For ACA-compliant fully-insured small-group coverage in Ohio, a carrier may move the rate on four things: whether the coverage is individual or family, the rating area, age, and tobacco use. 45 CFR 147.102(a)(2) shuts the list. Claims experience, health status, industry and the sex of your employees are not on it.
That is the answer, and three complications sit underneath it.
Four factors, and a closing clause that does the real work
The operative rule is federal, and it is written as a permission followed by a prohibition:
(a) In general. With respect to the premium rate charged by a health insurance issuer … for health insurance coverage offered in the individual or small group market— (1) The rate may vary with respect to the particular plan or coverage involved only by determining the following: (i) Whether the plan or coverage covers an individual or family. (ii) Rating area, as established in accordance with paragraph (b) of this section. … (B) In the small group market, using the group policyholder’s principal business address. … (iii) Age, except that the rate may not vary by more than [a stated ratio] for like individuals of different age who are age 21 and older and that the variation in rate must be actuarially justified for individuals under age 21, consistent with the uniform age rating curve under paragraph (e) of this section. … (iv) Subject to section 2705 of the Public Health Service Act and its implementing regulations …, tobacco use, except that such rate may not vary by more than [a stated ratio] and may only be applied with respect to individuals who may legally use tobacco under federal and state law. … (2) The rate must not vary with respect to the particular plan or coverage involved by any other factor not described in paragraph (a)(1) of this section.
Read the list, then read the closing clause. The permission is interesting; the prohibition is the answer. Nothing outside those factors can move the rate — not the group’s claims, not anyone’s health, not how long the group has been covered, not the industry code on the application. The two ratios in the passage are capped by the regulation and are withheld here, because the cap is not what an employer needs and the prohibition is.
This rule is a rule for a class of markets. It does not name Ohio anywhere, and it should be read as the federal floor that applies in Ohio rather than as Ohio’s own rule.
What a health status-related factor actually is
Ohio does define the term, and the definition is worth having in front of you when you read a renewal letter:
‘Health status-related factor’ means any of the following: (a) Health status; (b) Medical condition, including both physical and mental illnesses; (c) Claims experience; (d) Receipt of health care; (e) Medical history; (f) Genetic information; (g) Evidence of insurability, including conditions arising out of acts of domestic violence; (h) Disability.
That is ORC 3924.27(A)(2). Claims experience and receipt of health care sitting on the same list as medical history is the part worth noticing — a rate conversation that turns on “how your group used the plan last year” is a conversation about an item on that list.
The Ohio section that sounds exactly on point disclaims that reading one subsection later
Search for Ohio’s prohibition on health-status rating and you will land on a section headed with those words. ORC 3924.27(B) provides that no group health benefit plan, and no carrier offering coverage in connection with one, shall require any individual to pay a premium or contribution greater than that for a similarly situated individual enrolled in the plan, on the basis of any health status-related factor. That is an intra-group rule: one enrollee measured against another enrollee.
The next subsection is the one that matters. ORC 3924.27(C) provides that nothing in division (B) shall be construed to restrict the amount that an employer may be charged for coverage under a group health benefit plan, or to prevent premium discounts or rebates in return for adherence to programs of health promotion and disease prevention. So the Ohio section that reads like the answer to “can they rate my group on health” declines that reading in its own next breath. The protection at the group level is the federal one quoted above, not this one. Our Ohio page sets out the rest of the state-level framework around it.
Ohio has its own small-employer rating statute, and it describes a different world
ORC 3924.04, Limits on premium rates - low claim rates, is live, currently served Ohio law. It sets out a small-employer rating architecture built on variation from an applicable midpoint rate, a low claims discount for small employers with favorable claims experience, and a limit on how far an industry classification’s rate factor may sit from the average of all industry classifications. Its own effective date is in 2007 and it has not been amended since. Every figure in it is withheld here.
Its companion definition is ORC 3924.01(D), which defines case characteristics for that chapter to mean the geographic area in which the employees work, the age and sex of the individual employees and their dependents, the industry classification as determined by the carrier, the number of employees and dependents, and other objective criteria the carrier establishes — while expressly excluding claims experience, health status and duration of coverage from the date of issue.
Set that beside 45 CFR 147.102(a)(2) and the tension is obvious: industry and sex appear as permitted case characteristics in Ohio’s chapter and are absent from the federal list that closes itself. Both texts are current on their own faces and both carry their own dates. The honest handling is to state each with its date and to assert nothing about which instrument displaces which — that is a legal conclusion, and it is not one this agency makes. What an employer should take from it is narrower and more useful: do not read Ohio’s chapter as a description of how an ACA-compliant small-group rate is built today.
Geography is the one rating input Ohio draws for itself
Rating area is on the federal list, but the map is not federal. The federal fallback would draw one area for each metropolitan statistical area and one covering everything else, and Ohio’s published map is not that: it is drawn county by county, with a county name on every row and no three-digit zip refinement anywhere in it. That is what makes Ohio’s geography state-set rather than federally defaulted, and it is uniform across the issuers rating in the state.
No number of areas appears here and no area identifier does either. The mechanism is the publishable fact: where the group sits changes the geographic factor, and the boundaries follow county lines rather than metropolitan ones, so two employers a short drive apart can sit in different areas.
