Adjusted Community Rating


Also found in: Acronyms.

Adjusted Community Rating

The stratifying of insurance premiumrates—e.g., of health insurance—based on all members’ use of health benefits in a particular community and not on individual use of benefits.
In simplest terms, adjusted community rating is a rating method under which an insurer charges a particular group an amount derived by modifying the community rate for the group's specific demographic factors (e. g., age, gender, family composition, geography). Under ACR, a single rate applies to all small groups in the market, with limited adjustments allowed for specified “case characteristics.” The insurer sets a base rate for a particular set of case characteristics. The group's actual premium rate is then determined by varying the base rate based on a group's specific case characteristics that state law permits insurers to take into account when setting premiums. Allowable case characteristics often include age, gender, industry, geographic area, family composition, and group size.
References in periodicals archive ?
Adjusted community rating, as prescribed in the ACA for the individual insurance market, requires that premiums for those insured may only differ within a narrow band of differences in age (no greater than 3:1 between the youngest and the oldest), plus other adjustments for number of dependents in family coverage and a tobacco use surcharge.
Group Management Services by combining its captive insurance and TPA services will allow businesses to use an alternative to Adjusted Community Rating to mitigate premium increases, thus lowering healthcare costs for employers and enabling them to provide higher-quality health benefits to their employees.
It also sets forth an adjusted community rating system, which is a means of developing premiums in order to spread financial risk across the carrier's entire small group population.