What Is a Silver Plan Under the Affordable Health Care Act?

A Silver Plan Offers Roughly 70% Actuarial Value

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In the individual and small group health insurance markets, a silver health plan pays, on average, roughly 70% of enrollees' health care expenses. The enrollees pay the other 30% of their health care expenses in the form of copayments, coinsurance and deductibles.

This is also known as having a 70% actuarial value, or AV. This doesn't mean that you, personally, will get 70% of your health care costs paid by your silver plan. Rather, the plan pays 70% of the average costs for a standard population. But they'll pay a far lower percentage of total costs for a healthy enrollee with very little healthcare utilization, while they'll end up paying far more than 70% of total costs for a very sick enrollee who racks up a million dollars in claims. 

Note that while a silver plan will have an AV of roughly 70%, there's an allowable de minimus range, since it would be very challenging for health insurers to design plans that hit exactly 70% AV. Through 2017, the de minimus range was +/-2, so silver plans had AV in the range of 68% to 72%. But in April 2017, HHS finalized market stabilization regulations that extend the lower end of the range, allowing silver plans to have AV anywhere from 66% to 72% starting in 2018. 

Non-covered health care expenses don’t count when determining a health plan’s value. For example, if your silver-tier health plan doesn’t provide coverage for over-the-counter medicines, the cost of them isn’t included when calculating your plan’s value. Out-of-network services also don't count, and neither does care that doesn't fall under the ACA's definition of essential health benefits.

The Affordable Care Act's Standardized Value Levels

To make it easy for you to compare the value you’re getting for the money you spend on health insurance premiums, the Affordable Care Act standardized value levels for health plans in the individual and small group markets. These levels, or tiers, are:

  • bronze
  • silver
  • gold
  • platinum

In addition, in the individual market, catastrophic plans are available to people under the age of 30 and to people who qualify for a hardship exemption from the ACA's individual mandate.

This classification system applies to plans sold in each state's health insurance exchange, but they also apply to all individual major medical health insurance sold anywhere in the US, including outside the exchanges. Plans that aren't ACA-compliant (and that don't fit into one of those benefit categories) can no longer be sold in the individual major medical market, even outside the exchange ("excepted benefits," which include things like fixed indemnity plans and short-term health insurance, can still be sold, do not have to comply with the ACA, and do not fit into one of those benefit categories—but excepted benefits are not considered individual major medical coverage).

All of the health plans within a given level offer the same overall value:

  • Silver-tier plans offer a 70% actuarial value (range of 66% to 72%).
  • Bronze plans offer a 60% actuarial value (range of 56% to 65%; bronze plans have had a -4/+5 de minimus range since 2018).
  • Gold plans offer an 80% actuarial value (range of 76% to 82%).
  • Platinum plans offer a 90% actuarial value (range of 86% to 92%; in the individual market, there are many areas of the country where platinum plans are not available)
  • Catastrophic plans must have an actuarial value below 60%, although they don't have to fall within a specific range. However, they are required to adhere to the ACA's maximum out-of-pocket limits.

What Will I Have to Pay With a Silver Plan?

Premiums

Silver plan premiums tend to be less expensive than gold or platinum-tier plans since silver plans expect to pay out less toward your health care bills. But rates vary considerably from one insurer to another, and you'll often find that one company's silver plans might be more expensive than another company's gold plans.

And in the individual market, you might find a significant number of gold plans that are less expensive than silver plans, due to the way the cost of cost-sharing reductions is now being added to silver plan rates in most states. And if you receive premium subsidies, you might find that some of the bronze plans available to you are entirely free after the subsidy is applied. The Trump Administration's October 2017 decision to eliminate federal funding for cost-sharing reductions (CSR) has indirectly resulted in disproportionately larger premiums for silver plans, and thus disproportionately large premium subsidies in most states (there are a few states where insurers have taken a different approach to the cost of CSR and premium subsidies are not disproportionately large). In short, don't assume anything! Take a close look at all of the plans available to you before making a selection.

