Community Rating Simplified

As an insurance broker in both Florida and Virginia, we have a vested interest in monitoring legal changes affecting the way group health insurance premiums are set. To fully understand what effect community rating will have on your group health insurance rates, you must first understand how premiums are determined by health insurance carriers.

In the past, in the 2 – 50 business sized market, various factors played a role in setting rates: age, gender, occupation, health status, claims history and tobacco use just to name a few. Now that the ACA has reformed regulations, the same groups will be issued premiums for group health plans based solely on age, family size, geography, and tobacco use. Carriers will not allow the use of actual or expected health status or claims experience to set group health insurance premium rates. Additionally, a ratio of 3:1 is being applied to age ratings, while a ratio of 1.5:1 is being applied to those using tobacco.

Depending on where your employees fall into these categories, your health insurance rates could increase or decrease. Understandably, the older your population is, the higher your rates will be, but that doesn’t mean you’ll see much of a change. Since age has always been a factor, an older group may not be affected greatly. Groups that have younger males will see the most change, since males generally garner lower group health insurance premiums.