Actuarial Value, or AV, is calculated as the percentage of total average costs for covered benefits that a plan will cover. For example, if a plan has an AV of 70 percent, on average, a consumer could expect to be responsible generally for 30 percent of the costs of all covered benefits in that plan.
Beginning in 2014, non-grandfathered health plans in the individual and small group markets must meet certain AVs, or metal levels: 60 percent for a bronze plan, 70 percent for a silver plan, 80 percent for a gold plan, and 90 percent for a platinum plan. Issuers may offer catastrophic-only coverage to eligible individuals. “Metal levels” will allow consumers to compare plans with similar levels of coverage, which along with consideration of premiums, provider networks, and other factors, help the consumer make an informed decision.
To streamline and standardize the calculation of AV for health insurance issuers, HHS is providing a publicly available AV Calculator, which issuers will use to determine health plan AVs based on a standard population, as required by law. In 2014, the AV Calculator will use a national standard population. As described in the final rule, beginning in 2015, HHS will accept state-specific data sets for the standard population if states choose to submit alternate data for the calculator. The final rule includes standards and considerations for plans with benefit designs that the AV Calculator cannot easily accommodate. Consumer-driven health plans, such as high-deductible health plans integrated with health savings accounts, are compatible with the AV Calculator.
HHS recognizes that health plans need some flexibility in meeting the metal levels. A plan can meet a particular metal level if its AV is within +/- 2 percentage points of the standard. For example, a silver plan may have an AV between 68 percent and 72 percent. In addition, the final rule provides flexibility for issuers in the small group market regarding annual deductible limits if necessary to achieve a particular metal level.
As stated in previous guidance, the health care law directs that, starting in 2014, all types of health insurance will include an annual limit on out-of-pocket cost sharing for individuals and families. While not yet set for 2014, the comparable limit this year is $6,250 for self-only coverage. This protection will ensure that Americans will no longer face medical bankruptcy even when they have health insurance. Future rulemaking and sub-regulatory guidance will be issued regarding the application of this policy to the group market.