Actuarial Value (AV): The new term you MUST understand

Actuarial value (AV) represents the average percentage of medical bills that will be paid by a health plan during a calendar year were that plan offered to a large population of people. In plain language it means, what the insurance plan will pay.

As mentioned, there are four levels or tiers of plans: Platinum, Gold, Silver and Bronze. In effect, the Affordable Care Act (ACA) commoditized health insurance into four precious metals and defines them by their actuarial values (AV).

Plan

Actuarial Value
(Insurance pays)

You pay

Premium

Platinum 90% 10% $$$$ (highest premium)
Gold 80% 20% $$$
Silver 70% 30% $$
Bronze 60% 40% $ (lowest premium)

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Each metal plan must meet a specific AV, which becomes the common currency for comparing and evaluating plans. For example, a Silver plan must meet the Actuarial Value of 70%. This means the insurance company will pay on average 70% and you pay 30%. Every insurance company’s Silver plan must meet that same 70% criterion.

ImportantImportant Note: The Federal government created a computerized tool to determine the AV of a health plan. Since it is somewhat difficult to design a plan that is exactly 70%, insurance companies were allowed a range of plus or minus 2 percent. Thus a Silver plan with an AV of 70% can range from 68% to 72%.