Why is Gold plan cheaper?

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theplayer11
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Why is Gold plan cheaper?

Post by theplayer11 »

These 2 plans are on my state exchange. Both HMOs, same network, same Drs and hospitals.

Gold costs $1,158/mth(2 people)
Silver costs $1,167

Gold:
Ded-$2,500, $5k family
Max out of pocket - $5k, 10K
Hospital visit - only ded applies
ER-$350
outpatient - 0% after ded

Silver:(2nd lowest silver plan)
Ded $3,900, $7,800 family
Max-$7,850, $15,700
Hosp-35% after ded
ER-35% after ded
outpatient 35% after ded

To add to the confusion, my wife has received unemployment this year so we will qualify for max tax credits($1,167) and cost sharing reductions. I realize we must choose a silver plan for the cost sharing, but I don't know the specifics of the savings if we choose the silver.
opinions?
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Artful Dodger
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Re: Why is Gold plan cheaper?

Post by Artful Dodger »

Are they different companies?

You would still get cost sharing. It is based on the 2nd lowest cost silver plan, but would apply to all metallic levels.
mkc
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Re: Why is Gold plan cheaper?

Post by mkc »

It's called "silver loading". Basically, since assistance is based off the cost of a silver plan, insurance companies price Cost Sharing Reductions only into the silver plans.

https://www.verywellhealth.com/silver-l ... ms-4174119

The premium credits now apply across any metal level, but are still based of the cost of the second-lowest cost silver plan.

Your credit is $500 and a Bronze plan costs $475 without premium credit? You pay nothing (but you don't get the extra $25 left on the table)

Your credit is $500 and a Gold plan costs $1000? You pay $500.

Your credit is $500 and a Silver plan costs $800? You pay $300.
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theplayer11
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Re: Why is Gold plan cheaper?

Post by theplayer11 »

Artful Dodger wrote: Thu Apr 08, 2021 8:20 am Are they different companies?

You would still get cost sharing. It is based on the 2nd lowest cost silver plan, but would apply to all metallic levels.
yes same company. I thought cost sharing reductions were only for silver plans?
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theplayer11
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Re: Why is Gold plan cheaper?

Post by theplayer11 »

mkc wrote: Thu Apr 08, 2021 9:03 am It's called "silver loading". Basically, since assistance is based off the cost of a silver plan, insurance companies price Cost Sharing Reductions only into the silver plans.

https://www.verywellhealth.com/silver-l ... ms-4174119

The premium credits now apply across any metal level, but are still based of the cost of the second-lowest cost silver plan.

Your credit is $500 and a Bronze plan costs $475 without premium credit? You pay nothing (but you don't get the extra $25 left on the table)

Your credit is $500 and a Gold plan costs $1000? You pay $500.

Your credit is $500 and a Silver plan costs $800? You pay $300.
How do you figure out what the cost sharing reductions are? is there formula? if someone is unemployed I think I read they will get the maximum cost sharing reductions, but I don’t know what that is.
If the silver plan has a $5000 deductible what will the maximum cost sharing reduction lower that to?
I’m just trying to figure out if the silver plan with Cost sharing it’s a better deal than the gold plan.
I currently have bronze HSA plan I will be losing approximately $1700 in tax savings if I don’t go with the HSA.
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MP123
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Re: Why is Gold plan cheaper?

Post by MP123 »

CSRs are built right into the plan. It looks to me like the Silver plan you list above has no CSR since the Max OOP and deductible are so high. Usually an exchange won't show plans with CSR unless you're eligible, so with all the recent changes you might not be seeing them yet. You might contact the exchange and see what a Silver plan with full CSR would look like, otherwise I think you're comparing Gold to Silver without the CSR.

A Silver plan with CSR will cover much more of your medical costs than a Gold plan. Of course if you have no medical costs this isn't saving you anything. Giving up the HSA deduction would be a negative too.

First be sure you get the right details on the Silver plan to compare.
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theplayer11
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Re: Why is Gold plan cheaper?

