Understanding the four categories of Health Insurance Marketplace plans

Understanding the four categories of Health Insurance Marketplace plans

To help consumers choose among the abundance of policies available, the Health Insurance Marketplace divides plans into four categories: bronze, silver, gold, and platinum.

As their names suggest, the tiers offer different levels of services and charge varying levels of premium.

The main similarity between all four categories of plans is they must all cover the ten essential health benefits stipulated by the Affordable Care Act, which include:

Ambulatory patient services, which include regular doctor visits and treatments at walk-in clinics.
Emergency services, including visits to an emergency room.
Hospitalization, which includes medically necessary surgery.
Maternity and newborn care.
Pediatric care, including oral and vision care.
Mental health and substance abuse treatment, including counseling and behavioral health treatment.
Prescription drug coverage.
Rehabilitative and habilitative services and devices.
Laboratory tests and services.
Preventative and wellness care.

Each category differs based on the amount of monthly premium charged and how you and the plan share the cost of your health care.

Premium is the amount you pay each month to have health insurance coverage. Similar to your car and homeowners insurance, you pay it each month regardless of whether you visit a doctor or buy prescriptions.

When you use your health insurance for any covered treatment, the insurance company often expects the insured to pay part of the cost. This is called an out-of-pocket expense. These costs are paid through deductibles, co-pays, and co-insurance.
A deductible is an amount you have to pay for covered services before your insurance starts to pay. For instance, if you have a $1,000 deductible, you will pay 100 percent of your health care expenses during the plan period until the amount you have paid reaches $1,000. After you meet your deductible, some services might be covered at 100 percent while others would require you to pay coinsurance.

Some services will require a co-pay. This is a fixed amount you pay for a specific service, regardless of its total cost. Co-pays are typically assessed on regular doctor visits.

Co-insurance is a percentage of the cost you owe of a specific service. For example, some plans will require you to pay 100 percent up to the deductible, but then the plan will pay 80 percent afterward. The co-insurance you pay is 20 percent. Some plans charge different co-insurance percentages depending on whether you use an in-network or out-of-network provider.

Neither co-pays nor co-insurance payments counts toward the plan’s deductible.

Healthcare plans to set a maximum amount of out-of-pocket costs an insured has to pay during a given plan period. Those participating in the Health Insurance Marketplace in 2016 are limited to annual out-of-pocket maximums of $6,850 for individuals and $13,700 for families.

The lower priced metal plans (bronze and silver) require less monthly premium, but the insured pays more in out-of-pocket costs. On the other hand, the higher priced plans (gold and platinum) charge a much higher monthly premium but also cover more of the actual cost of care.

On average, bronze plans will pay 60 percent of your health care expenses, leaving you to cover the other 40 percent. Silver plans cover about 70 percent of expenses; gold plans pay 80 percent, and platinum plans will pay 90 percent, leaving only 10 percent in out-of-pocket costs.

Choosing the right plan for your situation starts by determining how much you can afford a month in premium. Then look at the deductible. Finally, look over the list of covered services and compare when coverage begins (immediately or after the deductible is met) and how much the plan pays.

According to the latest enrollment data, almost 90 percent of enrollees chose the silver (67 percent) and bronze options (22 percent). The higher priced gold (7 percent) and platinum (3 percent) accounted for most of the remainder, with catastrophic plans being purchased by the remaining 1 percent of buyers.