Small group age rating calculator

Rate the census

Paste the age column from a census, or type the ages separated by commas, and enter the plan's monthly rate for a 21-year-old in the group's rating area. The default is a 10-person census from 24 to 61 at a $420 age-21 rate. The calculator rates employees only; add each covered spouse and child as their own line if you want the full bill.

Ages stay in the browser, and the tool never sees names or dates of birth. A list of ages is enough.

How ACA age rating works

The ACA limits small group premiums to four factors: age, geographic rating area, tobacco use and family size. The carrier files one base rate per plan and rating area, and each person's premium is that base rate times their age factor. Health status, gender and the group's claims can't change the rate.

The federal default age curve sets a 21-year-old at 1.000 and a person 64 or older at 3.000, which is the 3:1 limit the ACA puts on age rating. Children 14 and under share one factor of 0.765, and the curve rises each year from 15 to 64. A handful of states, including Massachusetts, Minnesota, Oregon and Utah, plus DC, use their own curves, and New York and Vermont don't allow age rating at all. This calculator uses the federal default.

Family premiums are built the same way, person by person. Only the three oldest children under 21 are rated, so a family with five young children pays for three.

A worked census

That last line is the reason a small group's renewal can move sharply in either direction with no change in the carrier's rates. The census changed. Rerun the census at every renewal before you blame the carrier.

List billing and composite rates

By default, small group plans are list billed: the carrier bills each person's age-rated premium. Where the state allows it, a carrier can offer composite rates instead, one average rate per tier that bills the same total for the plan year. The federal rule requires the composite to be derived from the per-member rates, and it stays fixed for the plan year even if the census changes.

• List billing is exact. Each new hire's premium is their own, so the bill tracks the census every month.
• Composite rates are simpler to explain and to set contributions on, because every employee-only enrollee has the same premium. A percentage contribution on a composite treats a 25-year-old and a 60-year-old the same.
• With list billing and a percentage contribution, older employees pay more in dollars for the same plan. Many employers set a flat contribution based on the composite or the average to avoid that.

Using the census in a quote

The age-21 rate is the single number that changes between carriers and plans; the age curve is the same for every fully insured small group plan in the state. To compare two plans for one census, run each plan's age-21 rate through the same list of ages. The ratio between their totals equals the ratio between their base rates, so the cheaper base rate is cheaper for every census.

That is not true of level-funded and self-funded plans, which are priced on the group's expected claims and are not bound to the ACA's rating factors. A young, healthy group may see a much lower level-funded quote than its age-rated premium; an older group may see the reverse. Our guide to level-funded, self-funded and fully insured plans covers the trade-off.

Ask the client for ages as of the plan's effective date. Carriers rate on the age at the start of the plan year, so a census taken in March for a January renewal can put someone in the wrong year.

Getting the census right for age rating

Age-rated premiums are only as accurate as the ages on the census. A few checks catch most errors before a carrier does:

• Use dates of birth, not ages. Ages go stale; a date of birth lets you compute the age at the effective date.
• Remove terminated employees and add confirmed new hires. The census should describe who will be enrolled on day one.
• Check outliers. An age of 4 or 104 on an employee line is a typo, and the calculator drops ages outside 0 to 120 for that reason.
• Separate enrolling and waiving employees. Only people who enroll are rated; a census of everyone eligible overstates the premium.

Count dependents carefully. A spouse is rated at their own age, and each child is rated at theirs, up to the three oldest under 21. A census that lists only employees will understate a family-heavy group's premium by a wide margin; one that lists every child in a large family will overstate it.

Finally, rerun the census when the effective date moves. A group quoted for March that slips to May may have employees cross into a new age band, and the difference between 63 and 64 is the difference between a factor of 2.952 and 3.000. The carrier's final rates will use the census as of the date coverage starts.

Our guide to reading a census file covers the rest of the fields that move a quote.

What this calculator does not include

It does not apply a tobacco surcharge, a state-specific age curve or the rating-area differences inside a multi-state group. It rates employees only unless you add dependents as separate ages. And it uses one base rate, so it can't show the difference between plans unless you run each plan's rate separately.

It also does not apply to individual-market ICHRA plans, which use the same age curve but a different base rate in each employee's own rating area. Our ICHRA age rating calculator handles allowances that vary by age.