Bronze, Silver, Gold… Olympic Health Insurance?

olympicsAs the Winter Olympics launch this week, gold, silver and bronze medals will be awarded to the athletes who performed best – the highest honors in the world of sports.

In the new health insurance marketplace, consumers can choose from health insurance plans that are designated as bronze, silver, gold, or platinum plans.  Health insurance metals are not the same as Olympic medals. For one thing, in health insurance we have a fourth option: platinum.

The more important difference, though, is that with health insurance metals, there is not an absolute BEST.  For some people Bronze may be best; others will decide that Silver, Gold, or Platinum is the best choice for them.  The best choice for you depends on your situation.

Here’s how it works:

All the health insurance plans in the marketplace cover the same essential health benefits – hospitalization, prescriptions,  mental health care, and more .  All plans in the marketplace also offer free preventive care, with no co-payments or deductibles.

What’s different from one plan to another is how the cost is split between the consumer and the health insurance company.  The insurance companies set up plans that have different cost-sharing elements – these are the deductibles, co-payments, and out-of-pocket maximum limits which consumers pay when they use health care.  And then they set appropriate premiums for each plan, based on all their statistics about costs and typical consumer use.

  • With a bronze plan, the consumer’s share of the cost of care is higher (i.e. deductibles, co-pays and out-of-pocket maximum amounts are higher).  But the premiums the consumer pays are lower.
    In order to be called a bronze plan, the insurance company must pay, on average, 60% of health care costs for the average consumer.  This is the minimum value allowed for a qualified plan under the new law.
  • Silver plans must pay an average of 70% of consumers’ health care costs; therefore, the consumer’s share of cost (deductibles, etc) will be lower than bronze plans.  And the premiums will be higher.
  • Gold insurance plans pay an average of 80% of health care costs, so the consumer’s share averages 20%; consumers pay higher premiums for gold plans, compared to silver and bronze.
  • And – you guessed it – platinum plans pay an average of 90% of health care cost, leaving the consumer paying only 10% of costs through deductibles and co-payments.  Platinum plans will generally have the highest premiums.

You might be tempted to say that platinum plans are the best, because they cover more, and cost more.  We’re accustomed to thinking that the BEST always costs the most.

But I suggest that the best choice for you is the plan that makes the most of your dollars.  Why pay a high price for something you are unlikely to need?  If you use a lot of health care, a gold or platinum plan may be the logical choice; sure, your premiums will be higher, but then your out-of-pocket costs throughout the year will be lower.  On the other hand, if you don’t expect to need much health care, why spend the extra money on a higher-premium gold or platinum plan, if you’ll barely use any of the benefits?

The best plan for you depends on your expectation for health care needs in the coming year.

Here’s another piece of good news: you can change plans next year.  The plan you choose now does not lock you into that plan for future years – each year you can choose based on your current health care needs and finances.

If you don’t have health insurance now, be sure to check out the health insurance marketplace (www.healthcare.gov) soon – open enrollment continues until March 31!

~Barb

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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