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and would serve as the basis for the premiums to be charged in
the following year for group contracts with the same benefit and
the same coverage type.
As indicated, the distinguishing feature of community-rated
group contracts was that the annual premiums and the annual
increase or decrease, if any, in premium rates relating to
community-rated group contracts would be the same for all
community-rated group contracts with the same benefit and the
same coverage type.
Experience- and Cost-Plus-Rated Group Contracts
Premiums petitioner charged relating to groups with 100 or
more individual members (representing more than half of the total
premiums petitioner received) were either “experience” or “cost-
plus” rated.
With regard to experience-rated group contracts, total
claims received by petitioner from members of each experience-
rated group would be reviewed and would constitute the basis for
the premiums to be charged to the group in the following year.
Obviously, under this method, premium rate increases or decreases
relating to each experience-rated group contract would be unique.
Experience-rated group contracts offered by petitioner had
either a “retrospective refund” or a “retrospective credit”
feature (the first providing a cash refund, the second providing
a credit) relating to situations where total premiums received by
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Last modified: May 25, 2011