§ 26-19-304 — Restrictions relating to premium rates

(a) Premium rates for health benefit plans subject to this
act shall be subject to the following provisions:
(i) The index rate for a rating period for any class
of business shall not exceed the index rate for any other class
of business by more than twenty percent (20%);
(ii) 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 which could be charged to employers under the rating
system for that class of business shall not vary from the index
rate by more than thirty-five percent (35%) of the index rate;
(iii) The percentage increase in the premium rate
charged to a small employer for a new rating period shall not
exceed the sum of the following:
(A) 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 a small employer carrier is
no longer enrolling new small employers, the 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 carrier is actively enrolling new
small employers;
(B) Any adjustment, not to exceed fifteen
percent (15%) annually and adjusted pro rata for rating periods
of less than one (1) year, 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; and
(C) 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.
(iv) Adjustments in rates for claims experience,
health status and duration from issue shall not be charged to
individual employees or dependents. Any such adjustment shall
be applied uniformly to the rates charged for all employees and
dependents of the small employer;
(v) Any adjustment in rates charged by a small
employer carrier caused by reinsurance is subject to the rating
limitations set forth in this section;
(vi) Premium rates for health benefit plans shall
comply with the requirements of this section notwithstanding any
assessments paid or payable by small employer carriers under
this act;
(vii) In any case where a small employer carrier
utilizes industry as a case characteristic in establishing
premium rates, the rate factor associated with any industry
classification shall not vary from the arithmetic average of the
rate factors associated with all industry classifications by
greater than fifteen percent (15%) of such coverage;
(viii) In the case of health benefit plans issued
prior to the effective date of this act, a premium rate for a
rating period may exceed the ranges set forth in paragraphs (i)
and (ii) of subsection (a) of this section for a period of three
(3) years following the effective date of this act. In such
case, the percentage increase in the premium rate charged to a
small employer in such a class of business for a new rating
period may not exceed the sum of the following:
(A) 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 a small employer carrier is
no longer enrolling new small employers, the 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 carrier is actively enrolling new
small employers; and
(B) 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.
(ix) Small employer carriers shall apply rating
factors, including case characteristics, consistently with
respect to all small employers in a class of business;
(x) For the purposes of this subsection, a health
benefit plan that utilizes a provider network shall not be
considered similar coverage to a health benefit plan that does
not utilize such a network, provided that utilization of the
network results in substantial differences in claims costs;
(xi) The small employer carrier shall not use case
characteristics, other than age, gender, industry, geographic
area, family composition and group size without prior approval
of the commissioner;
(xii) The commissioner shall adopt regulations to
implement the provisions of this section and to assure that
rating practices used by small employer carriers are consistent
with the purposes of this act, including regulations that:
(A) Assure that differences in rates charged for
health benefit plans by small employer carriers are reasonable
and reflect objective differences in plan design;
(B) Prescribe the manner in which case
characteristics may be used by small employer carriers.
(b) A small employer carrier shall not transfer a small
employer involuntarily into or out of a class of business. A
small employer carrier shall 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 since issue.
(c) The commissioner may suspend for a specified period
the application of paragraph (a)(i) of this section as to the
premium rates applicable to one (1) or more small employers
included within a class of business of a small employer carrier
for one (1) or more rating periods upon a filing by the small
employer carrier and a finding by the commissioner either that
the suspension is reasonable in light of 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.
(d) In connection with the offering for sale of any health
benefit plan to a small employer, the small employer carrier
shall make a reasonable disclosure, as part of its solicitation
and sales materials, of the following:
(i) The extent to which premium rates for a specified
small employer are established or adjusted in part based upon
the actual or expected variation in claims costs or actual or
expected variation in health condition of the employees and
dependents of the small employer;
(ii) The provisions concerning the small employer
carrier's right to change premium rates and the factors other
than claim experience which affect changes in premium rates;
(iii) The provisions relating to renewability of
policies and contracts; and
(iv) The provisions relating to any preexisting
condition provision.
(e) Each small employer carrier shall:
(i) 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;
(ii) File with the commissioner annually on or before
March 15 an actuarial certification certifying that the carrier
is in compliance with this act and that the rating methods of
the small employer carrier are actuarially sound. A copy of the
certification shall be retained by the small employer carrier at
its principal place of business;
(iii) Make the information and documentation
described in paragraph (i) of this subsection available to the
commissioner upon request. Except in cases of violations of
this act, the information shall be considered proprietary and
trade secret information and shall not be subject to disclosure
by the commissioner to persons outside of the department except
as agreed to by the small employer carrier or as ordered by a
court of competent jurisdiction.