Alabama Federal Part III Actuarial Memorandum UnitedHealthcare Life Insurance Company NAIC: / FEIN:

Transcription

1 Alabama Federal Part III Actuarial Memrandum UnitedHealthcare Life Insurance Cmpany NAIC: / FEIN: Purpse Fllwing is a rate filing prepared by UnitedHealthcare Life Insurance Cmpany. This filing has been prepared t prvide the necessary infrmatin required by the Department f Health and Human Services. The purpse f this memrandum is t prvide infrmatin relevant t the Federal Part I Unified Rate Review Template. This filing establishes initial rates intended t be used fr individual health benefit plans sld ff the health insurance exchange in Alabama fr the 2016 plan year. This memrandum is intended slely fr the infrmatin f and use by the Department f Health and Human Services and the Alabama Department f Insurance and Financial Services. It will demnstrate cmpliance with state and federal laws and regulatins and is nt intended t be used fr any ther purpse. General Infrmatin Cmpany Identifying Infrmatin Cmpany Legal Name: UnitedHealthcare Life Insurance Cmpany State: Alabama HIOS Issuer ID: Market: Individual Effective Date: January 1, 2016 Primary Cntact Infrmatin Name: Telephne Number: Address: Previusly Apprved Filing Infrmatin Tracking Number: AMMS Effective Date: January 1, 2015 Page 1 f 15

2 Plicy Frms Platinum Cpay Select Gld Cpay Select Silver HSA 100 Silver Cpay Select 1 Silver Cpay Select 2 Silver Cpay Select 3 Brnze HSA 100 Brnze Cpay Select 1 Brnze Cpay Select 2 Select Saver OFX16-DP-P-PCS-01 OFX16-DP-P-GCS-01 OFX16-DP-P-SHSA-01 OFX16-DP-P-SCS1-01 OFX16-DP-P-SCS2-01 OFX16-DP-P-SCS3-01 OFX16-DP-P-BHSA-01 OFX16-DP-P-BCS1-01 OFX16-DP-P-BCS2-01 OFX16-DP-P-SS-01 Prpsed Rate Changes With this filing, we are taking a increase t base rates and a increase t plan factrs. We are als revising area factrs with an estimated aggregate impact f a increase. The verall rate impact t the Plan Adjusted Index Rate is a 24.5% increase. Fllwing are the prpsed rate changes fr each plan included in the single risk pl. These rate change percentages represent the average change in premium rates ver the rates included in the prir rate filing fr each plan. They measure the change in premium rate tables using the expected distributin f enrllment by age, gegraphic area, and tbacc status. These values are cnsistent with the rate change percentages reprted in Wrksheet 2, Sectin I f the Unified Rate Review Template. Plan Name Rate Change Platinum Cpay Select 38.4% Gld Cpay Select 25.5% Silver HSA % Silver Cpay Select % Silver Cpay Select % Silver Cpay Select 3 NEW Brnze HSA % Brnze Cpay Select % Brnze Cpay Select % Select Saver 16.5% Weighted Average 24.5% The figures abve may nt tally exactly due t runding f the display. We refined the medical plan price relativities t reflect the mst recent pricing methdlgy and pricing mdels. The methdlgy is based n UnitedHealthcare natinwide experience data, which cntains utilizatin frequencies and unit csts by service categry in additin t claim distributins and adjustment factrs fr a large number f plan design variables. Benefit design parameters such as deductibles, cinsurance, cpays, ut-f-pcket maximums, etc. were input fr each plan. The expected paid-t-allwed relativities and expected utilizatin differences due t differences in cst sharing fr each plan are then used t develp the plan factrs fr each benefit plan. All benefit plans are priced cnsistently with each ther, with the rates differing nly by the estimated value f the benefits and Page 2 f 15