Cost-sharing

In addition to your monthly premiums, each time you use your health insurance, you’ll have to pay cost-sharing like deductibles, coinsurance, and copays.

How each silver plan makes you pay your share of the costs will vary. For example, one silver plan might have a $4,000 deductible paired with a 20% coinsurance. A competing silver plan might have a lower $2,000 deductible, but pair it with a higher coinsurance and a $40 copay for brand-name prescriptions.

But people who purchase individual market coverage in the exchange and who have an income between 100% of the poverty level (139% in states that have expanded Medicaid) and 250% of the poverty level, cost-sharing reductions (cost-sharing subsidies) are available to make silver plans—and only silver plans—have AV that is higher than 70%. For lower-income enrollees, AV is increased to as much as 94%, making it better coverage than a platinum plan, at no additional cost to the enrollee. From 2014 through most of 2017, the federal government paid the insurers to provide this benefit. That funding stopped in late 2017, and insurers now incorporate the cost into the premiums they charge (as noted above, the cost is only added to silver plan premiums in most states).

You can only get the cost-sharing reduction benefit if you:

Why Should I Choose a Silver Plan?

Choose a silver health plan if you:

  • are looking to balance the cost of your monthly premiums with the cost of your out-of-pocket expenses 
  • want to avoid the high premium costs of gold and platinum plans, but also want to protect yourself from the possibility of having to pay the higher deductibles that generally come with bronze plans (keeping in mind that because of the way the cost of CSR is being added to silver plan premiums in most states, it's fairly common to see silver plan rates that are much higher than bronze plan rates and also higher than gold plan rates in some areas)
  • are eligible for cost-sharing reductions (CSR), because you must choose a silver-tier plan to get the subsidies. This is one of the most important reasons to pick a silver plan. If your income doesn't exceed 250% of the poverty level (and particularly if it doesn't exceed 200% of the poverty level, as CSR benefits are strongest below that level), a silver plan with CSR benefits will likely be the best value for you. This will reduce your deductible, copays, coinsurance, and out-of-pocket maximum so that you pay less when you use your health insurance. CSR increases the actuarial value of your health plan without raising the premium. 

Why Should I Avoid a Silver Pan?

You shouldn’t choose a silver health plan if:

  • You know that you'll incur at least modest medical expenses during the year and determine that gold or platinum plan with a lower out-of-pocket maximum will save you money, even when accounting for the higher premiums.
  • You’re trying to limit your expenses each time you use your health insurance—again, a gold or platinum plan might be a better option.
  • If you use your health insurance a lot and know in advance your out-of-pocket expenses will exceed the out-of-pocket maximum, you might be able to save money by choosing a bronze-tier plan with a similar out-of-pocket maximum but lower premiums. Your total yearly out-of-pocket expenses will be the same, but you’ll pay less for premiums. You can read more about how this technique works in, “How To Save on Health Insurance if You Reach the Out-Of-Pocket Maximum.”
  • You don't qualify for cost-sharing reductions and anticipate very little in health care costs during the coming year. A bronze plan might be your best option, as it will have lower premiums than a silver plan, in trade for less-robust coverage.
  • You don't qualify for premium subsidies and want to minimize your premiums. In most states, the cost of CSR has been added to silver plan premiums. In some states, this applies to all silver plan rates, including plans sold outside the exchange (assuming the insurer has at least some plans available in the exchange). In other states, it applies only to plans sold in the exchange. But if you don't qualify for premium subsidies and you pick a silver plan purchased in the exchange, there's a good chance that you're paying an additional premium to cover the cost of cost-sharing reductions. In most states, you can avoid this by selecting a plan at a different metal level (or by selecting a silver plan sold outside the exchange—check with a broker or insurer in your area to see if this is an available option).
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Article Sources

  1. Department of Health and Human Services. Patient Protection and Affordable Care Act: Market Stabilization. April 2017.

  2. Anderson, David. Balloon Juice. CSR Allocation Method for 2019 On-Exchange Plans. October 15, 2018.

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