69O-149.037. Calculation of Premium Rates

(1) This rule is applicable for all health benefit plans subject to Section 627.6699, F.S., and is in addition to Parts I and II.

(2)(a) A group’s rate shall not be changed due to employee age changes which occur during the period when a premium schedule is guaranteed.

(b) The rate applicable to new or terminating enrollees or any change in dependent status shall be made at the premium schedule in effect at the employer’s policy/certificate anniversary.

(3)(a) All contract forms issued pursuant to Section 627.6699, F.S., are subject to modified community rating and must be pooled together for all rating purposes, except that health maintenance organization plans need not be pooled with indemnity plans.

(b) Premiums for health benefit plans shall recognize benefit, deductible, and copay differentials as well as other plan structures that can be demonstrated to have a direct impact on costs. As an example, if the Standard Plan is enriched by the addition of riders for a particular employer by 20 percent, then the premium shall be 20 percent higher than a Standard Plan issued to the same employer. This does not prohibit reflecting appropriate premium differences due to cost differences of provider networks between plans.

(c)1. To avoid over insurance and to provide for coordination of benefits pursuant to Section 627.4235, F.S., a plan may include a provision to exclude claims for health benefits covered under the plan and paid by workers’ compensation insurance coverage of the employer.

2. To reflect the benefit differences provided by the plan, a carrier may file for approval a rating factor reflecting the additional benefits being provided by the health plan if the small employer does not have workers’ compensation insurance.

(4) Rate filing requirements –

(a) Modified Community Rating. Premium schedules for benefit plans offered to small employer groups shall be based solely on the following categories and factors applicable to eligible employees, without regard to the nature of the employer group.

1. Age Factors. Employee age shall be determined as of the date of issue and each subsequent renewal date thereafter as defined in the policy and certificate. If not explicitly defined in the contract, age shall be the attained age as of the date of issue or renewal of the certificate.

a. Age Categories Effective Prior to October 1, 2006.

(I) < 30 years of age

(II) 30-39 years of age

(III) 40-49 years of age

(IV) 50-54 years of age

(V) 55-59 years of age

(VI) 60-64 years of age

(VII) 65 & above years of age – Medicare is Primary

(VIII) 65 & above years of age – Health Plan is Primary

b. Age Categories Effective On or After October 1, 2006.

(I) < 24 years of age

(II) 25-29 years of age

(III) 30-34 years of age

(IV) 35-39 years of age

(V) 40-44 years of age

(VI) 45-49 years of age

(VII) 50-54 years of age

(VIII) 55-59 years of age

(IX) 60-64 years of age

(X) 65 & above years of age – Medicare is Primary

(XI) 65 & above years of age – Health Plan is Primary

c. The rate for the age 65 & above – Medicare is Primary category shall be applicable when both employee and spouse are enrolled in Medicare. If one is enrolled and one is not, regardless of which spouse is the employee, the rate charged shall be adjusted to reflect the reduction of exposure due to the fact that one spouse is enrolled in Medicare. The rate shall be determined assuming that one individual is enrolled in Medicare. The rate for the individual enrolled in Medicare will be isolated, multiplied by the Medicare is Primary to the Health Plan is Primary ratio, and then added back to the portion of the rate that is not Medicare primary. Samples of illustrative calculations are as follows and other combinations should be calculated in a similar manner:

(I) For employee + spouse coverage where Medicare is the primary coverage for the spouse – The difference between the employee + spouse rate where the Health plan is primary and the employee only rate where the Health Plan is Primary shall be determined. This value shall reflect the implied spouse rate. This implied spouse rate shall be multiplied by the ratio of the Medicare is Primary rate divided by the Health Plan is Primary rate. This resulting rate shall be added to the employee only rate.

(II) For family coverage – The difference between the family rate and the employee + dependent rate shall be determined. This difference shall reflect the implied spouse rate. This implied spouse rate shall be multiplied by the ratio of the Medicare is Primary rate divided by the Health Plan is Primary rate. This resulting rate shall be added to the employee + dependent only rate.

