The Word: Actuarial Value (of health plan benefits)

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

Used in a Sentence: Actuarial value can help consumers navigate different health insurance plans as they weigh coverage options and their associated costs.

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 new health insurance exchange marketplaces.  Health plan coverage options to be offered within the health exchanges, beginning in 2013, will be outlined through “metal” coverage tiers (bronze at 60%, silver at 70%, gold at 80%, and platinum at 90%).  For example, if a plan has a gold actuarial value at 80%, on average, an individual would have to pay 20% of the cost of their covered benefits.