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Actuarial Value. What is Actuarial Value. A measure of how rich a specific design is PPACA describes this as the amount of health care costs paid by the plan 4 tiers (metal levels) Platinum (90% of costs) Gold (80% of costs) Silver (70% of costs) Bronze (60% of costs). - PowerPoint PPT Presentation
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Colorado Division of Insurance
Actuarial Value
What is Actuarial Value A measure of how rich a specific design is
PPACA describes this as the amount of health care costs paid by the plan
4 tiers (metal levels) Platinum (90% of costs) Gold (80% of costs) Silver (70% of costs) Bronze (60% of costs)
Actuarial Value vs. Essential Benefits
Actuarial Value A measure of the out-of-pocket costs faced by
consumers One of the biggest determinants of premium Plan specific
Essential Benefits Determine what is covered Determine the denominator of the AV calculation Same for the entire market
Calculation of Actuarial Value Actuarial Value 2 broad methods for calculation
Plan Specific Individual carriers define the transformations to the standard the Carrier data is used to determine the costs
Standard A standard population and costs are used
Plan calculation can be more accurate but would result in different AVs for the same plan design
Smaller Provisions Automated processing of actuarial value HSA contributions counted as first dollar
Who determines AV if there are contributions Cost Sharing Subsidies Interactions between Large Group/ERISA plans
still to be determined
De Minimis Variations The bulletin indicates that all plans inside and
outside the Exchange will need to follow the metal levels
Plans will need an actuarial value within ±2% of the target For example all silver plans will have an actuarial
value between 72% and 68%
Individual Market Plans need to change on a yearly basis to stay
within the metal tier (Deductible leveraging) Colorado law makes changing benefits difficult The market will be reset on 1/1/2014 since
plans will not fall in de minimis ranges Some additional initial disruptions
Small Group Market Same issues as the individual market Small employers have better existing tools for
plan comparison Small employers have additional
communications challenges making changes more costly Small employers explain the health plan to
employees Small employers have additional requirements
Cost Sharing Subsidy Adjustments to a silver benefit design to reduce the AV for
low income members 100-150% 94% AV 151-200% 87% AV 201-250% 73% AV
First reduce OOP max Make additional adjustments to lower the AV New plan designs are allowed to use the de minimis
variations Initial payments based on rate filings followed by a detailed
reconciliation