3 the expected utilizatin differences due t differences in cst sharing. The utilizatin differences d nt reflect differences due t health status. Other significant factrs driving the prpsed rate change are discussed in further detail under the Credibility Manual Rate Develpment sectin f this memrandum. Experience Perid Premium and Claims The experience perid is January 1, 2014 t December 31, UnitedHealthcare Life Insurance Cmpany had n existing individual market business in Alabama fr the 2014 plan year. Therefre, n histrical claims experience exists. Since the Unified Rate Review Template requires entry f data in this sectin, amunts f $1 were entered in rder fr the spreadsheet t be validated and submitted. Benefit Categries Inpatient Hspital: Includes nn-capitated facility services fr medical, surgical, maternity, mental health and substance abuse, skilled nursing, and ther services prvided in an inpatient facility setting and billed by the facility. Outpatient Hspital: Includes nn-capitated facility services fr surgery, emergency rm, lab, radilgy, therapy, bservatin and ther services prvided in an utpatient facility setting and billed by the facility. Prfessinal: Includes nn-capitated primary care, specialist, therapy, the prfessinal cmpnent f labratry and radilgy, and ther prfessinal services, ther than hspital based prfessinals whse payments are included in facility fees. Other Medical: Includes nn-capitated ambulance, hme health care, DME, prsthetics, supplies, visin exams, dental services and ther services. Capitatin: Includes all services prvided under ne r mre capitated arrangements. Prescriptin Drug: Includes drugs dispensed by a pharmacy. This amunt shuld be net f rebates received frm drug manufacturers. Prjectin Factrs UnitedHealthcare Life Insurance Cmpany has n existing individual market business in Alabama in Therefre, n adjustment factrs were develped. Credibility Manual Rate Develpment Surce and Apprpriateness f Data Used These rates are intended t be used n a guarantee issue basis. As UnitedHealthcare Life Insurance Cmpany des nt have credible experience fr individual medical guarantee issue prducts in Alabama, we relied n the guarantee issue claims experience and rate develpment f affiliated small grup carriers t develp ur previusly apprved individual rates fr the 2015 plan year. Our 2016 individual rates are subsequently develped frm thse previusly apprved individual prjectins fr the 2015 plan year. Page 3 f 15

4 The experience used in the develpment f these rates is net f the apprpriate crdinatin f benefit recveries. Therefre, the rates reflect the necessary equitable reductin in premiums r csts t beneficiaries f such ther insurance r cntract rights. Adjustments t Expected Incurred Claims Trend Our incurred claims estimate has been adjusted fr annual trend factrs and nn-favrable emerging claims experience. The annual trend adjustment is expected t increase claims. Emerging Experience We have analyzed the experience fr ur ff exchange plans ffered natinally thrugh 2014 and have determined an additinal rate increase is needed. After we adjust fr market average risk we still end up with a higher than anticipated lss ratis n plans ffered exclusively ff the exchange. We are including an additinal increase. The experience wuld indicate a much higher increase is needed but since ACA business written in Alabama is limited, we used Actuarial Judgment and reduced the increase. Estimated Mrbidity Differential f the Ppulatin Insured: Because the data we used t create the 2015 rate manual was fr small grup business, we need t adjust fr the estimated mrbidity differential between the individual and small grup markets. UnitedHealthcare has participated in a multi-state study dne by a large actuarial cnsulting firm t help estimate the average expected mrbidity in the individual market relative t the average expected mrbidity fr the small grup market. Our analysis f the infrmatin prvided indicates that in states that allwed transitinal relief, we wuld anticipate that the mrbidity in the individual market in 2016 is expected t increase claims higher than we riginally estimated in ur 2015 rate manual develpment. Gegraphic Adjustment: Gegraphic area rating factrs are reviewed peridically versus UnitedHealthcare claims data that reflects unit cst differences by cunty. Such a review was cnducted as part f ur January 1, 2016 rate develpment. We have als taken int cnsideratin expected changes in unit csts resulting frm nging prvider cntracting initiatives. Where the analysis indicated that there were material differences indicated by the cmparisn f currently apprved area factrs and the expected unit cst differences, we have directinally adjusted the area factrs. We als anticipate ur individual ff-exchange business t have a different gegraphic cmpsitin cmpared t ur expectatins when develping the 2015 rate manual. The expected impact f changing gegraphic rating factrs and a changing cmpsitin is expected t increase incurred claims by. Benefit Adjustment: In develping the rate manual in 2015, adjustments have already been made t reflect the benefit variatins between the small grup prtfli and ur individual prduct, including additinal individual mandates that are nt cvered in the small grup plans. The expected impact n incurred claims fr benefit adjustments is an increase f. Plan Design Adjustment: Sme plan designs have been unifrmly mdified, discntinued r added since In additin, ur expectatin f which members will select ur varius plan designs is als changing. Our refined medical plan Page 4 f 15