2. Gender/Family Composition Factors.

a. Gender/Family Composition Categories.

(I) Employee – Male

(II) Employee – Female

(III) Employee – Male – Dependent Children

(IV) Employee – Female – Dependent Children

(V) Employee – Spouse

(VI) Employee – Spouse – Dependent Children

b. For both the employee with spouse plus dependent children category and the employee with dependent children category, companies may include up to three optional dependent children categories.

c. At the option of the company, dependent only categories.

3. Area Factors by County.

4. Tobacco Usage Factor (>1, base rates are for non-tobacco user).

5. Effective Date and Trend Adjustment Factor. The premium schedule may be adjusted based on a medical trend table, approved pursuant to Part I of this rule chapter, reflecting the period of time from the date the rate schedule is effective to the anniversary date of the new or renewing group for medical trend adjustment.

(b) SERCS. Small group rates must be filed on a 2-50 life basis using the Small Employer Rate Collection System (SERCS), Form OIR-B2-SERCS (Rev. 6/19/06), which is hereby adopted and incorporated by reference. These forms are available at: https://iportal.fldfs.com/ifile/fass/work/questions/sercs_upload.asp.

(5) The minimum loss ratio is 65 percent.

(6)(a)1.a. A small employer carrier may make up to a 15 percent adjustment in rates from the modified community rate schedule for claims experience, health status, or duration of coverage for a particular employer group from that otherwise determined from the tabular rate schedule determined above pursuant to Section 627.6699(6)(b)5., F.S.

b. A small employer carrier may make an adjustment to a small employer’s renewal premium, not to exceed 10 percent annually due to claims experience, health status, or duration of coverage subject to a maximum 15 percent differential from the modified community rate pursuant to Section 627.6699(6)(b)5., F.S.

2. The objective criteria and standards for application of this rate adjustment shall be applicable to and used for all small employer groups on a non-discriminatory basis.

3. Such criteria and standards shall be filed for approval pursuant to Part I of this rule chapter.

4. A small employer carrier may require completion of an application including health questions, but shall not decline to offer coverage if the employer is unwilling or unable to provide prior claims experience.

5. Such adjustment shall be uniformly applied to the entire premium schedule.

(b) A small employer carrier may file rating factors to provide a credit to the approved tabular community rate schedule to reflect efficiencies in administrative and acquisition expenses based on the size of the small employer. Such factors shall be filed for approval pursuant to Part I of this rule chapter, and shall be used for all small employer groups on a non-discriminatory basis.

(c) If a small employer carrier makes adjustments to individual employer group rates based on the provisions of paragraph (a) or (b) above, the carrier shall provide experience in all rate filings including both the actual premiums charged and the premium which would have resulted had no adjustments been made and the tabular community rate schedule was used. Rate analysis and rate adjustments shall be based on the restated premium as though the tabular community rate schedule were used without adjustment.

(d) Coverage available to an Alliance or other group association pursuant to Section 627.6699(6)(b), F.S., is subject to the provisions of Section 627.6699, F.S., and shall be available to the Alliance or other group association on a guaranteed issue basis. Any rate adjustments made pursuant to paragraph (b) above shall be applied uniformly to all members of the Alliance or other group association and not on an individual employer basis. Rate adjustments pursuant to paragraph (a) above shall be determined and applied on an individual employer group basis.

(7)(a) A small employer carrier may file for approval subject to Part I of this rule chapter a rate factor to be applied to one-life groups.

(b) If elected, the carrier shall file the rate schedule applicable to the 2-50 eligible employee groups and include the rate factor to be applied to such rate schedule resulting in the rate schedule to be applied to one-life groups.

(c) The one-life factor shall not exceed 1.50.

(d) The one-life factor shall be applied to all one-life groups.

(e) If the small employer carrier elects the option permitted by subsection 69O-149.037(6), F.A.C., in addition to this option, the one-life factor shall be determined such that the one-life factor times the maximum increase permitted under subsection 69O-149.037(6), F.A.C., does not exceed 1.50.

