Community Rating is a way to price insurance. It is when all policyholders in that area pay the same premium no matter their personal health, age, gender or other factors. The community is the area in which the insurance is offered. It could be an entire state or just part of a state.
Beginning in 2014, all insurers selling personal or small group products must use the Adjusted Community Rating (ACR). With ACR, insurers calculate the Community Rating and can adjust your cost based only on:
- Your family size
- Where you live
- If you use tobacco
- Your age
Insurers are limited in how much more they charge for these things. For example, they cannot:
- Charge the oldest people they insure more than three times what they charge the youngest person
- Charge tobacco users more than 50% more than what they charge people who don't use tobacco
Sometimes Adjusted Community Rating is called Modified Community Rating.
Grandfathered health plans and self-insured plans are exempt from this requirement.