METAL LEVELS FOR QUALIFIED HEALTH PLANS (QHP’S)

Beginning in 2014, the Affordable Care Act (ACA) requires health plans offered through a Marketplace Exchange, or what are called qualified health plans (QHPs), to meet certain levels of what the law refers to as “actuarial value”. ACA’s required actuarial value levels are referred to as “metal levels”—bronze (lowest premium and, in the event of claims, highest cost out of pocket), silver, gold and platinum (highest cost but, in the event of claims, least cost out of pocket). Morris & Reynolds Insurance offers every health plan for all metal levels and represents every leading insurer in the marketplace. We also offer you the advice, explanation and guidance on all plans and all insurers to help you make an informed decision on what coverage is best for you from year to year in addition to our award winning care and advocacy services with claims, providers and anything else you might need.

ACA’s metal levels are intended to allow consumers to compare health plans with similar levels of coverage in order to help them make informed decisions about their health insurance coverage. The four new metal plans are distinguished from one another by their “actuarial value.” Actuarial value refers to the average amount of insurance expenses that would be paid for by the insurance company. The higher the actuarial value of a plan, the lower the out-of-pocket costs you would pay in the event of a claim. With respect to the plan names, the more expensive the metal, the higher the actuarial value (and the more it pays when you have a claim and the more, typically, it costs in terms of the premium the insurer will charge). Since coverage will be similar (but not necessarily exact) for all plans in a given metal tier (for example, all silver plans), consumers can focus on other plan factors, such as the premium and network of providers, when selecting a health plan.

The metal levels are as follows;

PLATINUM PLAN GOLD PLAN SILVER PLAN BRONZE PLAN

Qualified Health Plans (insurers) must offer at least one plan in the silver level and one plan in the gold level through the Marketplace Exchanges. Outside of the Exchanges, non-grandfathered plans in the individual and small group markets must offer coverage that matches up to the metal levels.

ESSENTIAL HEALTH BENEFITS

The Affordable Care Act (“ACA” and also frequently referred to as “ObamaCare”) requires health plans to cover certain categories of benefits. These categories are described as “essential health benefits.” Beginning in 2014 individual and small group plans will have to include essential health benefits unless the plan qualifies as grandfathered.
Section 1302 of the Affordable Care Act requires health plans to provide coverage for at least the following categories:

  • Ambulatory patient services – These include outpatient services such as doctor visits.
  • Emergency services – These include care received in an Emergency Room
  • Hospitalization – These include medically-necessary surgeries and other inpatient procedures
  • Maternity and newborn care
  • Mental health services
  • Substance use disorder services – These services include behavioral health treatment
  • Prescription drug coverage
  • Rehabilitative and habilitative services and devices – Rehabilitation covers services such as relearning to walk after a stroke. Habilitative services involve learning a new skill such as a speaking without a speech impediment.
  • Laboratory tests and services
  • Preventive and wellness services as well as the management of chronic diseases
  • Pediatric services (including both oral care and vision care)

Health plans are allowed to impose cost sharing obligations on plan members for most essential benefits, but those that qualify under a category of preventative health services will be made available at no charge to plan members. The ACA gives states authority to specify details surrounding the essential benefits. The states must each choose a Benchmark Plan that will serve as a more detailed definition of benefits within each of the ten Essential Health Benefit categories. In Florida the benchmark plan shall be Blue Cross Blue Shield’s (Florida Blue) “BlueOptions HMO 5462″

ACTUARIAL VALUE

Actuarial value is calculated as the percentage of total average costs for what are called essential health benefits that a plan will cover. Essential health benefits are the core items and services that the plan must cover, such as prescription drugs, maternity and newborn care, preventive and wellness services and many additional benefits.

