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Obamacare Plan Metal Levels Explained

In an effort to standardize individual and family health insurance in the United States, the Affordable Care Act (the law more commonly known as Obamacare) introduced four metal levels to designate different plans. These four levels range from bronze to platinum. The value of the metal roughly corresponds to the level of coverage provided by the plan. A platinum plan typically has more expensive monthly costs but provides greater coverage (on average) than a bronze, silver, or gold plan.

It’s important to understand how the metal levels really work in order to find the best Obamacare plan for you or your family.

The Basics of Obamacare metal levels

No matter the metal level, all Obamacare health insurance plans have to cover the Affordable Care Act’s essential health benefits. Some plans may offer additional benefits to make them more attractive to consumers or conform to individual state requirements, but the main differences between metal levels is the way in which costs are shared between the insurance company and you when you actually receive medical care. This means that you shouldn’t just rely upon the Obamacare metal level as a guide but should examine your choices more closely.

It’s fair to assume that an average person will pay more in premiums and get more coverage from a higher metal level than from a lower one. It’s unlikely that you and your family will fit the exact profile of that average person, so you’re encouraged to consider different Obamacare coverage options before you choose your health insurance plan.

The actuarial value of Obamacare health insurance plans

Actuarial value is a fancy way to refer to the portion of medical costs that each metal level must pay for an average policy holder.

  • Platinum plans: these plans are designed to cover about 90% of the average person’s medical costs
  • Gold plans: these plans are designed to cover about 80% of the average person’s medical costs
  • Silver plans: these plans are designed to cover about 70% of the average person’s medical costs
  • Bronze plans: these plans are designed to cover about 60% of the average person’s medical costs

This doesn’t mean that all costs get covered by a specific plan by the percentage the overall plan provides. For example, under Obamacare some preventive medical services are provided at no out-of-pocket cost to you. At the same time, some tests or treatments may require more substantial cost sharing with consumers in the form of deductibles, coinsurance, and copays.

Which is the best metal level for your family?

You really can’t just judge a plan by its metal level. You’re better off considering your options in the light of those services that you and your family are likely to need and your budget to pay for unexpected medical expenses you might incur.

For instance, if you’re part of a young and relatively healthy family, you might be more interested in a cheaper plan with a higher deductible. You can always use your savings to build an emergency fund and cover your deductible if it becomes necessary. Alternatively, a middle-aged person with a chronic illness could save money and enjoy more predictable bills by paying more monthly for a higher metal level plan that covers more of the costs of prescriptions and treatment. It’s not possible to know exactly what sort of medical services you will need in the next year; however, it’s better to consider the services you are likely to need than to choose a plan without considering them at all.

What are Obamacare’s catastrophic health insurance plans?

In addition to the four metal levels, Obamacare also offers a catastrophic level of health insurance. Only people who qualify for a hardship exemption or haven’t yet turned 30 years old can buy one.

Catastrophic plans tend to come with extra higher annual deductibles, but lower monthly premiums. They still provide access to Obamacare’s essential health benefits, but you’ll pay more out of pocket for your covered medical care. Like other plans, however, catastrophic plans still provide you with access to many preventive medical services at no out-of-pocket cost.

How cost-sharing and premium subsidies may influence metal plan choices

Of course, one attraction of Obamacare is the ability to qualify for premium tax credits and cost-sharing subsidies. Premium tax credits (often just known as “Obamacare subsidies”) may lower the effective price that consumers themselves pay for their plans. Other cost-sharing subsidies can reduce deductibles and other out-of-pocket costs for qualified policy holders.

These are the basic guidelines to qualify for Obamacare subsidies:

  • The government offers premium tax credits to households with an income between 100 and 400 percent of the Federal Poverty Level.
  • Those with an income between 100 and 250 percent of the poverty level may qualify for additional help with out-of-pocket medical costs for covered services.

For example, a typical American family with four members may have a household income between $24,250 and $97,000 in 2016 to potentially qualify for help with premiums. An income between $24,250 and $62,625 may qualify that same family for additional help with out-of-pocket medical expenses. Families or individual family members with the ability to access other affordable health insurance through a workplace benefit or other source might not qualify for this additional help.

These are some important things to know about Obamacare subsidies and metal levels:

  • The dollar value of Obamacare’s premium tax credit subsidies is pegged to the “benchmark” silver plan in your area – which is typically the second-lowest-cost silver plan. While they can help reduce premiums for other levels, qualified people are often advised to seek bronze or silver plans for the best value.
  • You cannot use subsidies to help pay for a catastrophic Obamacare plan.
  • Obamacare only allows the other cost-sharing subsidies (those that may lower your deductible and copayments) for silver plans.
  • Your final eligibility for a subsidy is determined by the government and other qualifying factors may apply.

How to find the best health insurance value on the Obamacare marketplace

After you find out if your family qualifies for subsidies, you might find that one metal level or another offers you a better value. Even within these plan levels, you’re likely to find several options with varying premiums, copays, and deductibles. Since many Affordable Care Act health insurance plans are HMOs and PPOs, it’s also important to make sure you can find the right doctors on the network. Most people probably shouldn’t just consider the metal level of the health insurance plan in order to find the right coverage for themselves and their family.