What Is Actuarial Value in Health Insurance?
By the PlanVantage engine teamPublished June 19, 20258 min read
In health insurance, actuarial value (AV) is the percentage of total covered healthcare costs a plan is expected to pay for a standard population. Members pay the rest through deductibles, copays, and coinsurance. AV is the standard yardstick for how rich a plan is. It determines which metal tier an exchange plan lands in, whether an employer plan clears the ACA's minimum value floor (a related but distinct test, covered below), and how insurers and consultants put a number on a proposed design change before anyone commits to it. This guide covers the definition, the metal levels, minimum value versus actuarial value, what changed in the 2027 AV Calculator, and how a design change actually moves the number.
What Is Actuarial Value?
Actuarial value (AV) is the share of total allowed costs for essential health benefits that a plan is expected to pay for a standard population of enrollees. The calculation applies the plan's deductibles, copays, coinsurance, and out-of-pocket maximum to a standardized spending distribution, so the result reflects the plan design itself, not the luck of any particular group's claims year. The concept comes straight from the statute: Section 1302(d)(2)(A) of the ACA requires AV to be calculated based on the provision of essential health benefits to a standard population.
Example: A plan with an 80% actuarial value pays, in aggregate across the standard population, 80% of covered healthcare costs; members pay the remaining 20% through deductibles, copays, and coinsurance. Individual experience varies widely: a member who never meets the deductible sees far less than 80%, and a member who hits the out-of-pocket maximum on a major claim sees far more.
AV measures the generosity of the design, not the cost of the plan. Two plans with identical AVs can carry very different premiums once network, discounts, and the covered population enter the picture.
ACA Metal Levels: Where the Tiers Come From
The ACA groups non-grandfathered individual and small group plans, on and off the exchanges, into four metal levels, each anchored to a statutory AV target: bronze at 60%, silver at 70%, gold at 80%, and platinum at 90%. Plans do not have to hit the anchor exactly. A de minimis band around each target defines the compliant range, and for the 2027 plan year the band is plus or minus 2 percentage points for standard metal plans.
Bronze (60% anchor)
Silver (70% anchor)
Gold (80% anchor)
Platinum (90% anchor)
Metal tiers are a legal classification only for individual and small group plans. Large group and self-funded plans never receive a metal label, however rich or lean they are. For those plans, the binding federal threshold is minimum value.
Minimum Value vs Actuarial Value
Minimum value (MV) is the employer-mandate cousin of actuarial value, and the two are often conflated. An employer plan provides minimum value when its share of total allowed costs is at least 60%, roughly the bronze anchor, and the plan provides substantial coverage of inpatient hospital and physician services. That second test was added after a wave of 2014 designs passed the 60% calculation while excluding inpatient care entirely.
The stakes differ, too. Metal-level AV is a market classification. MV is a pass/fail gate under the employer mandate: if an applicable large employer's plan fails minimum value, or is unaffordable, and a full-time employee takes subsidized exchange coverage instead, the employer owes the Section 4980H(b) penalty for that employee.
Actuarial Value
- • Classifies individual and small group plans into metal tiers
- • Anchors at 60 / 70 / 80 / 90% with de minimis bands
- • Tested with the CMS AV Calculator, updated annually
- • A plan outside its band cannot be certified at that tier
Minimum Value
- • Employer-mandate compliance test for group health plans
- • 60% floor plus substantial inpatient and physician coverage
- • Tested with the MV Calculator, safe harbor checklists, or an actuary's certification
- • Failure exposes an applicable large employer to Section 4980H(b) penalties
In practice, most employer plans clear the floor comfortably: a typical employer PPO prices out in the gold range or above, and even HDHP designs usually sit well clear of 60%. MV becomes a live question mainly on the leanest designs, and on any plan that carves back inpatient or physician coverage.
