Divergent principles are followed in United States for determination of the premiums to be paid by the small employers when they enroll under the group health insurance plan of any of the provider insurance companies. Small insurance companies are allowed to determine the initial rates of premium in 38 states. In other states such premiums are determined on the basis of community rating.

In small group plans, the employees concerned are directed to provide necessary information about their own and the family members before such coverage. During determination of rates the insurance companies use medical information relating to these people. At times the information is cross checked using the services of some medical practitioners.

It is also permissible for the insurance companies to ask for additional information in such cases. When the employer is not able to provide adequate information, the insurance plan is dealt with conservatively resulting in the assumption that the information they have not been able to collect would be negative in nature.

Law however, does not permit any major variation in the rates of premium on the basis of such medical underwriting factors. The quantum of permissible fluctuation is limited to specific percentage. This percentage is called the rating band requirement.

Alternative for the medical underwriting is the community rating. In community rating all persons living in specific geographical location will be charged with identical premium rates. Such charges would be irrespective of their age and health conditions. The same practice is applicable when the insurance is under either section 105 or section 125.