What is actuarial value and how does it affect premiums?
The actuarial value of a health insurance policy is the percentage of the total covered expenses that the plan would, on average, cover. For example, a plan with a 70% actuarial value means that consumers would on average pay 30% of the cost of health care expenses through features like deductibles and coinsurance. The amount that consumers pay would vary substantially by the amount of services they use. The health reform law specifies a benchmark level of coverage for the purposes of premium subsidies using actuarial values. Subsidies would be tied to plans with an actuarial value of 70%, with additional assistance provided for cost sharing based on income. Insurers would have to cover a defined set of health care services and cap the total amount of cost sharing required of consumers at defined levels, but could otherwise vary the structure and degree of cost sharing so long as minimum actuarial value thresholds are met. The illustrative premiums used in the calculator are estimated
