The Affordable Care Act (ACA) has made it easier for those who don’t have employer-sponsored health insurance to find an affordable plan. With state and federal health insurance marketplaces came standard categories of plans, making comparison shopping faster and simpler.
If you’re ready to purchase individual health insurance, your first step is understanding the different metal levels of plans. While all marketplace plans cover the ten essential health benefits, each has different ratios of what you’ll pay and what your health insurer will pay.Below we’ll help you understand the metal tiers of health insurance as well as explain how to determine if you qualify for any subsidies to help cover costs so you’ll be closer to picking the best health plan option for you and your family.
What are the metal tiers in health insurance?
The ACA requires health insurance plans on the individual market to be classified by four standard levels of coverage. These four levels are called "metallic tiers" or "health coverage tiers."
The metallic tiers only show how your total healthcare costs are split between you and your health insurance carrier—not the quality of care you’ll receive.
When you study a health insurance plan option, you’ll notice that your total medical expenses include 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 more for a medical service or item. A less expensive tier (a plan with a lower premium) means higher out-of-pocket medical costs for the patient. Again, these categories have nothing to do with the quality of care you’ll receive.
The four metal plans of health insurance from lowest cost to highest cost are:
Within each metallic tier are various plan types, such as health maintenance organization (HMO) or preferred provider organization (PPO) plans that determine where you can get comprehensive coverage of care and what you’ll pay to receive eligible services and medications.
What is the relationship between metal tiers and health insurance premiums?
As you may already know, health insurance premiums and deductibles vary based on where you live, your insurance carrier, and your plan’s metal tier. Generally, plans with higher premiums have lower annual deductibles.
The average premium costs for plans are related 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.
According to recent data1, the average monthly premium for the metal tiers are:
- Bronze: $396
- Silver: $541
- Gold: $592
- Platinum: $678
Remember, no matter which plan you select, all marketplace health plans are what’s known as qualified health plans. And these plans must offer a set of preventive care services with no copayments.
What’s the difference between each metal tier?
To understand more about each tiered plan and how they work, we’ll go over them below. If you’re a visual learner, our blog on qualified health plans contains an easy-to-read chart describing the metal tiers in detail.
The bronze plan has an average actuarial value of 60%, meaning covered individuals must pay 40% of their expected medical expenses. Bronze plans usually have the lowest premiums of all the metal tiers, 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 types of plans can come with financial risk because you could be stuck paying high costs when you need healthcare, such as paying several thousand dollars in out-of-pocket costs before your health insurance company starts chipping in.
Bronze plans are typically a good choice if you’re looking for a lower monthly payment and don’t have a lot of medical needs. However, if you suddenly need major medical care, you could be facing a steep bill.
The silver plan has an average actuarial value of 70%, meaning covered individuals must pay 30% of their expected medical expenses. Silver plans are considered preferred tiers because they typically have moderate monthly premiums and out-of-pocket expenses when you need healthcare. With a silver plan, your annual deductible will be lower than a bronze plan.
A significant feature of silver 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. If you qualify, you could save thousands of dollars a year should you need to access many 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 advanced 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 is your best choice if you use a moderate amount of healthcare services and qualify for cost-sharing reductions. Even with subsidies, you’ll probably pay a higher monthly premium than a bronze plan, but you’ll get more overall health coverage.
The gold plan has an average actuarial value of 80%, meaning covered individuals must 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.
You might want a gold plan if you can afford to pay the monthly premium to have lower costs for services rather than unpredictable out-of-pocket expenses. This is especially true if you have a chronic condition or expect to need a lot of care in the future.
The platinum plan has an average actuarial value of 90%, meaning covered individuals must pay 10% of their expected medical expenses. They have 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.
If you use a lot of healthcare services or have a serious medical condition, a platinum plan may be the best fit if you can afford the high monthly premium. But because they’re so expensive, less than 1%2 of total marketplace enrollees opted for a platinum plan in 2022.
What are catastrophic health insurance plans?
Catastrophic health insurance plans have low monthly premiums, but high deductibles. These plans offer qualified individuals health insurance coverage in the event of an emergency or serious injury.
In 2022, the annual deductible for catastrophic coverage is $8,7003, and the current monthly premium is $313.
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 visits a year before your deductible is met. Afterwards, the plan will pay 100% for in-network essential coverage for the rest of the year.
To purchase a catastrophic health plan, you must meet specific criteria. They are for individuals under age 30 or those who get a financial hardship extension citing special circumstances, such as homelessness, facing eviction or foreclosure, facing significant medical debt, or having filed for bankruptcy.
What is actuarial value?
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. But 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.
Picking the right metal tier depends mainly on two factors—your health and your budget. If you need a lot of care from providers or prescription drugs, one of the higher-tier plans would be the best choice if you can afford the premium. If you’re generally healthy and don’t need a lot of healthcare, you can pay less with a silver plan or the cheapest plan option of a bronze tier plan.
There are tools on the marketplace to compare plan options to help you determine which is best for you. And 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 July 11, 2022.