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304.17A-0952
Premium rate guidelines for individual, small group, and
association plans.
Premium rates for a health benefit plan issued or renewed to an individual, a small
group, or an association on or after April 10, 1998, shall be subject to the following
provisions:
(1) The premium rates charged during a rating period to an individual with similar
case characteristics for the same coverage, or the rates that could be charged
to that individual under the rating system for that class of business, shall not
vary from the index rate by more than thirty-five percent (35%) of the index rate
upon any policy issuance or renewal, on or after January 1, 2003.
(2) Notwithstanding the thirty-five percent (35%) variance limitation in subsection
(1) of this section, insurers offering an individual health benefit plan that is
state-elected under sec. 35(e)(1)F of the Trade Act of 2002, Pub. L. No.
107-210 sec. 201, may vary from the index rate by more than thirty-five percent
(35%) for individuals who are eligible for the health coverage tax credit under
the following conditions:
(a) The insurer certifies that the individual does not meet the insurers
underwriting guidelines for issuance of an individual policy;
(b) The policy meets the requirements for state-elected coverage under the
Trade Act of 2002; and
(c) The premium rate is actuarially justified and has been approved by the
Department of Insurance pursuant to KRS 304.17A-095.
(3) The percentage increase in the premium rate charged to an individual for a
new rating period shall not exceed the sum of the following:
(a) The percentage change in the new business premium rate measured
from the first day of the prior rating period to the first day of the new rating
period. In the case of a class of business for which the insurer is not
issuing new policies, the insurer shall use the percentage change in the
base premium rate;
(b) Any adjustment, not to exceed twenty percent (20%) annually and
adjusted pro rata for rating periods of less than one (1) year, due to the
claim experience, mental and physical condition, including medical
condition, medical history, and health service utilization, or duration of
coverage of the individual and dependents as determined from the
insurers rate manual for the class of business; and
(c) Any adjustment due to change in coverage or change in the case
characteristics of the individual as determined from the insurers rate
manual for the class of business.
(4) The premium rates charged during a rating period to a small group or to an
association member with similar case characteristics for the same coverage, or
the rates that could be charged to that small group or that association member
under the rating system for that class of business, shall not vary from the index
rate by more than fifty percent (50%) of the index rate.
(5) The percentage increase in the premium rate charged to a small group or to an
association member for a new rating period shall not exceed the sum of the
following:
(a)
(6)
(7)
(8)
The percentage change in the new business premium rate measured
from the first day of the prior rating period to the first day of the new rating
period. In the case of a class of business for which the insurer is not
issuing new policies, the insurer shall use the percentage change in the
base premium rate;
(b) Any adjustment, not to exceed twenty percent (20%) annually and
adjusted pro rata for rating periods of less than one (1) year, due to the
claims experience, mental and physical condition, including medical
condition, medical history, and health service utilization, or duration of
coverage of the employee, association member, or dependents as
determined from the insurers rate manual for the class of business; and
(c) Any adjustment due to change in coverage or change in the case
characteristics of the small group or association member as determined
from the insurers rate manual for the class of business.
In utilizing case characteristics, the ratio of the highest rate factor to the lowest
rate factor within a class of business shall not exceed five to one (5:1). For
purpose of this limitation, case characteristics include age, gender, occupation
or industry, and geographic area.
Adjustments in rates for claims experience, mental and physical condition,
including medical condition, medical history, and health service utilization,
health status, and duration of coverage shall not be charged to an individual
group member or the member's dependents. Any adjustment shall be applied
uniformly to the rates charged for all individuals and dependents of the small
group.
The commissioner may approve establishment of additional classes of
business upon application to the commissioner and a finding by the
commissioner that the additional class would enhance the efficiency and
fairness for the applicable market segment.
(a) The index rate for a rating period for any class of business shall not
exceed the index rate for any other class of business in that market
segment by more than ten percent (10%).
(b) An insurer may establish a separate class of business only to reflect
substantial differences in expected claims experience or administrative
cost related to the following reasons:
1.
The insurer uses more than one (1) type of system for the marketing
and sale of the health benefit plans;
2.
The insurer has acquired a class of business from another insurer;
or
3.
The insurer is offering a state-elected plan under the provisions of
the Trade Act of 2002, Pub. L. No. 107-210 sec. 201.
(c) Notwithstanding any other provision of this subsection, beginning January
1, 2001, a GAP participating insurer may establish a separate class of
business for the purpose of separating guaranteed acceptance program
qualified individuals from other individuals enrolled in their plan prior to
January 1, 2001. The index rate for the separate class created under this
paragraph shall be established taking into consideration expected claims
experience and administrative costs of the new class of business and the
previous class of business.
(9) For the purpose of this section, a health benefit plan that utilizes a restricted
provider network shall not be considered similar coverage to a health benefit
plan that does not utilize a restricted provider network if utilization of the
restricted provider network results in substantial differences in claims costs.
(10) Notwithstanding any other provision of this section, an insurer shall not be
required to utilize the experience of those individuals with high-cost conditions
who enrolled in its plans between July 15, 1995, and April 10, 1998, to develop
the insurer's index rate for its individual policies.
(11) Nothing in this section shall be construed to prevent an insurer from offering
incentives to participate in a program of disease prevention or health
improvement.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1213, effective July 15, 2010. -Amended 2004 Ky. Acts ch. 168, sec. 1, effective April 21, 2004. -- Amended
2002 Ky. Acts ch. 351, sec. 15, effective July 15, 2002. -- Amended 2000 Ky.
Acts ch. 476, sec. 19, effective January 1, 2001. -- Created 1998 Ky. Acts ch.
496, sec. 10, effective April 10, 1998.
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