How Do You Compare Two Group Health Proposals in Tennessee

Start with the things the two proposals are not allowed to differ on, because that list is longer than most employers expect and it clears the table fast. Federal rules close the set of factors that may move a small group rate, and health status is not in it. Once that is settled, the real comparison is about five things: the shape of the per-employee line, how the arrangement is funded, the participation and contribution terms, the network, and the benefit set. Those are where two Tennessee proposals genuinely diverge.

What the two proposals cannot differ on

45 CFR 147.102(a)(1) permits a rate in the small group market to vary only by whether the plan or coverage covers an individual or family, by rating area, by age, and by tobacco use. Then (a)(2) shuts the door: “The rate must not vary with respect to the particular plan or coverage involved by any other factor not described in paragraph (a)(1) of this section.”

Age is a permitted factor within a federally capped band, and tobacco within its own capped band. Claims history, industry, gender and the health of a particular employee are not permitted factors at all.

Alongside that sits 45 CFR 147.104, which requires an issuer offering coverage in the small group market in a state to offer any employer in the state all products approved for sale in that market, and to accept any employer that applies. That guarantee is expressly subject to paragraphs (b) through (d) of the same section — see the participation discussion below — but the core of it means a proposal cannot be priced or withheld because of who works for you.

So if two proposals for the same census arrive at different totals, the difference is in the product, not in an opinion about your group.

The per-employee line can arrive in two different shapes

This is the difference that confuses more Tennessee employers than any other, and it is not a price difference at all.

One carrier may quote per-member: the group’s total is built by pricing each covered person and summing. Another may composite: the same total is re-expressed as flat per-enrollee tier amounts, so employees in the same tier are billed alike regardless of age. Federal law permits the second only if the total is preserved — 45 CFR 147.102(c)(3)(ii) conditions average enrollee premiums on the total group premium at the beginning of the plan year being “the same total amount derived in accordance with paragraph (c)(1) or (2) of this section.”

In Tennessee there is a state layer on top. Where a carrier does composite, Tennessee’s CMS-authorized method governs rather than the federal two-tier default, and it uses standard family-composition tier definitions with mandated factors. Tennessee does not require a carrier to composite; the method applies where compositing is offered. The shape of that method has its own post on this site, and the point for a comparison is narrower: do not read two differently shaped per-employee lines as two different prices. Compare the group totals, then look separately at how each proposal distributes that total across your payroll, because that is what your employees will actually see.

One address sets the rating area, and in Tennessee it is a county question

Rating area is a permitted factor, and in the small group market it is not determined employee by employee. 45 CFR 147.102(a)(1)(ii)(B) sets it “using the group policyholder’s principal business address,” and then defines that term — the principal business address registered with the State, or, where none is registered or the registered one is not a substantial worksite, the business address within the State where the greatest number of employees works. There is a further cascade for network plans whose service area does not cover the principal business address.

Tennessee’s rating areas are drawn on counties. The federal table that publishes them carries a three-digit zip code column, and no Tennessee row populates it — the geography here is county-based with no zip overlay.

That has a consequence worth checking before you compare anything. A municipality can lie in more than one county, and Spring Hill is the clear Tennessee example: its two counties are placed in different rating areas, so the rating-area line runs through the city. We are not going to tell you which side any particular Spring Hill employer lands on, because the determinant is the federal principal-business-address rule applied to one employer’s facts. If your address is near a county line, confirm which rating area each proposal used — and confirm both used the same one.

Ask both issuers the same participation and contribution questions

Minimum group participation and minimum employer contribution are real gating conditions in the small group market, and they sit outside the guaranteed-availability promise rather than inside it. 45 CFR 147.104(b) contemplates a group health plan in the small group market “that cannot comply with employer contribution or group participation rules for the offering of health insurance coverage, as allowed under applicable State law,” and permits an issuer in that case to restrict availability to a defined annual enrollment window.

The level is not fixed nationally. Federal rules for the federally-facilitated small business exchange recognize that a state law may set a participation rate, or that a higher or lower rate may be customarily used by the majority of issuers in a state. So the requirement is genuine, it varies, and it is answerable only by asking.

One mechanical point that changes the arithmetic in an employer’s favor: participation is measured against employees offered coverage, and employees who already hold other coverage — another group plan, government coverage, individual coverage — generally count toward the requirement rather than against it. Ask each proposal how it counts, and ask what contribution level it assumes. Two proposals with identical totals and different participation conditions are not equivalent offers.

