Cost Model
How we calculate expected annual out-of-pocket costs across premiums, deductibles, copays, and drugs.
Expected Annual Cost Model
For each plan, we compute the total expected annual cost as:
Total = Annual Premium + E[Deductible Spend] + E[Copay/Coinsurance] + E[Drug Costs] - HSA Tax Benefit
Expected medical out-of-pocket costs are derived from MEPS expenditure distributions, adjusted by age group and health condition multipliers. Drug costs are computed by matching each medication against the plan's formulary tiers and applying tier-specific cost-sharing.
The CMS Actuarial Value Calculator methodology ensures our cost estimates are consistent with the same framework insurers use to classify plans into metal levels.