58-18B-3. Regulations on premium rates.

Premium rates for health benefit plans subject to this chapter are subject to the following provisions:

(1)    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 twenty percent unless:

(a)    The class of business is one for which the carrier does not reject, and never has rejected, small employers included within the definition of employers eligible for the class of business or otherwise eligible employees and dependents who enroll on a timely basis, based upon their claim experience or health status;

(b)    The carrier does not involuntarily transfer, and never has involuntarily transferred, a health benefit plan into or out of the class of business; or

(c)    The class of business is currently available for purchase;

(2)    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 such employers under the rating system for that class of business, may not vary from the index rate by more than twenty-five percent of the index rate;

(3)    The percentage increase in the premium rate charged to a small employer 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 class of business for which the small employer carrier is not issuing new policies, the carrier shall use the percentage change in the base premium rate;

(b)    An adjustment, not to exceed fifteen percent annually and adjusted pro rata for rating periods of less than one 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 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 carrier's rate manual for the class of business;

(4)    For health benefit plans issued prior to July 1, 1991, a premium rate for a rating period may exceed the ranges described in subdivision (1) or (2) of this section for a period of five years from July 1, 1991. In that 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 class of business for which the small employer carrier is not issuing new policies, the carrier shall use the percentage change in the base premium rate; 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.

This section does not affect the use by a small employer carrier of legitimate rating factors other than claim experience, health status or duration of coverage in the determination of premium rates. Small employer carriers shall apply rating factors, including case characteristics, consistently with respect to all small employers in a class of business.

A small employer carrier may not involuntarily transfer a small employer 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 since issue.

Source: SL 1991, ch 402, § 3.