Actuarial value, as it relates to the Affordable Care Act, refers to the portion of covered medical benefit costs that a health insurance plan pays for its enrollees. The higher the actuarial value of a plan, the lower the out-of-pocket costs for the plan member.
Under the Affordable Care Act (aka “Obamacare”), new qualified health plans take effect in 2014. These health plans (sometimes referred to as metal plans) are primarily distinguished from one another by their actuarial value, not their benefits.
The actuarial value of a metal plan does not guarantee that your out-of-pocket expenses will be your medical service costs reduced by the percentage of the metal plan’s actuarial value. Actuarial values apply to the general population enrolling in a health plan. Your expenses may be higher or lower than the guidelines of your health plan’s actuarial value due to the specific medical services and medications you use. Additionally, actuarial values for the metal plans are typically allowed to be within 2% of the rule for the specific metal plan. For example, Bronze Plans have an actuarial value requirement of 60% of medical costs but a specific Bronze may have an actuarial value as low as 58% and as high as 62%.
If a health plan has a higher actuarial value than another, it does not necessarily mean that particular plan is “better”. Factors in choosing a particular health plan, such as premiums and healthcare provider network, are not included in determining the actuarial value of a plan. In a recent survey, about 1 in 3 consumers indicated a lower monthly premium would determine their health plan choice if health insurance plans offered the same benefits.
Actuarial values can be a useful tool to inform consumers within their health insurance plan evaluations. However, consumers should remember to also consider health plan quality ratings, acceptance of a health plan by their doctors and hospitals, as well as premium when deciding which plan in which to enroll.
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