A health plan’s actuarial value tells consumers how generous the plan’s coverage is based on its cost-sharing provisions such as deductibles, copayments and coinsurance. Plans with higher actuarial values provide coverage that is more generous and also cost more than those with a lower value. For example, if a plan has an actuarial value of 70%, on average, a consumer would be responsible for 30% of the costs of covered benefits. If a plan has an actuarial value of 80%, on average, a consumer would be responsible for 20% of the cost of covered benefits.

METAL LEVELS

Each metal level plan is based on a specified share of the actuarial value of the plan’s essential health benefits. Bronze plans have the least generous coverage in the form of highest out of pocket cost for consumers when you have a claim, while platinum plans have the most generous coverage in the form of lowest out of pocket costs when you have a claim. The Department of Health and Human Services (HHS) allows for small variations (plus or minus two percentage points) in the actuarial value used to determine levels of coverage. For example, under HHS’ guidance, a silver plan could have an actuarial value between 68% and 72%. Coverage levels are as follows:

BRONZE LEVEL SILVER LEVEL GOLD LEVEL PLATINUM LEVEL
60% actuarial value 70% actuarial value 80% actuarial value 90% actuarial value

Insurers will charge progressively higher premiums among the plans with Bronze Plans having the lowest premiums and Platinum having the highest premiums. However, this considers plans only within a single insurance company. It is possible that one company’s Silver Plan could be cheaper than another company’s Bronze Plan. Under the law, all plans, whether Bronze, Silver, Gold or Platinum, will have a shared maximum out-of-pocket amount that an enrolled individual can pay in a calendar year.

All the plans must offer essential health benefits. These are the basic insurance benefits that all qualified health plans must provide enrollees. States have the discretion to require additional benefits beyond the Essential Health Benefits. However, these are minimum benefits and plans can choose to offer additional benefits if they so choose so long as the essential benefits are properly covered. It is also important to note that since plans differ by the amount of costs they cover, the aforementioned plans may all cover the essential health benefits but they can cost the member different amounts due to the differences in insurance expenses paid for by the plans. Click on any of the names of the metal plans above to learn more about the individual plan and its cost-sharing.

Individual insurance companies are not required to offer all four plans. At a minimum, they must offer the Silver plan and the Gold plan. There is also a catastrophic plan for individuals who can demonstrate problems affording a Bronze Plan. This plan is only available through an exchange and tax subsidies cannot be used to reduce its premiums.

THE PLATINUM PLAN (AFFORDABLE CARE ACT) / 90%

The Platinum Plan is one of four new categories of health insurance plans created by the Patient Protection and Affordable Care Act (also known as Obamacare). A Platinum Plan is designed to offer the lowest out-of-pocket expenses for enrollees. Platinum Plan enrollees pay approximately 10% of the out-of-pocket costs of healthcare services with the plan paying the remainder. In comparison, the Bronze Plan requires enrollees to pay 40% of covered medical expenses.

Since the Platinum Plan has the most generous cost-sharing for enrollees, it is expected that these plans will typically have the highest premiums when compared to the Bronze, Silver, and Gold plans. However, this is a generalization. It will be important to compare premiums among different insurance companies offering Platinum Plans. Moreover, deductibles and copayments will also differ among Platinum Plans. This is perfectly acceptable as long as the Platinum Plan covers 90% of healthcare expenses for a standard population. Below is a hypothetical example revealing how cost-sharing could differ among Platinum Plans.

Platinum Plan Example A Platinum Plan Example B
Consumer Out-of-Pocket Costs 10% of costs 10% of costs
Deductible $250 $2,000
Coinsurance 10% 5%

Insurance companies are not obligated to offer a Platinum Plan. To participate in an Exchange the insurer must only offer a Silver Plan and a Gold Plan. While Platinum Plans share the same essential benefits as offered in Bronze, Silver, and Gold Plans, an insurer has the option to add extra benefits. Additionally, states may require plans to offer other benefits in order to participate in a state exchange.

