Which rating applies to individual health plans?

• A. Community rating
• B. Experience rating
• C. Both
• D. Neither

Answer: (A)

Understanding how health plans are priced: community rating vs experience rating. For individual health plans, a community rating approach is used, meaning the premium charged for everyone in a market is set without basing the rate on an individual’s health history. Health status doesn’t automatically push a healthier or sicker person into a higher price for the same plan; factors like age, location, and tobacco use may adjust the rate, but not health status itself. This keeps premiums from varying with an individual’s health risk. Experience rating, by contrast, would price based on past claims or health history, which is not how typical individual plans are priced. So, community rating is the correct concept for individual health plans.