5 price relativities are als changing, which results in a different expectatin f incurred claims by plan. The result f these changes is expected t increase incurred claims by. Demgraphic Adjustment: Demgraphic factrs are based n federal regulatins and have nt changed since the 2015 rate manual develpment. We d anticipate, hwever, ur individual ff-exchange business t have a different age/gender cmpsitin cmpared t ur expectatins when develping the 2015 rate manual. Therefre, an adjustment was made t accunt fr this difference. The expected impact n incurred claims is an increase f. Tbacc Adjustment: Neither the tbacc rating factrs nr ur expectatin f tbacc status by age are changing frm ur 2015 rate manual. Therefre, the expected impact n incurred claims is an increase f. Credibility f Experience UnitedHealthcare Life Insurance Cmpany had n existing individual market business in Alabama fr the 2014 plan year; s, zer credibility is applied t the base perid experience. We believe the affiliated small grup experience ultimately used fr develping ur manual rates t be fully credible. A specific credibility frmula was nt used fr this determinatin, but rather prfessinal actuarial judgment. As ASOP 25, sectin 3.4 states: Prfessinal Judgment - The actuary shuld use prfessinal judgment when selecting, develping, r using a credibility prcedure. The use f credibility prcedures is nt always a precise mathematical prcess. Paid-t-Allwed Rati The paid-t-allwed ratis were develped using the prprietary UnitedHealthcare pricing mdel. This mdel uses UnitedHealthcare natinwide experience data which is fully credible. Claim data is prjected t the pricing perid based n natinal prjectins f utilizatin and unit csts. These prjectins are dne at the service categry level (inpatient, utpatient, etc.). Benefit design parameters such as deductibles, cpays, and cinsurance rates are applied t the claim distributins f the matching service categry. Cst-sharing is applied, and the values f each service categry are summed t determine an verall benefit value, r paid-t-allwed rati. In rder t preserve cnsistency, the same claim experience and prjectin assumptins are applied t all plan relativity calculatins. A paid-t-allwed rati was prduced fr each plan using the mdel described abve. The weighted average is then based n the prjected membership by plan. The member distributin is discussed under the Membership Prjectins sectin later in this memrandum. Page 5 f 15

6 Plan Name Member Distributin Paid-t-Allwed Rati Platinum Cpay Select 1,574 Gld Cpay Select 2,408 Silver HSA Silver Cpay Select Silver Cpay Select Silver Cpay Select Brnze HSA 100 2,187 Brnze Cpay Select Brnze Cpay Select 2 1,041 Select Saver 1,548 Weighted Average 11,450 The figures abve may nt tally exactly due t runding f the display. Risk Adjustment and Reinsurance Prjected Risk Adjustments Net f Risk Adjustment User Fees We are ffering a variety f plans at different metal levels and using a prvider netwrk that we anticipate t be similar in size t ur cmpetitrs. Withut any credible infrmatin r mdeling f the market level risk, and lacking any ther infrmatin pertaining t the risk levels f ur wn business cmpared t that f ur cmpetitrs, we are assuming zer risk adjustment transfers. The HHS Ntice f Benefit and Payment Parameters fr 2016 specifies a risk adjustment user fee f per member per year, r apprximately PMPM. The prjected risk adjustment transfers net f risk adjustment user fees are therefre PMPM. Prjected ACA Reinsurance Recveries Net f Reinsurance Premium Reinsurance recveries are expected t be abut f incurred claims, as calculated belw. The ttal incurred claims were calculated using an affiliated carrier s individual market natinwide experience fr 2013 trended t the 2016 benefit perid. Reinsurance recveries were then calculated using the 2016 reinsurance parameters, as published in the HHS Ntice f Benefit and Payment Parameters fr The reinsurance parameters include a $90,000 attachment pint, 50% cinsurance, and a $250,000 reinsurance cap. Claim Range Members Incurred Claims Claims PMPY (-Infinite,90k] (90k,250k] (250K,Infinite) Reinsurance Benefit Ttal Incurred Claims Ttal Reinsurance Benefit Estimated 2016 Reinsurance Recveries as % f Claims The figures abve may nt tally exactly due t runding f the display. Incurred claims fr this prduct in the state f Alabama are expected t be PMPM. Therefre, reinsurance recveries are anticipated t be 4 PMPM. The HHS Ntice f Benefit and Payment Parameters fr 2016 specifies a reinsurance premium f per member per year, r PMPM. Page 6 f 15

