Code of Massachusetts Regulations
211 CMR - DIVISION OF INSURANCE
Title 211 CMR 41.00 - Nongroup Health Insurance Rate And Policy Form Filings, Review, And Hearing Procedures Under M.g.l. C.176m
Section 41.99 - Appendix B: Adjusted Composite Rate Worksheet Examples
Current through Register 1531, September 27, 2024
(1) Benefits Factor. The following example addresses the derivation of the factor. It assumes that the plan includes an eyeglasses benefit that is not part of the Standard Benefits Plan and that the benefit will be used equally by members regardless of age, premium payment mode, rate basis type, or geographic rating region, and that the proposed premiums reflect this assumption.
The Carrier assumes that the eyeglasses benefit represents 0.5% of each of the proposed premiums and, therefore, 0.5% of the composite rate. The Benefits Factor equals 0.9550 (which is 1 - 0.0050).
(2) Geographic Differences Factor. Examples 1 and 2 below address the derivation of the Geographic Differences Factor assuming that there are only two geographic rating regions eastern and western Massachusetts, and that both Company X and Y offer standard benefits plans with only one rate basis type and one premium payment mode (annual).
Example 1: Company X markets throughout Massachusetts, but proposes that its annual premium rate be $1,800 in western Massachusetts and $2,400 in eastern Massachusetts. Company X projects that 100 eligible individuals will enroll in Company X from western Massachusetts and 200 eligible individuals will enroll in Company X from eastern Massachusetts.
Example 2: Company Y markets a closed network plan in eastern Massachusetts and proposes that its annual premium rate be $2,500 in eastern Massachusetts. Company Y projects that 200 eligible individuals will enroll in Company Y from eastern Massachusetts.
(3) Common-age Factor. The following example addresses the derivation of the factor. It assumes that there are only two age bands -- 40 and under, and over 40 -- and that the Carrier offers a standard benefits plan with the same rates statewide with one rate basis type and one premium payment mode (annual).
Example: Company Z proposes that its annual premium rate is $1,800 for contractholders age 40 and under and $2,100 for contractholders over 40 years old. Company Z projects that 100 eligible individuals 40 and under will enroll in Company Z and 200 eligible individuals over 40 years old will enroll in Company Z.
