Rating of QHPs FAQ

For rating in the small group market, federal regulation 45 CFR 147.102(c)(3) requires issuers in the small group market to calculate rates for employee and dependent coverage on a per-member basis, and calculate the group premium by totaling the premiums attributable to each covered individual. For families, the premium is calculated as the sum of each adult's premium, plus the premiums for the three oldest children under age 21. Traditional rating tiers are no longer permitted.

• The employer is located in Michigan, the employee is located in a different state;
• The employer is located in Michigan, the employee is also located in Michigan but in a different geographic rating area;
• The employer is located in Michigan, the employee is at the same geographic location, but eligible dependents of the employee are located in a different geographic location?
  
  In all scenarios listed above, the area rating factor that will be used to rate the small employer group coverage will be the primary geographic location of the employer. There is no need for an out-of-state rating factor as employers securing coverage in Michigan will be Michigan employers.

Members of the same family unit are rated based on the subscriber's location not the individual family member's location. For example, a family living in Grand Rapids, with a college student in Detroit, is rated using the Grand Rapids rating area, including the college student in Detroit. Employees are rated based on their employer's location. For example, an employee living in Illinois, working for a Grand Rapids employer is rated using the Grand Rapids rating area.

Yes, area factors can be the same for different rating regions. We anticipate many issuers may choose to combine rating regions to align with their service areas, referral patterns, and unit costs. While you may choose to combine rating regions for internal purposes, your rate filing must list your selected rating factors by the state's geographic regions (A-P). As with all rating elements, the selected geographic area factors must be actuarially justified.

Quarterly trend adjustments to small group rates should be submitted in an issuer's single risk pool annual filing and justification, along with four separate rate tables, one for each quarter.