One of the issues that the government intends to monitor is whether Gold and Platinum plans attract more sickly enrollees and drive up premiums. The ACA provides some tools to address this issue (e.g. reinsurance, risk adjustment, and risk pooling) but it is impossible to tell whether these tools will be sufficient if these plans do attract a disproportionate representation of high-cost enrollees.

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THE GOLD PLAN (AFFORDABLE CARE ACT) / 80%

One of the four new categories of health insurance plans created by the Affordable Care Act (ACA) is the Gold Plan. The Gold Plan offers the second lowest out-of-pocket costs of the new plan types. Only the Platinum Plan offers lower out of pocket costs. The Gold Plan provides the same essential benefits, the minimum services covered by ACA, as the other plan types, however, individual plans do have the option of enhancing their benefits beyond the basic benefits required by the ACA.

Gold Plans are required to cover 80% of the medical costs with the remaining 20% paid by the plan enrollee. The 80% figure is based on the government’s expectation of healthcare usage. Depending on what services you use, this coverage may not exactly match 80% of medical costs. The 20% of healthcare costs paid by the enrollee would be in the form of out-of-pocket deductibles, copayments, and coinsurance fees. The monthly premium for the Gold Plan, however, is paid for in addition to the out-of-pocket costs mentioned earlier.

The Gold Plan is one of the two plan types that an insurance company must offer in order to participate in a health insurance exchange. A health insurance exchange is a state marketplace for health insurance plans meeting the ACA requirements.

Based on an average person’s expected use of healthcare services, Gold Plans have the insurance company pay 80% of covered healthcare expenses. The remaining 20% of expenses are paid by plan out of pocket. These out-of-pocket expenses include deductibles, copayments, and coinsurance. However, the plan’s monthly premium is not included as one of these out-of-pocket costs.

The specifics of deductibles, copayments, and other out-of-pocket costs will vary by Gold Plan, we do know that for a standard population the Gold Plan should be expected to cover 80% of healthcare expenses. To illustrate how costs could differ among Gold Plans, we’ve created a table of two hypothetical Gold Plans.

Gold Plan Example A Gold Plan Example B
Consumer Out-of-Pocket Costs 20% of costs 20% of costs
Deductible $250 $2,000
Coinsurance 20% 10%

One of the issues that the government intends to monitor is whether Gold and Platinum plans attract more sickly enrollees and drive up premiums. The ACA provides some tools to address this issue (e.g. reinsurance, risk adjustment, and risk pooling) but it is impossible to tell whether these tools will be sufficient if these plans do attract a disproportionate representation of high-cost enrollees.

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THE SILVER PLAN (AFFORDABLE CARE ACT) / 70%

The Affordable Care Act, sometimes called the ACA, defines four new types of health insurance plans for individuals and families. The four types of plans, ranked from most expensive out-of-pocket costs for consumers to the least, are: Bronze, Silver, Gold, and Platinum. All of these plans will all offer the same minimum of benefits. These minimum benefits are determined by the federal and state government and must be included in a plan regardless of any additional benefits the plan decides to include.

For an insurance company to participate in an exchange, i.e. a state-run marketplace offering Affordable Care Act plans, the company does not have to offer all four plans but it must offer at least the Silver Plan and also the Gold Plan.

The Silver Plan has lower out-of-pocket costs than the Bronze Plan but higher out- of-pocket costs than both the Gold and Platinum Plans. All Silver Plans share the same minimum health benefits but the way they charge out-of-pocket costs can differ significantly. Based on an average person’s expected use of healthcare services, Silver Plans have the insurance company pay 70% of covered healthcare expenses. The remaining 30% of expenses are paid by plan out-of-pocket. These out-of-pocket expenses include deductibles, copayments, and coinsurance. However, the plan’s monthly premium is not included as one of these out-of-pocket costs. The table below illustrates how out-of-pocket costs can differ among three insurance companies that offer a Silver Plan.

