Michigan Laws 500.3705 – Geographic areas; adjustment and determination of premiums; conditions; additional premium; small employer; rating factors
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Terms Used In Michigan Laws 500.3705
- Carrier: means a person that provides health benefits, coverage, or insurance in this state. See Michigan Laws 500.3701
- Commercial carrier: means a small employer carrier other than a health maintenance organization. See Michigan Laws 500.3701
- Director: means , unless the context clearly implies a different meaning, the director of the department. See Michigan Laws 500.102
- Geographic area: means an area in this state that includes not less than 1 entire county, is established by a carrier under section 3705, and is used for adjusting premiums for a health benefit plan subject to this chapter. See Michigan Laws 500.3701
- Health maintenance organization: means that term as defined in section 3501. See Michigan Laws 500.106
- Index rate: means the arithmetic average during a rating period of the base premium and the highest premium charged per employee for each health benefit plan offered by each small employer carrier to small employers and sole proprietors in a geographic area. See Michigan Laws 500.3701
- plan: means an expense-incurred hospital, medical, or surgical policy or certificate, or health maintenance organization contract. See Michigan Laws 500.3701
- Premium: means all money paid by a small employer, eligible employees, or eligible persons as a condition of receiving coverage from a small employer carrier, including any fees or other contributions associated with the health benefit plan. See Michigan Laws 500.3701
- Rate: means the cost of insurance per payroll before adjustment for an individual insured's size, exposure, or loss experience. See Michigan Laws 500.2402
- Rating period: means the calendar period for which premiums established by a small employer carrier are assumed to be in effect, as determined by the small employer carrier. See Michigan Laws 500.3701
- Small employer: means any person actively engaged in business that, on at least 50% of its working days during the preceding and current calendar years, employed not fewer than 2 and not more than 50 eligible employees. See Michigan Laws 500.3701
- Small employer carrier: means a carrier that offers health benefit plans covering the employees of a small employer. See Michigan Laws 500.3701
- state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories belonging to the United States; and the words "United States" shall be construed to include the district and territories. See Michigan Laws 8.3o
(1) For adjusting premiums for health benefit plans subject to this chapter, a carrier shall use the defined geographic areas established by the director and allowed under federal law.
(2) Premiums for a health benefit plan under this chapter are subject to the following:
(a) For a health maintenance organization, only industry, age, and group size may be used for determining the premiums within a geographic area for a small employer located in the geographic area. For a commercial carrier, only industry, age, group size, and health status may be used for determining the premiums within a geographic area for a small employer located in the geographic area.
(b) For a health benefit plan delivered, issued for delivery, or renewed in this state on or after January 1, 2014, the premiums charged during a rating period to small employers must be determined only by using the rating factors set forth in section 3474a.
(c) The premiums charged during a rating period by a health maintenance organization or commercial carrier for a health benefit plan in a geographic area to small employers located in the geographic area must not vary from the index rate for the health benefit plan by more than 45% of the index rate.
(d) Except as otherwise provided in this section, the percentage increase in the premiums charged to a small employer in a geographic area for a new rating period must not exceed the sum of the annual percentage adjustment in the geographic area’s index rate for the health benefit plan and an adjustment under subdivision (a). The adjustment under subdivision (a) must not exceed 15% annually and must be adjusted pro rata for rating periods of less than 1 year. This subdivision does not prohibit an adjustment because of change in coverage.
(3) Beginning January 23, 2005, if a small employer was covered by a self-insured health benefit plan immediately preceding application for a health benefit plan subject to this chapter, a carrier may charge an additional premium of up to 33% above the premium in subsection (2)(b) for no more than 2 years.
(4) Health benefit plan options, number of family members covered, and Medicare eligibility may be used in establishing a small employer’s premium.
(5) A small employer carrier shall apply all rating factors consistently with respect to all small employers in a geographic area. Except as otherwise provided in subsection (4), a small employer carrier shall bill a small employer group only with a composite rate and shall not bill so that 1 or more employees in a small employer group are charged a higher premium than another employee in the small employer group.