — because the health insurance exchanges will be required to offer four coverage levels: bronze, silver, gold and platinum.
What do the coverage levels mean?
The difference among these coverage tiers rests with their “actuarial” value — in other words, how much a plan will cover before the patient must chip in for co-insurance, deductibles and co-payments.
According to the Kaiser Family Foundation, the actuarial values for the four levels of coverage are:
- Bronze: 60 percent.
- Silver: 70 percent.
- Gold: 80 percent.
- Platinum: 90 percent.
For example, someone who gets a silver plan would have to pay 30 percent of health care costs, while the plan covers 70 percent. Most Americans will be required to get at least a bronze-level plan, according to Kaiser, unless they’re eligible for a religious or hardship exemption.
All plans, whether bronze, silver, gold or platinum, will cover certain essential health benefits determined by the U.S. Department of Health and Human Services, such as ambulatory services, emergency care, maternity care and prescription drugs.
The silver standard
You may have heard that health care reform caps the amount of your income you have to spend on health insurance. If your premiums exceed a certain percent of your income, you’ll be eligible for “premium assistance subsidies” to help defray the cost. For example, if your income is between 300 percent and 400 percent of the federal poverty level, you can’t spend more than 9.5 percent of your income on premiums. So, if your premiums can cost only a fixed percent of your income, why wouldn’t you just go straight for a platinum-level plan?
Here’s the answer: The premium caps are based on the silver health plan. According to the Congressional Budget Office, subsidy levels in each market are tied to the premiums of the second cheapest silver plan. So, if you go with the second cheapest silver-level plan available in your market and you make between 300 percent and 400 percent of the federal poverty level, you won’t have to spend more than 9.5 percent of your income on premiums. However, if you opt for a gold or platinum plan, you’ll have to make up the difference in costs between that plan and the silver plan.
If you or your family members have chronic health problems, you may want a gold or platinum plan because these plans cover more costs. But what if you can’t afford to pay the difference between that higher-tier plan and the silver plan? Variations on the basic plans are available for those with lower incomes. These more affordable variations are based on what’s called the “HSA level,” according to Kaiser.
To understand the HSA level, it’s necessary to understand how health savings accounts (HSAs) work. HSAs are high-deductible plans that involve high out-of-pocket costs. However, these out-of-pocket amounts are capped (as of 2011) at $5,950 for individuals and $11,900 for families, according to the U.S. Office of Personnel Management.
These same caps apply to bronze, silver, gold and platinum plans — no matter which plan you get, your out-of-pocket spending for the year is capped at $5,950 (if you have an individual plan) or $11,900 (if you have a family plan). Those with lower incomes can get plans with lower spending caps. In other words, you’ll be paying the same amount in premiums but spending less in out-of-pocket costs like co-insurance.
For example, according to Kaiser:
- Households between 100 percent and 150 percent of the federal poverty level can get a plan that covers 94 percent of costs (more than a platinum-level plan would) with an out-of-pocket spending cap that’s one-third of the standard HSA level.
- Households between 150 percent and 200 percent of the federal poverty level can get a plan that covers 87 percent of costs (more than gold, less than platinum) with an out-of-pocket spending cap that’s one-third of the standard HSA level.
- Households between 200 percent and 250 percent of the federal poverty level can get a plan that covers 73 percent of costs (just above the silver level) with an out-of-pocket spending cap that’s one-half of the standard HSA level.
- Households between 250 percent and 300 percent of the federal poverty level can get a silver plan with an out-of-pocket spending cap that’s one-half of the standard HSA level.
- Households between 300 percent and 400 percent of the federal poverty level can get a silver plan with an out-of-pocket spending cap that’s two-thirds of the standard HSA level.