Clarification of Regulation 482-1-116 — Small Employer Allocation Program (age brackets and family composite premiums)
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Provides clarification of Alabama Regulation 482-1-116 implementing the Small Employer Allocation Program, including allowance of single-age brackets and describing two approved family composite premium methods (Method A and Method B) and related requirements for carriers offering small group health insurance in Alabama.
Carrier Premium Calculation and Administration
Carrier premium calculation and administration criteria
Requirements and allowable practices for carriers offering small group health insurance in Alabama under Regulation 482-1-116 as clarified by this bulletin:
Family composite premium options
- Carriers may use family composite premiums and choose either Method A or Method B as described in this bulletin.
- Carriers may file an alternative family composite method for Department approval.
- Alternatively, a carrier may elect not to provide family composite premiums and instead bill member-level rates summed for the group.
Carrier Responsibilities and Offerings
Require offering of composite method to all employers; fixed tiers until renewal; establish missing tiers at start of year; tobacco adjustments applied per employee
If a carrier uses a family composite method for a product in a market, the carrier must offer that method to all employers in the market for that product; composite premium tiers may not change due to enrollment changes until the next renewal. If the initial employee census does not represent all tiers, the carrier must establish any missing tiers at the start of the policy year using a process filed with the Department. Tobacco adjustment factors must not be incorporated into composite premiums and instead must be applied to each individual employee's tier as appropriate.
- Offer the family composite method to all employers in the product market.
- Do not alter composite premium tiers mid-policy for enrollment changes; changes only at renewal.
- File and use a Department‑filed process to establish any tiers not represented on the initial census at the policy year start.
- Apply tobacco adjustment factors to individual employee tiers — do not include them in composite premiums.
Key Definitions: Age Brackets and Family Composite Methods
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