In the small group market under the Affordable Care Act, on what basis may rates vary?

In the small group market under the Affordable Care Act (ACA), rates can vary based on age, geographical area, tobacco use, and the type of coverage, whether individual or family. This approach to rate variation is designed to make coverage more accessible while ensuring that premiums reflect factors that are relevant to the risk of providing health insurance.

Age is a significant factor because healthcare costs tend to increase as individuals age. Geographic area also plays a crucial role since healthcare prices can vary widely depending on local markets and provider availability. Tobacco use is considered because individuals who use tobacco are at higher risk for certain health conditions, which can increase expected healthcare costs. Finally, offering different rates for individual versus family coverage acknowledges the different levels of risk and healthcare needs associated with covering more than one person.

The other aspects mentioned, such as business size, health status, and duration of coverage, are either not allowed for rate variation under the ACA for small groups or are governed by different regulations that do not apply to the rate determination process in this context. The ACA specifically prohibits discrimination based on health status or pre-existing conditions, ensuring that all individuals in the small group market have fair access to coverage regardless of their health.