The Affordable Care Act will establish various tiers of health insurance coverage beginning in 2014. The baseline “tier” will be a minimum amount of coverage that people need to have to satisfy the federal mandate to have health insurance (or face a tax penalty). Insurers will be required to offer plans that fit within four levels (tiers) of coverage: bronze, silver, gold, and platinum.
The levels of coverage aren’t defined using specific deductibles, co-pays, and coinsurance- they’ll use something called “actuarial value”. For example, a plan with an actuarial value of 70% (referred to as a “silver” plan) means the plan will pay 70% of a standard population’s health care expenses with the enrollee paying 30% through things like deductibles, co-pays, and/or coinsurance. The higher the actuarial value the less patient cost-sharing the plan will have on average.
Bronze plans will have more out-of-pocket costs, and platinum plans will have least. Bronze plans will cover 60% of enrollee costs, silver 70%, gold 80% and platinum 90%. Young people (under 30) will be able to buy “catastrophic” plans with an even lower actuarial value. Each plan (even catastrophic) needs to cover the state’s essential benefit package. Insurers don’t have to offer plans in all four levels, but within the exchange all insurers must offer at least one silver and one gold plan. You can read a lot more about actuarial value in this HHS bulletin.
There are also benchmarks for premium and cost-sharing subsidies that go to lower and middle income people buying their insurance in the exchange. I’ll cover that next week.