Silver Plan Example A Silver Plan Example B
Consumer Out-of-Pocket Costs 30% of costs 30% of costs
Deductible $250 $2,000
Coinsurance 30% 15%

As you can see in the examples above, deductibles and coinsurance can vary significantly among Silver Plans. Even though both Silver Plan examples cover 70% of medical costs, this coverage applies to the entire enrolled population. Some individual may receive more cost sharing and some less depending on the medical services used. The out-of-pocket costs also assume enrollees are using doctors and facilities approve by the plan.

If you use a healthcare provider who is not approved, you could pay considerably higher costs and those costs might not apply towards the maximum out-of-pocket expenses you can pay in a calendar year. There are also special versions of Silver Plans with lower out-of-pocket costs for people whose income qualifies them for enrollment. These Silver Plans are known as “Cost-Sharing Reduction” plans or CSR plans. CSR eligible health plans can only be Silver Plans and enrollees must meet income eligibility criteria.

TAX CREDIT FOR INDIVIDUALS & FAMILIES

The Affordable Care Act provides federal tax credits to people with middle incomes and low incomes whether they are buying individual or family insurance plans. The tax credit is based on the Silver Plan’s costs. If you are wondering what the tax credit is and how to determine if you are eligible then visit our Affordable Care Act Tax Credit page.

SILVER PLANS FOR SMALL BUSINESS EMPLOYEES

Small business can purchase group versions Silver Plans as well as the Bronze, Gold, and Platinum plans. These plans have the same benefit requirements but small group plans have different limits on deductibles. The maximum deductible for an individual enrollee is $2,000 in 2014 while the maximum deductible for a family enrollment is $4,000.

Companies with 50 or more full-time equivalent employees that fail to provide health insurance that covers at least 60% of the covered medical services face a penalty starting with their renewal date in 2015. This 60% minimum percentage means that an entry-level Bronze Plan could satisfy the requirement. Another aspect of the coverage requirement is that it must be affordable, affordability understood as an employee premium not exceeding 9.5% of household income.

Companies with fewer than 50 full-time equivalent employees are exempted from the health insurance requirements. A full-time employee is one who works at least 30 hours a week. Two part-time employees working 15 hours a week equal one full-time equivalent employee.

SILVER PLAN AS A “BENCHMARK PLAN”

A state insurance exchange uses the premium amount from a selected Silver Plan within the state to serve as the basis for subsidy calculations. The Silver Plan selected is the Silver Plan in the exchange with the second lowest premium. Even if a subsidy-eligible person chooses a Bronze, Gold, or Platinum plan, his or her subsidy amount is calculated based on the benchmark Silver Plan.

SILVER VERSUS BRONZE PLANS

A) BENEFIT COMPARISON

Silver Plans have the same benefit requirements as Bronze Plans. These benefit requirements are known as the Essential Health Benefits. An insurance company can choose the add benefits to a Silver Plan as well as any of the other new Affordable Care Act health plans. However, adding benefits are not required and does not distinguish a Silver Plan from a Bronze Plan, Gold Plan, or Platinum Plan.

B) COST COMPARISON

The answer is tricky. On average, Silver Plans should have higher premiums than Bronze Plans since Silver Plans pay a higher percentage of medical costs. However, prices vary among insurers and prices vary among regions so it is theoretically possible that there can be a specific Silver Plan that is less expensive than a specific Bronze Plan but this is expected to be an exception rather than the rule.

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The Bronze Plan (Affordable Care Act) / 60%

The Affordable Care Act, otherwise known as Obamacare, requires insurance companies in 2014 to offer new categories of health insurance plans to consumers: Bronze, Silver, Gold, and Platinum. These plans will all offer a minimum standard of benefits determined by the government. This minimum standard is known as the plan’s “essential health benefits.” Generally speaking, the Bronze Plan is intended to have the lowest premium of the four new categories of plans but charge the highest out-of-pocket costs for healthcare services (claims).

For people without group insurance from an employer or other group, the Bronze plan is the minimum health insurance plan in which they can enroll that will satisfy the Affordable Care Act’s mandate for people to purchase health insurance.

