How to Read an ACA Rate Filing: the URRT and the Actuarial Memorandum, Field by Field

An ACA single risk pool rate filing has three parts: the Unified Rate Review Template, a consumer narrative required only when a plan's increase reaches 15 percent, and the actuarial memorandum that justifies every factor (CMS, PY2027 Unified Rate Review Instructions). Worksheet 1 carries the whole rate development on one page, and CMS's annual public use file exposes every factor for every issuer.

Blue Cross and Blue Shield of Texas's PY2026 individual filing is the worked example throughout. Its experience index rate of $594.62 per member per month became a market adjusted index rate of $817.66, and one silver HMO's calibrated plan rate came out at $462.20, on a book of 1.08 million current enrollees facing an enrollment-weighted increase of 39.6 percent (CMS PY2026 URR public use file, March 27, 2026, computed).

Key Takeaways

Three documents make up a filing: Part I, the URRT with Worksheets 1, 2 and 3; Part II, the consumer justification narrative, required only when a plan in the product has a rate increase of 15 percent or greater; and Part III, the actuarial memorandum, required for any increase and any filing with qualified health plans (CMS, PY2027 URR Instructions, 2026).
Ten steps take the Worksheet 1 experience index rate to the market adjusted index rate: two years of cost and utilization trend, morbidity, demographic shift, plan design, other, credibility blending with a manual rate, reinsurance, risk adjustment, and the exchange user fee (45 CFR 156.80(d)(1); CMS instructions).
$113.60 PMPM is what the morbidity factor of 1.169 added in the Texas filing, against $76.81 from two years of trend and $82.96 from the "Other" factor of 1.106, on a $594.62 starting point (CMS PY2026 PUF, March 2026, computed).
1.031 was the median morbidity factor across the 373 individual-market filings in the PY2026 file, with a 90th percentile of 1.191; the median two-year trend factor was 1.154 and the median exchange user fee 2.67 percent (CMS PY2026 PUF, March 2026, computed).
Five plan-level factors are all that 45 CFR 156.80(d)(2) permits after the market adjusted index rate: actuarial value and cost sharing, provider network, non-EHB benefits, administrative cost, and the catastrophic plan eligibility adjustment; "Other" is not an allowable plan adjustment (CMS, PY2027 URR Instructions, 2026).

Three Parts and Where Each One Lives

Part I is the template itself, submitted through HIOS and published in redacted and unredacted forms. Worksheet 1 holds the market-level rate development, Worksheet 2 the product and plan detail including each plan's actuarial value, rate change and projection period premium, and Worksheet 3 the rating area factors (CMS, PY2027 URR Instructions, Sections 2.1 to 2.3). Every field on Worksheet 1 appears as a column in the annual public use file, so the 84 columns of the PY2026 Worksheet 1 file are the index rate development for 798 filings, 373 of them individual market.

Part II is the narrative a consumer sees on ratereview.healthcare.gov. Because it is triggered only by a 15 percent increase in a plan within the product, its absence tells the reader something: an issuer with a 14 percent average increase may have no Part II at all.

Part III is the document an actuary reads. It follows the Worksheet 1 order, states the paid-through date and completion method for the experience claims, the trend basis, the credibility standard under ASOP 25, and the derivation of each adjustment factor, and it ends with a certification that the index rate complies with 45 CFR 156.80 and 147.102 and was "neither excessive nor deficient" (Medica Insurance Company, PY2022 Iowa actuarial memorandum, June 11, 2021).

Three regulations govern the shape. Section 156.80(d)(1) lists the only market-level adjustments to the index rate: risk adjustment transfers, reinsurance, and exchange user fees. Section 156.80(d)(2) lists the only plan-level adjustments. Section 156.80(d)(3) requires a single calibration for age, geography and tobacco that may not vary by plan. Anything an issuer wants to charge for has to fit one of those slots, which is why the memorandum's "Other" section is the first place to look when a factor seems large.

Worksheet 1, Section I: the Experience Period

Section I is twelve months of history, a calendar year for the individual market, entered on an allowed and an incurred basis. The Texas filing's experience period is calendar 2024: 16,104,829 member months, allowed claims of $594.74 PMPM, incurred claims of $498.28 PMPM, earned premium of $551.40 PMPM, and a risk adjustment receipt of $41.26 PMPM (CMS PY2026 PUF, March 2026). The gap between allowed and incurred, $96.46 PMPM, is member cost sharing, and the ratio of incurred to premium, 90.4 percent before risk adjustment, is the experience loss ratio the projection has to correct.

Allowed claims are the number the rest of the worksheet works from, because the index rate is defined as allowed claims for essential health benefits per member per month, the same value for every non-grandfathered plan the issuer sells in the state and market (CMS instructions). The memorandum's experience section states the paid-through date and the completion method. Medica's 2022 Iowa memorandum, for instance, describes a Bornhuetter-Ferguson blend for recent lags and pure completion factors for older ones, with the incurred-but-not-paid estimate stated as of April 30 of the filing year.

The experience index rate is then split into six benefit categories. For Texas: inpatient $167.99, outpatient $178.36, professional $108.85, other medical $46.85, prescription drug $89.58, capitation zero, totalling $594.62 PMPM (CMS PY2026 PUF, March 2026). The split matters because trend is entered by category, and a filing with a 10 percent pharmacy cost trend and a 4 percent inpatient trend composites to something in between depending on the mix.

