Special Provisions Relating to the Sale of
Small Employer Health Insurance Policies
There are special provisions in the small employer health insurance law relating to the sale of group or individual health insurance policies to small employers.
- Small employer insurance plans are required to treat all eligible individuals equally with regard to health status. For example, plans may not discriminate against individuals with an unfavorable medical history.
- Small employer insurers are required to automatically renew group coverage each year as long as the insurer is in the group market.
- Small employer insurers selling coverage to small employers are required to make products available to all small employers who apply.
- The law sets restrictions on the premium rates that a small employer insurer can charge a small employer. The rates must not vary by more than 30% from the midpoint for policies issued by the insurer to all small employers with the same or similar case characteristics and the same or similar benefit design characteristics. This restriction means that if the midpoint rate charged to small employer groups with a given plan is $100 per month for single coverage, then the insurer could not charge less than $70 and not more than $130 per month for single coverage to other similar groups.
- The law also establishes restrictions on the amount insurers can increase premiums when a policy is renewed. It prohibits small employer insurers from increasing rates more than 15% per year due to claims experience.
What is meant by "case characteristics" and "benefit design characteristics?"
The premium rates an insurer can charge a small business are set in a range by Wisconsin law for employers offering plans which have similar "case characteristics" and with the same "benefit design characteristics."
Case characteristics include the age and sex of employees, the geographic location and other objective information which insurers use to determine rates. Case characteristics do not include loss or claims history, health status, occupation of the group, or how long the policy has been in force.
Benefit design characteristics refers to the medical services covered under the plan, the deductibles and copayments, the managed care, or utilization review aspects of the plan, and other features included in the plan.
Small employer insurers must use objective actuarial data to support the reasons for various benefit group characteristics.