What Is a Silver Plan Under the Affordable Health Care Act?

A Silver Plan Offers 70 Percent Actuarial Value

Open Enrollment Begins For Third Year Of Affordable Care Act
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A silver health plan pays, on average, 70 percent of your health care expenses. You pay the other 30 percent of your health care expenses in the form of copayments, coinsurance and deductibles.

 

This is also known as having a 70 percent actuarial value, or AV. This doesn't mean that you, personally, will get 70 percent of your health care costs paid by your silver plan. Rather, the plan pays 70 percent of the average costs for a standard population.

But they'll pay a far lower percentage of total costs for a healthy enrollee with very little healthcare utilization, while they'll end up paying for more than 70 percent of total costs for a very sick enrollee who racks up a million dollars in claims. 

Non-covered health care expenses don’t count when determining a health plan’s value. For example, if your silver-tier health plan doesn’t provide coverage for over-the-counter medicines, the cost of them isn’t included when calculating your plan’s value.

The Affordable Care Act's Standardized Value Levels

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 value levels for health plans in the individual and small group markets. These levels, or tiers, are:

  • bronze
  • silver
  • gold
  • platinum

All of the health plans within a given level offer the same overall value:

  • Silver-tier plans offer a 70 percent actuarial value (range of 68 to 72 percent).
  • Bronze plans offer a 60 percent actuarial value (range of 58 to 62 percent).
  • Gold plans offer an 80 percent actuarial value (range of 78 to 82 percent).
  • Platinum plans offer a 90 percent actuarial value (range of 88 to 92 percent)

    What Will I Have to Pay With a Silver Plan?

    Silver plan premiums tend to be less expensive than gold or platinum-tier plans since silver plans expect to pay out less toward your health care bills.

    In addition to your monthly premiums, each time you use your health insurance, you’ll have to pay cost-sharing like deductibles, coinsurance and copays.

    How each silver plan makes you pay your share of the costs will vary. For example, one silver plan might have a $4000 deductible paired with a 20 percent coinsurance. A competing silver plan might have a lower $2000 deductible, but pair it with a higher coinsurance and a $40 copay for prescriptions.

    Why Should I Choose a Silver Plan?

    Choose a silver health plan if you:

    • are looking to balance the cost of your monthly premiums with the cost of your out-of-pocket expenses 
    • want to avoid the high premium costs of gold and platinum plans, but also want to protect yourself from the possibility of having to pay the higher deductibles that generally come with bronze plans,
    • are eligible for cost-sharing subsidies, because you must choose a silver-tier plan to get the subsidies. This is one of the most important reasons to pick a silver plan. If your income doesn't exceed 250 percent of the poverty level (and particularly if it doesn't exceed 200 percent of the poverty level), a silver plan with cost-sharing subsidies will likely be the best value for you.

    Cost-sharing subsidies reduce your deductible, copays, coinsurance, and out-of-pocket maximum, so that you pay less when you use your health insurance. They increase the actuarial value of your health plan without raising the premium. 

    Why Should I Avoid a Silver Pan?

    You shouldn’t choose a silver health plan if:

    • You know that you'll incur significant medical expenses during the year and determine that gold or platinum plan with a lower out-of-pocket maximum will save you money, even when accounting for the higher premiums.
    • You’re trying to limit your expenses each time you use your health insurance - again, a gold or platinum plan might be a better option.
    • If you use your health insurance a lot and know in advance your out-of-pocket expenses will exceed the out-of-pocket maximum, you might be able to save money by choosing a bronze-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. 
    • You don't qualify for cost-sharing subsidies and anticipate very little in health care costs during the coming year. A bronze plan might be your best option, as it will have lower premiums than a silver plan, in trade for less robust-coverage.

    You can read more about how this technique works in, “How To Save on Health Insurance if You Reach the Out-Of-Pocket Maximum.”

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