Underwriting Changes

Risk adjustment factors (RAFs) are a thing of the past. Health insurance issuers are not permitted to charge higher rates due to heath status, gender or other factors. In California, health plans subject to the Affordable Care Act (ACA) rules can vary premiums based on three rating factors only:
  • 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. Insurance companies in California, the three oldest dependents under the age 21 are rated.
  • Geographic rating area.
In other states, tobacco use is another allowable premium rating factor with a limited 1.5:1 ratio.