What does "actuarial value" refer to in health insurance?

Actuarial value is a key concept in health insurance that indicates the percentage of total costs for covered benefits that a health plan will cover. This metric helps consumers understand how much of their healthcare expenses will be paid by the insurance versus how much they will be responsible for out-of-pocket. For example, if a plan has an actuarial value of 70%, this means the insurer would pay approximately 70% of the covered healthcare costs, while the insured would be responsible for the remaining 30%.

This concept is important for comparing different health insurance plans, as it provides a clear indication of the level of financial protection that a plan offers. Understanding actuarial value can help individuals make informed decisions based on their healthcare needs and budget.