The Regulation of the Individual Health Insurance Market. Rating Practices


With some variation, there are two distinct approaches to rating methods, or the process by which insurers calculate policy premiums, allowed by states.  Insurers in a handful of states must offer policies to all applicants (guaranteed issue) and are limited to rates that are similar regardless of health status.  This is called adjusted community rating.  For these states, rates will generally vary by age and gender but not with health conditions.  In states that do not require community rating, individual health insurance policies are underwritten, meaning that past health conditions of individuals are examined and rates are set according to the health risk of the applicant.  A number of other factors are also considered in determining the rates charged.

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