Silver or gold? If given the option, which would you choose? You’d probably be tempted to immediately answer gold. But when it comes to group health insurance, it’s not that easy. It turns out that the group health plans known as “Silver plans” are far more popular than “Gold plans.” So when is it worth it to go for gold?
The ACA Marketplace
The Affordable Care Act, otherwise known as the ACA or Obamacare, was signed into law in 2010. It mandated that health insurance exchanges be created in each state. It changed the way insurance worked. People can now go to this “marketplace” and shop for the plan that is right for them, choosing between different metal tiers of coverage (Bronze, Silver, Gold, and Platinum).
Under the ACA, small employers (businesses with 1- 50 employees) can also benefit from this marketplace. In the past, it could be challenging for small business owners to find multiple options for group insurance. But now they can shop around to choose between the same metal tiers as individuals can.
What is a “Metal Tier”?
Just like with individual plans, the metal tier options available to small businesses are Bronze, Silver, Gold, and Platinum. While it may sound like it, the different tiers do not indicate different levels of care.. After all, under the ACA, all plans must cover at least the 10 essential health benefits. What the metal tier actually represents is the cost-sharing split between the employee and the insurance company, meaning how much they will pay versus how much the insurance company will pay for medical care.
Employees with Bronze plans will pay the lowest monthly premiums, while those with Platinum plans will pay the highest premiums. However, premiums are not the only cost to consider: there are cost-sharing requirements, as well, including:
- Deductibles – the amount you need to pay for medical care before insurance “kicks in”
- Coinsurance – the percentage the insurance company will pay for services after you have met your deductible
- Copays – the amount of money you are responsible for, over and above what your insurance company pays – for example, it may cost you a flat copay of $35 to visit your doctor
Because Bronze plans are the lowest tier and have the lowest monthly premiums, they have the highest cost-sharing requirements, while Platinum plans, on the other hand, have the lowest out-of-pocket costs. The cost of premiums and these cost-sharing requirements varies between the metal tiers: for example, with a Bronze plan, employees will pay 40% of costs (with the insurance company paying 60%), while with a Platinum plan, the split is 10% / 90%. That being said, there is an out-of-pocket limit for every plan, which for 2020 is $8,200 for individuals and $16,400 for families. The out-of-pocket limit varies and will probably be highest for those with Bronze plans.
Silver Versus Gold Plans
The most popular plan among employers is the Silver plan, around 50% of employers choose this type of plan. Coming in second is the Gold plan, with almost 30% of employers choosing that type of plan. Leaving out Bronze plans with their high out-of-pocket costs, and Platinum plans, with their high premiums, let’s look at Silver and Gold plans.
With a Silver plan, employees will pay 30% of costs, and with a Gold plan they will pay 20%. These numbers are really dependent on how much healthcare they need throughout the year. For example, if an employee only uses their plan to see the doctor for an annual visit plus one or two other minor visits, they will be paying far less than 20% or 30%. But if they end up with a serious illness and need hospitalization or long-term care, they will be paying far more.
It is understandable, then, that many employers choose Silver plans as a one-size-fits-all option. The premiums are lower, and you might be banking on an able-bodied, working-age group of employees who will use medical services an “average” amount. In this case, the 30% cost sharing doesn’t seem too daunting.
When to Go for Gold
If lower monthly premiums are important to you as a small business owner in order to attract employees, then Silver may be the way to go. But when is Gold worth it?
Simply stated, a Gold plan is worth it for people who expect to use their health insurance. They are perfect for people with (or who have dependents with) chronic conditions or are in higher risk categories for things like the flu – or even those with very young children or children who play sports.
Remember, because of HIPAA (Health Insurance and Portability Act), you cannot directly ask employees about any specific health conditions they may have. You can, however, send out an anonymous survey and ask your employees what they are looking for generally in a healthcare plan. You may find that they are willing to pay more for premiums in order to lower their out-of-pocket costs. If they are worried about being faced with high bills when they need care, then a gold plan might be the right option.
Remember, if you are at a loss at where to begin in choosing group health insurance, EZ.Insure can help. You can start by simply entering your zip code in the bar above to get a quote, or you can contact us by email at Replies@Ez.Insure or call 888-998-2027.