What is 'experience rating' for group health insurance?

Experience rating sets group premiums based on the group's own historical claims data. Large groups (100+ employees) are typically experience-rated — their premium directly reflects their own utilization. Small groups (under 50-100 employees) are typically community-rated — their premium reflects the broader community's experience because their own data is statistically insufficient to predict future claims. Experience rating creates incentives for large employers to manage employee health and claim costs. The ACA created community rating requirements for individual and small group markets.