What does "age rating" in health insurance refer to?

Age rating in health insurance refers to the practice of setting premiums based on the age of the insured individual. This means that the insurance costs can vary depending on the age of the person purchasing the policy. Typically, older individuals may face higher premiums because they are generally perceived to have a higher risk of health issues compared to younger individuals. This method of pricing is often used to better align the cost of premiums with the expected healthcare costs associated with different age groups.

This approach helps insurers manage their risk and ensure that they have sufficient funds to cover the healthcare needs of their members. Age rating is a common practice in many health insurance markets, and it plays a significant role in how policies are priced. It also reflects the reality that health risks can increase as a person ages, leading to a higher likelihood of needing medical care and treatment.