The address that sets your area is the employer’s, not each employee’s
The federal rule is explicit that in the small group market the rating area is determined using the group policyholder’s principal business address
. The employer is the group policyholder, so a workforce spread across several Ohio counties — or across a state line — does not fracture into several rating areas. It also means the address actually on file is a rating input, which is worth confirming rather than assuming, particularly for an employer whose mailing habits and whose registered address diverged years ago.
Being a small employer is what puts your group under these rules at all
Which rating rules a carrier follows depends on which market the group is in, and in Ohio that turns on ORC 3924.01(M)(1). One sentence is all this post needs from it: the Ohio band is what decides whether the small-employer rules reach your group, and the detail of how the band counts belongs with the posts that answer how many employees you need.
One related point is worth stating because employers ask it directly. Ohio’s row on the federal state-rating-variation table carries no entry in any column, and that table states its own reading rule — where a cell is blank, the federal default applies. On the table’s own terms Ohio has not set a state-specific age rating ratio, age curve, tobacco ratio, family-tier method or expanded small-employer definition. That table carries a caption date from before its last page-modification stamp, so cite it for what it records rather than as a statement about today.
A rate outside the fully-insured small group market is not built this way
The federal rule governs the premium rate charged for coverage offered in the individual or small group market, and 45 CFR 147.102(h) provides that the section does not apply to grandfathered health plans. Those two scope limits are doing more work than they look like they are. An arrangement that is not fully-insured small group coverage is not priced under the closed factor list, and nothing in this post describes how such an arrangement is priced. If the document in front of you is not a fully-insured small group quote, the first question is not which factors moved the rate but which rules reached the rate at all — and that is a question worth putting to us before renewal, through the quote request or directly.
Alliances are a purchasing structure, not a separate rating rule
Ohio authorizes small employer health care alliances under ORC Chapter 1731 — chambers of commerce, trade associations and similar nonprofits whose members are small employers, certificated by the superintendent of insurance to sponsor a program helping members obtain coverage. The Ohio Department of Insurance publishes the current roster of certificated alliances as the Ohio Small Employer Health Care Alliance Listing.
It is a purchasing structure, and that is how it should be described. ORC 1731.09(B)(1) applies the premium rate limitations of ORC 3924.04 to each alliance class of business separately, which ties the alliance mechanism directly to the pre-federal-rule rating section discussed above. For that reason nothing here describes alliance rating machinery as how a member’s rate is set today, and the percentage cap in that section is withheld. If you are weighing an alliance route alongside a direct placement, contact us and we will read both documents against the same factor list.
The bottom line
For ACA-compliant fully-insured small-group coverage in Ohio, the federal rule at 45 CFR 147.102 lets a rate move on individual-or-family, rating area, age and tobacco use, and its closing clause forbids every other factor. Ohio adds one thing of its own — a county-drawn rating-area map. The Ohio statute that reads like a health-status rating prohibition is an intra-group rule that expressly declines to restrict what the employer is charged, and Ohio’s own small-employer rating section is text from before the federal rule and should not be read as what happens to a plan today.
Frequently asked questions
Can an Ohio insurer rate my group on our claims or our employees’ health?
Not for ACA-compliant fully-insured small-group coverage. 45 CFR 147.102(a)(1) names the factors a rate may vary on, and 45 CFR 147.102(a)(2) provides that the rate must not vary by any other factor not described there. Claims experience, health status and medical history are not on the list.
Does Ohio law prohibit health-status rating of a small group?
Not in the way its heading suggests. ORC 3924.27(B) is an intra-group rule about one enrollee against a similarly situated enrollee, and ORC 3924.27(C) says in terms that nothing in division (B) restricts the amount an employer may be charged for coverage under a group health benefit plan.
Can an Ohio carrier rate my group on our industry or on the sex of our employees?
ORC 3924.01(D) defines case characteristics to include industry classification and the age and sex of individual employees, and that is live Ohio text from before the federal rating rule. 45 CFR 147.102(a)(2) forecloses any factor outside its own list for ACA-compliant small-group coverage. Both texts exist; read each with its own date and do not treat the older one as current practice.
Does where my business sits change the rate in Ohio?
Yes, through the rating area. Rating area is one of the permitted factors under 45 CFR 147.102(a)(1), and Ohio draws its own geographic rating areas on counties rather than on the federal metropolitan-area default. The federal rule locates a small group by the group policyholder’s principal business address.
Does Ohio set its own age curve or its own age and tobacco limits?
Ohio’s row on the federal state-rating-variation table carries no entry in any column, and that table’s own reading rule is that where a cell is blank the federal default applies. On that reading Ohio has not set a state-specific age curve, tobacco variation, family-tier method or expanded small-employer definition.
Do these rating rules apply to a level-funded or self-funded plan?
45 CFR 147.102 governs the premium rate charged for coverage offered in the individual or small group market, and 45 CFR 147.102(h) provides that the section does not apply to grandfathered health plans. An arrangement outside the fully-insured small group market is not priced under this rule, which is why two documents can both be headed small group and not be built the same way.
About the author
Nate Jones, CPCU, is the founder of Wexford Insurance and Wexford Health Insurance, an independent agency placing small-business group benefits in 9 states. Nate reads Ohio small-group rate exhibits against the closed federal factor list and against Ohio’s county-drawn rating areas, including the two live Ohio sections that describe a rating mechanism the federal floor has overtaken. Start with the Wexford Health Insurance quote form.