In today’s episode of Regulatory Joe, we’re taking listeners through the 2025 Actuarial Value (AV) calculator, a tool that ensures plans meet standards for each metallic tier.

The Role of the AV Calculator

Published annually by CMS, the AV calculator categorizes health insurance plans into metallic tiers (Platinum, Gold, Silver, Bronze, Expanded Bronze) based on their AV, the percentage of total average costs for covered benefits that a plan will cover.

For Plan Year 2025, CMS has maintained the existing ranges: a ±2% AV range for all metallic tiers, with an additional 5% for expanded bronze plans. This is great news for health plans, as keeping the ranges consistent from 2024 drastically simplifies plan development.

AV Calculator Release and Key Timelines

Each year, CMS publishes a draft AV calculator following the release of the final Notice of Benefit Payment Parameters (NBPP). The draft calculator typically comes out in February of each plan year[JB1] , followed by the final version in March. This allows issuers to start testing early, incorporating the draft calculator into their initial plan designs to ensure alignment.

Regulatory Joe Recommendations

• Start testing early with the draft tool.
  We recommend testing your plan designs as soon as the draft AV Calculator is available. This allows you to work through potential issues before the final version is released and minimizes last-minute adjustments.
• Check AV ranges for each plan variant.
  Ensure that each of your plan variations, especially those with cost-sharing reductions (CSR), falls within the correct metallic tier range to prevent compliance issues with CMS and state reviews.
• Document everything.
  Track each step, version and adjustment carefully. This includes maintaining organized records of cost-sharing changes, template updates and AV screenshots to ensure accuracy and easy reference during reviews.
• Prioritize team coordination.
  Create a dedicated project team with a clear timeline and defined roles. This is critical to make sure your plan meets submission deadlines and helps reduce the risk of missed details and late compliance fixes.
• Understand the difference between internal and CMS AV calculations.
  Recognize that CMS AV calculations use standardized national averages and specific assumptions to ensure uniformity across issuers. Internal calculations, on the other hand, may use customized data or methodologies unique to your plan’s risk profile. This can create slight AV differences, so it’s essential to align your internal calculations with CMS’s standards to avoid questions during state or federal review.

By keeping your plan’s AV calculator process organized and prioritizing proactive testing, issuers can stay compliant and on track with both CMS and state requirements. The AV Calculator may be an annual requirement, but using it effectively is essential to ensure your plan designs meet regulatory expectations.

Be sure to watch the full episode for a more detailed run-down of changes and recommendations. 

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Video Transcript

Welcome to Regulatory Joe. I’m Joe Boyle, president of regulatory solutions here at Penstock. In today’s episode, we’ll be discussing the actuarial value calculator, also known as AV calculator, for plan year 2025.

When you ask, “What is the AV calculator?”—it’s a tool created and published by CMS since the start of the ACA. The AV calculator has an established methodology that dictates the metallic tiers outlined in a traditional qualified health plan. Everything from platinum, gold, silver, bronze, and even expanded bronze plans are defined by this tool.

For plan year 2025, CMS has codified the +/-2 AV ranges for all metallic tiers across the board. They’ve also retained the 5% differential for expanded bronze, as expected. While CMS has kept the +/-2% and retained the 5% differential for the expanded bronze plan, the change for 2025 is that there is no real change.

Aside from the AV Calculator, we’ve seen CMS stabilize some of their tools, releasing them on an annual basis with minimal, if any, changes year over year. With the updates we’ve reviewed for 2025 and the consistency CMS has shown year over year with the AV calculator, issuers can assume that they’ll continue to see the +/-2% differential across metallic tiers, as well as the 5% differential for expanded bronze at minimum, for 2026—and we expect this to hold for 2027 as well.

From a renewal and process standpoint, CMS typically releases a draft AV calculator after the final notice of benefit payment parameters has been published. We’ve never seen an AV calculator released before then. So, issuers can expect—and we encourage you to track the release of the NBPP—to anticipate the draft tools being provided by CMS.

For those closely involved in the process, whether you run the AV calculator yourself or work with colleagues in your organization who manage it, it’s essential to know the timeline and release of the tool. If you worked on this for plan year 2025, you already have the tool in hand. You’ve been working with it, testing it, running your plans through the ranges, and getting your results.

The year-over-year timeline is quite cyclical. Since we already have the tool for this year, we can look forward to next year and anticipate when to get that information. Generally speaking, CMS holds the tool until after the final notice of benefit payment parameters is published, as some policy changes in the MVP could affect the methodology CMS may consider changing.

Even if CMS releases the draft calculator before the final, we don’t believe issuers should wait for the final copy of the tool to start testing and incorporating it into their plan portfolio strategy. Given the nature of the tool and the time required to run the calculator on plan designs, it’s wise to begin with the draft and treat it as final until the final version is published.

A key aspect when running the AV calculator on your plans is the impact on plan variations, especially CSR, or cost share reconciliation, of your baseline parent plans. Use your silver as a baseline, and ensure that when you’re creating plan variants (such as 00, 01, and 02), each has its own unique AV within the specified metallic tier and range—whether bronze, gold, silver, platinum, or expanded bronze.

We anticipate CMS will release the draft AV calculator for plan year 2026 around February, with the final version expected at the end of March. Using the tool early is essential to prevent rework, revision of templates, incorrect cost shares, or compliance issues close to submission.

Too often, issuers wait until the last minute to validate their plan portfolio with the final calculator, which can jeopardize deadlines with state divisions of insurance or with CMS applications.

If your plan designs aren’t ready by the end of March or are still in progress, that’s okay. We encourage you, if you have an existing portfolio within the marketplace, to take the prior year’s portfolio, make proposed changes, and test scenarios within the tool. This helps you identify what aligns with your product strategy or requires adjustment.

It’s crucial to document these steps to track any internal changes to plans, whether they involve cost shares or co-pays, and to manage versions of templates used in drafts.

Anyone who’s run the AV calculator multiple times knows it’s easy to lose track of versioning, particularly with minor adjustments needed to fit a plan within the right metallic tier range. We recommend running the tool early, often, and with proper version control and naming conventions for your files. Additionally, it’s helpful to organize and aggregate AV screenshots. The AV calculator can run within the Excel file or export results as AV screenshots.

For filers, AV certification and screenshots are typically required in most submissions. So ensure your AV calculations are completed, outputs submitted, and validated at least five business days before your submission deadline.

We know this is an ambitious timeline, especially for actuarial partners managing other models contributing to their AV calculations. Establishing a workgroup, project management plan, and timeline around deliverables is essential to secure these AV screenshots as early as possible.

Another operational point we’ve seen through submission and reconciliation with state divisions of insurance and CMS is understanding the difference between CMS actuarial value and internal issuer actuarial value. Recognize the differences between these values within your plan and benefit template. When you run the AV calculator, note what populates within the issuer AV calculation versus the CMS AV calculation. Understanding these distinctions and instructions on how each value works will be valuable internally.

The AV calculator is a required tool for all submissions to CMS and any state division of insurance. We encourage all issuers to prioritize this tool when CMS releases all application instructions and templates for plan year 2026 and beyond.

Thanks again for listening. Give us a like, give us a share, and we’ll see you next time.