Utah Admin. Code R590-167-6 - Restrictions on Premium Rates

(1)

(a) A covered carrier shall develop a separate rate manual for each class of business.

(b) Base premium rates and new business premium rates charged to an individual or a small employer shall be computed solely from the applicable rate manual.

(c) To the extent that a portion of the premium rate is based on the carrier's discretion, the rate manual shall specify the criteria and factors considered by the covered carrier in exercising such discretion.

(2)

(a)

(i) A covered carrier may not modify the rating method used in the rate manual for a class of business until the change has been approved by the commissioner.

(ii) 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 rule.

(b) A covered carrier may modify the rating method for a class of business after filing an actuarial certification that clearly requests approval for a change in rating method and contains the following information:

(i) the reason for the change in rating method;

(ii) a complete description of each proposed modification to the rating method;

(iii) a description of how the change in rating method will affect the premium rates currently charged in the class of business;

(iv) an estimate from a qualified actuary of the number of individuals and small employers, including a description of the types of individuals and small employers, whose premium rates may change by more than 10% due to the proposed change in rating method, not including general increases in premium rates;

(v) a certification from a qualified actuary that the new rating method is based on objective and credible data and is actuarially sound and appropriate; and

(vi) a certification from a qualified actuary that the proposed change in rating method does not produce premium rates for an individual or small employer that violate Sections 31A-30-106, 31A-30-106.1, and 31A-30-106.5.

(c)

(i) A request for approval for a change in rating method shall be submitted as a separate filing.

(ii) The filing description shall state in the first line of the first paragraph, "REQUEST FOR APPROVAL FOR CHANGE IN RATING METHOD."

(3) The rate manual shall specify the case characteristics and rate factors to be applied by the covered carrier in establishing premium rates for the class of business.

(4)

(a)

(i) A covered carrier may not use case characteristics other than those specified in Sections 31A-30-106 and 31A-30-106.1 without the commissioner's prior approval.

(ii) A covered carrier seeking an approval under this Subsection (4)(a) shall make a filing with the commissioner for a change in rating method under Subsection (2)(b).

(b) Tobacco use is not an allowable case characteristic and may only be used under Subsection 31A-30-106(1)(b).

(c) The ratio of the base rate for any age band case characteristic under Subsection 31A-30-106.1(7) to the base rate for a less than 20 age band may not exceed the following:

(i) 1.22 for age band 20 to 24;

(ii) 1.34 for age band 25 to 29;

(iii) 1.46 for age band 30 to 34;

(iv) 1.60 for age band 35 to 39;

(v) 1.80 for age band 40 to 44;

(vi) 2.20 for age band 45 to 49;

(vii) 2.80 for age band 50 to 54;

(viii) 3.60 for age band 55 to 59;

(ix) 4.25 for age band 60 to 64; and

(x) 5.00 for age band 65 and above.

(d) A covered 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.

(e) Risk characteristics may not be considered when applying case characteristics.

(5)

(i) The rate manual shall clearly illustrate the relationship among the base premium rates charged for each health benefit plan in a class of business.

(ii) If the new business premium rate is different from the base premium rate for a health benefit plan, the rate manual shall illustrate the difference.

(6) 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 may not be based in any way on the nature of an individual or a small employer that chooses or is expected to choose a particular health benefit plan.

(7) A covered 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 individuals or small employers vary only due to reasonable and objective differences in the design and benefits of the health benefit plans and are not due to the nature of the individuals or small employers that choose or are expected to choose a particular health benefit plan.

(8) The rate manual shall provide for premium rates to be developed in a two-step process.

(a) In step one, a base premium rate shall be developed to reflect the allowable case characteristics that result in individuals or small employers with identical case characteristics.

(b) In step two, the resulting base premium rate may be adjusted by a risk load to reflect the risk characteristics, subject to Sections 31A-30-106, 31A-30-106.1, and 31A-30-106.5.

(9)

(a) Except as provided in Subsection (4)(b), a premium may not include a separate application fee, underwriting fee, or any other separate fee or charge.

(b) A covered carrier may charge a separate fee for an individual or a small employer health benefit plan, but only one fee per plan, provided the fee is no more than $5 per month per individual or employee and is applied in a uniform manner to each health benefit plan in a class of business.

(10) The premium rate change restrictions in Subsections 31A-30-106(1)(c) and 31A-30-106.1(3) shall be applied as follows:

(a) a covered carrier shall revise its rate manual each rating period to reflect changes in base premium rates and changes in new business premium rates;

(b)

(i) 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 the change in the base premium rate; or

(ii) 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 in which the covered carrier is no longer enrolling new individuals or small employers;

(c) if a covered carrier elects to use a trend increase:

(i) details for the trend rate calculation shall be filed annually in the rate manual; and

(ii) the trend increase is limited to a 12-month period; and

(d) 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 20%, the covered carrier shall file with the commissioner 30 days before the beginning of the rating period an explanation of how the respective changes in the new business premium rates were established and the reason for the difference.

(11)

(a) Except as provided in Subsection (11)(b), a change in premium rate for an individual or small employer shall produce a revised premium rate that is no more than the following:

(i) the base premium rate for the individual or small employer, as shown in the rate manual as revised for the rating period, multiplied by:

(ii) one plus the sum of:

(A) the risk load applicable to the individual or small employer during the previous rating period; and

(B) 15%, prorated for periods of less than one year.

(b) In the case of a health benefit plan into which a covered carrier is no longer enrolling new individuals or small employers, a change in premium rate for an individual or small employer shall produce a revised premium rate that is no more than the following:

(i) the base premium rate for the individual or small employer, given its present composition and as shown in the rate manual in effect for the individual or small employer at the beginning of the previous rating period, multiplied by:

(ii) 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 covered carrier is enrolling new individuals or small employers, multiplied by:

(iii) one plus the sum of:

(A) the risk load applicable to the individual or small employer during the previous rating period; and

(B) 15%, prorated for periods of less than one year.

(c) Except as provided in Subsections (11)(a) and (11)(b), a change in premium rate for an individual or small employer may not produce a revised premium rate that would exceed the limitations on rates provided in Subsections 31A-30-106(1)(b) and 31A-30-106.1(2)(b).

(12) A Taft-Hartley trust requesting a waiver of Subsection 31A-30-106(1) or 31A-30-106.1(1) shall file with the commissioner a request that identifies the provisions for which the trust is seeking the waiver that describes the extent each provision will:

(a) adversely affect the participants and beneficiaries of the trust; and

(b) require modifications to one or more of the collective bargaining agreements under which the trust is established or maintained.

(13) A covered carrier shall maintain, for a period of at least six years, any update or change to a rate manual, including 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.

Notes

Utah Admin. Code R590-167-6

Adopted by Utah State Bulletin Number 2024-05, effective 2/21/2024