Difference between bronze silver gold platinum health plans

If you’re in the United States and buying your own health plan or enrolling in small group health coverage, you need to understand the metal-tier system. Under the Affordable Care Act, all individual and small group health plans with effective dates of 2014 or later have to fit into one of four categories: bronze, silver, gold, or platinum (there's an exception for catastrophic plans sold in the individual market).

The metal tier tells you the actuarial value of the health plan. It's a simple way of comparing the value of one health plan to another so you can tell which plan gives you the most bang for your buck. All health plans on the same metal tier have roughly the same actuarial value, although they can vary by a few percentage points.

This article will explain how the metal tier classification works and how you can use it to help you select the health plan that will best fit your needs.

What Does Actuarial Value Mean?

The actuarial value of a plan tells you what percentage of healthcare costs that health insurance plan is expected to pay for its beneficiaries.

A plan with an actuarial value of 60% is expected to pay approximately 60% of the healthcare costs of its beneficiaries. The plan’s beneficiaries will pay the other 40% of their healthcare costs in the form of deductibles, coinsurance, and copayments.

Actuarial value is calculated for the health plan as a whole (based on a projected "standard population") not for individual members. So, on average across all of a health plan’s subscribers, the actuarial value describes the percentage of healthcare expenses that will be paid by the plan.

However, the percentage of your healthcare expenses the plan pays will vary depending on how you use your health insurance.

Examples

For example, let’s say your health plan has an actuarial value of 80%, which means it's a gold plan. If you only use your health insurance once all year long, perhaps to visit an urgent care clinic for a case of the flu, you may even find that your health plan doesn’t pay anything at all toward your healthcare expenses that year.

If your health plan counts urgent care visits towards your deductible, you'd end up paying the urgent care bill yourself, with the amount you paid being credited towards your deductible (if your plan has copays for urgent care visits, you'd pay the copay and the health plan would pay the rest, but lab work might end up being counted towards your deductible instead). In this case, your health plan certainly didn’t pay for 80% of your healthcare expenses. You paid for 100% of your own healthcare expenses.

However, across the entire plan membership, individual cases like the example above would be balanced by cases in which the health plan paid the vast majority of a member's total bills.

For example, a person who is diagnosed with cancer and ends up with $400,000 in medical bills for the year will only pay at most $8,700 for in-network care in 2022 (that's the upper limit for in-network out-of-pocket costs for all non-grandfathered, non-grandmothered plans in 2022; it increases to $9,100 for 2023). The health insurance plan will pay the rest, which will amount to at least 98% of the bill. 

And some members who don't get sick at all during the year will benefit from the fact that ACA-compliant plans pay 100% of the bill for certain preventive care services like yearly physical exams and birth control. Those people didn’t pay anything toward their own healthcare expenses that year. 

When the expenses of all of the plan’s subscribers are totaled at the end of the year, a plan with an actuarial value of 80% can be expected to have paid roughly 80% of the healthcare expenses of all of its beneficiaries together (the calculation is based on a standard population, rather than a health plan's actual membership, so there can be some variation).

Actuarial value calculations don’t include health insurance premiums, out-of-network health care costs, or things the health plan doesn’t cover. For example, if your health insurance doesn’t cover weight loss surgery, the cost of weight loss surgery wouldn’t be included when coming up with the value of the health plan.

How Do Metal Tiers Relate to Actuarial Value?

• Bronze-tier health plans have an actuarial value of approximately 60%
• Silver-tier health plans have an actuarial value of approximately 70% (for people who qualify for cost-sharing reductions and who select a silver-tier plan, the actuarial value of the silver plan will end up being higher than 70%, and in some cases, higher than Gold or Platinum plans).
• Gold-tier health plans have an actuarial value of approximately 80%
• Platinum-tier health plans have an actuarial value of approximately 90%

By using the metal-tier system, people who don’t understand exactly how actuarial value works still understand intuitively that a gold-tier plan provides more benefits than a bronze-tier plan. But as described below, people with modest income who select a silver plan could end up getting gold or platinum level benefits, as a result of an ACA subsidy that reduces out-of-pocket costs and increases actuarial value.

Should I Choose Bronze, Silver, Gold, or Platinum?

Base your choice of metal tier on a balance of how much you’re willing to pay in premiums with how much coverage you need.

Higher value plans generally have higher premiums, but they pay a higher percentage of your healthcare expenses than lower-cost, lower-value plans. But in some cases, silver plans are now more expensive than gold plans, due to the way insurers have handled the fact that the federal government is no longer reimbursing them for the cost of cost-sharing reductions.

