1.This section only applies to a health benefit plan offered by a small employer who
employed an average of at least two but not more than twenty-five eligible employees
on business days during the preceding calendar year and who employs at least two
employees on the first day of the plan year.
2.Premium rates for health benefit plans subject to this section and section 26.1-36-37.2
are subject to the following:
a.The index rate for a rating period for any class of business may not exceed the
index rate for any other class of business by more than fifteen percent.
b.For a class of business, the premium rates charged during a rating period to
small employers with similar case characteristics for the same or similar
coverage, or the rates that could be charged to the employers under the
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1. This section only applies to a health benefit plan offered by a small employer who
employed an average of at least two but not more than twenty-five eligible employees
on business days during the preceding calendar year and who employs at least two
employees on the first day of the plan year.
2. Premium rates for health benefit plans subject to this section and section 26.1-36-37.2
are subject to the following:
a. The index rate for a rating period for any class of business may not exceed the
index rate for any other class of business by more than fifteen percent.
b. For a class of business, the premium rates charged during a rating period to
small employers with similar case characteristics for the same or similar
coverage, or the rates that could be charged to the employers under the rating
system for that class of business, may not vary from the index rate by more than
twenty percent of the index rate.
c. The percentage increase in the premium rate charged to a small employer for a
new rating period may not exceed the sum of:
(1) 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 health benefit plan into which the small employer carrier is
no longer enrolling new small employers, the small employer carrier shall
use the percentage change in the base premium rate, provided that the
change does not exceed, on a percentage basis, the change in the new
business premium rate for the most similar health benefit plan into which the
small employer carrier is actively enrolling new small employers;
(2) Any adjustment due to the claim experience, health status, or duration of
coverage of the employees or dependents of the small employer as
determined from the small employer carrier's rate manual for the class of
business; however, the adjustment may not exceed fifteen percent annually
and must be adjusted pro rata for rating periods of less than one year; and
(3) Any adjustment due to change in coverage or change in the case
characteristics of the small employer, as determined from the small
employer carrier's rate manual for the class of business.
d. Adjustments in rates for claim experience, health status, and duration of coverage
may not be charged to individual employees or dependents. Premium rates
charged for a health benefit plan may not vary by a ratio of greater than four to
one after January 1, 1997. Any adjustment must be applied uniformly to the rates
charged for all employees and dependents of the small employer.
e. A small employer carrier may utilize industry as a case characteristic in
establishing premium rates, but the highest rate factor associated with any
industry classification may not exceed the lowest rate factor associated with any
industry classification by more than fifteen percent.
f. In the case of health benefit plans delivered or issued for delivery before
August 1, 1993, a premium rate for a rating period may exceed the ranges set
forth in subdivisions a and b for a period of three years following August 1, 1993.
Under this subdivision, the percentage increase in the premium rate charged to a
small employer for a new rating period may not exceed the sum of:
(1) 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 health benefit plan into which the small employer carrier is
no longer enrolling new small employers, the small employer carrier shall
use the percentage change in the base premium rate, provided that the
change does not exceed, on a percentage basis, the change in the new
business premium rate for the most similar health benefit plan into which the
small employer carrier is actively enrolling new small employers.
(2) Any adjustment due to change in coverage or change in the case
characteristics of the small employer, as determined from the carrier's rate
manual for the class of business.
g. (1) Small employer carriers shall apply rating factors, including case
characteristics, consistently with respect to all small employers in a class of
business. Rating factors must produce premiums for identical groups which
differ only by amounts attributable to plan design and do not reflect
differences due to the nature of the groups assumed to select particular
health benefit plans.
(2) A small employer carrier shall treat all health benefit plans issued or
renewed in the same calendar month as having the same rating period.
h. For the purposes of this subsection, a health benefit plan that uses a restricted
provider network may not be considered similar coverage to a health benefit plan
that does not use a restricted provider network, if the use of the restricted
provider network results in substantial differences in claims costs.
i. A small employer carrier may not use case characteristics, other than age,
gender, industry, geographic area, family composition, and group size, without
prior approval of the commissioner. Gender may not be used as a case
characteristic after January 1, 1996.
j. The commissioner shall adopt rules to:
(1) Assure that differences in rates charged for health benefit plans by small
employer carriers are reasonable and reflect objective differences in plan
design, not including differences due to the nature of the groups assumed to
select particular health benefit plans;
(2) Prescribe the manner in which case characteristics may be used by small
employer carriers; and
(3) Otherwise implement this section.
3. A small employer carrier may not transfer a small employer involuntarily into or out of a
class of business. A small employer carrier may not offer to transfer a small employer
into or out of a class of business unless the offer is made to transfer all small
employers in the class of business without regard to case characteristics, claim
experience, health status, or duration of coverage.
4. The commissioner may suspend for a specified period the application of subdivision a
of subsection 2 as to the premium rates applicable to one or more small employers
included within a class of business of a small employer carrier for one or more rating
periods upon a filing by the small employer carrier and a finding by the commissioner
that the suspension is reasonable in light of the financial condition of the small
employer carrier or that the suspension would enhance the efficiency and fairness of
the marketplace for small employer health insurance.
5. In connection with the offering for sale of any health benefit plan to a small employer, a
small employer carrier shall make a reasonable disclosure, as part of its solicitation
and sales materials, of:
a. The extent to which premium rates for a specified small employer are established
or adjusted based upon the actual or expected variation in claims costs or actual
or expected variation in health status of the employees of the small employer and
their dependents;
b. The provisions of the health benefit plan concerning the small employer carrier's
right to change premium rates and factors, other than claim experience, that
affect changes in premium rates;
c. The provisions relating to renewability of policies and contracts; and
d. The provisions relating to any pre-existing condition exclusion.
6. a. Each small employer carrier shall maintain at its principal place of business a
complete and detailed description of its rating practices and renewal underwriting
practices, including information and documentation that demonstrate that its
rating methods and practices are based upon commonly accepted actuarial
assumptions and are in accordance with sound actuarial principles.
b. Each small employer carrier shall file with the commissioner on or before March
fifteenth of each year an actuarial certification certifying that the carrier is in
compliance with this chapter and that the rating methods of the small employer
carrier are actuarially sound. The certification must be in a form and manner and
contain information specified by the commissioner. The small employer carrier
shall retain a copy of the certification at the carrier's principal place of business.
c. A small employer carrier shall make the information and documentation described
in subdivision a available to the commissioner upon request. Except in cases of
violations of this chapter and section 26.1-36-37.2, the information is proprietary
and trade secret information and is not subject to disclosure by the commissioner
to persons outside the department except as agreed to by the small employer
carrier or as ordered by a court of competent jurisdiction.