Monday, December 9, 2013

Am I Being Pushed Into Picking a Silver Health...

  Answer: If you’re buying individual or family health insurance through your state’s health insurance exchange, you may feel as though you’re being prodded to pick a silver-tier health plan. Although you ultimately have free choice to pick any plan the health insurance exchange offers, lawmakers designed the system such that it encourages you to choose a silver plan.How Am I Being Influenced to Choose a Silver Plan?The most blatant evidence that the lawmakers who wrote the Affordable Care Act want you to choose a silver plan involves cost-sharing subsidies. Cost-sharing subsidies lower the amount of deductibles, copayments and coinsurance when you use your health insurance. By lowering the deductibles, copayments and coinsurance without changing the monthly premium, your cost-sharing subsidy effectively gives you a free upgrade on health insurance.Cost-sharing subsidies will only be given to people who choose a silver health plan. If you meet the income eligibility criteria for a cost-sharing subsidy by having an income of less than 250 percent of federal poverty level, you must choose a silver–tier plan to get the subsidy. If you pick a lower cost bronze-tier health plan, or a higher cost gold or platinum-tier health plan, you won’t get the cost-sharing subsidy. This will obviously influence your decision about whether to choose a silver-tier plan over a bronze, gold or platinum health plan.A more subtle indicator that the design of the Affordable Care Act encourages you to choose a silver plan comes in the form of the premium tax credit subsidy. If you’re eligible for the premium tax credit subsidy, the federal government will pay part of the monthly premium for your health insurance. In effect, the premium subsidy gives you a discount on the cost of health insurance. To be eligible for the premium subsidy, your income must be from 100-400 percent of federal poverty level.The dollar amount of this subsidy is based on comparing your income to the price of the second-cheapest silver-tier health plan available on your state’s health insurance exchange. The design of the premium tax credit subsidy strives to make a silver-tier plan affordable for people of modest means.Gold-tier health plans have an actuarial value closer to the average value of employer-sponsored health insurance than silver-tier plans do. The Affordable Care Act could have stipulated that the premium subsidy be based on a comparing your income with a higher-valued gold-tier health plan. This would have had the effect of making gold-tier plans more affordable for people of modest means.Since lawmakers chose to base the premium subsidy on the cost of a silver-tier health plan rather than on a gold-tier plan, or on a lower cost bronze-tier plan, it could be construed as encouraging people receiving premium tax credit subsidies to choose a silver-tier plan.Unlike the cost-sharing subsidy, you’ll still get the premium subsidy if you choose a bronze plan, a gold plan or a platinum plan. But, you’ll pay the difference if you choose a more expensive plan than the one used to figure the amount of your subsidy. To learn more about the premium tax credit subsidy, read, “How Does the Health Insurance Subsidy Work?”To learn more about the how the tier system works and what it tells you about the value of a health plan, read, “Bronze, Silver, Gold & Platinum—Understanding the Metal-Tier System.”

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