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HHS bulletin reviews actuarial value definition, cost sharing

Posted on February 27, 2012 | No Comments

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On February 24, The Department of Health and Human Services (HHS) outlined the proposal it plans to use to define actuarial value for individual and small group health plans.  The bulletin also outlines the plans for cost-sharing requirements for benefits that insurers must cover for moderate-income people purchasing policies through insurance exchanges.

Actuarial value (AV), a measure of the percentage of expected health care costs a health plan will cover, would apply to nongrandfathered individual and small group plans that took effect after the enactment of the Affordable Care Act. AV is calculated based on cost-sharing provisions for benefits.

Under the ACA, insurers must reduce cost sharing for “essential health benefits” for people with household income below 400 percent of the federal poverty level who are enrolled in “qualified health plans” (QHPs).HHS expects consumers to use AV to compare QHPs and non-grandfathered individual and small group market plans.

The ACA requires insurers offering nongrandfathered individual and small group health plans inside and outside of the exchanges to meet specified levels of coverage, labeled bronze, silver, gold, and platinum. Bronze, silver, gold, and platinum plans must cover 60, 70, 80, and 90 percent of actuarial value, respectively.

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