ACA / Marketplace health plans

The metal tiers, and what they actually decide

Marketplace plans are sorted into Bronze, Silver, Gold and Platinum tiers. The tier does not describe the quality of care or the size of the network — it describes how the cost of care is split between you and the carrier across a typical population. Bronze plans put more of the cost on you at the point of care in exchange for a lower premium. Gold plans do the reverse.

The instinct is to choose Bronze because the monthly number is smaller. That instinct is right for a genuinely healthy household with savings to absorb a deductible, and wrong for almost everyone else. If you take medication, see specialists, or have a condition that produces claims, the higher-tier plan frequently wins on total annual cost even before you account for the peace of mind.

The subsidy nobody explains properly

There are two separate forms of help, and conflating them costs households real money every year. The first is the premium tax credit, which reduces your monthly premium and is available on any metal tier. The second is the cost-sharing reduction, which lowers your deductible, copays and out-of-pocket maximum — and is only available if you enroll in a Silver plan.

That second point is the single most valuable thing most people do not know about the Marketplace. A household eligible for cost-sharing reductions that enrolls in a Bronze plan to save on premium leaves the entire benefit on the table. The same household in a Silver plan can end up with a lower deductible than a Gold plan would have given them, at a lower premium.

Eligibility is driven by your projected household income for the coverage year relative to the federal poverty level for your household size. Because it is projected, it gets reconciled when you file taxes — estimate carefully, and tell the Marketplace when your income changes mid-year.

When you can enroll

Special Enrollment Periods are usually 60 days long and usually require documentation. They are also easy to miss: people spend the first month of a job loss dealing with everything else and discover the window when it has almost closed. If you know a change is coming, call before it happens rather than after.

1. Open Enrollment — typically November 1 to January 15, with a January 1 start date if you enroll by mid-December in most states.
2. Loss of other coverage — losing a job-based plan, ageing off a parent’s plan, or losing eligibility for Medicaid opens a 60-day Special Enrollment Period.
3. Household changes — marriage, divorce, birth, adoption, or a death in the household.
4. A permanent move to a new coverage area, provided you already had coverage.
5. Certain income changes and other qualifying circumstances defined by the Marketplace.

Retiring before 65

This is one of the most common reasons people call us about the Marketplace. If you retire at 62 or 63, you have two or three years to cover before Medicare eligibility, and the Marketplace is usually the answer. It is also a period where you have unusual control over your reported income — the mix of taxable withdrawals, Roth conversions and capital gains you choose directly affects the premium tax credit you receive.

We are not tax advisers and we will not pretend otherwise, but we will show you what your premium looks like at different income levels so you can have an informed conversation with whoever handles your taxes. For some households the difference between two withdrawal strategies is thousands of dollars a year in health premium.