PREMIUM RATE OVERSIGHT

Rating Methods
The HMO’s premium schedule must be filed with and approved by the Insurance Commissioner prior to use (NCGS 58-67-50(b)(1), 11 NCAC 16.0602(b)(1)).¹To be approved, the premium rating method must be based on sound actuarial principles, and not on the health status of an individual member. The premiums may not be excessive, inadequate, or unfairly discriminatory, and cannot be based on an individual’s health status.

Periodic Adjustments
The premiums for non-group coverage cannot be adjusted more frequently than once every 12 months and may not become effective unless the HMO has given the members at least 45 days advance notice (NCGS 58-67-50(b)(2)). HMOs may not adjust group rates more frequently than once every six months, although the Department of Insurance is unlikely to approve a rate adjustment in the first 12 months of enrollment.

⁴ Premiums for individual policies offered by commercial insurers must be filed and approved by the Commissioner prior to use (NCGS 58-51-95(f)). The Commissioner does not have the authority to review the premiums charged by commercial insurers to group policy holders. In these instances, the Commissioner must approve the group policy, but not the premiums or premium rating methodology. However, commercial insurers must provide evidence that the rates are established using sound actuarial principles (NCGS 58-51-85). The Commissioner has the responsibility of reviewing and approving nonprofit medical and hospital corporation (BCBS) premiums and rating methodology for the non-group market (NCGS 58-65-40, 58-65-45), but must only approve the rating methodology for the group market. The Commissioner must approve the methodology for determining adjusted community rates for the small group market (NCGS 58-50-130(b)).

RETURN TO HOMEPAGE