07-05: HB 818 (2007) 35% index rate variance change clarification

To:         All Health Insurers

From:     Linda Bohrer, Director, Missouri Department of Insurance, Financial Institutions and Professional Registration

Re:         HB 818 (2007) 35% index rate variance change clarification §379.936 RSMo

Date:      December 3, 2007

With regard to the expansion of the small-group rate corridor to 35% (from 25%) found in §379.936.1(2) RSMo above and below the index rate, the Insurance Market Regulation Division does not think this allows insurers the ability to go beyond the 15% cap on renewal rates imposed at §379.936.1(3)(b) RSMo.   Additionally, this does not allow carriers to exceed the 35% allowed variance on new business rates.  The division encourages carriers to administer rate structures in compliance with all provisions in the law. The division would not consider it appropriate to interpret the law so as to provide carriers the opportunity to impose a higher rate than would be allowed when complying with all of the provisions in §379.936 RSMo. 

The expansion of small group size to 2-50 employees, also requires carriers, at renewal on or after 1/1/08, to bring groups of 2 and 26-50, that were previously not included in the small group health insurance rating parameters, into compliance with the small group health insurance rating requirements. 

A new reporting form for 2009, reflecting the corridor change to 35%, will be available on the department’s Website later in 2008 for reporting 2008 business. The existing form should be used for reporting on 2007 business.