All that glitters is not gold. In the world of the Affordable Care Act, it may be platinum, silver or bronze.
The names of those four metals will be heard more and more as we move closer to the implementation of the Affordable Care Act (ACA). In 2014, coverage provided for essential health benefits will be included in a qualified health plan that fits within one of four levels: Platinum, Gold, Silver and Bronze. The four levels of coverage indicate the percentage of health costs that a health plan would pay for an average person.
Just what are “essential health benefits?”
The U.S. Department of Health and Human Services has specified that the essential benefits covered in a qualified health plan will include at least the following services:
Ambulatory patient services
Maternity and newborn care
Mental health and substance abuse treatment services, including behavioral health treatment
Rehabilitative services and devices
Preventive and wellness programs
Chronic disease management
Pediatric services, including dental and vision care
But, back to those glittering metals
Under the ACA, insurers will be required to offer plans that fit one of those four levels. This requirement will apply regardless of whether a plan is offered through an exchange (and premiums must be the same for plans inside and outside of the exchange). Insurers don’t have to offer plans in all of those levels, but within the health insurance exchanges, all insurers must offer at least one silver and one gold plan except for dental-only plans.
The four levels of coverage indicate the percentage of health costs that a health plan would pay for an average person. An insurer that offers coverage at any of these levels will be required to offer the same level of coverage in a plan designed specifically for individuals under age 21.
Platinum plans would pay 90 percent of covered benefits with an average individual paying the remaining 10 percent out-of-pocket.
Gold plans would have 80 percent of health care costs covered for an average person, with enrollees paying an average of 20 percent of the costs.
Silver plans would cover 70 percent of all health care costs for an average person, with enrollees paying the remaining 30 percent of costs.
Bronze plans would cover 60 percent of all health care costs for an average person, with enrollees responsible for paying 40 percent of the costs.
These four levels do not apply to coverage already in existence that meets certain conditions (“grandfathered” plans). A grandfathered plan is one that was in existence as of 2010 and provides no lifetime limits on coverage, coverage for children up to age 26 and no rescinding of benefits if an unintentional error was made on the application. Almost all employer-sponsored plans are grandfathered.
The ACA also requires that health plans place a cap on the maximum outof- pocket costs for enrollees, based on the out-of-pocket limits in high-deductible plans that are eligible to be paired with a Health Savings Account. The current out-of-pocket limits are $5,950 for an individual and $11,900 for a family, and will be adjusted over time after 2014 based on increases in premiums.
Most people will be required to have insurance that is at least at the Bronze level or pay a federal tax penalty. People who buy coverage on their own through an exchange and have family income up to four times the poverty level ($89,400 for a family of four and $43,560 for a single individual) may be eligible for premium and cost-sharing subsidies. The premium subsidies are based on family income and the premium (adjusted for age) of the second lowest cost Silver plan in an exchange. In addition, low and moderate income people buying insurance in exchanges may be eligible for coverage with a higher actuarial value and lower out-of-pocket maximum.
The various levels of coverage are defined based on actuarial value – which measures the generosity of a plan for a standard population. This means that the cost-sharing structure could vary from one plan to another. For example, one plan may have a higher deductible than another, but have a lower coinsurance percentage once the deductible is met in order to achieve the same actuarial value. Or, a plan may cover some physician visits before a person meets the deductible, yet have a higher deductible or coinsurance percentage. While enrollees would be expected to pay the same out-of-pocket costs in two plans that have the same actuarial value, any given enrollee could have different costs in the two plans, depending on how much and what type of health services he or she uses.
Another plan option permitted under ACA in 2014 is a catastrophic plan. A catastrophic plan will provide coverage for essential health benefits and have deductibles equal to the amounts specified as out-of-pocket limits for HSA-qualified High Deductible Health Plans. Such deductibles will not apply to at least three primary care visits. A catastrophic plan will be permitted only in the individual market only for young adults (under age 30 before the plan year begins) and for those exempt from the individual mandate because no affordable coverage is available or because they qualify for a hardship exemption.
Platinum, Gold, Silver and Bronze: The names of these four metals will be flashed about frequently as the exchanges get ready for open enrollment beginning in October.