7 The prjected reinsurance recveries net f reinsurance premium are therefre PMPM. Nn-Benefit Expenses and Prfit Administrative Expense Lad The administrative expense lad includes cmmissins, quality imprvements, and SG&A. Cmmissins: We anticipate an average cmmissin rate f apprximately fr Quality Imprvements: We included fr quality imprvements based n an affiliated carrier s individual market data. SG&A: Our general and administrative expense assumptin is based n PMPM estimates prvided by UnitedHealthcare s finance department fr the 2016 calendar year. Fr this prduct in the state f Alabama, this amunt equates t apprximately f premium fr Prfit and Risk Margin Our prjected prfit margin fr the 2016 rating perid is apprximately f pre-tax premium. This is an increase in the 2015 rate manual, where prfit was expected t be f pre-tax premium. The increase f is in respnse t the higher risk assciated with selling individual prducts ff the exchange. Emerging natinwide experience indicates the risks with selling such plicies are higher than initially anticipated. Premium Claims Premium Tax Reinsurance Fees Reinsurance Recveries Risk Adjustment User Fees Risk Adjustment Transfers Net Insurer Fees PCORI Fee Cmmissins SG&A Quality Imprvements Pre-Tax Incme Incme Tax After-Tax Incme The figures abve may nt tally exactly due t runding f the display. Taxes and Fees Taxes and fees are expected t be and include premium tax, insurer fees, PCORI fees, and federal incme tax. Premium Tax: The premium tax rate is fr the state f Alabama. Insurer Fees: Each insurance carrier's assessment f insurer fees will be based n earned health insurance premium in the prir year, with certain exclusins. UnitedHealthcare (parent cmpany f UnitedHealthcare Life Insurance Cmpany) estimates that f its 2016 premium will be allcated fr insurer fees. Page 7 f 15

8 PCORI Fees: This prduct will be ffered fr the 2016 plan year, with a PCORI fee f per member per year, r apprximately PMPM. Fr this prduct in the state f Alabama, this equates t apprximately f premium. Federal Incme Tax: Federal incme tax is prjected t be f premium and is calculated as 35% * (Pre- Tax Incme + Insurer Fees), since insurer fees are nt tax deductible. Prjected Lss Rati The prjected lss rati using the federally prescribed MLR methdlgy fr calendar year 2016 is. Claims Reinsurance Recveries Risk Adjustment Transfers Quality Imprvement Ttal MLR Claims Premium Premium Tax Reinsurance Fees Risk Adjustment User Fee Net Insurer Fees PCORI Fee Incme Tax Ttal MLR Premium Federal MLR The figures abve may nt tally exactly due t runding f the display. Single Risk Pl The single risk pl reflects all cvered lives fr every individual nn-grandfathered prduct and plan cmbinatin fr UnitedHealthcare Life Insurance Cmpany. It is established in accrdance with the requirements f 45 CFR Part 156, (d). Index Rate The index rate fr the 2016 prjectin perid represents f allwed claims fr this blck f business. Market Adjusted Index Rate The market adjusted index rate includes market-wide adjustments fr the federal reinsurance prgram and risk adjustment prgram. Please refer t the Risk Adjustment and Reinsurance and the Taxes and Fees sectins previusly discussed in this memrandum fr a brief descriptin f each f these items. The market adjusted index rate is calculated belw. Index Rate Net Reinsurance Adjustment Net Risk Adjustment Market Adjusted Index Rate $ The figures abve may nt tally exactly due t runding f the display. Page 8 f 15

