Obamacare Silver Plan

by / Wednesday, 17 April 2013 / Published in Metal Plans, Silver Plan

The Patient Protection and Affordable Care Act, commonly called Obamacare or the Affordable Care Act, represents the most significant government expansion and regulatory overhaul of the U.S. healthcare system since 1965. When the federal health insurance mandate goes into effect, most Americans will be required to get health insurance or face a penalty. Market reforms in the Affordable Care Act seek to improve the quality and availability of affordable coverage. The law will require that all plans offered through the exchanges meet a uniform standard of essential health benefits at four levels of cost sharing. The ACA identifies a range of services that must be included in the benefits package and requires preventive services to be covered.

 

The four levels of cost sharing rests with their actuarial values which are bronze, silver, gold and platinum. These tiers are used to set the minimum amount of coverage many people must have to satisfy the requirement that they be insured or pay a federal tax penalty beginning in 2014. All plans will cover certain essential health benefits determined by the U.S. Department of Health and Human Services. These requirements apply to all tiers of health insurance coverage, meaning that differences in the levels of coverage will reflect variation in cost-sharing, not differences in the underlying benefits. For example, someone who gets a silver plan would have to pay 30 percent of health care costs, while the plan covers 70 percent. The higher the actuarial value, the less patient cost sharing the plan will have on average.

 

All of the plans will all offer the same minimum of benefits which are determined by the federal and state government and must be included in a plan regardless of any additional benefits the plan decides to include. For an insurance company to participate in an exchange, a state run marketplace offering Affordable Care Act plans, the company does not have to offer all four plans but it must offer at least the silver plan and also the gold plan. The silver plan has lower out of pocket costs than the bronze plan but higher out of pocket costs than both the gold and platinum plans. All silver plans share the same minimum health benefits but the way they charge out of pocket costs can differ significantly. Based on an average person’s expected use of healthcare services, silver plans have the insurance company pay 70% of covered healthcare expenses. The remaining 30% of expenses are paid out of pocket by the insured. These out of pocket expenses include deductibles, copayments, and coinsurance. However, the plan’s monthly premium is not included as one of these out of pocket costs.

 

Deductibles and coinsurance can vary significantly among silver plans. The out of pocket costs also assume you are using doctors and facilities approved by the plan. If you use a healthcare provider who is not approved, you could pay considerably higher costs and those costs might not apply towards the maximum out of pocket expenses you can pay in a calendar year. The Affordable Care Act provides federal tax credits to people with middle incomes and low incomes whether they are buying individual or family insurance plans. The tax credit is based on the silver plan’s costs.

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