Post by theplayer11 »

MP123 wrote: Thu Apr 08, 2021 11:08 am CSRs are built right into the plan. It looks to me like the Silver plan you list above has no CSR since the Max OOP and deductible are so high. Usually an exchange won't show plans with CSR unless you're eligible, so with all the recent changes you might not be seeing them yet. You might contact the exchange and see what a Silver plan with full CSR would look like, otherwise I think you're comparing Gold to Silver without the CSR.

A Silver plan with CSR will cover much more of your medical costs than a Gold plan. Of course if you have no medical costs this isn't saving you anything. Giving up the HSA deduction would be a negative too.

First be sure you get the right details on the Silver plan to compare.
The exchange shows about 15 plans and they are not showing any tax credits or csr as our income is too high. My wife having unemployment will change that but not sure when the exchange will update or maybe even have to wait until next year’s tax return.
Having said that the gold plan still looks much better and is a few dollars cheaper that’s what I don’t understand. that’s without any tax credits or CSR.
Last edited by theplayer11 on Thu Apr 08, 2021 1:17 pm, edited 2 times in total.
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MP123
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Re: Why is Gold plan cheaper?

Post by MP123 »

theplayer11 wrote: Thu Apr 08, 2021 11:40 am
MP123 wrote: Thu Apr 08, 2021 11:08 am CSRs are built right into the plan. It looks to me like the Silver plan you list above has no CSR since the Max OOP and deductible are so high. Usually an exchange won't show plans with CSR unless you're eligible, so with all the recent changes you might not be seeing them yet. You might contact the exchange and see what a Silver plan with full CSR would look like, otherwise I think you're comparing Gold to Silver without the CSR.

A Silver plan with CSR will cover much more of your medical costs than a Gold plan. Of course if you have no medical costs this isn't saving you anything. Giving up the HSA deduction would be a negative too.

First be sure you get the right details on the Silver plan to compare.
The exchange shows about 15 plans and they are not showing any tax credits or csr as our income is too high. My wife beater unemployment will change that but not sure when the exchange will update or maybe even have to wait until next year’s tax return.
Having said that the gold plan still looks much better and is a few dollars cheaper that’s what I don’t understand. that’s without any tax credits are CSR.
My rough guess is that the above Silver plan with full CSR would have a $300 deductible and a $500 max oop along with cheaper co-pay and Dr visits. This would be a much "better" plan if you had significant medical costs. But if you didn't then you really aren't benefiting from the CSR.

All Silver plans have a higher premium to support this reduction in max oop for those that get the CSR. Most likely they would be getting a large PTC that would eliminate the premium anyway so the increased cost isn't an issue to them. But it does mean that the Silver plan without CSR isn't a particularly good deal for other people.

Premium tax credits are pretty easy to evaluate, but the benefit/value of CSR is much harder because it depends on your use of the plan.
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theplayer11
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Re: Why is Gold plan cheaper?

Post by theplayer11 »

MP123 wrote: Thu Apr 08, 2021 11:56 am
theplayer11 wrote: Thu Apr 08, 2021 11:40 am
MP123 wrote: Thu Apr 08, 2021 11:08 am CSRs are built right into the plan. It looks to me like the Silver plan you list above has no CSR since the Max OOP and deductible are so high. Usually an exchange won't show plans with CSR unless you're eligible, so with all the recent changes you might not be seeing them yet. You might contact the exchange and see what a Silver plan with full CSR would look like, otherwise I think you're comparing Gold to Silver without the CSR.

A Silver plan with CSR will cover much more of your medical costs than a Gold plan. Of course if you have no medical costs this isn't saving you anything. Giving up the HSA deduction would be a negative too.

First be sure you get the right details on the Silver plan to compare.
The exchange shows about 15 plans and they are not showing any tax credits or csr as our income is too high. My wife beater unemployment will change that but not sure when the exchange will update or maybe even have to wait until next year’s tax return.
Having said that the gold plan still looks much better and is a few dollars cheaper that’s what I don’t understand. that’s without any tax credits are CSR.
My rough guess is that the above Silver plan with full CSR would have a $300 deductible and a $500 max oop along with cheaper co-pay and Dr visits. This would be a much "better" plan if you had significant medical costs. But if you didn't then you really aren't benefiting from the CSR.

