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
|
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.
Important 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%.