RAF refers to the rate adjustment factor. A rate adjustment factor of 1.00 means that the quotes that are displayed are based on the standard published rate. A rate adjustment factor of .90 means that the displayed rates are 90% of the standard rates, and a rate adjustment factor of 1.10 means that the rates displayed are 10% higher than the standard rate. Each insurance company that offers small Small Business in a state must publish the standard rates with their state Department of Insurance. State regulations determine how much these rates may fluctuate, up or down, for any particular group. Certain conditions may affect what rate adjustment factor the insurance company will use in determining the rate to charge to your group. Some of these factors may include the size of the group, the geographic location of the group and the health status of the group. The rate adjustment factor used to calculate your quote may not be the final rate determined by the insurance company. These premiums may be adjusted up or down by the insurance company during the underwriting process. Typically, groups of 1 to 4 people will be subject to a higher rate adjustment factor than other small groups with more employees. Some Small Business quotes will display the rates based on a variety of rate adjustment factors. This allows the employer to view the possible rates, based on the best and worst case scenarios. You may also find that the available rate adjustment factors may vary from one insurance company to another. For instance, Insurance Company A may offer an RAF of .90 to groups of three, providing that the group is healthy and passes medical underwriting guidelines for qualifying for that discounted rate. Insurance Company B may automatically place all groups of three at an RAF of 1.10, which would make their potential rates much higher than those of Insurance Company A. A quality Small Business proposal should provide the employer with the possible rate adjustment factors available for each of the insurance plans and companies listed on the quote proposal. This is an important factor in determining which insurance company best fits the needs of your company. An employer with a few employees, all of which are healthy, would most likely avoid obtaining insurance from a company that automatically charges them an increased premium that is based solely on the small size of the group. A good group insurance proposal should also include the basic underwriting guidelines for each of the insurance companies represented on the quote. These guidelines should include information on how the insurance company calculates the rate adjustment factor. For instance, it might say: Groups of 2-4 start at 1.0, groups of 5-9 start at .95, groups of 10-50 may qualify for .90. These percentages will vary from state to state, since each state determines the allowable RAF for small group health plans in that state. For instance, in California the maimum allowable RAF for small groups is 1.10. In Teas the maimum RAF is 1.25 and in Pennsylvania it is 3.0. A rate adjustment factor of 3.0 means that the insurance company may charge some small groups up to 3 times the standard rate.