What You Should Know About Platinum Plan Health Insurance

A platinum plan is a somewhat standardized type of health insurance that can be obtained in the individual and small group markets. This article will explain how platinum health insurance works, where and when it can be obtained, and how you can determine whether it's the right choice for you.

A platinum health plan pays, on average, roughly 90% of a standard population's healthcare expenses. The members pay the other 10% of their healthcare expenses in the form of copayments, coinsurance, and deductibles. As discussed in more detail below, this 90/10 split is applicable across a population, but not on a member-by-member basis.

This standardization of health plans applies to policies in the individual/family and small-group markets. Individual plans are those that people buy themselves, either through the health insurance exchange or directly from an insurer. Small group plans are those that are sold to small businesses.

In most states, the term "small business" means it has up to 50 employees, although there are four states where employers with up to 100 employees are considered small businesses and buy health insurance in the small group market.

Where Are Platinum Plans Available?

Platinum plans are widely available in the small group market. But in the individual market, they have proven to be much less popular than the other metal-level plans, due in large part to their high costs. And they can also result in adverse selection for the insurers that do choose to offer them, as people with complex medical conditions are more likely to be drawn to these high-end plans.

As a result, insurers are much less likely to offer individual market platinum plans, resulting in limited availability. Insurers that offer individual market plans in the exchange are required to offer silver and gold plans, but are not required to offer bronze or platinum plans; most do offer bronze plans, but many have chosen to not offer platinum plans.

During the open enrollment period for 2023 health plans, more than 16.3 million Americans signed up for private individual health insurance coverage through the exchanges nationwide.

But only 140,961 of those enrollees—less than 1% of the total—selected platinum plans. And all of those platinum plans were selected in 16 states and DC; in the other 35 states, nobody enrolled in platinum plans (generally because insurers in those states simply didn't offer them).

So when we discuss the pros and cons of platinum plans in a moment, keep in mind that platinum plans might not be available to you.

Platinum plans are more widely available in the small group market than they are in the individual market. Insurers do tend to offer them, and it's up to the employer to decide which plan or plans will be the best fit for their team. If you work for a small business that offers a platinum plan option, you can choose that plan if you wish.

But if you're buying your own health insurance, your metal-level options in most states will tend to be just bronze, silver, and gold. However, if there's a platinum plan available in your area, it might end up being a good fit for your needs.

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 actuarial value levels for health plans in the individual and small group market. These levels, or tiers, are bronze, silver, gold, and platinum. All of the health plans within a given level are expected to offer roughly the same overall value.

For platinum-tier plans, the value is 90% (with a de minimus range of +2/-2, meaning that a platinum plan will have an actuarial value in the range of 88% to 92%; there was a wider range for a few years, but it was tightened back up to -2/+2 as of 2023).

Bronze, silver and gold plans offer values of roughly 60%, 70%, and 80% respectively.

What Actuarial Value Means in Regard to Health Insurance

Actuarial value, tells you what percentage of covered healthcare expenses a plan is expected to pay for its membership as a whole.

This doesn’t mean that you, personally, will have exactly—or even close to—90% of your healthcare costs paid by your platinum plan. Instead, it’s an average value spread across a standard population. Depending on how you use your health insurance, you might have more or less than 90% of your expenses paid.

To illustrate that, consider a person with a platinum plan who has very little in the way of healthcare expenses during the year. Maybe she sees the doctor a few times and has some lab work done. Let's say her deductible is $500, and she has to pay it for the lab work. She also pays $20 for each of her four office visits. Her total costs might only come to a couple of thousand dollars, and she's paid nearly $600, which is well over 10% of the cost.

But what if she were diagnosed with cancer during the year, and incurred $500,000 in total costs? She would still pay her $500 deductible, and let's say her plan's maximum out-of-pocket is $1,500, which means she'd pay another $1,000 in coinsurance and copays. But at the end of the year, she's only paid $1,500 out of $500,000, which amounts to far less than 10% of the total costs.

Non-covered healthcare 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. Out-of-network costs are not included in the determination of a plan's actuarial value, and neither are benefits that don't fall under one of the essential health benefit categories (virtually all medically necessary care is considered an essential health benefit, however).

And premiums are never counted as an out-of-pocket expense, even though the enrollee is responsible for paying them. Premiums are the cost you pay to purchase your coverage, regardless of whether you end up needing medical care or not. (Out-of-pocket costs are expenses that you pay if and when you need medical care.) Platinum plan premiums are more expensive than lower-value plans because platinum plans pay more money toward your healthcare 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 enrollees pay their overall 10% share will vary.

For example, one platinum plan might have a high $1,000 deductible paired with a low 5% coinsurance. A competing platinum plan might have a lower $400 deductible paired with a higher coinsurance and a $10 copay for prescriptions.

Pros

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. 

A word about out-of-pocket maximums: There is a cap that's set by the federal government each year, and virtually all health plans are required to cap out-of-pocket costs at no more than this limit (for 2023, it's $9,100 for an individual and $18,200 for a family plan).

But health plans can have out-of-pocket maximums below this limit. And platinum plans will generally cap out-of-pocket costs far below the allowable maximum.

Cons

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 (cost-sharing reductions, or CSR) because your income is below 250% of federal poverty level, you must choose a silver-tier plan in the exchange to get the subsidies. You won’t get the cost-sharing subsidies if you choose a health plan from any other tier, or if you shop outside of the exchange (premium subsidies are also only available in the exchange, but they can be used for plans at any metal level).

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, and depending on your income, the upgrade can make the coverage even better than an average platinum plan: The strongest cost-sharing subsidy benefit, for people with income up to 150% of the poverty level, boosts the actuarial value of the available silver plans to 94%, as opposed to an average of 90% actuarial value for platinum plans.

But if you're eligible for this free upgrade on your health insurance, you'll only get it if you select a silver plan. It's not available if you choose a platinum-tier plan.

Summary

Platinum health insurance is a type of coverage available in some areas in the individual/family and small group markets. The Affordable Care Act created four metal-level categories for individual and small group health plans: bronze, silver, gold, and platinum. Benefits become more robust as you move up that scale, so platinum plans have the most robust benefits, and generally also have the highest monthly premiums.

Platinum plans are not widely available in the individual market, as most insurers choose not to offer them. They are more widely available in the small group market, although it's up to each employer to pick the plan or plans they'll offer to their employees, and platinum plans are not as popular with employers as some of the other options.

A Word From Verywell

If you're enrolling in a small group plan that your employer offers, it's possible that you might have an option to pick a platinum plan (and in rare cases, that might be the only option your employer offers). If you're buying your own health insurance, platinum plans may or may not be available in your area.

The key point to keep in mind is that platinum plans will provide robust coverage, but generally come with a fairly high monthly premium. If you're eligible for a significant premium subsidy that puts a platinum plan within your budget, it might be a good choice. But if you're going to struggle to make the monthly payments, a plan from one of the lower metal levels might end up being a better option.