One goal of the Affordable Care Act (ACA) is to improve access to affordable health insurance plans for individuals without employer-sponsored coverage. The state and federal Health Insurance Marketplaces categorize plans into standard levels. This helps individuals find the right insurance policy more easily.
If you're ready to purchase individual health insurance, your first step is understanding the different metal levels of plans. All marketplace plans cover the ten essential health benefits. But, each has different ratios of what you'll pay and what your health insurer will pay for healthcare costs.
In this article, we'll explain the metal tiers of health insurance. We’ll also share how health insurance subsidies can help with out-of-pocket costs.
In this blog post, you'll learn the following:
- What types of plans are available on the individual market.
- How plans are organized based on costs shared between you and the health insurance company.
- How to pick which metal tier is best for your situation.
The federal government groups health insurance plans on the individual market into four coverage levels. These four levels are called "metallic tiers" or "health coverage tiers."
The metallic tiers only affect how healthcare costs are divided between you and your health insurance provider. They don't influence the quality of care you receive.
When you look at a health insurance plan option, you'll notice that your total medical expenses include common health insurance terms like premiums, deductibles, and out-of-pocket costs, such as copayments and coinsurance amounts.
A more expensive metal tier (a plan with a higher premium) means the health insurer pays a higher share of your medical expenses. A less expensive tier (a plan with a lower premium) means that you incur higher out-of-pocket medical costs. Again, these categories have nothing to do with the quality of care you receive.
The four metal categories of health insurance from lowest to highest premium cost are:
Within each metallic tier are various plan types, such as health maintenance organization (HMO) or preferred provider organization (PPO) plans. The type of plan determines where you can get comprehensive care and what you pay to receive medical services and medications.
As you may already know, health insurance premiums and deductibles vary based on:
Generally, plans with higher premiums have lower annual deductibles.
The average premium costs for plans relate to the amount of health insurance coverage they provide. Higher-tier plans, like gold or platinum, mean you'll pay higher monthly premiums. In lower levels of plans, like bronze or silver, you may pay less in premiums but pay a larger deductible.
Here are the average monthly premiums for each metal tier in 20241:
Remember, no matter which plan you select, all marketplace health plans are qualified health plans. That means they must offer a set of preventive care services with no copayments.
We’ll go over each tiered plan in more detail below to help you understand how they work.
The bronze health insurance plan has an average actuarial value of 60%. This means covered individuals typically pay 40% of their expected medical expenses. The bronze metal tier plans usually have the lowest monthly costs, so they can be very appealing if you're looking for the cheapest plan option. But bronze plans also have the highest annual deductibles.
These lower-tier plans can come with financial risk. You could be stuck paying high costs when you need healthcare, such as paying several thousand dollars as an out-of-pocket maximum before your health insurance company starts chipping in.
A bronze plan may be right for you if:
However, you could face a steep bill if you suddenly need major medical care.
The silver plan has an average actuarial value of 70%. Covered individuals pay 30% of their expected medical expenses. Silver-tier plans are considered a preferred tier because they typically have moderate monthly health insurance premiums and out-of-pocket expenses when you need care. With a silver plan, your annual deductible will be lower than a bronze plan.
A significant feature of silver-tier plans is they come with potential cost-sharing reductions based on your household income level and family size. Cost-sharing reduction subsidies only apply to silver-level plans. Meeting the requirements may provide you with additional savings each year when using different healthcare services.
If you qualify for a cost-sharing reduction, available to people with a household income up to 250% of the federal poverty level, you can reduce your out-of-pocket costs. There are also advance premium tax credits for people who earn between 100% and 400% of the federal poverty level. These types of tax subsidies reduce your premium costs.
A silver plan may be right for you if:
You may pay a higher monthly premium than a bronze plan, even with subsidies, but you'll receive more comprehensive coverage in return.
The gold plan has an average actuarial value of 80%. Covered individuals only pay 20% of their expected medical expenses. Gold plans have high monthly premiums but lower out-of-pocket costs because they typically have very low deductibles. This means you'll start seeing extra savings sooner if you access a lot of healthcare in a given year.
A gold plan may be best for you if:
The platinum metal plan has an average actuarial value of 90%. Covered individuals pay only 10% of their expected medical expenses. It has the highest monthly premiums and the lowest annual deductibles of all the tiers. This means extra savings will happen quicker if you need a lot of medical care.
A platinum plan may be best for you if:
But because platinum plans are expensive and not available in every county, KFF found that only 1%2 of total marketplace enrollees opted for a platinum plan in 2024.
Catastrophic health insurance plans are your cheapest choice for health coverage. They fall below the bronze tier. They have low monthly premiums but high deductibles. These plans offer qualified individuals health insurance coverage in the event of an emergency or serious injury.
Like the metal tier plans, catastrophic plans must cover certain preventive health services at no charge. These plans also provide covered benefits of three primary care doctor visits a year before your deductible is met. After that, the plan will pay 100% for in-network essential coverage for the rest of the year. According to the KFF, the annual deductible for catastrophic coverage in 2024 is $9,4503.
To purchase a catastrophic health plan, you must meet specific criteria. They are for people younger than 30 or those who have a hardship exemption citing special circumstances. These circumstances include homelessness, facing eviction or foreclosure, facing significant medical debt, or having filed for bankruptcy.
Actuarial value is the percentage of costs a health plan covers in relation to how much the individual policyholder is expected to pay. It's calculated by the total expected payments for essential coverage divided by the total expected costs of the “standard population” for essential benefits.
Average actuarial values determine the cost-sharing baseline between you and your health insurance carrier. Because actuarial value is based on a standard population, the cost-sharing structure could vary from one plan to another, so your actual costs may differ.
For example, a plan with a higher deductible may have a lower coinsurance to offset it to reach the plan's desired actuarial value. Another plan may compensate for a high deductible by covering a few services completely before the plan deductible is met.
The goal of the actuarial value structure is to keep all participants of the same metal level plan paying the same cost of care. However, how the out-of-pocket costs are paid will vary by plan and the medical services you may need, so it's important to read each plan's summary of benefits to understand its structure before enrolling.
Choosing the appropriate metal tier primarily depends on two factors: your health and your budget. If you require significant medical care or medications, one of the higher-tier plans is an excellent choice if the premium is within your budget. If you're generally a healthy individual and don't need a lot of healthcare, you can pay less with a silver plan or a bronze tier plan.
There are tools on the marketplace to compare plan options to help you determine which is best for you. By using premium tax credits and cost-sharing subsidies, you may even be able to secure a cheaper monthly premium. At the end of the day, ensuring you have health insurance is crucial to managing unexpected medical bills if you have an accident or become ill.
This article was originally published on August 29, 2013. It was last updated on September 24, 2024.