With hundreds of options available in the health insurance marketplace, feeling overwhelmed and confused during the enrollment process is understandable, especially when seemingly random “metal tiers” get used to differentiate plans.
However, each metal tier (Bronze, Silver, Gold, and Platinum) represents the shared costs of your health insurance, setting the balance between the monthly premiums your business would pay and the potential medical costs your employees might face.
That’s why it’s important to recognize and understand how each plan's cost and coverage level could affect your circumstance — equipping you to make the best decision possible and avoid common benefits mistakes.
Let’s explore the differences between each metal tier and how to choose the right one for your situation.
The difference between metal tiers lies in their cost-sharing structure — that is, how you and your insurance company split the costs of your employees’ healthcare. For instance, Bronze plans typically come with low monthly premiums but the highest costs when your employees need care.
On the other hand, Platinum plans have the highest monthly premiums but the fewest out-of-pocket costs when you seek care. Silver and Gold plans fall in between, with Silver plans having lower premiums and higher care costs than Gold plans.
So why is each tier named after a metal?
One of the goals of the Affordable Care Act (ACA) (also known as Obamacare) was to standardize individual health insurance policies. This was done by creating metal tier lists. While all metals (insurance plans) carry value, they symbolize and generalize the escalating value of plans in the context of health insurance.
The better you understand the different metal tiers, the more informed your decision will be when selecting a health insurance plan for your employees.
Regardless of the metal tier, each plan comes with essential health benefits. Here is an estimated breakdown of the percentages you’d pay, depending on the metal level insurance plan you choose:
Bronze plans are the basic level of health insurance. They have the cheapest monthly fees, called premiums. However, employees who go to the doctor or hospital might have to pay more from their own pocket.
Bronze plans could be good for younger employees who rarely see the doctor. But if someone gets sick often, it might cost them more. As a business owner, think about your team’s health needs when looking at Bronze plans.
The Silver tier sits comfortably between Bronze and Gold in terms of costs. Think of it as the middle sibling in the health insurance family. It offers more manageable personal expenses than the Bronze plan, making it perfect for small businesses looking for a great mix of healthcare quality and premium affordability.
While Gold commands higher monthly premiums compared to the Silver tier, the lower costs during medical visits make it a cost-effective option for businesses that have employees with consistent medical needs or those that prioritize health check-ups and frequent care.
Think of it like this: The Gold plan reduces subsequent medical expenses by investing upfront every month.
The Platinum metal tier is the apex of health insurance tiers. It has the highest premiums but also comes with the lowest coinsurance, meaning your employees will be responsible for the least amount of expenses when accessing medical care.
For businesses with employees facing chronic health challenges or prioritizing healthcare, investing in a Platinum tier would allow you and your employees to save on personal expenses.
Lastly, while not included with the metal tiers, there are catastrophic plans for people under 30. These offer low premiums and high deductibles and are a cost-effective way for employees to protect themselves in the event of a serious illness or injury.
It’s important to acknowledge that these plan percentages are generalizations and don’t always reflect the exact amounts your employees will be expected to pay.
For example, if your employee opts for a silver plan, they might believe they’ll always be responsible for 30% of their costs and expect the insurance company to cover the remaining 70%.
However, if they only visit a doctor’s office once during the course of the year, they’ll likely be paying close to 100% of the costs of that visit. Conversely, if they have a major event that requires extensive surgery, almost all of that will be covered by their insurance carrier.
Before you choose a metal tier plan, it’s essential to understand actuarial value and key cost components.
Actuarial value might sound like a hefty term, but it’s fairly straightforward when broken down. It denotes the average percentage of total medical costs that an insurance plan will cover for its beneficiaries. Defined by the ACA for standardization, it’s an indispensable metric for evaluating different healthcare plans.
For example, if a Silver plan has an actuarial value of 70%, that means that, on average, the healthcare insurance company will cover 70% of the healthcare costs while the last 30% is out-of-pocket expenses.
Choosing the right healthcare plan comes down to the nitty-gritty costs your employees will encounter.
Here are the pivotal cost components that shape metal-tiered plans:
The monthly premium is the fixed amount paid by employers, employees, or both to the insurance company — this ensures the health plan remains active.
While higher-tier plans like Platinum come with large premiums, they provide a safety net against unexpected healthcare costs.
Lastly, if you’re a small business owner, it might be worth your time to see if you qualify for premium tax credits, which can help reduce the overall amount you pay for health insurance every year.
A copay or copayment is a set fee that employees pay when receiving specific healthcare services or prescription drugs, regardless of the service cost.
For instance, an employee might have a $20 copay for a doctor’s visit, unrelated to the doctor’s total charge. Lower-tier plans like Bronze or Silver may have higher copays compared to their Gold or Platinum counterparts.
A deductible is the amount an employee must pay for healthcare services before the insurance company starts to pay.
For instance, if a deductible is $1,500, the employee pays the first $1,500 of their medical expenses. After that, the insurance company will help pay for a percentage of the employee’s medical costs.
Typically, a higher deductible can mean a lower monthly premium. However, it’s crucial to gauge the likelihood of reaching that deductible based on one’s health needs.
After the deductible is met, coinsurance kicks in — which is the percentage of healthcare costs the employee and the insurance company share. If the coinsurance was 20%, the employee pays 20% of the healthcare services, and the insurance company covers the remaining 80%.
Again, these percentages are generalizations. The exact amount your employees will be expected to pay will depend on their specific circumstances.
Coinsurance is different than copays because it’s not a fixed cost. Additionally, certain plans may offer cost-sharing reductions, changing the percentage.
Your employee’s out-of-pocket maximum is the total amount an employee will be required to pay for healthcare services during a year, excluding the monthly premiums. Once this limit is reached, the insurance company covers 100% of the allowed amount for covered services.
In essence, it’s a ceiling that protects employees from excessive fees, especially in unforeseen, tragic circumstances.
While the metal tiers in insurance come with a lot of information, understanding the plans holistically helps simplify the decision-making process. Each tier offers a different balance of monthly premiums and healthcare costs, suiting diverse health and financial scenarios.
Take a company where the majority of employees are proactive about their health, focusing on preventive care and opting for regular check-ups. In that scenario, a Silver plan that offers moderate coverage with a manageable premium might be a good fit.
But if your organization has a mix of individuals, some of whom require specific health needs, a Gold or Platinum plan could ensure comprehensive coverage.
Lastly, it’s important to gauge the preferences and needs of your team. For instance, indirect costs like subsidies might offset overall expenses for qualifying employees, meaning a higher-tier plan could be feasible without straining your company’s budget.
At Pebble, we’re all about finding affordable healthcare solutions that’ll benefit your team. Contact us today to learn more about how Pebble can make your search for health insurance simpler.