Allowable Rating Factor

Acronym: ARF

The ARF reflects the ages of enrollees in a plan and the impact on the premium the plan would collect based on the age rating rules. The rating for the most expensive group cannot be more than three times as high as the rating of the lowest group (e.g., an enrollee who is 21 years of age has an ARF of 1.00, and the maximum rating for an enrollee aged 64 and older is 3.00). A plan with a higher ARF can collect more premium revenue due to the age rating than a plan with a lower ARF. For example, an insurer has a Plan A with an ARF of 2.00 and a Plan B with an ARF of 1.60. The insurer would be able to collect 25% more Plan A premiums than Plan B premiums, given the differences in age rating.