The Affordable Care Act, also known as Obamacare, refined what kind of insurance plan can be sold in the United States. The new qualified health plans that take effect in 2014 are sometimes referred to as "metal plans" since they are each named after a different type of metal (Bronze, Silver, Gold, and Platinum).
The four new metal plans are distinguished from one another by their "actuarial value." Actuarial value refers to the average amount of insurance expenses that would be paid for by the plan. The higher the actuarial value of a plan, the lower the out-of-pocket costs for the plan member. With respect to the plan names, the more expensive the metal, the higher the actuarial value. For example, a Platinum Plan covers 90% of covered medical expenses while a Bronze Plan only covers 60%.
In the market place, it is expected that an insurer will charge progressively higher premiums among the plans with Bronze Plans having the lowest premiums and Platinum having the highest premiums. However, this considers plans only within a single insurance company. It is possible that one company’s Silver Plan could be cheaper than another company’s Bronze Plan. All plans, whether Bronze, Silver, Gold of Platinum, will have a shared maximum out-of-pocket amount that an enrolled individual can pay in a calendar year.
All the plans must offer essential health benefits. These are the basic insurance benefits that all qualified health plans must provide enrollees. States have the discretion to require additional benefits beyond the Essential Health Benefits. However, these are minimum benefits and plans can choose to offer additional benefits if they so choose so long as the essential benefits are properly covered. It is also important to note that since plans differ by the amount of costs they cover, the aforementioned plans may all cover the essential health benefits but they can cost the member different amounts due to the differences in insurance expenses paid for by the plans. Click on any of the names of the metal plans above to learn more about the individual plan and its cost-sharing.
Individual insurance companies are not required to offer all four plans. At a minimum, they must offer the Silver plan and the Gold plan. There is also a catastrophic plan for individuals who can demonstrate problems affording a Bronze Plan. This plan is only available through an exchange and tax subsidies cannot be used to reduce its premiums.
Some people have questioned why the metal plans have the names that they do. Part of the reason is that the Affordable Care Act was based on an earlier health insurance reform in Massachusetts. The Massachusetts plans had the names Bronze, Silver, and Gold. Originally the marketing officer in charge of naming the plans was considering names with historical significance for Massachusetts such as "The Minute Man Plan" and the "Patriot Plan." However, after hearing the ideas his wife suggested that he use the name of the medals in the Olympics: Bronze, Silver, and Gold. She said that consumers would know instantly that a Silver Plan was better than a Bronze Plan and a Gold Plan was better than a Silver Plan.
