What does it mean if a health plan has a high actuarial value?

A health plan with a high actuarial value indicates that the plan covers a higher percentage of total costs for an average population. Actuarial value is a measure that reflects the share of healthcare costs that a health insurance plan pays, on average, across a population of enrollees. For example, if a plan has an actuarial value of 80%, it means that the insurer pays, on average, 80% of covered healthcare expenses, leaving the insured responsible for the remaining 20%.

This high percentage signifies that the plan is designed to provide substantial financial support for healthcare expenses, which can make it an attractive option for individuals who anticipate needing more healthcare services. Generally, plans with higher actuarial values tend to have higher premiums, but they also tend to offer greater financial protection against high medical costs. In terms of income eligibility, actuarial value does not determine whether a plan is meant for low-income households, as health plans can be available to various income brackets based on the marketplace or employer offerings.