How Are Group Health Insurance Rates Determined? 
Health insurance issuers -LRB- i.e. , licensed entities -RRB- in the individual and small group markets must consider all enrollees in all non-grandfathered health plans issued in a particular state to be members of a single risk pool when developing rates and premiums for plan years -LRB- in the individual market , policy years -RRB- effective on or after Jan. 1 , 2014 . Each issuer must have one individual market pool and one small group market pool in each applicable state . States may choose to require issuers merge these pools . The final rule also requires : Each issuer in a state will have an index rate for each of the individual and small group pools for each plan year -LRB- policy year , in the individual market -RRB- . The index rate is based on the total combined claims costs for providing essential health benefits within the single risk pool . If there is not enough claims data available , issuers may use any reasonable source of claims data , including claims from grandfathered business . There may be market-wide adjustments for risk adjustment and reinsurance programs as well as Exchange user fees . Premium rates for a particular plan may vary from the market-wide index rate only by several enumerated factors . For example , issuers may modify the market-wide index rate at the individual plan level to adjust for administrative costs -LRB- other than Exchange user fees -RRB- , so long as actuarially justified . Plan-specific adjustments to the market-wide index rate must not reflect differences in health status or risk selection . Issuers are expected to use pooled allowable claims data as a basis for calculating the plan-specific actuarial value instead of using the HHS actuarial value calculator . Fair Health Insurance Premiums -LRB- applies to non-grandfathered plans -RRB- - Health insurance issuers may vary the premium rate charged to a specific non-grandfathered individual or small group from the rate established for that particular plan only based on the following factors : family size -LRB- individual or family -RRB- , geography -LRB- rating area -RRB- , age -LRB- within a ratio of 3:1 for adults -RRB- and tobacco use -LRB- within a ratio of 1.5:1 -RRB- . 