Worksheet 1, Section II: the Ten-Step Chain to the Market Adjusted Index Rate

Section II applies factors to the experience index rate in a fixed order, each entered as one plus a percentage. Trend comes first, split between cost and utilization for two projection years and by benefit category. Texas entered inpatient cost trends of 1.0439 and 1.0422 with utilization near 1.003 in each year, and pharmacy cost trend of 1.1005 with utilization of 1.0217 in year one; the composite took $594.62 to $671.43, a two-year factor of 1.129 (CMS PY2026 PUF, March 2026, computed).

Morbidity is the change in average allowed claims that would occur "where all demographic and product mix, and all provider network contracts and time parameters are held constant on the population that exists in the Experience Period." The instructions list what it may contain: take-up of the uninsured, health status of the newly insured, induced and pent-up demand, and subsidy effects (CMS, PY2027 URR Instructions, 2026). Demographic shift captures age, gender and area changes; plan design captures utilization changes from cost sharing; "Other" is reserved for legislative change and 1332 waivers and must be described in the memorandum.

Worksheet 1 step	Factor entered	PMPM after step	Change
Experience period index rate (EHB allowed, CY2024)		$594.62
Cost and utilization trend, two years, by category	1.129 composite	$671.43	+$76.81
Morbidity adjustment	1.1692	$785.03	+$113.60
Demographic shift	0.9972	$782.83	-$2.20
Plan design changes	1.0027	$784.97	+$2.14
Other	1.1057	$867.93	+$82.96
Credibility (manual rate weight)	100% experience	$867.93	$0
Risk adjustment payment expected	+$72.60 received	$795.33	-$72.60
Reinsurance	$0	$795.33	$0
Exchange user fee	2.73% (divide by 0.9727)	$817.66	+$22.33
Market adjusted index rate (MAIR)		$817.66	+37.5% on $594.62

Blue Cross and Blue Shield of Texas, individual market, effective January 1, 2026, SERFF TXAC-134670013. Computed from the CMS PY2026 Unified Rate Review public use file, Worksheet 1.

Two things stand out in the Texas chain. Morbidity at 1.169 is the largest single step and sits at roughly the 90th percentile of the 373 individual filings, where the median was 1.031. And the "Other" factor of 1.106 is the second largest, worth $82.96 PMPM, which means the memorandum's description of that field carries more of the increase than trend does. A reader who stops at the 39.6 percent headline has seen none of that.

The last three steps convert allowed claims into the market adjusted index rate. Credibility blends the adjusted experience with a manual rate; Texas applied 100 percent to experience, while more than a tenth of the individual filings entered zero credibility and a manual rate, the position of a new entrant with no experience period.

Risk adjustment is entered as the projected transfer, grossed up to an allowed basis, positive when a payment is expected; Texas expects to receive $72.60 PMPM, which lowers the MAIR. The exchange user fee is the one fee applied at market level, by dividing by one minus the percentage; Texas used 2.73 percent against a file median of 2.67 (CMS PY2026 PUF, March 2026, computed).

Worksheet 2 and the Memorandum: From the MAIR to a Rate Someone Pays

The MAIR is the same for every plan the issuer sells in the market. Worksheet 2 turns it into plan rates using only the 156.80(d)(2) factors. For BCBSTX's MyBlue Health Silver Standard HMO, the on-exchange plan with 41,966 current enrollees, the factors were 1.0094 for actuarial value and cost sharing, 0.7601 for the provider network, 1.0 for non-EHB benefits, and loads of 6.48 percent administrative, 1.86 percent taxes and fees and 4.91 percent risk and profit, applied as a share of premium (CMS PY2026 PUF, March 2026, Worksheet 2).

The arithmetic runs: $817.66 times 1.0094 times 0.7601 gives $627.32 of plan-level allowed claims, and dividing by one minus the 13.25 percent of combined loads gives a plan adjusted index rate of $723.10. Calibration then resets that figure to an age factor of 1.0, a geographic factor of 1.0 and a tobacco factor of 1.0: the filing's average age factor was 0.6413, its geographic calibration 1.0 and its tobacco calibration 0.9967, so the calibrated plan adjusted index rate is $462.20. Multiplying by the federal age curve factor for a given age and the Worksheet 3 rating area factor produces the premium on the quote (CMS instructions; CMS PY2026 PUF, computed).

The network factor is where two plans from the same issuer diverge most. BCBSTX's Blue Advantage Silver HMO Standard carried a network factor of 1.1103 against MyBlue's 0.7601, and the same MAIR produced a plan adjusted index rate of $1,066.88 against $723.10, a cumulative rate change of 50.5 percent against 39.9 percent, and a projected loss ratio of 94.3 percent against 77.1 percent (CMS PY2026 PUF, March 2026). The memorandum's network section explains how those relativities were built; Medica's describes provider cost relativities by service category against an open-access baseline.

The memorandum sections map to the worksheet in order, and a reader working a filing can go straight to the one that matters. The proposed rate change and its drivers are stated up front. The experience section gives the paid-through date and completion method. Trend, credibility, morbidity, benefits, demographics and "Other" each get a subsection under the development of the projected index rate. Risk adjustment and reinsurance sit under the market adjusted index rate. Network, catastrophic eligibility, administrative expense and the CSR load sit under the plan adjusted index rate, and calibration and the actuarial value calculator close the document before the certification.

The certification is worth reading last. It states that only the allowable modifiers in 156.80(d)(1) and (d)(2) were used, that geographic factors reflect delivery cost and not morbidity, and that the AV calculator was used for every plan except as noted. A filing whose Worksheet 1 "Other" factor is large, whose network factors spread from 0.76 to 1.11, and whose morbidity sits at the 90th percentile has told the reader where its increase came from before the state review begins.