Texas Department of Insurancewww.tdi.state.tx.us - Consumer Helpline 1-800-252-3439
Small Employer Health Benefit Plan Rate Guide(Revised March 2006) To view rates, please select a city from the list below: Austin | Brownsville | Corpus Christi | Dallas/Fort Worth | El Paso | Houston | Lubbock | Midland/Odessa | San Antonio | Tyler | Wichita Falls View a list of all companies licensed to sell small employer accident and health coverage in Texas. IntroductionShopping for the right health care plan at the right price can be time-consuming for busy employers and managers. The Texas Department of Insurance (TDI) has developed this region-specific small employer health benefit plan rate guide to help small employers shop for coverage. Understanding RatesTo improve the affordability and availability of health coverage for small employers, Texas law requires all fully insured small employer health benefit plans to small employers to comply with specific rating requirements. These requirements do not apply to "self-insured" or "self-funded" health plans. Although TDI does not set or approve health coverage rates, the law establishes certain limits and guidelines that carriers must use when calculating rates for small employers. Following is a very simplified explanation of how rates are established. Case CharacteristicsCase characteristics are objective characteristics that serve as good predictors of a group´s expected claims experience. Texas law allows carriers to use the following five case characteristics in determining a group´s rate:
Currently, no carrier has requested approval to use any additional case characteristics. Carriers may use all or some of the five criteria. For instance, a carrier might base its rates on age, gender, group size, and area, but opt not to use the employer´s industry classification. The carrier, however, must use the same criteria for all small employer groups. In other words, the carrier cannot use industry classification as a basis to set rates for one small employer, but not use it for another. A carrier may use additional criteria only with the prior approval of the Commissioner of Insurance. There are currently no additional approved rate-setting criteria for small employer carriers. Below is a brief discussion of each case characteristic: Age Statistics show that, in general, an individual is more likely to use health care services as he or she ages. Therefore, older employees can reasonably be expected to have more, and often more expensive, health-related claims. The older your employees are, the more you can expect to pay for health insurance. Gender Females generally incur greater medical costs than males at younger ages, particularly during childbearing years. The variances in costs diminish with age until medical costs for males begin to exceed those for females in their late fifties or early sixties. This difference can be seen by comparing the female employee-only rate at 25 to the male employee-only rate at 25. Group Size Carriers often base rates on group size. Group size discounts or surcharges are appropriate for two reasons:
Industry People working in some industries exhibit higher medical claim costs than in other industries. This is due in part to the working conditions and the prevalence of accidents in some industries. Also, higher employee turnover in some industries may result in higher administrative costs for the insurer. The highest factor associated with an industry classification may not exceed the lowest factor associated with an industry classification by more than 15 percent. Geographic Area The cost of medical care varies from one area to another. This is due to the general cost level of the area, the differences in medical practices by region, the degree of specialization of services, and the amount of competition in the area. Most small group plans vary rates either by county or ZIP code. The employer´s business address is normally used to determine rates. Calculating the Premium Rate for a Group The rating process can be described as a two-step process. First, a premium rate is determined based on the group´s case characteristics and plan design factors (copays, deductibles, out of pocket maximums, etc.) but without regard to other risk characteristics. Second, the rate may be adjusted by a "risk load" to reflect risk characteristics of the group. Risk characteristics include health status-related factors, the duration of coverage, and any other characteristics related to the health status or experience of a small employer group or of any member of a small employer group. The risk load adjustment must apply uniformly to all members of the group. Initially, when an employer is first issued a policy, the risk load may be as high as 67 percent. The risk load may be increased at renewal by no more than 15 percent per 12-month period (pro-rata for periods less than 12 months). This 15 percent maximum applies to the risk load portion only. Increases due to other factors such as changes in plan design or changes in case characteristics may be in addition to any increase in the risk load. Increases in Rates At renewal, rates may change because of the following reasons:
Health Benefit Plan CharacteristicsHealth plans are now classified as either "state-mandated health benefit plans" or "consumer choice health benefit plans." A state-mandated plan provides certain required minimum features and coverages. A consumer choice health benefit plan is any plan developed by a carrier that is required by law to include only a very few state-required benefits. Although consumer choice health benefit plans also may be called "standard plans," the term should not be interpreted to mean that the coverages provided are "standardized." Each carrier´s consumer choice health benefit plan may be different - and, in fact, a carrier may offer several different consumer choice health benefit plans. Some state-mandated benefits continue to be required for consumer choice health benefit plans, including coverages for
Consumer choice health benefit plans may vary depending on the type of carrier offering the plan. For example, HMO consumer choice health benefit plans must pay for 20 outpatient mental health visits per enrollee per year, but that´s not a requirement in indemnity plans. In addition, unlike insurance companies, HMO consumer choice health benefit plans must include basic health care services, such as inpatient, outpatient, and preventative services. Carriers may offer optional benefits that vary widely from plan to plan. The rate guide contains rate information on the following types of plans:
An indemnity plan gives the employee the freedom of choice to use any provider. When services are received, the employee usually pays the provider and then submits a properly completed claim form to the carrier. The plan will require that the employee satisfy the deductible before it will reimburse at the stated reimbursement level. PPO plans have two levels of benefits. The plan will reimburse at a higher level of benefits when the employee uses a network provider. The plan will reimburse at a lower level of benefits when an "out of network" provider is used. Carriers do not have to offer both PPO and indemnity plans. Some carriers, however, may offer both types of plans. Generally, HMOs require employees to receive services from providers in the HMO´s network. Although, the HMO must pay for out-of-network services when those services are not available from network providers, if an employee obtains services from an out-of-network provider without prior authorization, the HMO might not pay for the treatment. xml" title="Consumer Publications">Publications are available in alternate languages and formats and on our website.
For more information contact: ConsumerProtection@tdi.state.tx.us Last updated: 12/06/2006 |
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