230 R.I. Code R. 230-RICR-20-30-10.5

Current through December 3, 2024

Section 230-RICR-20-30-10.5 - Rate Manual and Restrictions Relating to Premium Rates

A. Rate manual. A small employer carrier shall develop a rate manual based on an adjusted community rate and may only vary the adjusted community rate for the following case characteristics:

1. age;

2. gender; and

3. family composition.

B. Age brackets. The adjustment for age in § 10.5(A) of this Part may not use age brackets smaller than five (5) year increments. These brackets shall begin with age thirty (30) and end with age sixty-five (65).

C. Separate rates for individuals age sixty-five or older. A small employer carrier is 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 are subject to the requirements of R.I. Gen. Laws § 27-50-5(a).

D. Four-to-one compression. For each health benefit plan offered by a carrier, the highest premium rate for each family composition type shall not exceed four (4) times the premium rate that could be charged to a small employer with the lowest premium rate for that family composition type.

E. Premium rates for bona fide associations except for the Rhode Island Builders Association whose membership is limited to those who are actively involved in supporting the construction industry in Rhode Island shall comply with the requirements of R.I. Gen. Laws § 27-50-5.

F. Carriers that provide coverage to the Rhode Island Builders Association must take steps to ensure that subscribers in the Builders Association block of business are limited to:

1. Persons actively engaged in the business of building, repairing, rehabilitating, adding onto, or upgrading homes, apartments, and other structures; the repairing, rehabilitating, additions or upgrading of property;

2. Persons who are employed at least 30 hours per week by entities or persons in the business of building, repairing, rehabilitating, adding onto, or upgrading homes, apartments, and other structures; the repairing, rehabilitating, additions or upgrading of property;1

3. Suppliers that derive at least 20 percent of their gross annual revenue from sales to persons or entities actively in the business of building, repairing, rehabilitating, adding onto, or upgrading homes, apartments, and other structures; the repairing, rehabilitating, additions or upgrading of property;

4. Subcontractors who derive at least 20 percent of their gross annual revenue from the provision of their services to persons or entities actively in the business of building, repairing, rehabilitating, adding onto, or upgrading homes, apartments, and other structures; the repairing, rehabilitating, additions or upgrading of property; and

5. Architects, engineers, accountants, lawyers or others who derive at least 20 percent of their gross annual revenue from the provision of their professional services to persons or entities actively in the business of building, repairing, rehabilitating, adding onto, or upgrading homes, apartments, and other structures; the repairing, rehabilitating, additions or upgrading of property.

G. Carriers that provide coverage to the Rhode Island Builders Association must rate that group consistent with the carrier's rate manual, consistent with standard actuarial practices, and consistent with the purposes of the Act.

H. For a small employer group renewing its health insurance with the same small employer carrier which provided it small employer health insurance in the prior year, the combined adjustment factor for age and gender for that small employer group will not exceed one hundred twenty percent (120%) of the combined adjustment factor for age and gender for that small employer group in the prior rate year.

I. Family composition. Each small employer carrier shall include all categories of family composition set forth in the Act in each health benefit plan offered to every small employer.

1. Those categories are:

a. the enrollee;

b. the enrollee, spouse and children;

c. the enrollee and spouse; or

d. the enrollee and children.

2. Consistent with R.I. Gen. Laws § 27-50-3(m), employees who work on a full-time basis for entities or persons in the business of building, repairing, rehabilitating, adding onto, or upgrading homes, apartments, and other structures; the repairing, rehabilitating, additions or upgrading of property with a normal work week of at least seventeen and one-half hours may be included by an employer, so long as this eligibility criterion is applied uniformly among all employees.

J. Small employer carriers shall apply rating factors consistently with respect to all small employers. Rating factors shall produce premiums for identical groups that 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. Two groups that are otherwise identical, but which have different prior year rate factors may, however, have rating factors that produce premiums that differ because of the requirements of § 10.5(H) of this Part.

K. Nothing in § 10.5 of this Part shall be construed to prevent a group health plan and a health insurance carrier offering health insurance coverage from establishing premium discounts or rebates or modifying otherwise applicable copayments or deductibles in return for adherence to programs of health promotion and disease prevention, including those included in affordable health benefit plans, provided that the resulting rates comply with the other requirements of § 10.5 of this Part. The calculation of premium discounts, rebates, or modifications to otherwise applicable copayments or deductibles for affordable health benefit plans shall be made in a manner consistent with accepted actuarial standards and based on actual or reasonably anticipated small employer claims experience. As used in the preceding sentence, "accepted actuarial standards" includes actuarially appropriate use of relevant data from outside the claims experience of small employers covered by affordable health plans, including, but not limited to, experience derived from the large group market, as this term is defined in R.I. Gen. Laws § 27-18.6-2(19).

L. Requirement to maintain rating information. In accordance with R.I. Gen. Laws § 27-50-5(h), a small employer carrier shall maintain rating information and documentation relating to rating practices and renewal underwriting practices and make it available to the health insurance commissioner. Such information shall be provided to the commissioner within ten days of a written request, provided however, the commissioner may, in his or her discretion, provide for an extension of time upon a showing of good cause by the carrier. The small employer carrier is not required to file such information with the commissioner for approval prior to use.

M. Rates computed solely from the rate manual. Except as provided in R.I. Gen. Laws § 27-50-5(a)(5), base premium rates and new business premium rates charged to small employers by the small employer carrier shall be computed solely from the rate manual developed pursuant to § 10.5(M) of this Part. 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.

N. Relationship among the base premium rates. The rate manual, developed pursuant to § 10.5 of this Part, shall clearly illustrate the relationship among the base premium rates charged for each health benefit plan.

O. Differences among base premium rates. 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, except as otherwise specifically permitted under the Act, and shall not be based in any manner 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.

P. No application fees; in general. Except as provided in § 10.5(Q) of this Part, 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.

Q. Applications fees charged; exception to the prohibition. A carrier may charge a separate fee with respect to a health benefit plan (but only one fee with respect to such plan) provided the fee is no more than five dollars per month per employee and is applied in a uniform manner to each health benefit plan.

R. Allocation of expenses-statutory plans. A small employer carrier shall allocate administrative expenses to any health benefit plans required to be offered by R.I. Gen. Laws § 27-50-1 et seq. on a no less favorable basis than expenses are allocated to other health benefit plans.

S. Allocation of administrative expenses-the rate manual. The rate manual developed pursuant to § 10.5 of this Part shall describe the method of allocating administrative expenses to the health benefit plans for which the manual was developed.

T. Retention of rate manuals. The rate manual developed pursuant to § 10.5 of this Part shall be maintained by the carrier for a period of six years. Updates and changes to the manual shall be maintained with the manual.

U. Compliance with guidance. The rate manual and rating practices of a small employer carrier shall comply with all guidelines issued by the health insurance commissioner, including those issued pursuant to bulletins and orders adopting market conduct examination reports.

V. Employer does not meet "small employer" definition. If an employer does not meet the definition of a "small employer" under R.I. Gen. Laws § 27-50-3(kk), the small employer carrier shall rate the employer as a large employer, and the provisions of R.I. Gen. Laws § 27-50-5 and § 10.5 of this Part shall not apply.

W. Small employer carriers must provide to each employer, at the time of renewal of the employer's plan, a Renewal Explanation Form with information describing the renewal rate calculation and the reasons for any changes in premiums. Small employer carriers must also provide the applicable Form upon the request of individual beneficiaries. The carrier must use a form substantially similar to the form issued as Appendix J in a bulletin promulgated for that purpose.

230 R.I. Code R. 230-RICR-20-30-10.5