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Adjusted community rating (ACR)

What is the adjusted community rating (ACR)?

The ACR is a rating system that determines premiums for members of small employers that buy insurance in and outside the public “marketplace.” It is required for all plan years effective January 1st, 2014, or later by the Affordable Care Act (ACA).

The rates for employee and dependent coverage are calculated on a per-member basis. Certain group demographics, such as age, geographic area, family size, and tobacco use, influence the ACR. However, ACR does not vary based on a member’s health or existing health conditions.

Why is the ACR important?

The ACR replaces risk rating, in which premiums are based on prior or expected health care costs. This has led to greater access to health insurance across the United States, although some healthy enrollees may have to pay more than they did when premiums were risk-rated.

Overall, the ACR prevents health insurers from varying premiums for a company based on health status. This ensures that those with an existing medical condition do not have to pay more for their health insurance.