All Silver plans have a higher premium to support this reduction in max oop for those that get the CSR. Most likely they would be getting a large PTC that would eliminate the premium anyway so the increased cost isn't an issue to them. But it does mean that the Silver plan without CSR isn't a particularly good deal for other people.

Premium tax credits are pretty easy to evaluate, but the benefit/value of CSR is much harder because it depends on your use of the plan.
Thanks, I get it now. ..and if we don't have any medical expenses the rest of the year, then we would have been better off keeping the bronze HSA and saving about $1,700 in taxes on the $8,100 contribution.
I'm leaning toward the silver plan with the CSR(didn't realize they would be so substantial), but not sure I have confidence in my state exchange that they will update the pricing on our account with my wife having unemployment income this year. She is not the account holder on the policy, listed as a dependent..but from what I've read that shouldn't matter.
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Re: Why is Gold plan cheaper?

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theplayer11 wrote: Thu Apr 08, 2021 10:09 am
mkc wrote: Thu Apr 08, 2021 9:03 am It's called "silver loading". Basically, since assistance is based off the cost of a silver plan, insurance companies price Cost Sharing Reductions only into the silver plans.

https://www.verywellhealth.com/silver-l ... ms-4174119

The premium credits now apply across any metal level, but are still based of the cost of the second-lowest cost silver plan.

Your credit is $500 and a Bronze plan costs $475 without premium credit? You pay nothing (but you don't get the extra $25 left on the table)

Your credit is $500 and a Gold plan costs $1000? You pay $500.

Your credit is $500 and a Silver plan costs $800? You pay $300.
How do you figure out what the cost sharing reductions are? is there formula?
Start here for an estimate https://www.kff.org/interactive/subsidy-calculator/

Once you put your estimated AGI into healthcare.gov (or your state's exchange if you have one), your premium credit should show you your net cost for each of the plans available to you.
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theplayer11
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Re: Why is Gold plan cheaper?

Post by theplayer11 »

mkc wrote: Thu Apr 08, 2021 2:08 pm
theplayer11 wrote: Thu Apr 08, 2021 10:09 am
mkc wrote: Thu Apr 08, 2021 9:03 am It's called "silver loading". Basically, since assistance is based off the cost of a silver plan, insurance companies price Cost Sharing Reductions only into the silver plans.

https://www.verywellhealth.com/silver-l ... ms-4174119

The premium credits now apply across any metal level, but are still based of the cost of the second-lowest cost silver plan.

Your credit is $500 and a Bronze plan costs $475 without premium credit? You pay nothing (but you don't get the extra $25 left on the table)

Your credit is $500 and a Gold plan costs $1000? You pay $500.

Your credit is $500 and a Silver plan costs $800? You pay $300.
How do you figure out what the cost sharing reductions are? is there formula?
Start here for an estimate https://www.kff.org/interactive/subsidy-calculator/

Once you put your estimated AGI into healthcare.gov (or your state's exchange if you have one), your premium credit should show you your net cost for each of the plans available to you.
thanks, shows actuarial value of 94% with out of pocket max of $5,750 for the 2 of us.
2nd lowest silver plan costs $14k a year. Not sure how the 94% relates to the $5,750.
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Re: Why is Gold plan cheaper?

Post by mkc »

theplayer11 wrote: Thu Apr 08, 2021 5:24 pm
mkc wrote: Thu Apr 08, 2021 2:08 pm
theplayer11 wrote: Thu Apr 08, 2021 10:09 am
mkc wrote: Thu Apr 08, 2021 9:03 am It's called "silver loading". Basically, since assistance is based off the cost of a silver plan, insurance companies price Cost Sharing Reductions only into the silver plans.

https://www.verywellhealth.com/silver-l ... ms-4174119

The premium credits now apply across any metal level, but are still based of the cost of the second-lowest cost silver plan.

Your credit is $500 and a Bronze plan costs $475 without premium credit? You pay nothing (but you don't get the extra $25 left on the table)

Your credit is $500 and a Gold plan costs $1000? You pay $500.

