Prior to the Affordable Care Act (ACA) becoming the law of the land in 2010, it was common for insurance companies to vary the price you paid for your insurance based on a number of different factors. Those factors included things like your health status, demographics and industry you worked in – just to name a few.
Beginning in 2014, that all changes
On January 1st, 2014, health insurance companies offering coverage to individuals and small employers will only be allowed to vary premiums based on 4 factors:
- Age – Insurance companies will be allowed to vary rates based on age, but they may not charge older people more than three times the rate they charge younger people. Older adults are defined as persons who are 64 and older. Younger persons are defined as people between the ages of 21 and 63.
- Family Size – Insurance companies will still be allowed to vary rates based on who is enrolled in the plan. Different rates can be charged based on whether the plan covers only an individual or a family. There can also be different family rates depending on the number of people covered by a plan (for example, individual and spouse or individual and children).
- Geography – Insurance companies will be allowed to charge more for people who live in areas where medical costs are high. There are a lot of complex variables that go into determining this, so consult your employer or health insurance agent to find out what the rate is where you live.
- Tobacco Use – Insurance companies will be allowed to charge up to 50 percent more in premiums for people who use tobacco products than they charge for non-tobacco users.
Basing premiums on any other factors except for those named above will be illegal under the Fair Health Insurance Premiums provision of the ACA.
Pre-existing conditions have also been all but done away with in 2014, as adults with pre-existing conditions will be able to obtain individual coverage through a Marketplace and pay the same rate as other participants in same age group. Insurers cannot place annual or lifetime limits on coverage, nor can they deny coverage or charge higher premiums due to a pre-existing condition.
Mark Bailey, Jr. is the Senior Marketing Manager of NFP's Atlantic region. Before joining the company, Mark was a production assistant on the tv show Glee and an on-air talent on 95.1 WAPE. He has over 10 years of experience in the insurance and corporate benefits space. Mark is an avid Jacksonville Jaguars fan and loves to spend his free time building custom mechanical keyboards.