Clarification of Small Group Rating Rules for Family Coverage

Bulletin 13-31 December 13, 2013 Page 2 that “nothing prevents [a carrier] from converting per-member rates into average enrollee premium amounts (calculated composite premiums), provided that the total group premium is the same total amount derived in accordance with the process established by the regulations.” Id. at 72327. HHS proposed to add a provision at § 147.102(c)(3) clarifying that if an issuer offers a composite premium calculated when the employer obtains or renews coverage, the carrier must ensure that such amount does not vary for any plan participant or beneficiary during the plan year with respect to the particular plan involved. Under this proposal, a carrier would be required to accept the group’s composite premium, calculated based on applicable employee enrollment at the beginning of the plan year, as the applicable premium rate for any new individual who enrolls in the plan during the plan year. HHS encouraged carriers to voluntarily adopt this approach for plan years beginning in 2014. This Bulletin clarifies that the approach proposed by HHS is permissible under Maryland law. HHS also noted that it is considering establishing for 2015 a uniform tiered-composite rating structure that would apply market wide, unless a state required and HHS approved an alternative tiered-composite rating methodology. Under the methodology being considered, a carrier issuing a small group plan offering composite rating would calculate the composite premium for different tiers of enrollees covered under the employer’s plan, with children under age 21 in a different tier than adult enrollees. For example, in a two-tier structure, one composite premium would be calculated for covered adults (employees and adult dependents) and another composite premium would be calculated for covered children. Alternatively, in a three-tier structure, there would be one composite premium for covered employees, a second composite premium for covered adult dependents, and a third composite premium for covered children. The premium for a given family composition would be determined by summing the applicable tiered-composite rates. Id. at 72328. This Bulletin clarifies that this approach, too, is permissible under Maryland law, provided that the total group premium is the same total amount derived using the per-member rating methodology. Any question about this Bulletin may be directed to Sarah Li, Chief Actuary, Office of the Chief Actuary at sarah.li@maryland.gov. Therese M. Goldsmith Insurance Commissioner Signature on original