The Affordable Care Act (ACA), also known as Obamacare, standardized the health benefits that all individual and small-group plans must cover. In the process, Obamacare also made it easier to compare health insurance plans by dividing them into four tiers. Plans are categorized into one of those tiers based on how the insurance company splits health care costs with you.
The four tiers of health insurance plans available on the market are named after metals — bronze, silver, gold, platinum — and so they are referred to as the metal tiers (or “metal levels”). The tiers differ based on how the cost of health care services are split between you and your insurer.
Bronze plans generally have the lowest premiums, but that’s because they require you to pay more out of pocket before your insurance starts paying for some of your medical expenses. Platinum plans usually have the highest premiums, but your insurance typically pays for more and may offer coverage for more health care services.
It’s important to know that these tiers don’t represent the quality of medical care that you receive. All plans need to cover the same 10 essential health benefits. You may even have access to the same network of doctors regardless of which tier your plan is in. The metal tiers only tell you how you will split health care costs with your insurance company. (See our study on where Obamacare plans cost the most.)
What is a metal tier?
If you don’t have employer-sponsored health insurance, you will need to purchase a health plan through the health insurance marketplace, also called the exchange.
Learn more about applying for health insurance and getting covered.
Marketplace health plans are divided into four categories based on how the insurance company splits your health care costs with you. The fours categories are called tiers and they are Bronze, Silver, Gold, and Platinum. Knowing the difference can help you find affordable health insurance.
The difference between metal tiers is how insurance companies split costs with consumers. Cost sharing is a necessary part of health insurance, because it helps both you and your insurer to afford the high cost of medical care. Each tier has an average cost split associated with it. The table below lists the average cost-sharing breakdown that consumers and insurers will pay.
What metal tier cost sharing means for you
The percentages in the table above are useful because they give you a quick way to compare health plans. Plans that require you to pay more of your own money (if you use medical services) probably aren’t the best option for someone who knows they will need to regularly visits the doctor, but they may be perfect for someone who is healthy and doesn’t expect to go to the doctor very much.
However, the cost-sharing percentages are not what you will actually pay for your health care. They’re based on the total average costs that an insurer will pay over the course of a year for covered services and benefits. (These percentages are called actuarial values. You can read more about them in the next section.)
The actual costs that you pay will depend on which health care services you use during the year and the details of your individual plan. Let’s say you have a Bronze plan, you go a whole year without getting needing medical care, and you only see your doctor for an annual physical. You will pay for less than 60% of your care over that year. On the other hand, an illness that requires major medical care and surgery could leave you paying for more than 60%. (For types of care that aren't covered by your health plan, such as vision and dental, you may need to purchase a supplemental health insurance plan.)
Learn more about the different types of health insurance.
How actuarial value works
Actuarial value is the percentage of the total average costs that a health insurance plan will pay for covered benefits throughout the year. These values are the percentages in the table above and as you compare health insurance plans, you will likely see these percentages again.
Obamacare required plans to begin categorizing themselves according to pre-set actuarial values: 60%, 70%, 80%, and 90%. This was part of the creation of the metal tiers and simply makes it easier for consumers to compare plans. Note that large group plans, like what you get through an employer, don’t have to adhere to the tiers, but do need to have an actuarial value of at least 60%.
Insurance companies calculate actuarial values by combining all the costs that a consumer could pay, including copays, deductibles, and coinsurance (more on all of these in the next section).
However, the actuarial value for a plan is just the average amount a consumer will pay. You could end up paying a higher or lower percentage of your total costs. Your actual spending will vary by plan and by which services you actually use during the year.
What you actually pay
The costs you actually pay for health insurance will depend on the details of your individual plan. In general there are five main costs you need to know about and they vary by plan. Make sure to check the details of your individual plan for these costs.
Your monthly premium is the amount you spend each month (or each year if you want to pay a lump sum annually) in order to keep insurance coverage with your plan. The size of your premium payments depends on your individual plan, but Bronze plans usually have the lowest premiums, followed by Silver plans, Gold plans, and Platinum plans.
In general, plans with lower premiums require you to pay the most out of pocket before insurance starts helping you cover medical bills.
