Kilpatrick

Carrier News

2015 Composite (or Member) Rate Methods by Small Group Carrier

When HHS issued the market rating rules for small group policies effective in 2014, they generally prohibited traditional composite rating in small group. They required carriers to invoice employers for premium rates specific to each covered member’s age (with a couple of nuances). This rating/billing requirement is only applicable to ACA-compliant small group policies—i.e.: fully insured policies written in our state’s small group market with plans that are not grandfathered or offered under transitional relief. By the latter part of 2014, most carriers figured out a way around the rule.

For policies effective in 2015, HHS reinforced the member rating standard in their 2015 market rating rules. To further inhibit the ability for carriers to use traditional composite rating, HHS created a new definition of “composite rating.” Under the federal definition, carriers would be required to invoice the employer using rates attributable to each member, except the carrier would be allowed to use an “average” adult rate or an “average” child rate based on each member’s age on the effective date of his/her coverage. By defining “composite rating” as member rating using average adult and child rates, the federal government presumably blocked any other method in states that have not sought and received approval for their own state definition/standard for composite rating. As of the date of this article, 16 states have received approval to use a special state composite rating standard. Texas has not sought approval and may not for political reasons.

With that in mind, the table below represents the rating method that each carrier appears to be using for 2015 as of today:

MEMBER TRADITIONAL COMPOSITE FEDERAL ADULT/CHILD COMPOSITE NOTES
Aetna Member rating all sizes.
BCBS Member rating all sizes.
Humana Member rating all sizes.
Memorial Hermann Groups have option of member or composite.
UHC Member rating all sizes.
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