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304.17A-764 Determination of premiums -- Restrictions in calculation.
(1)
(2)
(3)
Notwithstanding any other provision of this chapter, the amount or rate of
premiums for an insurance purchasing outlet health benefit plan may be
determined, subject to the restrictions of subsection (2) of this section, based
upon the experience or projected experience of the insurance purchasing
outlets whose members obtain coverage under the plan. The index rate for the
insurance purchasing outlet shall be calculated solely with respect to that
insurance purchasing outlet and shall not be tied to, linked to, or otherwise
adversely affected by any other index rate used by the participating insurer.
The following restrictions shall be applied in calculating the permissible amount
or rate of premiums for an insurance purchasing outlet health benefit plan:
(a) The premium rates charged during a rating period to members of the
insurance purchasing outlet with similar characteristics for the same or
similar coverage, or the premium rates that could be charged to a
member of the insurance purchasing outlet under the rating system for
that class of business, shall not vary from its own index rate by more than
twenty-five percent (25%), except that the premium rates charged to an
insurance purchasing outlet member shall not vary from the index rate by
more than fifty percent (50%) through December 31, 2002. However,
upon any policy issuance or renewal, on or after January 1, 2003, the
maximum variation shall revert to twenty-five percent (25%) of the index
rate.
(b) The percentage increase in the premium rate charged to a member of an
insurance purchasing outlet for a new rating period shall not exceed the
sum of the following:
1.
The percentage change in the new business premium rate for the
insurance purchasing outlet measured from the first day of the prior
rating period to the first day of the new rating period;
2.
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 member as determined from the
insurer's rate manual; and
3.
Any adjustment due to change in coverage or change in the case
characteristics of the member as determined by the insurer's rate
manual.
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
purposes of this limitation, case characteristics include age, gender, occupation
or industry, and geographic area.
Effective:July 15, 2002
History: Created 2002 Ky. Acts ch. 207, sec. 8, effective July 15, 2002.
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