The 2027 AV Calculator: What Changed
AV is not computed freehand. Plans subject to the requirement run their design through the CMS AV Calculator, a public workbook HHS updates every year for costs, plan designs, and the standard population. HHS published the Final 2027 AV Calculator Methodology on February 25, 2026, and four things are worth a consultant's attention.
1. Fresh claims data
The 2027 continuance tables are built from 2021–2023 enrollee-level EDGE claims data from individual and small group issuers, projected forward to 2027 with each year weighted equally.
2. Higher trend, especially for drugs
The final projection year applies 6.7% medical trend and 10.7% drug trend for 2026 to 2027. The gap is deliberate: CMS's review of issuer rate filings shows drug spending growing persistently faster than medical spending.
3. De minimis bands unchanged, for now
CMS finalized wider bands (+2/-4) beginning with the 2026 plan year, but a federal court stayed those provisions, so 2027 keeps the familiar +2/-2, with +5/-2 for expanded bronze. Plans sitting near the bottom edge of a tier should watch the litigation.
4. A gentler out-of-pocket check
Earlier calculators refused to return a result when the entered out-of-pocket maximum exceeded that year's maximum annual limitation on cost sharing. The 2027 calculator returns the AV anyway and leaves the limit check to plan validation.
The practical point: the calculator's population and trend move every year, so the same design can score differently from one plan year to the next. A silver plan sitting at 71.8% can drift out of its band with no design change at all. Re-run AVs annually rather than carrying last year's number forward. And note CMS's own caveat: the AV Calculator is a comparison tool, and it was never developed for pricing.
How a Plan Design Change Moves AV
AV is at its most useful when a plan sponsor wants to change the design and needs to know what the change is worth. Consider a concrete case.
Worked Example
A plan sponsor with an 85% AV plan needs to cut cost. The consultant proposes three changes:
- • Raising the deductible from $1,500 to $2,500
- • Moving ER and outpatient surgery from copays to deductible and coinsurance
- • Raising member coinsurance from 10% to 20%
Changes of this shape typically take a design of this richness down on the order of five points, into the neighborhood of 80% AV, with the out-of-pocket maximum still capping every member's worst case. The exact figure depends on the full design, including the out-of-pocket maximum and the copay levels being replaced, so the number that goes in front of a client should come from a calculator run, not a rule of thumb.
What five points is worth: a five-point drop takes the plan's share of allowed claims from 85 percent to 80 percent, about a 6 percent reduction in plan-paid claims before any behavioral response. Two things move it from there: induced utilization runs the other way, and AV is a standard-population measure, so the group's own claims mix decides the actual figure. Price it on the group, not on the AV.
Why doesn't a $1,000 deductible increase move AV more on its own? Because claims are concentrated. A small share of members accounts for most of the spend, and those members pass through any realistic deductible on the way to the out-of-pocket maximum. The deductible change only reprices dollars in the $1,500 to $2,500 band, and only for members who reach it. The coinsurance change reaches much further up the spending distribution, which is why it does more of the work in this example, until the out-of-pocket maximum caps member exposure on catastrophic claims.
Two changes with the same AV impact can also land very differently. A deductible increase is felt broadly by moderate utilizers, while a coinsurance increase concentrates on the highest-cost claimants until the out-of-pocket maximum catches them. AV tells you the size of the shift, not its distribution, which is exactly why the design conversation should not stop at the AV number. For the reverse maneuver, easing member cost sharing without repricing the whole plan, see our guide to deductible buy-downs.
Key Takeaways
Actuarial value is the common language of plan richness: it fixes the metal tier, sets the minimum value floor at 60%, and puts a defensible number on any proposed design change. It is a population average and a comparison tool, so use it to size a change, then price that change against the actual population. And because CMS rebuilds the calculator every year, treat AV as an annual check, not a one-time label.
Try it on a design: the PlanVantage AV Model values current and proposed designs side by side on its own continuance basis, not the CMS calculator, with the actuarial math running live as you edit a deductible, copay, or coinsurance cell. See it in a demo or start a free trial.