The Health Insurance Tier System Explained
If you’ve had to shop for health insurance in the past couple of years, you’re familiar with the health care tier system. Many people find it confusing, even though it was created to help consumers compare similarly priced health plans side-by-side. To make it even more confusing not all health insurance plans use the tier system and not all employer-based health insurance plans use the metal tier system. However, most health insurance providers do use it, so it’s important to familiarize yourself with it before buying health insurance during open enrollment.
We want to make it easy to compare health insurance plans. Below we simplify the most important things you need to understand about the health insurance tier system before you shop for health insurance.
Platinum, Gold, Silver, and Bronze: What Does it Mean?
As you may have guessed, the value of each of these metals is reflected in the depth of coverage and price of the health plans you’ll find in the marketplace. This means that premiums for platinum health care plans will cost the most in monthly premiums, but they will also cover more of your health care needs so you don’t pay as much out-of-pocket when you see doctors and specialists. You’ll also pay less for treatments and surgery. For bronze health plans you pay very little monthly but when you visit a doctor, you pay more than you would with a higher-tier plan.
The difference between the value of each tier is important to keep in mind when you choose your health plan. Otherwise, you may not be making the best decisions that result in savings. In a platinum plan, you only pay roughly 10% of the cost of a healthcare provider’s services. Compare that to paying 40% out of pocket with a bronze plan.
As you can see, it makes sense for a young, healthy person who does not see a doctor more than maybe once a year to buy the bronze plan. Of course, there are sometimes unforeseen circumstances, like a sudden illness or accident, that may require more doctor's visits and possibly a hospital stay, which would end up being very costly if you’re paying 40% of the cost yourself. For this reason, even the healthiest young person who doesn’t have an emergency fund may be better off with a silver plan (paying 30% of costs) or even gold (paying about 20% of costs). In the end, it’s your choice to take as much risk as you want to.
Choosing which level of protection you need is a personal decision that should be made based on lifestyle and health. Overall, the majority of Americans opt for a silver tier health insurance plan. If you’re not sure what’s right for you, think about how often you visited a doctor last year. If it was one or two times, chances are you’d be wasting money on a platinum plan, but if on the off-chance that you became gravely ill, or had a debilitating accident, you would be saving lots of money. Makes sense, right? The trick is to feel out where you fall into this tier system.
Which Health Plan Fits Your Lifestyle?
If your kids are in high school or up to the age of 26 and on your plan, it may not be a bad idea to buy a bronze plan, but only if everyone is healthy and not involved in sports activities or any risky hobbies. Generally speaking, it’s not advised to be on such a bare-bones plan if you are over 70 years old.
A silver plan may be right for you if you are under 70 years old and have elementary-school-age kids who are not involved in any activities that would expose them to injury. This plan is advised over a bronze one if you or a family member sees a doctor and/or specialist a few times a year and only require one or two medications.
If you or a family member have a condition that needs closer monitoring, you may want to consider the gold plan. This plan is for those who have frequent doctor visits and need expensive medication. Older people and younger children who see the doctor more frequently should be on this or a platinum health plan.
A platinum plan may be expensive but it may be cheaper overall if you or a family member suffer from a chronic condition that also requires frequent trips to medical care providers. If you also take several expensive medications, this tier plan can be very cost-effective. A platinum plan is perfect for the elderly and those prone to illness and injury.
At a Glance:
- Lowest monthly premiums
- Highest out-of-pocket costs
- High deductibles
- This is really meant for emergency medical situations for people who are otherwise very healthy.
- Moderate monthly premiums
- Moderate out-of-pocket
- Moderate deductibles
- This is a good plan for an individual or family that needs routine care only
- High monthly premium
- Low out-of-pocket costs
- Low deductibles
- This is a great plan for someone who needs routine care on a regular basis and can pay a little more each month as opposed to paying more for each visit.
- Highest monthly premium
- Lowest out-of-pocket expenses
- Very low deductibles
- This is a great plan for someone who regularly needs care and can pay higher monthly premiums while having most if not all costs covered.
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Choosing a higher deductible plan will help to lower your health insurance premium. So this is a smart financial move. As is keeping a small emergency fund to pay for medical expenses until you reach that deductible.
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It’s always a good idea to get acquainted with the way plans are set up and what you’re responsible to pay before open enrollment which takes place in late fall. If you have a qualifying event, like a new job or if you’ve moved, had a baby, gotten divorced or had any life change that affect your coverage, you may be able to buy a new health insurance plan today.
Like auto and homeowners insurance healthcare insurance also has a deductible which needs to be paid before insurance begins to cover expenses. However, healthcare deductibles work a little differently. For instance, your healthcare insurance will pay for some services even before you meet your deductible.
You may be shopping for health insurance because you got a new job, which doesn’t offer health insurance. Some people even prefer to have a health plan separate from their jobs. It’s usually a more expensive option to buy an individual health insurance policy when an employer offers to pay a portion of your premiums each month. However, some people prefer to choose their own insurance company and a plan that fits their needs.