Subsidies7 minute read
The Silver trap, and why the cheapest plan is usually the expensive one
Between 100 and 250 percent of the federal poverty level, buying Bronze to save the premium is the most common and most costly mistake on the Marketplace.
Senior agent, Boston · NPN 16209884
Every November somebody calls this desk having already decided. They have found a Bronze plan that costs nothing after the credit, they have compared it to a Silver plan that costs ninety-six dollars a month, and they want confirmation that the free one is the better deal. It is a completely reasonable conclusion drawn from the only two numbers anyone showed them, and for a household under two hundred and fifty percent of the federal poverty level it is almost always wrong.
The rule almost nobody is told
Cost-sharing reductions attach to Silver plans and only to Silver plans.1 They are not a separate product, there is no form to fill in, and nobody sends a letter about them. If your household income falls between one hundred and two hundred and fifty percent of the federal poverty level and you enrol in a Silver plan, the Marketplace quietly swaps you into an enriched version of it - a 73, an 87 or a 94 variant, named for the effective actuarial value you end up with.
A 94 variant is a richer plan than most Gold plans on the same exchange. It carries a Silver premium and behaves like Platinum. Choose Bronze instead and it evaporates, silently, with no warning anywhere in the enrolment flow.
The subsidy that lowers your premium and the subsidy that lowers your bills are different subsidies with different rules, and only one of them is visible while you shop.
What the trade actually costs
Here is one household: a single forty-year-old non-smoker at a hundred and forty percent of the federal poverty level, entitled to a $352 monthly advance credit.2
| Measure | Bronze | Silver 94 |
|---|---|---|
| Gross premium | $312 | $448 |
| Advance credit | -$352 | -$352 |
| Net premium | $0 | $96 |
| Annual premium | $0 | $1,152 |
| Deductible | $7,500 | $800 |
| Maximum out-of-pocket | $10,600 | $3,150 |
| Primary care visit | 40% after ded. | $5 |
| Bad-year total cost | $10,600 | $4,302 |
Bad-year total cost assumes the household reaches its maximum out-of-pocket. Annual premium plus MOOP.
In a year where nothing happens, Bronze wins by $1,152. In a year with one appendectomy, one broken wrist or one course of chemotherapy, Silver wins by $6,298. And the Silver plan pays five dollars for a primary care visit before the deductible, which means it gets used - whereas a $7,500 deductible is an instruction not to see a doctor until something is seriously wrong.
Why anyone chooses Bronze anyway
Because premium is the only number presented in large type, and because a zero is a very persuasive number. Enrolment interfaces sort by premium by default. The deductible is a secondary line. The cost-sharing variant is not shown at all until after you have selected the plan, at which point the interface simply says Silver 94 as though that were a model number.
There is one genuine case for Bronze in this income band, and it is worth stating fairly: a household with a real emergency fund, no chronic conditions, no prescriptions, and a strong preference for holding cash rather than transferring it monthly. That household is making an informed bet, and it is a defensible one. The problem is that almost nobody who takes the bet knows they are taking it.
What to do about it
- Find your household income as a percentage of the federal poverty level before you shop.
- If it is between 100% and 250%, filter to Silver first and look at nothing else.
- Compare on total annual cost - premium times twelve, plus expected cost sharing - not on premium.
- Then, and only then, check whether the network and the formulary work for the people in your household.
None of this is difficult arithmetic. It is simply arithmetic that nobody does for you, at a moment when you have eleven weeks and a deadline.
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