The actuarial value of a health insurance plan has several variables, but is generally a percentage of the total covered expenses that the plan would, on average, cover. For example, the “Bronze” package, or minimum coverage defined by the new health reform law in 2014, has a 60 percent actuarial value, which means the consumer would pay on average 40 percent of the cost of health care expenses through features like deductibles and co-payments.

As previously mentioned, traditionally there have been several factors that determine an actuarial value of a health insurance policy, including the plan type (HMO, PPO, POS, CDHP), benefits, exclusions, deductible level, co-payment/coinsurance, provider networks, out of pocket maximums and employer health savings account contributions. The general rule is higher premiums mean higher actuarial value; you pay more for more coverage. For purposes of the new health reform law, actuarial values were used to set benchmarks levels of coverage to qualify for minimum coverage and premium subsidies.

Back to FAQ