Health Plan Tiers

Below is information on health plan tiers and qualified plans to help employers respond to employee questions during the open enrollment period.

What is Tiering?

Tiering is a method of ranking health plans by cost and quality.
Tier 1 plans typically offer a lower premium than Tier 2 or Tier 3.
The average of the qualified Tier 1 plan rates per county are used to establish the 88% employer contribution amounts (for employers who use the 88% calculation method for the employer share of the health insurance premium).

Note that employer contribution amounts are based on a formula of all qualified, Tier 1 plans in their county, not a single dollar value. It’s possible for a Tier 2 plan to be less expensive than a Tier 1 plan. A plan’s tier designation is the same for all counties that offer that plan and in which the plan is qualified.

What Makes a Plan Qualified?

A qualified plan minimally requires that the plan in a given county either:

Has, in a rural county (mileage distances are lower in urban counties):
- a primary care provider in a 20-mile radius,
- a hospital within a 35-mile radius, and
- certain specialists within a 35-mile radius.

includes five primary care physicians who accept new patients
includes one hospital if there is one in the county, and
includes one chiropractor.

If an employee’s health plan has changed tiers, they may want to look at other health plans available to them during open enrollment. The employee should contact the health plan they are considering changing to, and may also use the Health Plan Search in the Health & Pharmacy section of the ETF website to verify providers are covered by their chosen health plan the following year.

If the employee is concerned about a clinic, hospital, or specialty care facility accepting the health plan that the employee is considering, the employee should contact those facilities directly to verify that their chosen health plan is accepted at those facilities.

Frequently Asked Questions

The main factor that would cause a health plan to move from Tier 1 to another tier is the amount of the plan’s rate increase from the previous year. As a cost containment measure, Tier 1 plans cannot have a rate increase of more than a certain percentage, as determined by the consulting actuary.
The SMP is a plan that offers Uniform Benefits and is made up of providers in designated areas in Wisconsin, Minnesota, and the Upper Peninsula. The Group Insurance Board designates the counties that will contain SMP when no Tier 1, qualified plan is available in the county. When medical services are not available from an in-network provider, the SMP’s administrator will reimburse out-of-network providers as in-network if prior authorization has been approved. If prior authorization is not received, members will be subject to out-of-network cost-sharing. The out-of-network benefit applied is a $5,000 individual, $10,000 family deductible followed by 50% coinsurance with no out-of-pocket maximum.