PREMIUM RATE FACTORS
Premiums are no longer calculated based on an individuals health. Also, remember that no one can be turned down due to pre-existing conditions. The way premiums will now be rated in the new marketplace are based on four factors. This means that whether a person is sick or healthy their premiums will only be based on the following four factors: Age, Family composition, Geographic area, and Tobacco use.
There are limits to how much a rate is based on age. A rate for an individual who is older can not be more than three times the rate of a person who is younger within the family.
Family Composition Factor:
Each individual member of the family will be rated based on their age. Also, carriers are now only allowed to charge for the three oldest children. If a member of the family is over 21, they are included in the adult category and must give their age. The children under 21 are put into the age category of 0 to 21.
Geographic Area Factor:
This is simply a factor based on where a person lives.
Tobacco Use Factor:
A person who uses tobacco can not have a rate higher than 1.5 times that of a person who does not use tobacco within the family.
If you have questions or would like help in obtaining health insurance please contact us.
Below is an article from healthnet.com on rate factors.
Rating Variation Limits (Premium Rating Rules)
The major provisions of the Affordable Care Act are right around the corner. The way premiums are rated will be a major factor in reshaping the health insurance market.
As one example, health insurers in the Individual and Small Group markets must treat the entire market as a single risk pool when setting rates.
In addition, differences in premiums based on health status are not allowed. Insurers must rate sick people and healthy people the same based on specific rating factors.
Health plans under reform can vary premiums based on the following four allowable rating factors:
Age – limited to a 3:1 ratio. This means that the rate for a 64-year-old can’t be more than three times (i.e., 300 percent) the rate for a 21-year-old.
Family composition with member-level rating applied. This means that each family member will be rated individually based on his/her age.
Carriers can charge only for the three oldest children in the family who are under 21*. For example, let’s say the Moore family has mom, dad and four children under age 21. The Moore family’s rate would include: mom + dad + the child rate x 3 (age 0–21).
Now if the oldest of the four children in the Moore family is over 21 years old, the rates would include: mom + dad + 23-year-old + the child rate x 3 (age 0–21).
Geographic rating area.
Tobacco use – limited to a 1.5:1 ratio.
Health Net has opted against rating for tobacco, so we will not be factoring that into our rates.
* Rating methodology varies by state. For example, in California, the three oldest dependents under age 21 are rated for individual and family plans.