What does "actuarial value" indicate regarding health insurance?

"Actuarial value" refers to a key concept in health insurance that expresses the proportion of total costs for covered benefits that a health plan is expected to pay on average, as opposed to what the enrollees would typically pay out-of-pocket. When a health insurance plan has a higher actuarial value, it indicates that a greater percentage of expenses will be covered by the insurer, resulting in lower costs for policyholders when they use health care services.

For instance, if a plan has an actuarial value of 80%, it means that, on average, the plan will cover 80% of covered healthcare costs, leaving 20% to be paid by the insured individuals. This concept helps consumers understand the financial responsibilities associated with different health insurance plans and aids in comparing the value of coverage options.

The other options reflect different aspects of health insurance but do not accurately define actuarial value. For example, the total amount an individual must spend before insurance coverage starts refers to the deductible, while the number of services covered pertains to the benefits of a plan, and the approval rates for applicants concern eligibility rather than coverage costs.