Save money with the right tier plan
Aside from picking a provider, the other major decision individuals will need to make while buying health insurance through the Marketplace is which category of coverage they want to sign up for: bronze, silver, gold or platinum.
Commonly known as the metal tiers, these four levels aren’t indicative of the quality of care you’ll receive — each offers the same benefits — but rather what portion of your health care costs you’ll be responsible for paying.
This includes the monthly premium, annual deductible and out-of-pocket expenses like co-payments and prescriptions.
It typically breaks down as follows percentage wise:
Bronze: beneficiary pays 40%, provider pays 60%; silver: beneficiary pays 30%, provider pays 70%; gold: beneficiary pays 20%, provider pays 80%; platinum: beneficiary pays 10%, provider pays 90%.
Premiums are lowest in bronze plans, which tend to appeal to healthy and/or younger individuals who don’t anticipate needing a significant amount of medical care in the coming year and prefer to pay less monthly for their insurance.
They increase as you move up in metal tiers, the tradeoff being that while you’re paying more per month for your policy, should you need regular medical attention (perhaps for a chronic condition or a pregnancy), your insurer will be responsible for picking up a greater portion of the tab for your medical costs than you will.
When weighing your options, the first thing to do is figure out if you qualify for financial assistance, which can be determined by entering your household and income information into your online Marketplace application. There are two primary types of subsidies individuals are eligible to receive: an advanced premium tax credit (APTC) and cost sharing reductions (CSR).
“Nationwide, about 57% of marketplace enrollees are eligible for reduced cost sharing,” says Larry Levitt, senior vice president of the Kaiser Family Foundation, a nonprofit, nonpartisan organization that analyzes health care policy.
Anyone whose income is between 100%-250% of the federal poverty level is eligible to receive them, and they’re often referred to as “extra savings” since it’s an additional subsidy on top of the APTC, which anyone whose annual household income falls between 100% and 400% of the federal poverty level receives. This year, 84% of marketplace enrollees received an APTC, according to Kaiser Family Foundation reports.
Here’s where things can get a little confusing: APTCs can be applied to any insurance plan at any metal tier, but CSRs only kick in for silver plans, so it’s important to figure out how much financial aid you’re eligible for and select a plan that allows you to access the full amount.
For example, if your annual income is $24,000 (approximately 200% of the federal poverty level), the premium for a bronze plan might appear to be the most affordable option. But because you’d be eligible to receive both an APTC and a CSR, your monthly premium, as well as your cost-share percentage, could actually be cheaper if you signed up for a silver plan.
And in 2018, that decision could mean saving a significant amount of money.
That’s because on Oct. 12, President Trump issued an executive order terminating cost-sharing reductions for insurance companies — meaning the federal government will no longer help insurance companies cover the full cost of providing policies through the Marketplace.
As a result, many plan providers have increased premiums for beneficiaries to compensate for the loss in federal funding. Depending on the state, that could be across all metal tiers or just in silver plans where costsharing reductions apply.
The Kaiser Family Foundation estimates premiums will go up by 19% on average in 2018. Similarly, consulting firm Avalere Health predicts average premium increases of 20% across the country.
This has caused a serious shakeup for insurance companies. But because the majority of beneficiaries are eligible for CSRs, there will be relatively little impact to the amount they pay monthly for insurance compared to last year (if their household and income status stays the same).
Why? “Insurers are still required to offer the cost sharing reductions to eligible individuals,” Levitt says. “Those subsidies increase dollar for dollar as premiums rise, protecting consumers in those plans.”
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