Consumers turning to the new marketplaces created by the Affordable Care Act will find health insurance plans organized by "metal" tiers -- bronze, silver, gold and platinum -- that signal a new era of comparison shopping.
The system, which also includes a "catastrophic" tier, will help consumers "make rational comparisons" when choosing the insurance option that best suits their health and budget needs, says Michael Miller, director of strategic policy for Community Catalyst. "For a lot of people, the process of choosing a health plan has been more of a crapshoot than an analysis. Now they'll have more information."
Millions of Americans are expected to gain coverage through the state-based marketplaces, also known as "exchanges," that will begin selling policies in October with coverage effective Jan. 1, 2014. Most U.S. citizens who can afford coverage must purchase insurance or pay a penalty beginning in 2014. People with low and moderate incomes qualify for tax credits and subsidies to help cover the cost of plans sold in these marketplaces.
"The metal tiers provide consumers with a standard measurement so they can easily compare and understand which plans will offer more comprehensive coverage and cover a greater portion of their health care costs," says Lydia Mitts, a health policy analyst at Families USA.
Each category is assigned an "actuarial value," a term that which refers to the share of health care expenses the plan will cover, on average. "Bronze plans are less generous, meaning you'll pay more out of pocket. Platinum plans are more generous. They have a higher premium, but lower out of pocket costs," says JoAnn Volk, a senior research fellow at Georgetown University's Center on Health Insurance Reforms. Bronze plans in the state marketplaces, for example, will cover 60 percent of costs, on average, while platinum plans will cover 90 percent of health care costs.
While every case is different, here are some factors to consider when reviewing tiers and plans:
All plans will offer essential health benefits
Although the marketplaces will vary from state to state, all new health insurance policies sold in the individual and small group markets must provide a minimum level of coverage known as "essential health benefits" in 10 categories. These include prevention and wellness, ambulatory (outpatient) care, laboratory services, emergency care, hospitalization, maternity and newborn care, pediatric care (medical, dental and vision), mental health and substance use disorder services, prescription medications, rehabilitation and habilitation. "Consumers can shop with confidence knowing that all the plans have a comparable floor of benefits," says Mitts.
Look at your total estimated cost of care
Gerald Kominski, director of the UCLA Center for Health Policy Research, urges consumers to calculate their estimated total health care costs for the year. "In the past, people focused almost exclusively on the premium," he said. "But to make an informed choice, you also need to focus on your out-of-pocket liability. People are going to make trade offs. Maybe the plan that is right for you requires a higher monthly premium, but has lower out of pocket expenses."
Carefully review the network of providers
Check out the network of doctors and hospitals available in each of the tiers to ensure that you have access to the resources you need, especially if you are tackling a chronic condition (such as asthma, diabetes, high blood pressure, or congestive heart failure) that involves a variety of specialists, says Volk. Typically, plans with higher premiums, such as those found in the platinum and gold tiers, will have a broader network. You may need to decide between "access and budget," says Miller, when choosing a provider network.
Tap into tax credits and subsidies on the silver tier