What You Should Know About Platinum Plan Health Insurance

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A platinum plan is a standardized type of health insurance that pays, on average, roughly 90 percent of members' health care expenses. The members pay the other 10 percent of their health care expenses in the form of copayments, coinsurance, and deductibles.

Background

To make it easy for you to compare the value you’re getting for the money you spend on health insurance premiums, the Affordable Care Act standardized actuarial value levels for health plans in the individual and small group market.

These levels, or tiers, are bronze, silver, gold, and platinum. All of the health plans within a given level are expected to offer roughly the same overall value.

For platinum-tier plans, the value is 90 percent (with a de minimus range of +/-2, which will expand to +2/-4 in 2018, meaning that a platinum plan in 2018 will have an actuarial value in the range of 86 percent to 92 percent). Bronze, silver and gold plans offer values of roughly 60, 70 and 80 percent respectively.

What Value Means in Regard to Health Insurance

Value, or actuarial value, tells you what percentage of covered health care expenses a plan is expected to pay for its membership as a whole. This doesn’t mean that you, personally, will have exactly 90 percent of your health care costs paid by your platinum plan. It’s an average value spread across a standard population. Depending on how you use your health insurance, you might have more or less than 90 percent of your expenses paid.

Non-covered health care expenses don’t count when determining a health plan’s value. For example, if your platinum-tier health plan doesn’t provide coverage for over-the-counter medicines, the cost of those things isn’t included when calculating your plan’s value. Out-of-network costs are not included in the determination of a plan's actuarial value, and neither are benefits that don't fall under one of the essential health benefit categories (virtually all medically necessary care is considered an essential health benefit, however)

Premiums

You’ll have to pay monthly premiums to get the health plan coverage. Platinum plan premiums are more expensive than lower-value plans because platinum plans pay more money toward your health care bills.

Each time you use your health insurance, you’ll have to pay cost-sharing like deductibles, coinsurance, and copays. How each platinum plan makes you pay your 10 percent share will vary. For example, one platinum plan might have a high $1000 deductible paired with a low 5 percent coinsurance. A competing platinum plan might have a lower $400 deductible paired with a higher coinsurance and a $10 copay for prescriptions.

Pros

Choose a platinum health plan if the most important factor to you is low out-of-pocket expenses when you use your health insurance. If you expect to use your health insurance a lot, or you aren’t bothered by the higher monthly premiums of a platinum plan, a platinum health plan might be a good choice for you.

If you use your health insurance a lot, perhaps because you have an expensive chronic condition, take a careful look at the platinum plan’s out-of-pocket maximum. If you know in advance that your out-of-pocket expenses will exceed this out-of-pocket maximum, you might be able to save money by choosing a lower-tier plan with a similar out-of-pocket maximum but lower premiums.

Your total yearly out-of-pocket expenses will be the same, but you’ll pay less for premiums

Cons

Don’t choose a platinum-tier health plan if you can’t afford high monthly premiums. If you lose your health insurance coverage because you couldn’t pay the premiums, you could find yourself in a tough spot.

If you’re eligible for cost-sharing subsidies because your income is below 250 percent of federal poverty level, you must choose a silver-tier plan in the exchange to get the subsidies. You won’t get the cost-sharing subsidies if you choose a health plan from any other tier, or if you shop outside of the exchange (premium subsidies are also only available in the exchange, but they can be used for plans at any metal level).

Cost-sharing subsidies lower your deductible, copays, and coinsurance so that you pay less when you use your health insurance. In effect, a cost-sharing subsidy increases the actuarial value of your health plan without raising the premium. It’s like getting a free upgrade on health insurance. You won’t get the free upgrade if you choose a platinum-tier plan.

Availability

Under the ACA, insurers that sell plans in the exchange are only required to offer coverage at the silver and gold levels. Platinum plans are much less popular than the other metal levels (platinum plans accounted for less than 1 percent of total exchange enrollment during the 2017 open enrollment period), and tend to have high costs for insurers, as the people likely to select them tend to be those with health conditions who anticipate significant utilization of healthcare during the year. 

Because of the low overall enrollment and high costs, insurers in some areas have stopped offering platinum plans. That means you may not be able to purchase a platinum plan at all, although gold plans will continue to be available.

Sources:

Department of Health and Human Services. Patient Protection and Affordable Care Act: Market Stabilization. April 2017.

Kaiser Family Foundation. 2017 Marketplace Plan Selections by Metal Level (November 1, 2016, to January 31, 2017).

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