Bronze Plans are designed so that insurance companies will pay 60% of covered healthcare expenses with the remaining 40% to be paid by consumers. The consumer’s expenses will be in the form of out-of-pocket fees over and above the cost of the plan’s monthly premium. Out-of-pocket expenses for individuals is expected to be capped at $6,350 annually starting in 2014.

The 40/60 percentages are based on projected use of healthcare services by plan members. The actual out-of-pocket expenses of any single beneficiary may work out to be more or less than this ratio but should remain within the range. Those people whose out-of-pocket limits reach the annual maximum could see their share of healthcare costs fall until a new calendar year begins and the annual limit reset.

Out-of-pocket expenses include fees like deductibles, copayments, or coinsurance. Different plans will approach the 40/60 split in various ways (see the table below) so it is important to research the financial details of a specific plan before deciding which one to purchase. For example, a person who has frequent medical expenses may want a Bronze Plan with a lower deductible (depending on premium) while a healthy person may want the opposite. Below is an illustration of how costs could differ among Bronze plans for an individual enrollee.

Bronze Plan Example A Bronze Plan Example B
Consumer Out-of-Pocket Costs 40% of costs 40% of costs
Deductible $250 $2,000
Coinsurance 40% 20%

For some plans, the consumer’s share of expenses may come in the form of large deductibles (e.g. above $5,000) with low out-of-pocket costs for services received after the deductible is satisfied. For other plans, the deductible might be low but the consumer would be responsible for 40% of the cost of every covered medical service he or she receives. The examples above show significant differences between deductibles and coinsurance even though the plans offer the same essential benefits and cap the maximum out-of-pocket expenses at $6,350 in 2014. It’s also important to remember that coverage depends on you using the plan’s approved healthcare providers. Using a doctor or hospital outside of that network could result in significantly higher costs.

It is estimated that the Bronze Plan requires higher cost-sharing for consumers than the typical employer-based plan. Moreover, people who are insuring family members along with themselves will have higher out-of-pocket limits as well as higher premiums. However, with respect to families, the income limits for government subsidies are also higher.

BRONZE PLAN PREMIUMS

As noted, bronze are expected to have the lowest premium rates for the four new types of plans since they charge the highest out-of-pocket costs. However, there may be instances where the Silver Plan for one insurance company may charge a lower premium than the Bronze Plan of another insurance company. Comparison shopping will be essential for anyone who wants to minimize their healthcare expenses. Some estimates suggest that a Bronze Plan premium in 2016 to be $4,500 to $5,800 annually for individuals and $12,000 to $20,000 for families of four or five. Initial open enrollment for Bronze Plans and other qualified health plans on October 1, 2013 with coverage beginning January 1, 2014.

Bronze Plans for Small Business Employees

Are the Small Business Bronze Plans the same as the Bronze Plans sold to individuals and families?

The small business version of the Bronze Plan will have the same mandatory benefit requirements as Bronze Plans in the individual and family market. The will also cover the same overall percentage of medical costs for a typical population of enrollees. The small business versions of the Bronze Plan will have maximum deductible amounts. For a single employee insured by a Bronze Plan, the maximum deductible in 2014 is $2,000. Since this is a maximum amount, the actual deductible amount could be lower. For a family insured through a Bronze Plan provided by a small business employer, the maximum deductible is $4,000 in 2014.

Small business Bronze Plans are known as “group plans” since a single plan covers a collection of employees. Typically a group plan can obtain lower rates as compared to an individual purchasing identical coverage. The larger the firm is, the greater its purchasing power.

The Affordable Care Act requires companies employing 50 or more workers to provide health insurance to their employees or face a monetary penalty. Additionally, employee premiums cannot exceed 9.5% of household income or the employer can face penalties. For more information on small business health insurance and the Affordable Care Act, see our Small Business Health Insurance article.

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