Updated August 17, 2015.

Definition of Platinum Plan Health Insurance

A platinum plan is a standardized type of health insurance that pays, on average, 90 percent of your health care expenses. You pay the other 10 percent of your health care expenses in the form of copayments, coinsurance and deductibles.

Background

To make it easy for you to compare the value you’re getting for the money you spend on health insurance premiums, the Affordable Care Act standardized value levels for health plans.

These levels, or tiers, are bronze, silver, gold, and platinum. All of the health plans within a given level are expected to offer the same overall value. For platinum-tier plans, the value is 90 percent. Bronze, silver and gold plans offer values of 60, 70 and 80 percent respectively.

What Does Value Mean When Talking About Health Insurance?

Value, or actuarial value, tells you what percentage of covered health care expenses a plan is expected to pay for its membership as a whole. This doesn’t mean that you, personally, will have exactly 90 percent of your health care costs paid by your platinum plan. It’s an average value spread across all of a plan’s members. Depending on how you use your health insurance, you might have more or less than 90 percent of your expenses paid.

Non-covered health care expenses don’t count when determining a health plan’s value. For example, if your platinum-tier health plan doesn’t provide coverage for over-the-counter medicines, the cost of those things isn’t included when calculating your plan’s value.

What Will I Have to Pay With a Platinum Plan?

You’ll have to pay monthly premiums to get the health plan coverage. Platinum plan premiums are more expensive than lower-value plans because platinum plans pay more money toward your health care bills.

Each time you use your health insurance, you’ll have to pay cost-sharing like deductibles, coinsurance and copays. How each platinum plan makes you pay your 10 percent share will vary. For example, one platinum plan might have a high $1000 deductible paired with a low 5 percent coinsurance. A competing platinum plan might have a lower $400 deductible paired with a higher coinsurance and a $10 copay for prescriptions.

Why Should I Choose a Platinum Plan?

Choose a platinum health plan if the most important factor to you is low out-of-pocket expenses when you use your health insurance. If you expect to use your health insurance a lot, or you aren’t bothered by the higher monthly premiums of a platinum plan, a platinum health plan might be a good choice for you.

If you use your health insurance a lot, perhaps because you have an expensive chronic condition, take a careful look at the platinum plan’s out-of-pocket maximum. If you know in advance that your out-of-pocket expenses will exceed this out-of-pocket maximum, you might be able to save money by choosing a lower-tier plan with a similar out-of-pocket maximum but lower premiums. Your total yearly out-of-pocket expenses will be the same, but you’ll pay less for premiums. You can read more about how this technique works in, “How To Save on Health Insurance if You Reach the Out-Of-Pocket Maximum.”

Why Should I Avoid a Platinum Pan?

Don’t choose a platinum-tier health plan if you can’t afford high monthly premiums. If you lose your health insurance coverage because you couldn’t pay the premiums, you could find yourself in a tough spot.

If you’re eligible for cost-sharing subsidies because your income is below 250 percent of federal poverty level , you must choose a silver-tier plan to get the subsidies. You won’t get the cost-sharing subsidies if you choose a health plan from any other tier.

Cost-sharing subsidies lower your deductible, copays and coinsurance so that you pay less when you use your health insurance. In effect, a cost-sharing subsidy increases the actuarial value of your health plan without raising the premium. It’s like getting a free upgrade on health insurance. You won’t get the free upgrade if you choose a platinum-tier plan.