(f) If the small employer carrier elects the options permitted by subsection 69O-149.037(6), F.A.C., and this option, the rate quoted to the one-life group shall first apply the one-life factor under this subsection (7) and then apply the provisions of subsection (6) with the total adjustment limited to 1.50.

(g) Future filings shall include aggregate small group experience, actual one-life group experience, one-life group experience with the earned premium restated to remove the one-life factor; i.e., restate earned premium as though the 2-50 eligible employee rate schedule without the one-life factor rate had been charged, and the 2-50 group experience with the earned premium restated to the current manual rate basis.

(h) The aggregate experience, as well as the separate one-life experience, shall meet the target loss ratio standards for the form.

(8) Calculation of COBRA Rates. The premium paid for continuation of coverage may not exceed 115 percent of the group rate for groups that consist of fewer than 20 employees as permitted by Section 627.6692(5)(f), F.S., and 102 percent for groups with 20 or more employees as provided by Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.A. § 1162 (2005). The additional rate indicated above, i.e., 15 percent and 2 percent shall be hereinafter referred to as the applicable load.

(a) Qualified beneficiaries, as defined in Section 627.6692(4)(f), F.S., electing continuation of coverage shall be charged the group rate applicable to the qualified beneficiary on the day before the qualifying event, as increased by the applicable load. Whenever the small employer group’s rates change, generally on the group’s anniversary, the rate subsequently charged to the qualified beneficiary for the continuation of coverage will be based on the small employer group’s rate which the qualified beneficiary would have been charged if the qualified beneficiary had remained within the group. If the qualified beneficiary electing continuation of coverage is a spouse or dependent of the covered employee, and the covered employee remains in the group, the rate charged to the covered employee shall be adjusted to reflect the reduction of risk exposure to the company, e.g., the group’s rate applicable after the demographic change. The rate charged for the spouse or dependent shall be isolated from the group’s rate and multiplied by a factor, not to exceed one plus the applicable load, to determine the COBRA rate. Samples of illustrative calculations are as follows and other combinations should be calculated in a similar manner:

1. For employee + dependent coverage when the dependent is electing continuation of coverage, the difference between the employee + dependent rate and the employee only rate shall be determined. This difference shall then be divided by the average number of dependents used by the carrier in developing the rate schedule. This value shall reflect the implied single dependent rate. To determine the COBRA rate, the implied dependent rate shall be multiplied by a factor that does not exceed one plus the applicable load. The employee shall be charged the group employee only rate.

2. For family coverage where the dependent is electing continuation of coverage, the difference between the family rate and the employee + spouse only rate shall be determined. This difference shall then be divided by the average number of dependents used by the carrier in developing the rate schedule. This value shall reflect the implied single dependent rate. To determine the COBRA rate, the implied single dependent rate shall be multiplied by a factor that does not exceed one plus the applicable load. The employee shall be charged the group rate applicable to the remaining covered lives in the group, e.g., if the remaining covered lives are the employee, spouse and another dependent, then the family rate would be charged. If the remaining covered lives are only the employee and spouse, then the employee + spouse rate would be charged.

3. If a small employer carrier uses optional dependent children categories as provided by sub-subparagraph (4)(a)2.b. above, the dependent rate shall be directly determined by calculating the difference between the two family tier rates, e.g., a rate with two dependents minus the rate with one dependent shall determine the single dependent rate.

(b) COBRA rates do not need to be filed unless the small employer carrier seeks to utilize a different rating methodology other than the one described above.

Specific Authority 624.308(1), 624.424(1)(c), 627.6699(17) FS. Law Implemented 627.410, 627.6692, 627.6699(3), (6), (12)(e), (13), (13)(i) FS. History–New 3-1-93, Amended 11-7-93, 5-11-94, 4-23-95, 8-4-02, 6-19-03, Formerly 4-149.037, Amended 7-6-06, 5-24-07.