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

A Silver Plan Offers 70 Percent Actuarial Value

Open Enrollment Begins For Third Year Of Affordable Care Act
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In the individual and small group health insurance markets a silver health plan pays, on average, roughly 70 percent of enrollees' health care expenses. The enrollees pay the other 30 percent of their health care expenses in the form of copayments, coinsurance and deductibles.

This is also known as having a 70 percent actuarial value, or AV. This doesn't mean that you, personally, will get 70 percent of your health care costs paid by your silver plan. Rather, the plan pays 70 percent 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 percent 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 percent, there's an allowable de minimus range, since it would be very challenging for health insurers to design plans that hit exactly 70 percent AV. Through 2017, the de minimus range was +/-2, so silver plans had AV in the range of 68 to 72 percent. 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 percent. 

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, does not have to comply with the ACA, and does 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 percent actuarial value (range of 68 to 72 percent, extending to 66 to 72 percent in 2018).
  • Bronze plans offer a 60 percent actuarial value (range of 58 to 62 percent, extending to 56 to 65 percent in 2018; bronze plans have a -4/+5 de minimus range starting in 2018).
  • Gold plans offer an 80 percent actuarial value (range of 78 to 82 percent, extending to 76 to 82 percent in 2018).
  • Platinum plans offer a 90 percent actuarial value (range of 88 to 92 percent, extending to 86 to 92 percent in 2018)
  • Catastrophic plans must have actuarial value below 60 percent, 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 has been added to silver plan rates in most states, starting in 2018. 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 decision to eliminate federal funding for cost-sharing reductions has indirectly resulted in disproportionately larger premiums for silver plans, and thus disproportionately large premium subsidies. 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 $4000 deductible paired with a 20 percent coinsurance. A competing silver plan might have a lower $2000 deductible, but pair it with a higher coinsurance and a $40 copay for prescriptions.

But people who purchase individual market coverage in the exchange and who have an income between 100 percent of the poverty level (139 percent in states that have expanded Medicaid) and 250 percent 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 percent. For lower-income enrollees, AV is increased to as much as 94 percent, making it better coverage than a platinum plan, at no additional cost to the enrollee (the federal government pays the insurers to provide this benefit).

You can only get the cost-sharing reduction benefit if you have an eligible income, are not eligible for affordable employer-sponsored health insurance that provides minimum value, are legally present in the US, and enroll in a silver plan through the exchange in your state.

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,
  • are eligible for cost-sharing subsidies, 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 percent of the poverty level (and particularly if it doesn't exceed 200 percent of the poverty level), a silver plan with cost-sharing subsidies will likely be the best value for you.

Cost-sharing subsidies reduce your deductible, copays, coinsurance, and out-of-pocket maximum so that you pay less when you use your health insurance. They increase 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 significant 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 don't qualify for cost-sharing subsidies 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 can read more about how this technique works in, “How To Save on Health Insurance if You Reach the Out-Of-Pocket Maximum.”

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