Bronze Plans are the best? That seems counter intuitive? But my goodness was this the most important discovery of my first year as a broker.
The ACA did a lot for health insurance. One thing Obama wanted to do was “simplify the decisions for individuals”. The solution: rate each plan based on a tier. The tiers are Platinum, Gold, Silver, and Bronze. Platinum plans are the most robust plans. This means you will pay the least when you have medical needs. Often times they have a $0 deductible and you usually pay 10% in co-insurance when you do need medical attention.
Bronze plans offer the least coverage. You have a high deductible, often $5000 or so. This means you are paying for your health care needs as they arise (until you reach that $5000). And finally, when you do reach that deductible you still pay about 40% of your medical needs from there on out.
So how are bronze plans the best?
They have a much less expensive monthly cost.
You still have an out of pocket maximum, and when you reach it, your insurance pays the remaining medical costs you may have.
So take a look at this example.
My friend Q is deciding whether or not he should get the cheapest plan available to him, the Bronze PPO, or jump up to the Silver to get better coverage. He is covering himself and his wife, M.
Let’s say Q and M have a perfect year. They don’t need to see a single doctor or purchase a single drug. They will end up paying: $6,975 in yearly premiums for the bronze plan and $8,471 in yearly premiums for the Silver plan.
Bronze plan is better.
Now let’s say Q and M have a terrible, terrible year and have horrendous health problems. Q and M will still spend the same on monthly premiums, $6,975 for the bronze plan and $8,471 for the Silver plan. And they reach their out of pocket maximum. Meaning they paid for their portion of their medical expenses and still needed more medical help.
Bronze: $6,975 in yearly premiums + $13,100 in OOP max expenses = $19,975
Silver: $8,471 in yearly premiums + $13,600 in OOP max expenses = $22,071
So when does it make sense to select the silver plan? Somewhere in the middle, there is a section that shows how the Silver plan can be more effective. If Q and M have medical expenses between $8,000 and $40,000, the silver plan is a better choice...
So are the bronze plans always the best? No. But if you are healthy, you are going to want to choose the Bronze plan every time. It will cost you less during a healthy year. And even if you have the absolute worst year of health, you will you will likely pay less than if you went for a higher tier plan.