Fully-insured and level-funded are not the same purchase

If one proposal is fully-insured and the other is level-funded, you are not comparing two versions of the same thing.

In a fully-insured arrangement the issuer carries the claims risk and the coverage is subject to the small group market’s federal requirements — the essential health benefits package, guaranteed renewability, the single risk pool. A level-funded arrangement is described by the federal Departments as a type of self-funded arrangement in which the plan sponsor makes set monthly payments covering estimated claims costs, administrative costs and stop-loss premium for claims above an attachment point; a year that runs under budget may produce a refund or a surplus carried forward, and a year that runs over may push the following year’s payments up.

The Departments also recorded the warning, and it is the single most useful sentence in the comparison: small employers moving to these arrangements “may be unaware that the self-funded plans they are offering to their employees may not include certain benefits that would have to be covered if the plan were fully-insured.” They add that, if the entire arrangement is treated as self-insured, the essential health benefit requirements would not apply, and that such arrangements are not generally treated as subject to the guaranteed renewability and single risk pool requirements that apply to fully-insured small group coverage.

That is a description of how the arrangement works, not a rule about what it must do — the federal text describing it sits in a proposed rule whose final version expressly declined to address the subject. Treat it as the Departments’ account of the mechanism, and treat the question as one to put directly to each proposal: which benefits are in, and what happens in a bad claims year.

Metal tier and network type are two different axes

A metal label is a statement about actuarial value — the share of expected covered costs the plan design carries, with the balance falling to the member through cost-sharing. Under 45 CFR 156.140, actuarial value is what determines whether a plan is bronze, silver, gold or platinum. It is not a quality grade and it says nothing about network size.

Network type is the other axis. An HMO usually limits coverage to its own contracted providers and generally will not cover out-of-network care except in an emergency. A PPO contracts a network and costs you less inside it while still covering out-of-network care at additional cost. An EPO covers services only in-network except in an emergency. A high-deductible plan — now more often labeled an HSA-eligible plan — trades a lower monthly premium for more cost falling to the member before coverage pays, and can be paired with a health savings account.

Two proposals in the same metal tier with different network types are a genuinely different experience for your staff. Check whether the hospital system and physician groups your employees already use sit inside each network before the tier label does any work in your decision.

The benefit side: what we could check, and what we could not

The federal floor is checkable and worth naming. 45 CFR 156.110(a) requires an EHB-benchmark plan to “Provide coverage of at least the following categories of benefits:” — ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; pediatric services, including oral and vision care. The same section leaves some room to states: where a base-benchmark plan does not include habilitative services coverage, “the State may determine which services are included in that category.”

A state may also require benefits in addition to the essential health benefits, and the machinery for that is public: under 45 CFR 155.170 the state identifies which required benefits are in addition to EHB and must make payments to defray their cost, either to the enrollee or directly to the issuer. Note one scope point if you read that section yourself — its test keyed to state action on or before December 31, 2011 governs plan years beginning before January 1, 2028, and a different four-part test takes over from that date.

What we could not do is tell you Tennessee’s own list. The Department publishes a “Laws” link for the insurance code; it redirects to a subscription legal-research container, and what comes back to an ordinary reader is a small page carrying a browser check and a redirect instruction with no statutory text in it. The single consolidated federal compilation that names Tennessee carries an enactment-year column reading “Before 2012” for every entry and cannot be affirmed as current — demonstrably so, since Tennessee enacted a further coverage requirement in 2026 that the compilation does not contain. We did not substitute a third-party summary, and we are not going to tell you Tennessee adds nothing, because that is a claim and we do not have the evidence for it.

The practical route around the gap: make each issuer state the Tennessee-specific provisions in its own filed policy form, and compare those two documents against each other.

Who is on the shelf

We are appointed with a panel of carrier markets that includes Anthem, Aetna, Cigna and Humana. That is a statement about our own appointments — not a statement that any particular one of them will write a plan for your Tennessee group, not a market survey, not a ranking, and not a judgment about who fits your group best, which is a question about your census and your employees’ providers rather than about a name.

Two things to verify independently before you sign anything. The Insurance Division publishes a license verification tool and a list of licensed insurance companies, and any employer is entitled to check a producer or a company against them. And the rate underlying either proposal was filed with the Insurance Division for approval — how that review works, and who performs the federal half of it, is a separate subject with its own post.

Then compare the five things that can actually differ, in this order: billing shape, funding arrangement, participation and contribution terms, network, benefit set. The totals mean something only after those five line up.