What to Know About Gold Plan Health Insurance

A gold plan is a type of health insurance that pays, on average, 80% of covered healthcare expenses for a standard population. Plan members pay the other 20% of healthcare expenses with their copayments, coinsurance, and deductible payments.

To make it easy to compare the value you’re getting for the money you spend on health insurance premiums, the Affordable Care Act (ACA) created new coverage categories for individual and small group plans (but not for large group plans). These plans are divided into levels, or tiers—platinum, gold, silver, and bronze—based on their actuarial value.

All of the health plans of a given level offer roughly the same overall value. For gold-tier plans, the value is 80%. Platinum plans offer a 90% value, silver a 70% value, and bronze a 60% value. In each case, there's an acceptable actuarial value range of -4/+2 for silver, gold, and platinum plans, and -4/+5 for bronze plans (note that California sets their range at -2/+4).

Although the ACA called for the creation of health plans at all four metal levels, there are very few platinum plans available for people who purchase their own coverage in the individual market (ie, through the exchange or directly from an insurer, as opposed to getting their coverage from an employer). Most of the plans available in the individual market are bronze, silver, or gold.

Gold colored caduceus surrounded by pills.
Steven Hunt / Getty Images

What Does Health Insurance Value Mean?

The actuarial value tells you what percentage of covered healthcare expenses a plan is expected to pay for its membership as a whole. This doesn’t mean that you, personally, will have exactly 80% of your healthcare costs paid by your gold plan (or within the allowable gold plan range of 76-82%). You might have more or less than 80% of your expenses paid depending on how you use your gold health plan. The value is an average spread across all of a plan’s members.

This is best illustrated with an example: Consider a person with a gold plan who only has one doctor visit during the year, and some lab work. Perhaps his copay is $35 per visit, and his insurance pays another $100 for the office visit. But the lab work is counted towards his deductible, so he has to pay the full bill, which ends up being $145 after the network negotiated discount. When it's all said and done, he's paid $180, and his insurance has paid $100. So his insurance only paid about 36% of his costs ($100 out of a total of $280).

But now consider the same person, with the same gold plan, developing cancer during the year. He has several office visits at $35 each, meets his $2,500 deductible soon after the diagnosis, and hits his $3,500 out-of-pocket maximum before he even starts chemo. After that, his insurance pays for everything, as long as he stays in-network. At the end of the year, his insurance has paid $230,000 and he's paid $3,500. So his insurance has covered more than 98% of his costs.

In both cases, it's the same gold plan, and it pays an average of 80% of covered medical costs across a standard population. But as the above examples show, the percentage of each member's costs that are covered will depend entirely on how much medical care that particular member needs, and will thus vary considerably from one person to another.

Things your health insurance doesn’t cover at all aren’t taken into account when determining a health plan’s value. For example, if your gold-tier health plan doesn’t pay for cosmetic surgery or over-the-counter medicines like cold tablets or first-aid cream, the cost of those things isn’t included when calculating your plan’s value.

Things your health plan covers without any cost-sharing are included. So, the free birth control and preventive care your health plan provides are included when your plan’s value is determined.

What Will You Have to Pay?

You’ll pay monthly premiums for the health plan. Gold plan premiums tend to be more expensive than plans with lower actuarial value because gold plans pay more toward your healthcare bills than silver or bronze plans do. Gold plan premiums will usually be cheaper than platinum plan premiums because gold plans pay a lower percentage of healthcare expenses than platinum plans pay.

But those intuitive pricing guidelines don't necessarily apply anymore in the individual market. The normal pricing scale—bronze plans generally being least expensive, followed by silver, then gold, then platinum—hasn't necessarily held true in recent years.

Because the cost of cost-sharing reductions (CSR) has been added to silver plan premiums in most states since 2018, it's possible to find gold plans in many areas that are less expensive than silver plans. This does not apply in the small group market, however, because CSR benefits aren't available on small group plans (so insurers haven't had to add the cost of CSR to group health insurance premiums).

In addition to premiums, you’ll also have to pay cost-sharing like deductibles, coinsurance, and copays when you use your health insurance. How each plan makes members pay their 20% share of overall healthcare expenses will vary. For example, one gold plan might have a high $2,500 deductible paired with a low 10% coinsurance. A competing gold plan might have a lower deductible paired with a higher coinsurance or more copays.