Your credit is $500 and a Silver plan costs $800? You pay $300.
How do you figure out what the cost sharing reductions are? is there formula?
Start here for an estimate https://www.kff.org/interactive/subsidy-calculator/

Once you put your estimated AGI into healthcare.gov (or your state's exchange if you have one), your premium credit should show you your net cost for each of the plans available to you.
thanks, shows actuarial value of 94% with out of pocket max of $5,750 for the 2 of us.
2nd lowest silver plan costs $14k a year. Not sure how the 94% relates to the $5,750.
The credits are calculated so that you pay no more than 8.5% AGI for the second-lowest-cost silver plan. So your calculated credit is the difference of SLCSP minus 8.5% of your AGI.

If the SLSCP for your zip code, ages, and people covered is $20K per year, and 8.5% of your AGI for 2021 is $7K, your credit is $13K.

That credit is usable across all medal plans. If your plan costs less than the credit, you pay nothing but don't get the difference. If your plan costs more than the credit, you pay the amount above the credit.

Not sure what you mean by 94% actuarial value related to the KFF calculator.
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MP123
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Re: Why is Gold plan cheaper?

Post by MP123 »

The 94% actuarial value is for a Silver plan with full cost sharing reductions. That's because the deductible and max oop for such a plan are so low that the plan will pay 94% of your costs on average. A Bronze plan pays 60% for comparison.

The KFF calculator is great for figuring premium tax credits, but it can't show cost saving reductions because the same premium applies to plans with and without CSR. It's just that the CSR plan will have lower deductible and max oop, if your income qualifies.

Premium tax credits are money in your pocket in the form of a tax credit. Cost sharing reductions are a reduction of your potential out of pocket medical expenses. Very different things.
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theplayer11
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Re: Why is Gold plan cheaper?

Post by theplayer11 »

MP123 wrote: Thu Apr 08, 2021 10:56 pm The 94% actuarial value is for a Silver plan with full cost sharing reductions. That's because the deductible and max oop for such a plan are so low that the plan will pay 94% of your costs on average. A Bronze plan pays 60% for comparison.

The KFF calculator is great for figuring premium tax credits, but it can't show cost saving reductions because the same premium applies to plans with and without CSR. It's just that the CSR plan will have lower deductible and max oop, if your income qualifies.

Premium tax credits are money in your pocket in the form of a tax credit. Cost sharing reductions are a reduction of your potential out of pocket medical expenses. Very different things.
MP123..so in my situation with my wife receiving some unemployment benefits this year, it makes sense to switch to the 2nd lowest silver plan over any gold plan? We should be getting the max csr and max tax credits. We will lose the HSA tax savings, but HSA account is well funded and I believe the risk/reward favors the silver plan.
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MP123
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Re: Why is Gold plan cheaper?

Post by MP123 »

theplayer11 wrote: Fri Apr 09, 2021 6:00 am
MP123 wrote: Thu Apr 08, 2021 10:56 pm The 94% actuarial value is for a Silver plan with full cost sharing reductions. That's because the deductible and max oop for such a plan are so low that the plan will pay 94% of your costs on average. A Bronze plan pays 60% for comparison.

The KFF calculator is great for figuring premium tax credits, but it can't show cost saving reductions because the same premium applies to plans with and without CSR. It's just that the CSR plan will have lower deductible and max oop, if your income qualifies.

Premium tax credits are money in your pocket in the form of a tax credit. Cost sharing reductions are a reduction of your potential out of pocket medical expenses. Very different things.
MP123..so in my situation with my wife receiving some unemployment benefits this year, it makes sense to switch to the 2nd lowest silver plan over any gold plan? We should be getting the max csr and max tax credits. We will lose the HSA tax savings, but HSA account is well funded and I believe the risk/reward favors the silver plan.
My understanding is that her unemployment benefits would allow you to treat your joint income as being 133% of FPL for ACA purposes. This was in the American Rescue Plan Act and is in the process of being implemented.

In that case, if you selected the second lowest cost Silver plan and qualified for cost sharing reductions (it sounds like you would) then you'd be getting essentially free health insurance with a very low out of pocket for the rest of this year. The CSR would make the Silver plan much better than a Gold plan. You could also go with a Bronze plan and have money left over from the premium tax credit that would reduce your tax bill, but your potential out of pocket would be much higher because you couldn't get the CSR.

