What does RAF mean?
Typically, groups of 1 to 4 people will be subject to a higher rate adjustment factor than other small groups with more employees. Some group health insurance quotes will display the rates based on a variety of rate adjustment factors. This allows the employer to view the possible rates, based on the best and worst case scenarios. You may also find that the available rate adjustment factors may vary from one insurance company to another. For instance, Insurance Company A may offer an RAF of .90 to groups of three, providing that the group is healthy and passes medical underwriting guidelines for qualifying for that discounted rate. Insurance Company B may automatically place all groups of three at an RAF of 1.10, which would make their potential rates much higher than those of Insurance Company A. A quality group health insurance proposal should provide the employer with the possible rate adjustment factors available for each of the insurance plans and companies listed on the quote proposal. This is an important factor in determining which insurance company best fits the needs of your company. An employer with a few employees, all of which are healthy, would most likely avoid obtaining insurance from a company that automatically charges them an increased premium that is based solely on the small size of the group. A good group insurance proposal should also include the basic underwriting guidelines for each of the insurance companies represented on the quote. These guidelines should include information on how the insurance company calculates the rate adjustment factor. For instance, it might say: Groups of 2-4 start at 1.0, groups of 5-9 start at .95, groups of 10-50 may qualify for .90. These percentages will vary from state to state, since each state determines the allowable RAF for small group health plans in that state. For instance, in California the maximum allowable RAF for small groups is 1.10. In Texas the maximum RAF is 1.25 and in Pennsylvania it is 3.0. A rate adjustment factor of 3.0 means that the insurance company may charge some small groups up to 3 times the standard rate. 2 CommentsLeave a comment |
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What does RAF mean?
RAF refers to the rate adjustment factor. A rate adjustment factor of 1.00 means that the quotes that are displayed are based on the standard published rate. A rate adjustment factor of .90 means that the displayed rates are 90% of the standard rates, and a rate adjustment factor of 1.10 means that the rates displayed are 10% higher than the standard rate. Each insurance company that offers small group health insurance in a state must publish the standard rates with their state Department of Insurance. State regulations determine how much these rates may fluctuate, up or down, for any particular group. Certain conditions may affect what rate adjustment factor the insurance company will use in determining the rate to charge to your group. Some of these factors may include the size of the group, the geographic location of the group and the health status of the group. The rate adjustment factor used to calculate your quote may not be the final rate determined by the insurance company. These premiums may be adjusted up or down by the insurance company during the underwriting process.
Hi, how can a small business pin down who was the cause their health insurance quote and rates to go up? Ok, let me give you a hypothetical situation. You apply for a job with a small company and you get group insurance at these rates. Afterwards you make tons of claims and because of this the insurance company determines that your group is actually high risk, so they raise the rates to compensate. If you have not told your employer about your health situation, is there any way that they can actually find out that it is you, who have been causing the rise in rates?
Comment by Zack — June 29, 2009 @ 2:30 am
The answer to your questions would depend on whether your employer/prospective employer has a fully insured plan or a self funded plan, and also the size of your company for obvious reasons. In a nutshell: In a fully insured plan, the rates are higher (relatively speaking) for the employer because by agreeing to pay the monthly rate that an insurance company has proffered (after it has done its actuarial group analyses) the insurance company takes on the risk for the employer for claims paying. The medical claims reports that an employer would receive would be group reporting, without any identifiers as to specific employee. In a self funded plan, the employer has the insurance company doing the claims processing and administrative work, but the claims payor, that is, the entity taking on the risk is the employer. As such the employer receives monthly claims information, including what amounts have been paid to which providers on behalf of what employee. Bear in mind that there is something called “claims experience” that is the claims history/trend pf a health care plan — this is true of whether a plan is fully insured or self funded. If you have been absent from work due to medical reasons, and there is a spike in the claims experience, it would not be difficult to put two and two together as to why claims cost has suddenly increased. You should also know that it is against the law for an employer to ask questions about your health. Some employers may require pre-hire physicals if the work entailed is labor-intensive. There are also some medical conditions (need for back surgery) where health insurance companies can pinpoint whether an employee had a pre-existing condition. Back conditions is a classic textbook example, in that, unless you were in a catatrophic accident, back conditions develop over time, not suddenly. Hope this helps — didn’t see your posting until today. Good luck.
Comment by Florinda — November 5, 2009 @ 2:16 pm