Kentucky affirms a mechanism rather than a list of factors. An insurer must file its rates with the commissioner before use and charge them as filed, may not set enrollment eligibility on health status, and may not charge one employee more than a similarly situated employee for a health reason. The rate is then guaranteed for a fixed statutory term.
What “rating” means in Kentucky: a filing, not a private formula
The first thing a Kentucky small employer should know about rating is that the number in front of them is not invented for them. KRS 304.17A-095(1)(a) requires each insurer that issues, delivers or renews any health benefit plan to any market segment other than a large group to file with the commissioner, before use, its rates, fees, dues and other charges paid by insureds, members, enrollees or subscribers — to submit a copy of the filing to the Attorney General — and to adhere to those rates, fees, dues and other charges as filed. A material change requires a new filing; a lesser change requires an amendment to the previously approved filing.
That is the affirmed rating-side mechanism in this state, and it is worth more to a buyer than a list of adjectives. Two quotes in front of you on a group health decision were each built from a document the insurer lodged with the Commonwealth and is bound to.
The review window, and what happens when it runs out
Kentucky does not make an insurer wait for approval before using a filed rate. KRS 304.17A-095(2)(a) provides that a rate filing may be used by the insurer on and after the date of filing, prior to approval, and that the commissioner shall approve or disapprove it within the statutory window — and that if the window expires without either, the filing is deemed approved.
The commissioner’s power does not end there. KRS 304.17A-095(5) allows the commissioner, after a public hearing on notice, to withdraw approval of rates previously approved and to order a refund or a credit against future premium. A rate in use is not a rate that has been blessed forever.
The rate you accept is guaranteed for a fixed term
This is the sentence to take away. KRS 304.17A-095(4) provides: The rates for each policyholder shall be guaranteed for twelve (12) months at the rate in effect on the date of issue or date of renewal.
A Kentucky employer signing a policy is not signing up for a number that can move underneath them mid-term. That fact changes what a renewal conversation is for, which is why it is the anchor of how we shop a renewal.
What an insurer may not build an eligibility rule on
Kentucky writes the health-status prohibition as a closed enumeration, and it is worth reading in the statute’s own words rather than in a summary. KRS 304.17A-200(1) provides:
An insurer that offers health benefit plan coverage in the small group, large group, or association market may not establish rules for eligibility of any individual to enroll under the terms of the plan based on any of the following health status-related factors in relation to the individual or the dependent of the individual: (a) Health status; (b) Medical condition, including both physical and mental illness; (c) Claims experience; (d) Receipt of health care; (e) Medical history; (f) Genetic information; (g) Evidence of insurability, including conditions arising out of acts of domestic violence; and (h) Disability.
Note what the subsection governs: rules for eligibility to enroll. It is a rule about who gets in, applied at the individual level.
The individual-premium protection is narrower than it sounds
KRS 304.17A-200(2) is the subsection most often over-read. It provides that an insurer shall not require any individual to pay a premium or contribution greater than the premium or contribution for a similarly situated individual enrolled in the plan on the basis of any health status-related factor in relation to the individual or a dependent — while expressly preserving the insurer’s ability to set premium discounts or rebates, or to modify otherwise applicable copayments or deductibles, in return for adherence to programs of health promotion and disease prevention.
Read carefully, that protects one employee against being charged more than a comparable colleague for a health reason. It is a real and useful protection. It is not a statement about what the employer is charged for the group as a whole, and a summary that says “Kentucky bars health-status rating” is reading the subsection past its own words.
What the commissioner weighs on a filing is not a list of rating factors
This is the trap that produces confident, wrong articles. KRS 304.17A-095(3) sets out what the commissioner shall consider in approving or disapproving a filing: whether the benefits provided are reasonable in relation to the premium or fee charged; whether provider fees are reasonable in relation to that premium; previous premium rates or fees for the policies to which the filing applies; the effect of the rate or increase on policyholders, enrollees and subscribers; whether the charges are excessive, inadequate or unfairly discriminatory; the effect of an assessment made under the relevant subtitle; and other factors the commissioner deems relevant.
Those are review criteria for a filing. An author who lists them under “what an insurer can use to rate your group” has published something false while holding a perfectly correct citation. The heading of a statute, and the list inside one, both need reading for what they actually do.
The federal closed list
Alongside Kentucky’s own law sits the federal rating rule, which does close a list. 45 CFR 147.102(a)(1) and (a)(2) provide:
(a) In general. With respect to the premium rate charged by a health insurance issuer in accordance with § 156.80 of this subchapter for health insurance coverage offered in the individual or small group market—
(1) The rate may vary with respect to the particular plan or coverage involved only by determining the following:
(i) Whether the plan or coverage covers an individual or family.
(ii) Rating area, as established in accordance with paragraph (b) of this section. …
(iii) Age, except that the rate may not vary by more than 3:1 for like individuals of different age who are age 21 and older and that the variation in rate must be actuarially justified for individuals under age 21, consistent with the uniform age rating curve under paragraph (e) of this section.
(iv) Subject to section 2705 of the Public Health Service Act and its implementing regulations (related to prohibiting discrimination based on health status and programs of health promotion or disease prevention) as applicable, tobacco use, except that such rate may not vary by more than 1.5:1 and may only be applied with respect to individuals who may legally use tobacco under federal and state law. For purposes of this section, tobacco use means use of tobacco on average four or more times per week within no longer than the past 6 months. This includes all tobacco products, except that tobacco use does not include religious or ceremonial use of tobacco.
