Individual Banded Medical Rates
What is it?
Individual banded medical rates supports age and gender banded rates where employee and spouse are rated individually based on their own age and gender. Unlike ACA rated plans, there is no geographic rating component to these plans, and the children are given a flat rate based on each enrolled child, instead of an age-based rate.
How do I set it up?
Under a medical plan, in the Costs section, Rates will allow you select from one of the 4 types of medical rates supported. Select "Individual Banded".
Rate per Child: Monthly amount carrier charges for each child
Max rate per child cap: Maximum number of children that will be charged the monthly rate when enrolled. For example, if selecting max rate per child cap = 3, if 4 children are enrolled, only 3 will receive the per child rate.
Rate change options:
- First of month: Rates change on the first of the month in which birthday occurs. Example, if DOB is 7/25 and member is now in a new rate tier, the enrollment change is effective July 1.
- First of following month: Rate changes on the first of the month AFTER birthday. Example, if DOB is 7/25 and member is now is a new rate tier, the enrollment change is effective August 1.
- Policy anniversary: no rate change occurs when member ages into a new rate tier.
Caution: If plan is configured with a first of the month or first of the month following change rule, and enrollments change due to birthday moving them into a new age band, if the plan rule is changed to policy anniversary, a rate recalc will not UNDO the rate change that already occurred.
Individual Banded Rates
Under a medical plan, in the Costs section, after selecting the Individual Banded option under rates, the new Individual Banded Rates tab will allow age and gender rates to be added. The rates are the same for employees and spouses, so there is only one input value needed for each gender. Save the rate, and select Add Band to repeat the process until all rates have been entered.
The contribution tab allows configuration of the amount given to employee based on a 4 tier contribution tier structure. For this type of rate tier, this works well when the employer is giving a contribution based on a % of the rates. For example, an employer may choose to cover 100% of the employee cost, and 50% of any enrolled dependents. The 4 tier contribution structure does not work when an employer is attempting to give a $ to any enrolled spouse or child, because this contribution amount will vary based on the spouse age and the number of enrolled dependents. Watch out for future enhancement to support this, later in 2016.
How does the calculation work?
Individual banded medical rates are calculated based on summing the rate for employee based on employee age and gender + rate for spouse (if applicable) based on spouse age and gender + the per child rate (if applicable) for the number of eligible rated children enrolled.
Male: $350 Female: $450
Male: $375 Female: $425
Children: $150 for each child up to 3
If employee is 33 year old female, spouse is 36 year old Male, and there are 4 enrolled children.
Calculation is $450 + $375 + $150 + $150 + $150 = $1275
Note: Rate is based on the age at the calculated effective date, unless plan has rates change rule of First of Month. For First of Month change rule, the rate is based on the age on the last day of the month in the calculated effective date. For example, if DOB is July 25, and Employee is enrolling effective July 1, the age change will be effective on the first of the month of birthday, so we need to put that person in the higher rate tier for a July 1 effective date.
How does the rate change work?
A nightly job has been created to evaluate enrollments in the Individual Banded medical plans to determine if there is a birthday that would move the enrolled employee or spouse into a new age band.
- First of the Month change rules: The nightly job will pick up an employee or spouse in the month of the birthday and detect that at the end of the month, the member will be in a new age band, and needs to change. This change is expected to occur on the first of the month of birthday, effective on the first of the month.
- First of the Following Month change rules: The nightly job will pick up an employee or spouse who is changing into a new age band. The change is expected to occur on the first day of the month following the birthday.
- Policy anniversary: The nightly job will not look at these enrollments and change mid-year.
What happens on a life event?
When a life event occurs, the employee and spouse are evaluated based on the age as of the effective date of the life event. For example, if employee is enrolled effective 1/1, and adds a spouse on 8/1, the rate will be evaluated based on the employee and spouse age as of 8/1.
For policy anniversary plan- if employee/spouse changed to a new rate tier after plan effective date, but prior to life event effective date, the rates after the life event will be in the new tier because as of 8/1, the member is in a new rate tier.
For First of the Month and First of the Month After plan, the employee or spouse should have changed rates through the above mentioned nightly job process, and the cost should have already adjusted to account for new rate tier.