Actuarial Value and Employer-Sponsored Insurance. Summary


  • According to preliminary estimates, the overwhelming majority of employer-sponsored insurance (ESI) plans meets and exceeds an actuarial value (AV) of 60 percent.  An estimated 1.6 to 2.0 percent of individuals covered by employer-sponsored insurance (ESI) — approximately 2.6 to 3.2 million individuals — are estimated to be enrolled in plans that have an actuarial value below 60 percent when AV is assessed relative to a benchmark set of services such as the services covered in the Federal Employees Health Benefits Program Blue Cross/Blue Shield Preferred Provider Organization (FEHBP-PPO) plan.
  • According to this preliminary analysis, the choice of a broader versus a narrower benchmark set of services is likely to have minimal impact on the estimated number of enrollees in plans with AVs below 60 percent.  A hypothetical example of a narrower benchmark set of services (relative to the FEHBP-PPO plan) that excludes coverage for rehabilitative services, durable medical equipment, acupuncture and chiropractic services, and home health services is used to estimate this difference.  This set of excluded services accounts for a small share of the total cost (5 percent of the total of covered services in the broader benchmark), so using a narrower benchmark increases the estimated AV of each plan by only a small amount.  Further, because there are very few enrollees in plans with AVs below 60 percent when assessed against a broader benchmark, using a narrower benchmark has very little effect on the estimated number in plans with AVs below the 60 percent threshold.  The estimated number of individuals in ESI plans with AVs below 60 percent declines very slightly to approximately 2.2 to 2.9 million when AV is assessed relative to a narrower benchmark set of services.
  • Plans with benchmark AVs falling below 60 percent under either a broader or narrower standard are likely PPO plans with high deductibles, in which most individuals do not reach the annual deductible, or so-called mini-med plans, which have low annual limits.

View full report


"rb.pdf" (pdf, 156.38Kb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®