For a primer on health insurance terms, check out our recent blog post on premiums, deductibles, copayments, and co-insurance here.
Before we dive in, it’s important to understand how plans are organized. In the US, we have many insurance companies. Blue Cross Blue Shield, Cigna, Kaiser and UnitedHealthcare are just some of the many brands. And each company offers different plans with rates determined by various factors—like where you live, who your employer is, plan level, and care type. Blue Cross Blue Shield, for example, has Blue Shield of California for people in California. And your employer may have negotiated specific plan rates with one of these insurers.
Then, there are plan levels (bronze, silver, gold and platinum), which specify how you and your insurance company will share medical costs. And within each plan level, you may have an option of how your healthcare is managed (HMO, PPO, POS, EPO).
Let’s get started.
Bronze plans have the lowest monthly premiums out of all four level plans but only pay an average of 60% of an individual’s covered medical costs. Bronze plans also typically have high deductibles. In fact, many bronze plans qualify as high-deductible health plans (HDHPs). HDHPs have lower monthly fees (your premium) but require you to pay more for healthcare services (your deductible) before your insurance kicks in.
With their low premiums, bronze plans can be good cost-saving option for those who are relatively healthy and need minimal doctor’s visits, prescription medications and other healthcare services. However, if your plan has a high deductible, you’ll be responsible for a larger portion of your healthcare expenses upfront, so you’ll want to put money aside in case of a costly medical event. The IRS allows people on HDHPs to save and invest through a tax-deductible health savings account (HSA) to be used on qualified medical expenses.
Silver plans are what most people buy. These plans pay an average of 70% of an individual’s covered medical costs and usually have lower deductibles than bronze plans.
Through the Health Insurance Marketplace at healthcare.gov, some individuals can qualify for enhanced silver plans based on their income and receive savings through lower copays, co-insurance and deductibles. In essence, enhanced silver plans can give you the benefits of a gold or platinum plan for the price of a silver plan.
Gold plans pay an average of 80% of an individual’s covered medical costs. Compared to silver plans, gold plans have a higher monthly premium but don’t require you to pay as much toward a deductible before your insurance kicks in. This could be good if you have expensive medical needs that the plan covers, and you can easily reach your deductible.
Platinum plans pay an average of 90% of an individual’s covered medical costs. Platinum plan deductibles, copays and co-insurance are typically lower than those for gold plans, which translates into the plan paying more for covered expenses in the long run. This is why platinum plans are often the go-to for people who need to see a doctor often, take multiple medications, and are worried about high out-of-pocket healthcare costs.
Two important notes on insurance plan levels
Insurance plan care types
After you’ve chosen a plan level, you’ll usually have a choice of how your healthcare is managed. That’s where HMO, PPO, POS, EPO plans come in.
So, which type of plan is the best? Hopefully, this guide has shown you that it really boils down to your healthcare needs, budget and preferences.
Are you generally healthy and willing to take on the risk of not have maximum coverage? Maybe look into a bronze HMO or HDHP plan with low monthly premiums. Or do you have expensive medications and want the flexibility of being able to choose your doctors and specialists? Then, perhaps a platinum PPO plan is right for you.
Open Enrollment to sign up for individual health insurance for 2019 is November 1, 2018 to December 15, 2018, so be sure to enroll in a plan within that time frame. Some states have extended deadlines. For more information about deadlines and what to expect with plans in the new year, please see our recent blog post here.
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