(2) 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.
By its own terms that section applies for plan years beginning on or after January 1, 2014, and it does not apply to grandfathered health plans.
Kentucky’s own premium-rate-guideline statute, and what we will not tell you about it
Kentucky has a premium-rate-guideline statute for individual, small group and association plans: KRS 304.17A-0952. It was created in 1998 and last amended in 2010. It is listed as live in the table of contents for its own subtitle with no repeal marker, and is served as a current document by the Legislative Research Commission.
Here is the honest position, and it is deliberately a position rather than an answer. This brand does not assert which instrument governs which Kentucky policy, and it does not assert federal preemption. No Kentucky primary source we could locate states which provisions of KRS 304.17A-0952 the Department currently enforces alongside the federal requirements. What is unestablished is the statute’s operative effect — not its existence — and the difference between those two things is the whole finding. Anyone who tells a Kentucky employer that the state has no rating rules is wrong on the face of the statute book; anyone who reads the 1998 permissions as live without the federal rule beside them is telling that employer something that may not be true of their policy. If a specific quote raises the question for your group, ask us and we will show you both instruments rather than pick one.
Renewal: the closed list, and the one ground inside your control
Rating does not stop at issue, so the renewal rule belongs in this answer. KRS 304.17A-240(1) requires an insurer to renew or continue in force a health benefit plan at the option of the insured. KRS 304.17A-240(2) then permits nonrenewal, cancellation or discontinuance based only on one or more of an enumerated set of grounds: nonpayment; fraud or intentional misrepresentation of material fact; intentional and abusive noncompliance with material plan provisions; the insurer ceasing to offer coverage in the market; a network-plan service-area exit applied uniformly without regard to any health status-related factor; the end of bona fide association membership on the same uniformity condition; and, at KRS 304.17A-240(2)(g), a group that no longer meets participation requirements or contribution requirements as established by the insurer.
Health status is not on that list. Participation and contribution are — and they are the one entry on it that an employer can actually manage. KRS 304.17A-240(3)(b)2 adds a further discipline on the insurer’s side: one that discontinues all health benefit plans in Kentucky may not issue any in the Commonwealth during the statutory period that follows.
That is the shape of Kentucky rating law a small employer can rely on. If you want the state-level context around it, our Kentucky page sets out the rest of the picture.
The bottom line
Kentucky affirms a rating mechanism rather than a tidy list of rating factors. The insurer files its rates with the commissioner before it uses them and must charge what it filed; the rate you accept is guaranteed for the term the statute sets; eligibility may not be built on health status-related factors; and no employee may be charged more than a similarly situated employee for a health reason. Where Kentucky’s own premium-rate-guideline statute and the federal rating rule sit alongside each other, this brand states both and resolves neither, because no Kentucky primary source we could locate resolves it.
Frequently asked questions
Can a Kentucky insurer raise our group’s rate because someone had a bad claims year?
This brand does not answer that question either way, and the reason is on the record. Kentucky’s own premium-rate-guideline statute for individual, small group and association plans, KRS 304.17A-0952, is served as current and unrepealed; the federal rating rule at 45 CFR 147.102 closes the list of factors an individual or small-group rate may vary by. No Kentucky primary source we could locate states which provisions of the Kentucky statute the Department enforces alongside the federal requirements, so we state both instruments and resolve neither.
Does Kentucky bar health-status rating for small groups?
Not in those words, and the accurate reading is narrower. KRS 304.17A-200(1) bars an insurer from establishing eligibility rules based on health status-related factors, and KRS 304.17A-200(2) bars requiring an individual to pay a premium or contribution greater than a similarly situated individual enrolled in the plan on the basis of any health status-related factor. That subsection protects the individual’s premium or contribution. It does not say what the employer is charged for the group.
How long is a Kentucky small-group rate good for?
KRS 304.17A-095(4) guarantees the rates for each policyholder at the rate in effect on the date of issue or date of renewal, for the term the subsection sets. That is the single most concretely useful sentence in Kentucky’s rating law for a small employer, because it means a mid-term rate change is not something the insurer simply decides to do.
Is the insurer allowed to use a rate before the commissioner approves it?
Yes, and the statute says so expressly. KRS 304.17A-095(2)(a) provides that a rate filing may be used by the insurer on and after the date of filing, before approval, and that the commissioner must approve or disapprove within the statutory review window — with the filing deemed approved if the window expires first. KRS 304.17A-095(5) lets the commissioner withdraw approval after a public hearing on notice and order a refund or a future premium credit.
Do the things the commissioner weighs on a rate filing tell us how our group is rated?
No, and confusing the two is the easiest mistake to make here. KRS 304.17A-095(3) lists what the commissioner considers when approving or disapproving a filing — whether benefits are reasonable in relation to the premium, previous rates, the effect on policyholders, whether the charges are excessive, inadequate or unfairly discriminatory, and so on. Those are review criteria for a filing. They say nothing about how an insurer builds a particular group’s premium.
About the author
Nate Jones, CPCU, is the founder of Wexford Insurance and Wexford Health Insurance, an independent agency placing small-business group benefits in 9 states. Nate reads Kentucky small-group rate filings and renewal paperwork against the Commonwealth’s own health benefit plan statutes for employers who want to know which parts of a quote are the insurer’s discretion and which parts the statute already settled. Start with the Wexford Health Insurance quote form.