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- Annamaria submits a claim of $650 for herself. How much will insurance cover?
- Chet has claims totaling $28,500. How much will this insurance pay for these claims?
- Rachael has claims totaling $18,600 for the year for herself. How much will this insurance cover?
B. Calculating Insurance Premiums- Trustworthy Healthcare Insureco uses adjusted community rating for its PPO plan. The community rate for this plan is
$195 single, $390 for a double (single person with spouse or partner), and $635 for family. Deressigt Corp. wants to
offer this plan to its employees. The company’s industry factor is 1.05 and its demographic factor is 0.983. Calculate
the premium Deressigt Corp. would pay for this plan. - Suppose that health insurance rates are to be determined by adjusted community rating for a company whose
demographic factor is 1.035 and whose industry factor is 0.985. The single community rate is $303.92 and the family
rate is $765.55. Calculate the company’s rates. - Second Law Capital Management offers a medical plan to its employees. Last year, the 937 employees who
participated in the plan incurred medical costs totaling $5,213,929. The insurer uses a rating formula that bases
each year’s rates on the prior year’s claims, and then applies load factors of 1.08 for cost and utilization trends and
1.15 for administrative costs, including margin of error and profi t. Determine the rate per employee for the coming
year. - Suppose that health insurance rates are to be determined by an experience rating formula. The insurer calculates the
new year’s rates by starting with the last year’s claims, and then applies load factors of 1.10 for cost and utilization and
1.18 for administrative expenses including margin and profi t. Last year’s claims came to $385.96 per employee per
month. Determine the rate per employee per month for the coming year. - Last year, Contrapolar Power Corp’s health insurance rates were $293.75 single and $755.92 family. These rates
were based on projected claims of $2,935,910. This year’s rates are based on projected claims of $3,333,145.
The administrative loads did not change, and neither did the rating formula. What will the company’s rates be this
year? - Suppose that health insurance rates are to be determined by experience rating. Last year’s rates were $372.00 single
and $779.55 family. Last year’s projected claims were $3,500,000, while this year’s projection is $3,378,904. Assuming
no changes in the administrative loads or rating formula, what will this year’s rates be?
Exercises 17 to 18 use the credibility table given on page 542.- Smallco Industries has 145 employees who participate in the company’s health insurance plan. The company’s rates
based on full experience rating would be $168.52 single and $390.75 family. The community rate is $242.75 single
and $506.75 family. Calculate the company’s health insurance rates.
Exercises 13.2 547