A copay is a flat fee that you pay (out of pocket) each time you receive certain health care services. Your copays could be higher under Bronze plans as they generally require the most in overall out-of-pocket expenses. You may also have more situations that require you to make a copay.
Read more on what a copay is.
Your health insurance deductible is the amount you need to pay in out-of-pocket expenses before your insurance starts paying for some of your medical costs. So if your deductible is $1,500, that means you need to pay $1,500 before your insurer will start covering any of your insurance costs.
Bronze plans often have the highest deductible, requiring you to pay more before your insurer steps in to help. In some cases, the deductible for a Bronze plan could be nearly twice as high as the next tier, Silver. Deductibles for Platinum plans are often the lowest of the four tiers.
You can learn more here about deductibles.
Once you’ve hit your deductible, your insurance still won’t cover the full cost of your medical expenses. You will have to pay a certain percentage of the costs. That percentage is your coinsurance. So if you have coinsurance of 20%, which is common, then you will pay 20% of each medical bill after you hit your deductible (until you hit your out-of-pocket limit) and then your insurance will pay the other 80%. As with all the other costs we’ve mentioned, Bronze plans usually require you to pay the most.
Coinsurance is often confused with the cost-sharing breakdown of the metal tiers, but they aren’t the same. If you have a Bronze plan, which pays an average of 60% of consumers’ costs, that isn’t the same percentage as your coinsurance. The cost-sharing percentage of a metal tier factors in all of your out-of-pocket expenses, including copays, your deductible, and coinsurance.
For more of a breakdown, read this guide simple explainer on how coinsurance works.
Once you reach a certain threshold of health care spending, your insurance will take over and cover the rest of your medical costs for the year. This threshold is called your out-of-pocket maximum or limit. The highest possible out-of-pocket limit for an individual in 2019 is $7,900, and for family plans it is $15,800. Your limit may be higher with a Bronze plan.
Learn about your health insurance options.
Type of health insurance
Health insurance plans are defined by the types of services they cover. A preferred provider organization (PPO) plan, for example, may cover a lot more health expenses, but it could cost more than a health maintenance organization (HMO) plan, which offers less coverage.
Learn more about the difference between PPOs, HMOs and other types of health insurance plans.
How to sign up for a metal tier plan
To sign up for one of the metal tier plans, you have to wait until the next Open Enrollment period.
Open Enrollment is from Nov. 1 to Dec. 15 when you can sign up for a new health insurance plan through the marketplace or make changes to the plan you already have (including if you have a plan through your employer). Any plan you choose will then take effect starting in the next calendar year, on Jan. 1.
The only way you can get a new health insurance plan outside of open enrollment is if you qualify for Special Enrollment. In order to qualify, you have to experience a qualifying life event (QLE). A QLE is a major life change, like a marriage, the birth of a new child, or starting a new job.
Read more about Special Enrollment and who qualifies.
What if you can’t afford a health insurance plan
Most people need health insurance. If you enroll in a plan through the marketplace but you can’t afford to make the premium payments, there are a few options to consider:
Health insurance subsidies
Catastrophic health insurance plans
Medicare and Medicaid
A health insurance subsidy can help low-income individuals and families to afford insurance coverage that would otherwise be too expensive. Your household income needs to fall between 100% and 400% of the federal poverty level in order to qualify. Some subsidies only apply to plans in the Silver metal tier, but they give you a lower monthly premium, deductible, coinsurance, copays, and out-of-pocket maximum.
Catastrophic health insurance plans are available to those under age 30 and those who have experienced a financial hardship in the past year. Catastrophic care has historically been a way for people to avoid paying the Obamacare individual mandate penalty for not having health insurance, while paying a low premium. However, some Bronze plans will have lower premiums and offer more comprehensive coverage.
Once you hit 65, you’re eligible to use Medicare. Younger individuals with certain disabilities or illnesses may also qualify. Our guide to Medicare will help you understand whether or not you qualify for Medicare.
Medicaid is a health insurance program for low-income individuals and families. It’s partially state funded, so states have some control over who qualifies and how much aid they can receive. Our state-by-state guide to Medicaid will tell you all you need to know about eligibility and how to apply.