Georgia Navigator Practice Exam

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

1. The percentage of total costs a health plan covers

2. The total premium paid by consumers

3. The deductible amount for services

4. The total out-of-pocket expenses per year

The correct answer is: The percentage of total costs a health plan covers

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.