Sixty-four year-old grandfathers incur nine times more medical expenses than their eighteen year-old grandsons. But under small group ACA adjusted community rating, their health premiums can be no more than three times the cost charged to their second generation progeny, who now pay more to subsidize their forefathers.

Female rates have always been within the 3:1 age ratio due to the expenses of childbearing years. So the major impact of ACA adjusted community rating falls on the cost of young men.

The ACA also eliminated health risk rating for small groups. Thus small employer groups composed chiefly of young male or healthy employees are paying much higher health premiums than necessary to cover their risk.

Many small employers are migrating from fully-insured plans that are priced by adjusted community rating to partially self-funded plans that are priced for their own employees’ actual age, gender, and health risk profile.

Employee Benefit Advisors can help you with Level Funding, Traditional Self-Funding, and Employer Group Stop Loss Captives. Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services.

A special thanks to TCC Benefits Administrators for the content in this blog.