I'm not sure how any medical payments made earlier this year would apply to the new lower Silver CSR deductible though.

Also, assuming you had HDHP coverage earlier this year, you could make at least a partial HSA contribution for those months even if you switch to the Silver CSR plan for the rest of the year.
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Re: Why is Gold plan cheaper?

Post by GTBuzz »

MP123 wrote: Fri Apr 09, 2021 11:14 am You could also go with a Bronze plan and have money left over from the premium tax credit that would reduce your tax bill, but your potential out of pocket would be much higher because you couldn't get the CSR.
I'm pretty sure this is not correct. If you change plans during the year, tax credits get reconciled month-by-month on IRS Form 8962, and the tax credit you actually get is limited to the premium of the plan you were actually enrolled in. Therefore, you cannot capture any excess subsidy you are eligible for by buying a plan that is cheaper.

AFAIK, the only way to effectively get a net-negative premium plan is to buy a $0 plan and hope that the health insurer has to pay out Medical Loss Ratio rebates (which a lot of them will for the next few years based on 2020 results).
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theplayer11
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Re: Why is Gold plan cheaper?

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MP123 wrote: Fri Apr 09, 2021 11:14 am
theplayer11 wrote: Fri Apr 09, 2021 6:00 am
MP123 wrote: Thu Apr 08, 2021 10:56 pm The 94% actuarial value is for a Silver plan with full cost sharing reductions. That's because the deductible and max oop for such a plan are so low that the plan will pay 94% of your costs on average. A Bronze plan pays 60% for comparison.

The KFF calculator is great for figuring premium tax credits, but it can't show cost saving reductions because the same premium applies to plans with and without CSR. It's just that the CSR plan will have lower deductible and max oop, if your income qualifies.

Premium tax credits are money in your pocket in the form of a tax credit. Cost sharing reductions are a reduction of your potential out of pocket medical expenses. Very different things.
MP123..so in my situation with my wife receiving some unemployment benefits this year, it makes sense to switch to the 2nd lowest silver plan over any gold plan? We should be getting the max csr and max tax credits. We will lose the HSA tax savings, but HSA account is well funded and I believe the risk/reward favors the silver plan.
My understanding is that her unemployment benefits would allow you to treat your joint income as being 133% of FPL for ACA purposes. This was in the American Rescue Plan Act and is in the process of being implemented.

In that case, if you selected the second lowest cost Silver plan and qualified for cost sharing reductions (it sounds like you would) then you'd be getting essentially free health insurance with a very low out of pocket for the rest of this year. The CSR would make the Silver plan much better than a Gold plan. You could also go with a Bronze plan and have money left over from the premium tax credit that would reduce your tax bill, but your potential out of pocket would be much higher because you couldn't get the CSR.

I'm not sure how any medical payments made earlier this year would apply to the new lower Silver CSR deductible though.

Also, assuming you had HDHP coverage earlier this year, you could make at least a partial HSA contribution for those months even if you switch to the Silver CSR plan for the rest of the year.
are you saying I could pocket the difference between the bronze and silver plans for the rest of the year on next tax return? Currently paying $787/mth, 2nd lowest silver plan is $1,195.
Partial HSA contribution , good call.
We haven’t used any deductible this year so far.
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MP123
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Re: Why is Gold plan cheaper?

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theplayer11 wrote: Fri Apr 09, 2021 11:34 am are you saying I could pocket the difference between the bronze and silver plans for the rest of the year on next tax return?
Yes, you would pocket the difference when you file your 2021 return.

At 133% of federal poverty level you are expected to pay 0% of your income towards health insurance for 2021. So you'd get a PTC for $1195.

You could use that to get the Silver plan with CSR which would be free because it costs $1195. Or you could get the Bronze plan for $787 and get the difference back when you reconcile on your taxes. I don't really see any reason why you'd want to consider the Gold plan in this situation.

And the only reason to get the Silver CSR plan would be if you expect high medical bills for the rest of this year, then the CSR would save you money.
Last edited by MP123 on Fri Apr 09, 2021 1:09 pm, edited 1 time in total.
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Re: Why is Gold plan cheaper?

