Renewal drivers
RenewalA renewal is your carrier's price and terms for the next plan year. For a fully insured group it usually arrives 60 to 90 days before the plan year starts, and the increase combines medical trend with your own claims, large claims, enrollment changes, plan changes and the carrier's fees.▶ 1:19 videoMedical TrendMedical trend is the expected yearly rate of change in health care costs per person. It combines price increases, changes in how much care people use, shifts toward more expensive services, and new drugs and technology. Every renewal starts by applying trend to your past claims.▶ 1:13 videoExperience RatingExperience rating sets a group's premium using its own past claims, projected forward with trend and blended with the carrier's standard (manual) rate based on how credible the group's data is. Larger groups lean more on their own experience; smaller groups lean more on the manual rate.▶ 1:14 videoCredibilityCredibility is the weight a carrier gives your group's own claims when it sets your renewal. The rest of the weight goes to the manual rate, the carrier's standard price for a group like yours. Bigger groups get more credibility, but it grows slowly.▶ 1:09 videoLoss RatioA loss ratio is claims divided by premium for a set period. An 85% loss ratio means 85 cents of every premium dollar went to claims. Carriers compare it to a target loss ratio to decide how much to raise or lower rates.▶ 1:23 videoMedical Loss RatioThe medical loss ratio (MLR) is an ACA rule requiring insurers to spend a minimum share of premium on medical care and quality improvement: 80% in the individual and small group markets, 85% in large group. If an insurer falls short in a state market, it must pay rebates.▶ 1:24 video
Funding options
Coming soon: Fully Insured Plan, Level-Funded Plan, Self-Funded Plan, Actuarially Sound
Stop-loss
Coming soon: Specific Stop-Loss, Aggregate Stop-Loss, Attachment Point
Claims and measures
IBNRIBNR (incurred but not reported) is an estimate of claims for care that has already happened but hasn't been reported or paid yet. Because claims arrive weeks or months after the service date, paid claims always understate what a plan actually owes for recent months.▶ 1:19 videoPMPM (Per Member Per Month)PMPM (per member per month) is total claims or premium divided by member months, the count of everyone covered for each month they were covered. It puts groups and years of different sizes on the same footing.▶ 1:24 video