Why Choose a Gold Plan?

In choosing a health plan, if you don’t mind paying higher premiums to have a greater percentage of your healthcare costs paid by your health insurer, a gold-tier plan might be a good choice for you. If the idea of having to pay lower out-of-pocket costs when you use your health plan—in trade for potentially higher premiums—appeals to you, then a gold plan could be a good match.

Gold plans are likely to appeal to people who expect to use their health insurance, who fear being responsible for high out-of-pocket costs when they need care, or who can afford to pay a bit more each month for a little extra peace of mind than they’d have with a silver or bronze plan.

But as noted above, it may make more sense for individual market shoppers in some areas to buy a gold plan simply because it's less expensive than a silver plan, despite offering better coverage. This has been the case since 2018, when the cost of CSR started to be added to silver plan premiums, resulting in disproportionately large premiums for silver plans.

(Note that for people who are eligible for cost-sharing reductions and earn no more than 200% of the poverty level, the available silver plans in the exchange will be modified to have actuarial value well above 80%, meaning that they'll provide more robust coverage than gold plans; this is discussed in more detail below).

This pricing structure—which results in gold plans priced lower than silver plans in some areas—could continue indefinitely unless regulations change to prevent insurers from adding the cost of cost-sharing reductions to silver plan premiums. The Department of Health and Human Services (HHS) has considered the possibility of changing the rules for how CSR costs can be added to premiums, but Congress acted in 2019 to prevent HHS from banning insurers from adding the cost of CSR to silver plan premiums in 2021.

And in the final Benefit and Payment Parameters for for both 2021 and 2022, HHS did not mention anything about changing the rules regarding silver loading. So for the time being, silver plan premiums are likely to continue to be disproportionately large (which also results in disproportionately large premium subsidies).

For people who qualify for cost-sharing reductions, the silver plan is likely to provide a better value, especially since silver plans have actuarial value well above 80% for CSR recipients whose income doesn't exceed 200% of the poverty level: If household income is up to 150% of the poverty level, the available silver plans will have an actuarial value of 94%; if household income is between 151% and 200% of the poverty level, the available silver plans will have an actuarial value of 87%.

But for people who don't qualify for cost-sharing reductions (ie, their income is above 250% of the poverty level, or $31,900 for a single individual buying coverage for 2021), a gold plan will provide better coverage and may have lower premiums, depending on the area.

If you work for a small employer that offers a gold plan option in addition to plans at other metal levels, you'll need to compare the options side-by-side to see which one will work best for your situation. The cost of CSR is not a factor in the employer-sponsored market, as CSR is not provided on group health plans. So gold employer-sponsored plans will generally tend to be more expensive than bronze and silver plans, but less expensive than platinum plans offered by the same insurer (across multiple insurers, however, costs vary considerably; Insurer A might have a gold plan that's less expensive than Insurer B's bronze plans).

Why Not Choose a Gold Pan?

Don’t choose a gold-tier health plan if a low monthly premium is the most important factor to you. You’re likely to have lower premiums if you choose a silver or bronze plan, instead (except, as noted above, in situations where a gold plan ends up costing less than a silver plan due to the cost of CSR being added to silver plan premiums).

If you’re eligible for cost-sharing subsidies because your income is 250% of the federal poverty level or lower, you’re only eligible for the cost-sharing subsidies if you choose a silver-tier plan and buy it on your state's health insurance exchange. Even if your income is low enough to qualify, you won’t get the cost-sharing subsidies if you choose a gold plan.

Cost-sharing subsidies make your deductible, copays, and coinsurance lower so you pay less when using your health insurance. In effect, a cost-sharing subsidy will increase the value of your health plan without raising the monthly premiums. It’s like getting a free upgrade on health insurance. If you choose a silver plan rather than a gold plan, your cost-sharing subsidy could help you get the same value you would have gotten with a gold or platinum plan, but for the lower premiums of a silver plan. You won’t get the free upgrade if you choose a gold tier plan.

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Article Sources
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