The premium rate charged by health insurance issuers in the individual or small group market (in or outside of an exchange) may only vary by age within a 3:1 ratio as defined by uniform age bands set by 45 C.F.R. 147.102(a)(1)(iii), according to a Center for Consumer Information and Insurance Oversight (CCIIO) guidance document. Issuers must use a uniform age rating curve established by the state. If such a rate is not applied, issuers must use a uniform age rating curve established by HHS. Additionally, states are obligated to submit to CMS certain rating information regarding the scope and establishment of rating curves
Premium rate. Under 45 C.F.R. 147.102(a)(1)(iii), the premium rate charged by a health insurance issuer for non-grandfathered health insurance coverage in the individual or small group market may vary by age, except that such rate may not vary by more than 3:1 for adults. That variation is then further defined by uniform age bands, which were amended by the HHS Notice of Benefit and Payment Parameters for 2018 Final Rule. The CMS guidance sets out the federal default standard age curve, which is to be used if an age curve is not established by the state. The age curve establishes the ratios by which premiums can deviate according to age.
State reporting. States are also obligated by Section 147.102 to submit to CMS state-specific rating information. That information includes:
• the use of a narrower age rating ratio than 3:1 for adults age 21 and older,
• the use of a narrower tobacco rating ratio than 1.5:1 for individuals who legally use tobacco,
• state-established or proposed geographic rating areas,
• state-established age rating curves,
• in states that do not permit rating based on age or tobacco use, the use of uniform family tiers and corresponding multipliers, and
• whether premiums in the small group market must be based on average enrollee premium amounts (composite premiums).
The state reporting obligations also include the requirement to provide CMS with information on whether the individual and small group markets in the state are merged into a single risk pool under section 1312(c) of the Patient Protection and Affordable Care Act.
SOURCE: CCIIO Guidance, December 16, 2016.
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