The Affordable Care Act (ACA) and Premium Rates for Qualified Health Plans

Starting January 1, 2014, the premium rates for Qualified Health Plans (QHPs) sold in individual and small-group markets will be allowed to vary ONLY for the following factors:

  • Age (except the rate cannot vary by more than 3 to 1 for adults);
  • Self-only or family enrollment;
  • Geographic area
  • Tobacco use (except the rate cannot vary by more than 1.5 to 1)

The standards below provide details for each of those factors.

Age Premium Rates Standards for Qualified Health Plans (QHPs)

  • Federal age bands
    • 0-20 
    • One-year bands between 21 and 63
    • 64 and older
  • States can establish the age curve or default to federal age curve (see Table 1)
  • Insurance companies are not allowed to charge an older adult more than three times the rate of a 21-year old

Table 1. HHS Default Standard Age Curve

AGE Premium Ratio AGE Premium Ratio AGE Premium Ratio
0-20 0.635 35 1.222 50 1.786
21 1.000 36 1.230 51 1.865
22 1.000 37 1.238 52 1.952
23 1.000 38 1.246 53 2.040
24 1.000 39 1.262 54 2.135
25 1.004 40 1.278 55 2.230
26 1.024 41 1.302 56 2.333
27 1.048 42 1.325 57 2.437
28 1.087 43 1.357 58 2.548
29 1.119 44 1.397 59 2.603
30 1.135 45 1.444 60 2.714
31 1.159 46 1.500 61 2.810
32 1.183 47 1.563 62 2.873
33 1.198 48 1.635 63 2.952
34 1.214 49 1.706 64 and Older 3.000

 

Family Premium Rates Standards for Qualified Health Plans (QHPs)

  • Number of family members included in rates:
    • 1 or 2 parents
    • Up to 3 family members under the age of 21
  • Family premiums are based on the premiums for each family member, including each family member’s age and tobacco use
  • Only the premiums for the first three children under age 21 contribute toward the total family premium
  • Family rates include per member rates for dependent children 21 and older

Geographic Premium Rates Standards for Qualified Health Plans (QHPs)

  • Premiums may reflect geographic rating areas in the state
  • Rating area is:
    • Home address for individual market coverage
    • For small group coverage, employer’s primary place of the business in the state

Tobacco Premium Rates Standards for Qualified Health Plans (QHPs)

  • Insurance companies cannot charge an individual who uses tobacco products more than 1.5 times the non-tobacco user’s rate
  • Tobacco rating can vary based on age (e.g., 1.2 for those under 35)
  • For small employers covered individuals will be able to avoid the tobacco surcharge by participating in a wellness program

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