What is "actuarial value" in health insurance?

Actuarial value refers to the percentage of total healthcare costs that a health insurance plan is expected to cover for a typical population of plan holders. This measure is fundamental to understanding how insurance plans differ in terms of generosity and how much out-of-pocket expense members can anticipate when accessing healthcare services. For instance, if a plan has an actuarial value of 70%, it signifies that the plan is designed to cover 70% of a typical enrollee's healthcare expenses, leaving the enrollee to cover the remaining 30% through deductibles, copayments, and coinsurance.

This concept is essential in comparing different insurance plans and is often a factor in evaluating compliance with regulations set forth in the Affordable Care Act (ACA), where minimum actuarial values are established for various tiers of plans. The other choices provided do not accurately define actuarial value, as they concern aspects like premium costs or service quantity rather than the percentage of costs borne by the insurance plan.