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Health Insurance Glossary

Definitions for common health insurance terms

community rating

DEFINITION: An insurance pricing system that prohibits medical underwriting and requires that all of a carrier’s insureds in the same geographical area pay the same premiums, regardless of their health status.

Pure community rating means that age and gender are also not used to determine premiums. Starting in 2014, modified community rating will be used in the individual health insurance market: Medical underwriting will no longer be allowed, but there will be some variation in premiums based on age (premiums will be up to three times higher for older applicants – in some states, the current pricing model allows for significantly higher ratios than this), and tobacco users will still pay more for their health insurance.