Sunday, December 8, 2013
Silver Plan–What Is It?
Definition: A silver health plan is a standardized type of health insurance that pays, on average, 70 percent of your health care expenses. You pay the other 30 percent of your health care expenses in the form of copayments, coinsurance and deductibles.BackgroundTo 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. These levels, or tiers, are bronze, silver, gold, and platinum. All of the health plans within a given level are expected to offer the same overall value. For silver-tier plans, the value is 70 percent. Bronze plans offer a 60 percent value; gold plans are valued at 80 percent; platinum plans offer a value of 90 percent.What Does Value Mean When Talking About Health Insurance?The actuarial value tells you what percentage of covered health care expenses a plan is expected to pay for its membership as a whole. This doesn’t mean that you, personally, will have exactly 70 percent of your health care costs paid by your silver plan. It’s an average value spread across all of a plan’s members. Depending on how you use your health insurance, you might have more or less than 70 percent of your expenses paid.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.What Will I Have to Pay With a Silver Plan?You’ll have to pay monthly premiums to get the health plan coverage. Silver plan premiums are more expensive than bronze-tier plans because silver-tier plans expect to pay out more money toward your health care bills than bronze plans do. Likewise, 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.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 30 percent share will vary. For example, one silver plan might have a high $2000 deductible paired with a low 20 percent coinsurance. A competing silver plan might have a lower $1000 deductible paired with a higher coinsurance and a $40 copay for prescriptions.Why Should I Choose a Silver Plan?Choose a silver health plan if you’re looking to balance the cost of your monthly premiums with the cost of your out-of-pocket expenses like coinsurance and deductibles. If you 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 an entire 40 percent of your health care expenses as you would with a bronze plan, a silver plan might work for you.If you’re eligible for cost-sharing subsidies because your income is below 250 percent of federal poverty level, you must choose a silver-tier plan to get the subsidies. You won’t get the cost-sharing subsidies if you choose a health plan from any other tier.Cost-sharing subsidies lower your deductible, copays and coinsurance so that you pay less when you use your health insurance. In effect, a cost-sharing subsidy increases the value of your health plan without raising the premium. It’s like getting a free upgrade on value. You won’t get the free upgrade unless you choose a silver health plan.Why Should I Avoid a Silver Pan?You shouldn’t choose a silver health plan if you can’t afford to pay approximately 30 percent of the cost of your health care expenses. If you’re trying to limit your expenses each time you use your health insurance, you’ll do better with a gold or platinum plan.If you use your health insurance a lot, perhaps because you have an expensive chronic condition, take a careful look at the silver plan’s out-of-pocket maximum. If you know in advance that your out-of-pocket expenses will exceed this 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.”