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Submitted by: Dennis Jarvis
Why Does the Silver Exchange Plan Matter?
Jan 1st 2014 will mark the era of the Metallics. It’s not some futuristic forecast of shiny doom but a reflection of the new Exchange health plans that will be available to everyone effective as of that date. There is a Platinum, Gold, Silver, and Bronze option available in the Exchange. What do these names reflect in terms of level of benefit and why is the Silver specifically important to the California health insurance market.
Here comes the Insurance Terms!
First, what’s the difference between the four levels? According to health reform, each State will choose a baseline health plan. California decided on the Kaiser $30 copay no-deductible small group plan as their baseline. Based on this, there will be four core plans (and a more catastrophic plan for younger people) designed on “actuarial value”. This is one of those lovely insurance terms that even people well versed in California health insurance have a difficult time explaining. Actuarial value. What is that? Basically, it’s an approximation of benefit level according to how a plan might pay out for health claims. The platinum was given a 90% actuarial value of the Kaiser $30 copay plan mentioned above. This means that it is expected to pay out 90% of the claims that the Kaiser plan would pay out. The member would then pay out 10% more than what a member on the Kaiser plan would pay as an example. Since the Kaiser plan is a no-deductible, $30 copay plan, what does 90% really mean? Great question and all the carriers will have slightly different takes on this question. Our guess is that probably a $250-500 deductible with a slightly higher max out of pocket. We should start to see the carrier’s approximations of this AV by summer of 2013.
So what about the other Metallic plans?
Gold will have an 80% actuarial value (maybe $500-1000 deductible, etc). Silver will have a 70% actuarial value (maybe $1500-2500 deductible, etc). Bronze will have a 70% actuarial value (maybe $3000-4000 deductible, etc). There can also be differences in other other benefits such as doctor copays, prescription coverage, coinsurance, and max out of pocket but a lot of what must be included (Essential health benefits) is mandated by the law. For example, all plans will cover maternity. Our estimate is that most of these differences will be mute and the vast majority of enrollee in an exchange plan will go with the Silver option and here’s why.
Have Silver, will subsidize.
As the law is currently interpreted, only the Silver plan enrollees will be able to receive a health insurance subsidy and this is critical. If you make between 133% and 400% of poverty, there are different levels of subsidies you can receive immediately to offset the cost of California health insurance. As you go lower down the scale, these subsidies become very large with a family of four making 150% of poverty receiving in excess of $1000 monthly. Our belief is that the only reason you would buy a plan in the Exchange (rather than plans available outside) is due to the subsidy and since only the Silver plan is eligible, the majority of enrollees will indeed be on the Silver plan. The reason for this is eligible for it’s own article but it should bare out. For this reason, the Bronze and Silver will be the go to Exchange plans and of course, you will be able to quote it here at calhealth.net
About the Author: Dennis Jarvis is a licensed agent for
Health insurance in California
with extensive knowledge of the Individual California health market. More info on the
Why the California Silver Exchange Plan Matters
Source:
isnare.com
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