North Dakota Administrative Code
Title 45 - Insurance, Commissioner of
Article 45-06 - Accident and Health Insurance
Chapter 45-06-06.1 - Regulation to Implement The Small Employer Health Insurance Availability Act
Section 45-06-06.1-05 - Restrictions relating to premium rates
Universal Citation: ND Admin Code ยง 45-06-06.1-05
Current through Supplement No. 394, October, 2024
1. This section applies only to a health benefit plan offered by a small employer who employed an average of at least two but not more than twenty-five eligible employees on business days during the preceding calendar year and who employs at least two employees on the first day of the plan year.
2.
a.A
small employer carrier shall develop a separate rate manual for each class of
business. Base premium rates and new business premium rates charged to small
employers by the small employer carrier shall be computed solely from the
applicable rate manual developed pursuant to this subsection. To the extent
that a portion of the premium rates charged by a small employer carrier is
based on the carrier's discretion, the manual shall specify the criteria and
factors considered by the carrier in exercising such discretion.
b.
(1) A
small employer carrier shall not modify the rating method used in the rate
manual for a class of business until the change has been approved as provided
in this paragraph. The commissioner may approve a change to a rating method if
the commissioner finds that the change is reasonable, actuarially appropriate,
and consistent with the purposes of the Act and this chapter.
(2) A carrier may modify the rating method
for a class of business only with prior approval of the commissioner. A carrier
requesting to change the rating method for a class of business shall make a
filing with the commissioner at least thirty days prior to the proposed date of
the change. The filing shall contain at least the following information:
(a) The reasons the change in rating method
is being requested;
(b) A complete
description of each of the proposed modifications to the rating method;
(c) A description of how the
change in rating method would affect the premium rates currently charged to
small employers in the class of business, including an estimate from a
qualified actuary of the number of groups or individuals and a description of
the types of groups or individuals whose premium rates may change by more than
ten percent due to the proposed change in rating method, not generally
including increases in premium rates applicable to all small employers in a
health benefit plan;
(d) A
certification from a qualified actuary that the new rating method would be
based on objective and credible data and would be actuarially sound and
appropriate; and
(e) A
certification from a qualified actuary that the proposed change in rating
method would not produce premium rates for small employers that would be in
violation of North Dakota Century Code section 26.1-36.3-04.
(3) For the purpose of this
section a change in rating method means:
(a)
A change in the number of case characteristics used by a small employer carrier
to determine premium rates for health benefit plans in a class of business;
(b) A change in the manner or
procedures by which insureds are assigned into categories for the purpose of
applying a case characteristic to determine premium rates for health benefit
plans in a class of business;
(c)
A change in the method of allocating expenses among health benefit plans in a
class of business; or
(d)
1 A change in a rating factor with respect to
any case characteristic if the change would produce a change in premium for any
small employer that exceeds ten percent.
2 For the purpose of item 1, a change in a
rating factor shall mean the cumulative change with respect to such factor
considered over a twelve-month period. If a small employer carrier changes
rating factors with respect to more than one case characteristic in a
twelve-month period, the carrier shall consider the cumulative effect of all
such changes in applying the ten percent test under item 1.
3.
a.The
rate manual developed pursuant to subsection 2 shall specify the case
characteristics and rate factors to be applied by the small employer carrier in
establishing premium rates for the class of business.
b. A small employer carrier may not use case
characteristics other than those specified in subdivision j of subsection 1 of
North Dakota Century Code section 26.1-36.3-04 without the prior approval of
the commissioner. A small employer carrier seeking such an approval shall make
a filing with the commissioner for a change in rating method under subdivision
b of subsection 2.
c. A small
employer carrier shall use the same case characteristics in establishing
premium rates for each health benefit plan in a class of business and shall
apply them in the same manner in establishing premium rates for each such
health benefit plan. Case characteristics shall be applied without regard to
the risk characteristics of a small employer.
d. The rate manual developed pursuant to
subsection 2 shall clearly illustrate the relationship among the base premium
rates charged for each health benefit plan in the class of business. If the new
business premium rate is different than the base premium rate for a health
benefit plan, the rate manual shall illustrate the difference.
e. Differences among base premium rates for
health benefit plans shall be based solely on the reasonable and objective
differences in the design and benefits of the health benefit plans and shall
not be based in any way on the actual or expected health status or claims
experience of the small employer groups that choose or are expected to choose a
particular health benefit plan. A small employer carrier shall apply case
characteristics and rate factors within a class of business in a manner that
assures that premium differences among health benefit plans for identical small
employer groups vary only due to reasonable and objective differences in the
design and benefits of the health benefit plans and are not due to the actual
or expected health status or claims experience of the small employer groups
that choose or are expected to choose a particular health benefit plan.
f. The rate manual developed
pursuant to subsection 2 shall provide for premium rates to be developed in a
two step process. In the first step, a base premium rate shall be developed for
the small employer group without regard to any risk characteristics of the
group. In the second step, the resulting base premium rate may be adjusted by a
risk load, subject to the provisions of North Dakota Century Code section
26.1-36.3-04, to reflect the risk characteristics of the group.
g. A premium charged to a small employer for
a health benefit plan shall not include a separate application fee,
underwriting fee, or any other separate fee or charge.
h. A small employer carrier shall allocate
administrative expenses to the basic and standard health benefit plans on no
less favorable of a basis than expenses are allocated to other health benefit
plans in the class of business. The rate manual developed pursuant to
subsection 2 shall describe the method of allocating administrative expenses to
the health benefit plans in the class of business for which the manual was
developed.
i. Each rate manual
developed pursuant to subsection 2 shall be maintained by the carrier for a
period of six years. Updates and changes to the manual shall be maintained with
the manual.
j. The rate manual and
rating practices of a small employer carrier shall comply with any guidelines
issued by the commissioner.