Each of the articles below includes sections on who should consider and who should avoid that particular metal tier. If you’re choosing a health plan, once you’ve determined the plan’s metal tier, make sure you’re not on the list of people who should avoid that tier:

• Bronze Plan
• Silver Plan
• Gold Plan
• Platinum Plan (note that many areas do not have Platinum plans available for people who buy their own health insurance in the individual market)

Your eligibility for government subsidies may influence your choice of metal tiers. If you’re eligible for a government cost-sharing subsidy (aka, cost-sharing reduction, or CSR) to help you pay for your deductibles, copays, and coinsurance, you won’t get the subsidy if you don't buy a Silver-tier health plan using your state’s health insurance exchange.

If you're eligible for a cost-sharing subsidy and you buy a Silver plan, you could end up getting coverage that's equivalent to a Gold or Platinum plan, for the price of a Silver plan. So it's important to pay attention to the details of each plan that's available, instead of just assuming that one metal level will be a better option than the others.

And in another counter-intuitive twist, premiums for gold plans in some areas, for some enrollees, are actually lower than premiums for silver plans. This is because the Trump administration stopped reimbursing insurance companies for the cost of CSR in late 2017, and insurers in most states have added the cost of CSR to silver plan premiums.

That results in much larger premium subsidies in some areas, and metal-level pricing that doesn't follow the expected patterns (i.e., higher metal tiers being more expensive). If you get a premium subsidy, you might find that a Gold plan is less expensive than a Silver plan, and you might find that a Bronze plan is very inexpensive or even free.

The American Rescue Plan has made it easier for people who are eligible for CSR to select a Silver plan instead of a less-expensive (sometimes free) Bronze plan. The law enhanced premium subsidies across all metal-level plans, and the Inflation Reduction Act extended that provision through 2025.

Why Not Just Pick the Cheapest?

Although all plans on a given tier will have the same actuarial value, they'll differ in other ways. Take those differences into account when choosing a plan, and pick a plan that works well for your situation.

For example, one gold plan might have a deductible of $1,500 and coinsurance of 15%. Another gold plan might have a lower deductible paired with higher coinsurance and prescription copays.

If you can’t afford to pay the larger deductible before your health insurance kicks in, you might choose the plan with the lower deductible even if it has slightly higher premiums. You know the actuarial value of all gold plans is roughly the same, so your choice is being made based on a more detailed look at how you're likely to use the plan during the year.

Another comparison point is the health plan’s network. Is your healthcare provider in-network with all of the health plans you’re comparing? Is each plan’s network of providers large enough to give you a good choice of providers if you decide you don’t like a particular practitioner or hospital and want to switch to another?

Prescription drug formularies (covered drug lists) will also vary from one insurer to another. So you may be looking at three different silver plans, but only one of them covers a particular drug that you're taking.

Does one plan offer you more freedom of choice than another? HMOs generally won’t pay for the care you get out-of-network. On the other hand, PPOs will cover for out-of-network care, but at a lower rate than if you had stayed in-network. PPOs aren't available in all areas, but when they are available, they tend to be among the more expensive options. Are you willing to pay higher premiums for a plan that allows you to get care out-of-network if you wish? Or would you rather give up that freedom of choice, but pay lower premiums? 

(One important note when we talk about PPOs: Depending on the plan, the out-of-network deductible might be so high that you still end up paying for your own out-of-network care. Don't just assume that a PPO will pay for your care no matter where you go.)

Are the quality scores for one plan much better than for a competing plan? Are the premiums for one plan significantly lower than for competing plans with similar quality scores?

If you plan to use your health insurance a lot, compare the out-of-pocket maximums of the plans. If one plan has a significantly lower out-of-pocket maximum than the other plans on the same tier, you might save money choosing the plan with the lower out-of-pocket maximum.

And if you're interested in saving money in a health savings account (HSA), make sure you select an HSA-qualified high-deductible health plan (HDHP). You'll need to be enrolled in an HDHP in order to make contributions to an HSA.

Summary

Under the Affordable Care Act, all individual and small group health plans with effective dates of 2014 or later are required to fall into one of four metal-level categories (there is a fifth category of catastrophic plans available to some enrollees in the individual market).

The metal levels—Bronze, Silver, Gold, and Platinum—are determined by a plan's actuarial value, which is a measure of the percentage of health care costs that the plan will pay for a standard population. Bronze plans have an actuarial value of roughly 60%; Silver plans roughly 70% (unless the plan is enhanced by cost-sharing reductions); Gold plans roughly 80%, and Platinum plans roughly 90%.

A Word From Verywell

If your employer buys coverage in the small group market, they may have picked just one plan for all employees, in which case you wouldn't have a choice of your coverage options. But if they offer you multiple choices, or if you buy your own health coverage (through the exchange or off-exchange), you'll want to understand what the metal-level designations mean.

In general, the higher up the metal-level scale you go, the more robust the health plan will be, but also the more expensive it will be in terms of monthly premiums. But there are some exceptions: Silver plans with cost-sharing reductions are often more robust than Gold or even Platinum plans, and in some areas, some Gold plans are less expensive than some Silver plans. So it's important to carefully consider the details whenever you're picking health coverage, rather than relying on general concepts.

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