Your Guide to Obamacare Options
The new health marketplaces will launch in 2014. Here are the four basic plans.
This article previously appeared on Insure.com.
Before you start shopping for health insurance for 2014, learn the difference among platinum, gold, silver and bronze — the names for new standardized health plans that will be sold starting next year through "marketplaces" created by the Affordable Care Act, sometimes known as Obamacare.
(The implementation isn’t affected by the government’s recent decision to push back to 2015 the mandate that companies with 50 or more full-time workers provide employees health coverage or pay a penalty.)
What Health Marketplaces Will Do
Health plans offered through state and federally operated health insurance marketplaces, formerly known as health insurance exchanges, will be standardized to make it easier to compare prices and benefits.
The website of the National Conference of State Legislatures has state-by-state information on marketplaces around the country.
All of the health insurance plans must offer the same core package of essential benefits, like coverage for prescription drugs, maternity and newborn care, lab services, emergency services and preventive and wellness care. None of the plans can deny coverage or charge higher premiums for pre-existing conditions.
How the Health Plans Will Differ
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, for example, the insurer will cover roughly 60 percent of the tab and you will pay 40 percent out of pocket.
Your out-of-pocket costs will include the amount of the annual deductible, co-insurance (the percentage of the medical bill you pay after the deductible is met) and office-visit co-payments. The premium you’ll pay for the insurance won’t count as part of your out-of-pocket percentage.
Here's a breakdown of the four basic plans:
- 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 co-payments for medical care.
Health insurance companies in the marketplaces won'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.
Catastrophic Plans Will Also Be Offered
Besides the bronze, silver, gold and platinum plans, health insurers can also offer catastrophic plans, which will pay for a lower percentage of costs than bronze.
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.
These plans will be available only for people under age 30 and those who are exempt from the law’s individual mandate because the cost of a standardized health insurance plan would exceed 8 percent of their income. (That mandate is the Affordable Care Act’s provision that requires almost everyone to have health insurance starting in 2014.)
Insurers can also sell plans directly to consumers outside the marketplaces. Many employers will continue to offer health insurance through their employee benefit packages.
Barbara Marquand is a writer with more than two decades of experience reporting for newspapers and national trade and consumer magazines. She has been covering the insurance industry from a consumer perspective since 2009.