Section 420-G:4 Premium Rates.
I. Health carriers providing health coverage to individuals and small employers under this chapter shall be subject to the following:
(a) All premium rates charged shall be guaranteed for a rating period of at least 12 months, and shall not be changed for any reason, including but not limited to a change in the group's case characteristics.
(b) Market rate shall be established by each health carrier for all of its health coverages offered to individuals and, separately, for all of its health coverages offered to small employers.
(c) Health carriers shall calculate health coverage plan rates for each of the coverages or health benefit plans written by that carrier. Variations in health coverage plan rates shall be solely attributable to variations in expected utilization or cost due to differences in coverage design and/or the provider contracts or other provider costs associated with specific coverages and shall not reflect differences due to the nature of the groups or eligible persons assumed to select particular health coverages.
(d) In establishing the premium charged, health carriers providing coverage to individuals shall calculate a rate that is derived from the health coverage plan rate through the application of rating factors that the carrier chooses to utilize for age, health status, and tobacco use. Such factors may be utilized only in accordance with the following limitations:
(1) The maximum premium differential for age as determined by ratio shall be 4 to 1. The limitation shall not apply for determining rates for an attained age of less than 19.
(2) The maximum differential due to health status shall be 1.5 to 1 and the maximum differential rate due to tobacco use shall be 1.5 to 1. Rate limitations based on health status do not apply to rate variations based on an insured's status as a tobacco user.
(3) Permissible rating characteristics shall not include changes in health status after issue.
(e) In establishing the premium charged, health carriers offering coverage to small employers shall calculate premium rates that are derived from the health coverage plan rate by making adjustments to reflect one or more case characteristics. Such adjustments from the health coverage plan rate may be made only in accordance with the following limitations:
(1) In establishing the premium rates, health carriers offering coverage to small employers may use only age, group size, and industry classification as case characteristics. No consideration shall be given to health status, claim experience, duration of coverage, geographic location, or any other characteristic of the group.
(2) Carriers making adjustments from the health coverage plan rate for age may do so only by using the following age brackets:
0 - 18 19 - 24 25 - 29 30 - 34 35 - 39 40 - 44 45 - 49 50 - 54 55 - 59 60 - 64 65 +
(3) The maximum premium rate differential after adjusting for all case characteristics as determined by ratio shall be 3.5 to 1. This limitation shall not apply for determining premium rates for covered persons whose attained age is less than 19.
(4) In establishing the premium rates, health carriers offering coverage to small employers may make further adjustments based on family composition.
(5) The small employer health carrier shall set premium rates for small employers after consideration of case characteristics of the small employer group as well as family composition. No small employer health carrier shall inquire regarding health status or claims experience of the small employer or its employees or dependents until after the premium rates have been agreed upon by the carrier and the employer.
(6) Carriers may calculate premium rates using either list billing or composite billing. Carriers shall use the same billing method in all succeeding rating periods unless the small employer agrees to allow the carrier to change the methodology.
(7) [Repealed.]
(f) Each rating factor that a carrier chooses to utilize in the individual market shall be reflective of claim cost variations that correlate with that factor independently of claim cost variations that correlate with any of the other allowable factors.
(g) The same rating methodology shall apply to newly covered individuals and to individuals renewing at each annual renewal date, or to new small employers and small employers renewing at each annual renewal date or anniversary date. Rating methodology shall not be construed to include health carrier incentives to individual subscribers or members to participate in wellness and fitness programs provided such incentives are approved by the insurance department.
(h) The commissioner shall not approve any filing if such filing is excessive, inadequate, or contrary to the intent of this chapter.
II. (a) Health carriers providing health coverage to large employers may not require any person, as a condition of receiving health coverage or continued health coverage, to pay a premium or contribution that is greater than that of similarly situated persons based on any health status related factor of that person or that person's dependents.
(b) Nothing in subparagraph (a) shall be construed to restrict the amount that a health carrier may charge a large employer, nor to prevent a health carrier from establishing premium discounts or rebates or modifying copayments or deductibles in return for adherence to programs of health promotion and disease prevention.
III. [Repealed.]
Source. 1997, 344:1. 1998, 340:9, 10. 2001, 295:2; 296:1, 2. 2003, 188:5, 6; 188:15. 2005, 225:9, 10, 15, eff. Jan. 1, 2006; 225:13, eff. Jan. 1, 2007.