Post by GTBuzz »

MP123, can you clarify how IRS Form 8962 would allow OP to get the difference back on their taxes? I'd hate for them to rely on advice that is not correct, only for them to find out when it's too late.
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Re: Why is Gold plan cheaper?

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GTBuzz wrote: Fri Apr 09, 2021 12:05 pm MP123, can you clarify how IRS Form 8962 would allow OP to get the difference back on their taxes? I'd hate for them to rely on advice that is not correct, only for them to find out when it's too late.
Good catch, thank you.

It appears that 8962 will limit the monthly PTC in column e of Part 2 to the lower of the actual premium or the maximum PTC.

I'll edit my above post.
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theplayer11
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Re: Why is Gold plan cheaper?

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MP123 wrote: Fri Apr 09, 2021 11:59 am
theplayer11 wrote: Fri Apr 09, 2021 11:34 am are you saying I could pocket the difference between the bronze and silver plans for the rest of the year on next tax return?
Yes, you would pocket the difference when you file your 2021 return.

At 133% of federal poverty level you are expected to pay 0% of your income towards health insurance for 2021. So you'd get a PTC for $1195.

You could use that to get the Silver plan with CSR which would be free because it costs $1195. Or you could get the Bronze plan for $787 and get the difference back when you reconcile on your taxes. I don't really see any reason why you'd want to consider the Gold plan in this situation.

And the only reason to get the Silver CSR plan would be if you expect high medical bills for the rest of this year, then the CSR would save you money.
even moderate medical bills would favor the silver plan I would think. Current deductible with bronze plan is $6,750 for individual. With the max csr with the silver plan, if the ded is only $500 that you guessed or even higher, it seems the silver plan is the way to go. Worst case, no medical bills and I lose the tax savings of the HSA.
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Re: Why is Gold plan cheaper?

Post by MP123 »

theplayer11 wrote: Fri Apr 09, 2021 4:07 pm
MP123 wrote: Fri Apr 09, 2021 11:59 am
theplayer11 wrote: Fri Apr 09, 2021 11:34 am are you saying I could pocket the difference between the bronze and silver plans for the rest of the year on next tax return?
Yes, you would pocket the difference when you file your 2021 return.

At 133% of federal poverty level you are expected to pay 0% of your income towards health insurance for 2021. So you'd get a PTC for $1195.

You could use that to get the Silver plan with CSR which would be free because it costs $1195. Or you could get the Bronze plan for $787 and get the difference back when you reconcile on your taxes. I don't really see any reason why you'd want to consider the Gold plan in this situation.

And the only reason to get the Silver CSR plan would be if you expect high medical bills for the rest of this year, then the CSR would save you money.
even moderate medical bills would favor the silver plan I would think. Current deductible with bronze plan is $6,750 for individual. With the max csr with the silver plan, if the ded is only $500 that you guessed or even higher, it seems the silver plan is the way to go. Worst case, no medical bills and I lose the tax savings of the HSA.
Yes, since your expected contribution (for this year at least) appears to be $0 the Silver plan would be better.

Next year you might have to pay as much as 8.5% of your MAGI towards the plan, which might change the math. And from 2023 on we're back to the possibility of the "cliff" and no limit to your payments depending on your income.

And this is all assuming that your state implements the 133% of FPL for unemployment treatment, and extends CSRs to those cases, as we hope they will. Even without the CSR a free Silver plan would be better than a free Bronze plan.
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Re: Why is Gold plan cheaper?

Post by Artful Dodger »

theplayer11 wrote: Thu Apr 08, 2021 10:05 am
Artful Dodger wrote: Thu Apr 08, 2021 8:20 am Are they different companies?

You would still get cost sharing. It is based on the 2nd lowest cost silver plan, but would apply to all metallic levels.
yes same company. I thought cost sharing reductions were only for silver plans?
Sorry for the late reply, but I've been off for a few days. I misread your question and thought you were asking about the premium credits which are tied to the silver plan. Only the silver plans will have the cost sharing reductions and they come into play when your reported income falls between 100% (or 138%) to 250% of FPL.
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