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- Title
Controlling Characteristics of Group Insureds: Risk Rating.
- Authors
Lilly, Frances S.; Lilly, Claude C.
- Abstract
Employers in the U.S. seek to manage risk in their group health and life insurance plans through wellness programs and certain hiring practices. In both cases, the Americans with Disabilities Act may ultimately affect the use of these forms of risk rating on the grounds that they are discriminatory. In this article, group health insurance risk rating is examined. Group health insurance coverage rates are initially calculated on an aggregate basis by type of benefit. The base rate is then adjusted for characteristics of a particular group. To illustrate, a table is provided that shows how the base cost for outpatient and inpatient coverage for a group might be calculated. Also, employers' efforts to prevent losses by risk rating are explored. Most employers do not risk rate workers, but they are working to prevent losses. They make use of monetary incentives in at least four ways. For instance, a discount is given to a worker who does not smoke or a person who gives up smoking might get a 10 percent reduction in his or her monthly life or health insurance premium contribution. In addition, the author identifies problems with incentives and risk rating.
- Subjects
UNITED States; RISK (Insurance); GROUP insurance; RISK assessment; EMPLOYEE benefits; COMPENSATION management
- Publication
Benefits Quarterly, 1993, Vol 9, Issue 2, p65
- ISSN
8756-1263
- Publication type
Article