On April 14, the Kaiser Family Foundation (KFF) released a brief explaining the system of actuarial values assigned to health plans under health reform.  Health reform establishes four tiers of health coverage based on actuarial value, representing the share of health expenses that a plan will cover for a typical group of enrollees.  The brief explains how the different tiers translate into tangible costs and coverage for consumers.  KFF concludes that the system creates the potential for substantial variation in plan designs, suggesting that coverage could vary significantly between insurers.  The authors argue that this variation could make it difficult to compare plans, emphasizing health exchanges’ important role in simplifying the consumer plan selection process.

From the report:

The Patient Protection and Affordable Care Act (ACA) establishes various tiers of health insurance coverage. These tiers are used for three primary purposes:

• To set the minimum amount of coverage many people must have to satisfy the requirement that they be insured or pay a federal tax penalty beginning in 2014.
• To establish standardized levels of insurance individuals and small businesses can buy in health insurance purchasing Exchanges or in the outside market. 
• And, as benchmarks for premium and cost-sharing subsidies provided to lower and middle income people buying their own insurance in Exchanges.

Full Report: What the Actuarial Values in the Affordable Care Act Mean (PDF | 395 KB)

Kaiser Family Foundation. (2011). What the actuarial values in the Affordable Care Act mean.