By Barbara Marquand
June 25, 2013 – Editor’s note: Clark Howard, Consumer Advocate and author, also recommends two additional resources as you’re preparing for the new health care laws in 2014. Kaiser Family Foundation has a calculator where you can see if you will be eligible for health care subsidies based on family size, age, etc. Meanwhile, you can learn how the health insurance exchange will work in your state at HealthCare.gov.
Before you start shopping for health insurance for 2014, learn the difference among platinum, gold, silver and bronze — the names for new standardized plans that will be sold through “marketplaces.”
Health plans sold through the state and federally operated health insurance marketplaces, formerly known as exchanges, will be standardized to make it easier to compare prices and benefits.
The National Conference of State Legislatures has state-by-state information on marketplaces.
All the plans must offer the same core package of essential benefits, such as coverage for prescription drugs, maternity and newborn care, lab services, emergency services and preventive and wellness care. And none of the plans can deny coverage or charge higher premiums for pre-existing conditions, meaning illnesses or conditions you already have.
The difference between the four choices will boil down to something called “actuarial value.” Simply put, it’s how much of the total costs of covered benefits the insurer will pay for an average person.
If a plan has an actuarial value of 60 percent, the insurer will cover roughly 60 percent of the tab and you will pay 40 percent out of pocket. Your out-of-pocket costs include the amount of the deductible, co-insurance (the percentage of the medical bill you pay after the deductible is met) and office visit copayments. The premiums you pay for insurance don’t count as part of the out-of-pocket percentage.
Here’s how the four basic types of plans break down:
- Bronze – Pays 60 percent of the costs. You pay 40 percent.
- Silver – Pays 70 percent. You pay 30 percent.
- Gold – Pays 80 percent. You pay 20 percent.
- Platinum – Pays 90 percent. You pay 10 percent.
Premiums will generally be lower for bronze and silver plans than for gold and platinum plans, but you’ll pay higher deductibles and copayments for medical care.
Health insurance companies in the “marketplaces” don’t have to offer a plan at every level, but they must offer at least one silver plan and one gold plan in each marketplace where they participate.
Besides the bronze, silver, gold and platinum plans, health insurers can offer a catastrophic plan, which will pay for a lower percentage of costs than the bronze plan. Catastrophic plans will carry lower premiums than the bronze, silver, gold or platinum plans, but will have higher out-of-pocket costs for medical care.
Catastrophic plans will be available only for people under age 30 and people who are exempt from the individual mandate because the cost of a standardized health insurance plan would exceed 8 percent of their income. The individual mandate is the Affordable Care Act provision that requires almost everyone to have health insurance starting in 2014.
Insurers can also sell plans directly to consumers outside the exchanges, and many employers will continue to offer health insurance through their employee benefit packages.