Section 8.52. Regulation of rates and rate changes.

 

(1)   Identification of the set of midpoint rates.

(a) Each small employer insurer shall identify a set of rates applicable to all combinations of case characteristics and benefit design characteristics that serves as the set of midpoint rates for policies issued to small employers. These rates shall be represented by any combination of rates and rating factors that satisfy the following:

1. All differences among rates in the set shall be in accordance with the insurer's rate manual or rating procedures and shall be based on the actuarially determined values of the differences in case characteristics and benefit design characteristics.

2. The differences among the rates may not reflect any differences due to such factors as the claim experience, health status and duration of coverage of an individual policy or a collection of policies grouped according to anything other than case characteristics or benefit design.

(b) The set of midpoint rates identified in par. (a) shall apply during a specified period which shall not be less than one calendar month.

(2)   Rate variance restriction.

(a) For a new policy issued on or after March 15, 1992, the following table lists the maximum percent a rate may vary from the midpoint rate applicable to policies with the same case characteristics and benefit design characteristics according to the effective date of any rate applied to that policy: - See PDF for table

(b) For a policy issued before March 15, 1992, an insurer shall comply with the rate variance restriction specified in par. (a) 2 no later than August 15, 1994

(3)   Premium rate changes; documentation and restrictions.

(a) For the purpose of complying with s. 635.02 (2) , Stats., and this subsection,"class of business" means a group of policies with the same or similar benefit design whose rates are based wholly or partly on their aggregate loss experience.

(b) For a policy renewed on or after March 15, 1993, an insurer shall maintain sufficient documentation so that each of the following distinct components can be identified:

1. The percentage change in the new business premium rate measured from the rating period in which the small employer was last rated to the current rating period or, in the case of a class of business for which the insurer is not issuing new policies, the corresponding change in the base premium rate.

2. The percentage change due to adjustments in case characteristics, determined in accordance with the insurer's rate manual or rating procedures.

3. The percentage change due to adjustments in benefit design, determined in accordance with the insurer's rate manual or rating procedures.

4. The percentage change due to such rating factors as claim experience, health status and duration of coverage, determined in accordance with the insurer's rate manual or rating procedures.

(c) Each renewal rate, regardless of whether the rate represents an increase, shall be limited to the previous rate adjusted by the combination of the 4 components specified in par. (b) with the following restrictions on the experience component specified in par. (b) 4. :

1. For a policy issued on or after March 15, 1992, the experience component shall be limited to 15% per year, adjusted proportionately for rating periods of less than one year.

2. For a policy issued before March 15, 1992, subd. 1. applies, except if the premium rate exceeds the midpoint rate by more than the percentage specified in sub. (2) (a) for the applicable period for policies with the same case characteristics and benefit design characteristics, the experience component may not exceed 0%.

(d) For a rate change made before the end of the policy term due to the addition of a new entrant, late enrollee, underwritten individual or a new dependent of an insured employee, par. (c) applies, except that:

1. The new business rate change component specified in par. (b) 1. may not be applied at that time.

2. The experience component specified in par. (b) 4. may not exceed 15% per year, adjusted proportionately to the time remaining in the policy term.

3. The experience component specified in par. (b) 4. , when combined with the experience component of the last scheduled rate renewal and any other subsequent rate changes during the current policy term, shall not exceed the limit specified in par. (c) 1. or 2. , whichever applies.

(4)   Annual publication of rates.

(a) On or before December 1, every small employer insurer shall annually file with the commissioner the small employer insurer's lowest available monthly new business premium rates which will be in effect the following January 1. The filing shall be made on a form provided by the commissioner and shall require all of the following information as may apply to the type of plan offered:

1. For an indemnity plan , the rates shall be based on the insurer's plan that is closest to a plan that features a $500.00 annual deductible and 80%/20% coinsurance.

2. For a defined network plan, the rates shall be based on a plan which is actuarially equivalent to the features described in subd. 1.

3. For all plans , the rates shall be specified for family and single plans, by group size and by the geographical criteria that are used by the insurer.

4. The commissioner may require additional information be provided in the form as appropriate to implement this subsection.

(b) Small employer insurers who file rates with the commissioner as described in this subsection will be in compliance with the requirements of s. 635.12 , Stats.

History: Cr. Register, October, 1992, No. 442 , eff. 11-1-92; am. (3) (d) (intro.), Register, November, 1993, No. 455 , eff. 2-1-94; CR 02-043 : cr. (4), Register October 2002 No. 562 , eff. 11-1-02.

Note

OCI 26-500, the form described in this subsection may be obtained without charge by contacting the Office of the Commissioner of Insurance PO Box 7873, Madison WI. 53707-7873. The form is also available on the OCI website at oci.wi.gov Microsoft Windows NT 6.1.7601 Service Pack 1