Community Rating For Group Health Insurance
Many states impose an upper limit on the extent of insurances permissible. They also permit the insurance companies to impose higher premium rates for groups that have poor medical histories. For determination of the premiums payable on the group health insurance provided by them the insurance companies often resort to the community rating methods. This method is also the standard tool in many states for determination of the insurance premiums.
Some of the states however have eliminated the health status from the list of the factors that are to be considered by the insurance companies for determination of their premium and other payables. This virtually means that every one in a particular geographic area will pay uniform rate of premium for health insurance.
There is however no pure community rating. It has become uncommon because while it is one of the best deals for older people it is not so for younger ones. The older people would be paying higher premiums if there were no community rating. Younger people will often find the community rating dearer and opt out of group health plans. With only the old and infirm in the fray, the insurance companies cannot expect business boon.
Community rating is not applicable for the individual or the self employed health insurance plans. The modified community rating is a common underwriting procedure for the states that allow it. It also depends on the ZIP code of the employer since the geographic area is one of the determinants for the issues.