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Actuarial Value (of health benefit plans)

Definition: Actuarial value outlines the percentage of medical costs that a health plan will cover.

What It Means: Actuarial value is meant to define how “generous” a health plan is in covering health care costs. Understanding the actuarial value of a health plan helps consumers understand what they might have to pay (deductibles and coinsurance/copays) out-of-pocket in order to cover their overall health care costs.

History: Under the Affordable Care Act, actuarial value is utilized to help individuals and the small business market understand and compare health plan options offered inside and outside of health insurance exchange marketplaces. Health plan coverage options offered within the health exchanges, which began in 2013, were outlined through “metal” coverage tiers (bronze at 60%, silver at 70%, gold at 80%, and platinum at 90%). For example, for a plan with a gold actuarial value of 80%, on average, an individual would have to pay 20% of the cost of their covered benefits.