middle-income people who buy their own insurance in exchanges (Kaiser Family Foundation, 2011b). All qualified plans are required to insure a range of medical care services, including physicians, prescription medications, laboratory and diagnostic tests, and hospital care.

People purchasing coverage through the exchange will be able to choose among four different levels of cost-sharing, with all plans required to include an out-of-pocket maximum after which the insurance plan would cover costs in full. These levels of coverage are specified using the concept of an “actuarial value”:

  • 1st tier (bronze) actuarial value: 60 percent, meaning on average a person would pay 40 percent of the costs of medical care and the health plan would cover 60 percent.
  • 2nd tier (silver) actuarial value: 70 percent.
  • 3rd tier (gold) actuarial value: 80 percent.
  • 4th tier (platinum) actuarial value: 90 percent.

To satisfy the requirement to have insurance, people will be required to have insurance at least at the bronze level. For families with incomes of 400 percent of poverty or higher, plans in all tiers would have an out-of-pocket maximum of $5,950 per person or $11,900 per family.

Income-related premium assistance will be available for plans at the silver level with additional income-related cost-sharing subsidies for individuals and families with incomes below 400 percent of poverty. The ACA’s income-related premium and benefit provisions are relatively more protective the nearer household income is to poverty, recognizing that such households have limited income resources to pay for either premiums or out-of-pocket expenses for medical care. As illustrated in Table 2-1, the additional cost-sharing subsidies will result in a higher actuarial value than silver for those with incomes below 200 percent of the official poverty thresholds, including lower out-of-pocket maximums. Those buying coverage on their own and not eligible for the Medicaid expansion (up to 133 percent of poverty) will be eligible for a federal subsidy to help pay for the cost of premiums.2


2 For a summary of the Affordable Care Act provisions related to health insurance and estimates for different levels of coverage, see Kaiser Family Foundation (2011a) at http://healthreform.kff.org/scan/2011/august/national-health-council-analysis-examines-potential-cost-of-essential-health-benefits-package.aspx. Also see Congressional Research Service reports: Medicaid and Children’s Health Insurance Program Provisions in PPACA (2010a); Medicare Provisions in the Patient Protection and Affordable Care Act (PPACA) (2010b); and Private Health Insurance Provisions in the Patient Protection and Affordable Care Act (PPACA) (2010c). For more information on actuarial values, see http://www.kff.org/healthreform/upload/8177.pdf.

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