4. If group size is used as a case characteristic by a small employer carrier, the highest rate factor associated with a group size classification shall not exceed the lowest rate factor associated with such a classification by more than twenty percent.
5. The restrictions related to changes in premium rates in subdivisions c and g of subsection 1 of North Dakota Century Code section 26.1-36.3-04 shall be applied as follows:
a. A small employer carrier shall revise its
rate manual each rating period to reflect changes in base premium rates and
changes in new business premium rates.
b.
(1) If,
for any health benefit plan with respect to any rating period, the percentage
change in the new business premium rate is less than or the same as the
percentage change in the base premium rate, the change in the new business
premium rate shall be deemed to be the change in the base premium rate for the
purposes of paragraph 3 of subdivision c of subsection 1 and paragraph 1 of
subdivision g of subsection 1 of North Dakota Century Code section
26.1-36.3-04.
(2) If, for any
health benefit plan with respect to any rating period, the percentage change in
the new business premium rate exceeds the percentage change in the base premium
rate, the health benefit plan shall be considered a health benefit plan into
which the small employer carrier is no longer enrolling new small employers for
the purposes of subdivisions c and g of subsection 1 of North Dakota Century
Code section 26.1-36.3-04.
c. If, for any rating period, the change in
the new business premium rate for a health benefit plan differs from the change
in the new business premium rate for any other health benefit plan in the same
class of business by more than twenty percent, the carrier shall make a filing
with the commissioner containing a complete explanation of how the respective
changes in new business premium rates were established and the reason for the
difference. The filing shall be made within thirty days of the beginning of the
rating period.
d. A small employer
carrier shall keep on file for a period of at least six years the calculations
used to determine the change in base premium rates and new business premium
rates for each health benefit plan for each rating period.
6.
a.
Except as provided in subdivisions b through d, a change in
premium rate for a small employer shall produce a revised premium rate that is
no more than the following:
(1) The base
premium rate for the small employer, as shown in the rate manual as revised for
the rating period, multiplied by;
(2) One plus the sum of:
(a) The risk load applicable to the small
employer during the previous rating period; and
(b) Fifteen percent, prorated for periods of
less than one year.
b. In the case of a health benefit plan into
which a small employer carrier is no longer enrolling new small employers, a
change in premium rate for a small employer shall produce a revised premium
rate that is no more than the following:
(1)
The base premium rate for the small employer, given its present composition and
as shown in the rate manual in effect for the small employer at the beginning
of the previous rating period, multiplied by;
(2) One plus the lesser of:
(a) The change in the base rate; or
(b) The percentage change in the
new business premium for the most similar health benefit plan into which the
small employer carrier is enrolling new small employers, multiplied by;
(3) One plus the sum
of:
(a) The risk load applicable to the small
employer during the previous rating period; and
(b) Fifteen percent, prorated for periods of
less than one year.
c. In the case of a health benefit plan
described in subdivision g of subsection 1 of North Dakota Century Code section
26.1-36.3-04, if the current premium rate for the health benefit plan exceeds
the ranges set forth in subsection 1 of North Dakota Century Code section
26.1-36.3-04, the formulae set forth in subdivisions a and b will be applied as
if the fifteen percent adjustment provided in subparagraph b of paragraph 2 of
subdivision a and subparagraph b of paragraph 3 of subdivision b were a zero
percent adjustment.
d.
Notwithstanding the provisions of subdivisions a and b, a change in premium
rate for a small employer shall not produce a revised premium rate that would
exceed the limitations on rates provided in subdivision b of subsection 1 of
North Dakota Century Code section 26.1-36.3-04.
7.
a. A
representative of a Taft-Hartley trust, including a carrier upon the written
request of such a trust, may file in writing with the commissioner a request
for the waiver of application of the provisions of subsection 1 of North Dakota
Century Code section 26.1-36.3-04 with respect to such trust.
b. A request made under subdivision a shall
identify the provisions for which the trust is seeking the waiver and shall
describe, with respect to each provision, the extent to which application of
such provision would:
(1) Adversely affect
the participants and beneficiaries of the trust; and
(2) Require modifications to one or more of
the collective bargaining agreements under or pursuant to which the trust was
or is established or maintained.
c. A waiver granted under subsection 3 of
North Dakota Century Code section 26.1-36.3-04 shall not apply to an individual
who participates in the trust because the individual is an associate member of
an employee organization or the beneficiary of such an individual.
General Authority: NDCC 26.1-01-08, 26.1-36.3-04
Law Implemented: NDCC 26.1-36.3-04
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