KRS 304.17A-0952: Premium rate guidelines for individual, small group, and association

plans.

Premium rates for a health benefit plan issued or renewed to an individual, a small group,

or an association on or after April 10, 1998, shall be subject to the following provisions:

(1) The premium rates charged during a rating period to an individual with similar case

characteristics for the same coverage, or the rates that could be charged to that

individual 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 upon any policy

issuance or renewal, on or after January 1, 2003.

(2) Notwithstanding the thirty -five percent (35%) variance limitation in subsection (1)

of this section, ins urers offering an individual health benefit plan that is state -

elected under sec. 35(e)(1)F of the Trade Act of 2002, Pub. L. No. 107 -210 sec.

201, may vary from the index rate by more than thirty -five percent (35%) for

individuals who are eligible for the health coverage tax credit under the following

conditions:

(a) The insurer certifies that the individual does not meet the insurer's

underwriting guidelines for issuance of an individual policy;

(b) The policy meets the requirements for state -elected coverage under the Trade

Act of 2002; and

(c) The premium rate is actuarially justified and has been approved by the

Department of Insurance pursuant to KRS 304.17A-095.

(3) The percentage increase in the premium rate charged to an individual 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 class of business for which the insurer is not issuing new

policies, the insurer shall use the percentage change in the base premium rate;

(b) Any adjustment, not to exceed twenty percent (20%) annually and adjusted

pro rata for rating periods of less than one (1) year, due to the claim

experience, mental and physical condition, including medical condition,

medical history, and health service utilization, or duration of coverage of the

individual and dependents as determined from the insurer'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 individual as determined from the insurer's rate manual

for the class of business.

(4) The premium rates charged during a rating period to a small group or to an

association member with similar case characteristics for the same coverage, or the

rates that could be charged to that small group or that association member under the

rating system for that class of business, shall not vary from the index rate by more

than fifty percent (50%) of the index rate.

(5) The percentage increase in the premium rate charged to a small group or to an

association member 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 class of business for which the insurer is not issuing new

policies, the insurer shall use the percentage change in the base premium rate;

(b) Any adjustment, not to exceed twenty percent (20%) annually and adjusted

pro rata for rating periods of less than one (1) year, due to the claims

experience, mental and physical condition, including medical condition,

medical history, and health service ut ilization, or duration of coverage of the

employee, association member, or dependents as determined from the insurer'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 smal l group or association member as determined from

the insurer's rate manual for the class of business.

(6) In utilizing case characteristics, the ratio of the highest rate factor to the lowest rate

factor within a class of business shall not exceed five to one (5:1). For purpose of

this limitation, case characteristics include age, gender, occupation or industry, and

geographic area.

(7) Adjustments in rates for claims experience, mental and physical condition,

including medical condition, medical history, a nd health service utilization, health

status, and duration of coverage shall not be charged to an individual group member

or the member's dependents. Any adjustment shall be applied uniformly to the rates

charged for all individuals and dependents of the small group.

(8) The commissioner may approve establishment of additional classes of business

upon application to the commissioner and a finding by the commissioner that the

additional class would enhance the efficiency and fairness for the applicable marke t

segment.

(a) The index rate for a rating period for any class of business shall not exceed the

index rate for any other class of business in that market segment by more than

ten percent (10%).

(b) An insurer may establish a separate class of business only to reflect substantial

differences in expected claims experience or administrative cost related to the

following reasons:

1. The insurer uses more than one (1) type of system for the marketing and

sale of the health benefit plans;

2. The insurer has acquired a class of business from another insurer; or

3. The insurer is offering a state -elected plan under the provisions of the

Trade Act of 2002, Pub. L. No. 107-210 sec. 201.

(c) Notwithstanding any other provision of this subsection, beginning January 1,

2001, a GAP participating insurer may establish a separate class of business

for the purpose of separating guaranteed acceptance program qualified

individuals from other individuals enrolled in their plan prior to January 1,

2001. The index rate for the se parate class created under this paragraph shall

be established taking into consideration expected claims experience and

administrative costs of the new class of business and the previous class of

business.

(9) For the purpose of this section, a health bene fit plan that utilizes a restricted

provider network shall not be considered similar coverage to a health benefit plan

that does not utilize a restricted provider network if utilization of the restricted

provider network results in substantial differences in claims costs.

(10) Notwithstanding any other provision of this section, an insurer shall not be required

to utilize the experience of those individuals with high-cost conditions who enrolled

in its plans between July 15, 1995, and April 10, 1998, to dev elop the insurer's

index rate for its individual policies.

(11) Nothing in this section shall be construed to prevent an insurer from offering

incentives to participate in a program of disease prevention or health improvement.