Reviewing the Four Health Insurance Categories

Choosing health insurance coverage for your employees is a difficult task, one that calls for careful consideration and thorough research. Your staff depends on you to put their best interests first, and this is a great opportunity for you to show them how much you value their hard work and contributions. As part of your company’s overall benefits package, your health insurance plan could also serve as a great selling point when attempting to attract thoughtful and talented new employees.

In order to help you find a healthcare plan that works for your business and meets your employees’ needs, we’ve created this brief primer about the four insurance categories that you’ll find in the marketplace.

Covered California for Small Business

The insurance offerings on the Covered California for Small Business marketplace (called the “SHOP Marketplace” on the federal exchange) are offered by private insurance companies and must provide care for pre-existing conditions. For 2017, the maximum out-of-pocket costs and deductibles are as follows:

• High-Deductible Health Plans (HDHP) Minimum Annual Deductibles
  • $1,300 for self-only coverage
  • $2,600 for family coverage
     
• Out-of-Pocket (OOP) Maximums
  • $6,550 for self-only coverage
  • $13,100 for family coverage
     
• Maximum Annual Health Savings Account (HSA) Contributions
  • $3,400 for self-only coverage
  • $6,750 for family coverage
     
• Annual OOP Maximums for Health Plans Other than HDHPs with HSAs
  • $7,150 for individual coverage
  • $14,300 for family coverage

In addition, Covered California plans are required to meet the following ten essential health benefits:

1. Ambulatory patient services (outpatient care you get without being admitted to a hospital)
2. Emergency services
3. Hospitalization (like surgery and overnight stays)
4. Pregnancy, maternity, and newborn care (both before and after birth)
5. Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
6. Prescription drugs
7. Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
8. Laboratory services
9. Preventive and wellness services and chronic disease management
10. Pediatric services, including dental and vision care (note that adult dental and vision coverage aren’t considered essential health benefits)

Plans must also include birth control and breastfeeding coverage. Lastly, plans may offer additional benefits such as dental coverage, vision coverage, and medical management programs.

Levels of Insurance, Named by Metal

The plans on the Covered California for Small Business marketplace are divided into four separate tiers, each of which bears the name of a particular metal. Please note that these levels have nothing to do with quality of care but rather are organized according to how costs are divided between insurance companies and employees.

• Bronze: The plan covers about 60% of the total costs of care, leaving the employee to pay about 40%. Bronze plans include the lowest premiums but the highest out-of-pocket costs in the event that your employee requires care. Deductibles can reach thousands annually, but this plan tier is a good option for healthy individuals who don’t have families and don’t have to worry as much about receiving routine care over the next year.
• Silver: The plan covers about 70% of the total costs of care, leaving the employee to pay about 30%. Silver plans include inexpensive premiums and somewhat higher out-of-pocket costs should your employee require care. Deductibles are typically lower than those in Bronze plans, but can still be quite expensive. Silver plans are good for moderately health individuals who feel that they will require minor routine care over the next year.
• Gold: The plan covers about 80% of the total costs of care, leaving the employee to pay about 20%. Gold plans include high premiums but lower out-of-pocket costs should the employee require care. Deductibles are typically lower than those in Silver plans, and Gold plans are good for older individuals or those who feel that they will likely require substantive care over the next year.
• Platinum: The plan covers about 90% of the total costs of care, leaving the employee to pay about 10%. Platinum plans include the highest premiums but the lowest out-of-pocket costs should your employee require care. However, now that we are in the fourth year of the Affordable Care Act, Platinum prices have become very expensive and are usually not a better value than a Gold plan, even for those individuals with substantial medical issues. Employers and consumers need to consider the trade-off of premium and out-of-pocket costs before committing to a Platinum plan.

In addition to the four plans listed previously, Minimum Coverage plans (called “Catastrophic Coverage” on the federal exchange) represents the fifth tier of care. Under Catastrophic plans, your employees will pay extremely low monthly premiums but have a very high deductible amount — $7,150. These plans, which protect against worse-case scenarios, work well for individuals who are under the age of 30 and who have a hardship exemption from the requirement to have health coverage.

Minimum Coverage covers three doctor visits or urgent care visits annually, including outpatient mental health or substance abuse visits) with no out-of-pocket costs and free preventive benefits.