Current through Register Vol. 43, No. 02, November 27, 2024
(a) For rating periods beginning on and after
the effective date of this regulation, premium rates for health benefit plans
subject to this Regulation shall be subject to all of the following provisions:
(1) The small employer carrier shall develop
its base rate or rates utilizing an adjusted community rating methodology and
may only vary the adjusted community rate or rates for one or more of the
following:
a. Geographic area.
b. Family composition.
c. Age.
d. Sex.
(2) The adjustment for age in Paragraph c. of
Subdivision (1) in Subsection (a) above may not use age brackets smaller than
five-year increments and these shall begin with age twenty (20) and end with
age sixty-five (65).
(3) The small
employer carrier shall be permitted to develop separate rates for individuals
age sixty-five (65) or older for coverage for which Medicare is the primary
payer and coverage for which Medicare is not the primary payer. Both rates
shall be subject to the requirements of this Subsection (a).
(4) The adjustment for age permitted in
Paragraph c. of Subdivision (1) in Subsection (a) above for any age group shall
not result in a rate per enrollee of more than four hundred percent (400%) of
the lowest rate of any age group, other rating characteristics being the
same.
(5)
a. The small employer carrier shall be
permitted to adjust the base rate or rates developed according to the
requirements of Subdivisions (1) through (4) in Subsection (a) above by a group
health characteristic factor and a group size factor as set forth in this
subdivision.
b. The small employer
carrier may vary the group health characteristic according to the general
health characteristics of the group written but may not vary the factor by
industry group. The maximum group health characteristic factor (F) which may be
applied to health benefit plans issuing or renewing on and after the effective
date of this regulation is within a range of .75 <
F < 1.25.
c. If a carrier employs a group size factor,
the factor (G) associated with a group size classification which may be applied
to health benefit plans issuing or renewing on and after the effective date of
this regulation must be within a range of .85 < G
< 1.15.
(b) The premium charged for a health benefit
plan may not be adjusted more frequently than annually except that the rates
may be changed to reflect any one or more of the following:
(1) Changes to the enrollment of the small
employer.
(2) Changes to the family
composition of the employee.
(3)
Changes to the health benefit plan requested by the small employer.
(4) Changes to the health benefit plan
mandated by the legislature and subject to any time constraint in
enactment.
(c) Premium
rates for health benefit plans shall comply with the requirements of this
section.
(d) Rating factors shall
produce premiums for identical groups which differ only by the amounts
attributable to plan design and do not reflect differences due to the nature of
the groups assumed to select particular health benefit plans, except to the
extent permitted in Subdivision (5) of Subsection (a) above.
(e) For the purposes of this section, a
health benefit plan that contains a restricted network provision shall not be
considered similar coverage to a health benefit plan that does not contain such
a provision, provided that the restriction of benefits to network providers
results in substantial differences in claim costs.
(f) In connection with the offering for sale
of any health benefit plan to a small employer, a small employer carrier shall
make a reasonable disclosure, as part of its solicitation and sales materials,
of all of the following:
(1) The provisions
of the health benefit plan concerning the small employer carrier's right to
change premium rates and the factors, other than claim experience, that affect
changes in premium rates.
(2) The
provisions relating to renewability of policies and contracts.
(3) The provisions relating to any
preexisting condition provision.
(4) A listing of and descriptive information
about all benefit plans for which the small employer is qualified.
(g)
(1) Each small employer carrier shall
maintain at its principal place of business a complete and detailed description
of its rating practices and renewal underwriting practices, including
information and documentation that demonstrate that its rating methods and
practices are based upon commonly accepted actuarial assumptions and are in
accordance with sound actuarial principles.
(2) Each small employer carrier shall file
with the Commissioner annually on or before March 15, both of the following:
a. An actuarial certification certifying that
the carrier is in compliance with this Regulation and that the rating methods
of the small employer carrier are actuarially sound. The certification shall be
in a form and manner, and shall contain such information, as specified by the
Commissioner. A copy of the certification shall be retained by the small
employer carrier at its principal place of business.
b. A market data and experience report
containing information on the market penetration, premium rate trend and claims
trend under health benefit plans offered by the carrier. The format and content
of the report shall be as specified by the Commissioner.
(3) A small employer carrier shall make the
information and documentation described in Subdivision (1) available to the
Commissioner upon request. Except in cases of violations of this Regulation,
the information shall be considered proprietary and trade secret information
and shall not be subject to disclosure by the commissioner to persons outside
of the Alabama Department of Insurance except as agreed to by the small
employer carrier or as ordered by a court of competent jurisdiction.
(h) Health benefit plans may not
establish individual eligibility rules based on health status related factors.
Such factors include, but are not limited to, current medical condition
(physical and mental), past claims experience, medical history, genetic
information, evidence of insurability (including conditions arising out of acts
of domestic violence), and disability.
(i) The requirements of this section shall
apply to all health benefit plans issued or renewed on or after the effective
date of this Regulation.
Author: Reyn Norman, Associate
Counsel
Statutory Authority:
Code of Ala.
1975, §
27-52-21.