9 Plan Adjusted Index Rates The plan adjusted index rates include adjustments fr all allwable plan level mdifiers as defined in the market rating rules. The calculatins are shwn belw, and the allwable adjustments are subsequently discussed in further detail. The weighted average is based n the prjected membership by plan, as previusly utlined in the Paid-t- Allwed Rati sectin f this memrandum. Plan Name Market Adjusted Index Rate Actuarial Value & Cst-Sharing Adjustment Platinum Cpay Select Gld Cpay Select Silver HSA 100 Silver Cpay Select 1 Silver Cpay Select 2 Silver Cpay Select 3 Brnze HSA 100 Brnze Cpay Select 1 Brnze Cpay Select 2 Select Saver Weighted Average The figures abve may nt tally exactly due t runding f the display. Benefits in Excess f EHBs Catastrphic Eligibility Adjustment Distributin & Admin. Cst Adjustment Plan Adjusted Index Rate The actuarial value and cst sharing adjustment accunts fr benefit differences, utilizatin differences due t differences in cst sharing, and an adjustment fr nn-tbacc user status. Since we will be applying tbacc user rating factrs, an adjustment must be made t remve the prtin f csts that is expected t be recuped thrugh the tbacc surcharge. The ttal average tbacc surcharge is expected t be abut f premium as calculated belw. The ttal member distributin is based n the same survey results used fr the age calibratin discussed in the Calibratin sectin f this memrandum. The individual tbacc user percentages are based n an affiliated carrier s individual blck f business. Age Grup Member Distributin Nn-Tbacc Tbacc Users Users Ttal Members Ttal The figures abve may nt tally exactly due t runding f the display. Tbacc User Factr Tbacc Surcharge Factrs Nn-Tbacc Factr Average Surcharge Benefits in excess f EHBs were previusly discussed under the Index Rate sectin f this memrandum, and are expected t be f allwed claims. The catastrphic adjustment reflects the differences in anticipated demgraphics and mrbidity f the catastrphic ppulatin as cmpared t the rest f the single risk pl. Catastrphic plans are available nly t peple under age Page 9 f 15

10 30 r thse with a mandate exceptin due t affrdability r hardship. Due t the 3:1 HHS age band limit, age factrs fr ages less than 30 will be smewhat higher than the anticipated relative claims csts fr these age categries, s a demgraphic eligibility adjustment is made. In additin, catastrphic plans will nt be pled with the metallic plans fr risk adjustment purpses, s a mrbidity adjustment is als made. The catastrphic adjustment factr, applicable t incurred claims, is. Distributin and Administrative Csts include premium tax, insurer fees, PCORI fees, cmmissins, SG&A, quality imprvements, federal incme tax, and after-tax incme. These items were previusly discussed in the Nn-Benefit Expenses and Prfit sectin f this memrandum. Reinsurance recveries and fees, and risk adjustment transfers and user fees have already been adjusted ut f the market adjusted index rate prir t the plan adjusted index rate calculatin. Calibratin The calculated age curve calibratin is. As UnitedHealthcare Life Insurance Cmpany has n credible individual market business, the average age curve calibratin is based n 2015 individual business enrllment. This average age factr apprximately crrespnds t an average age assumptin f years. Age Grup Member Distributin Average HHS Age Factr Ttal The figures abve may nt tally exactly due t runding f the display. The gegraphic factr calibratin is which is based n ur expected distributin f cvered individuals. Our gegraphic rating factrs and expected member distributin fr each rating regin are prvided belw. Our expected member distributin is based n 2015 individual business enrllment. Our gegraphic factrs are based n rates and emerging experience frm the affiliated small grup carrier used as the starting pint fr ur rate develpment. Page 10 f 15

11 Rating Regin Member Distributin Area Factrs Area 1 Area 2 Area 3 Area 4 Area 5 Area 6 Area 7 Area 8 Area 9 Area 10 Area 11 Area 12 Area 13 Ttal The figures abve may nt tally exactly due t runding f the display. Calibrating the plan adjusted index rate t the age curve and gegraphic distributin results in the calibrated premium rate fr each plan. The calibrated premium rate represents the preliminary premium rate charged t an individual befre applying the cnsumer specific rating adjustments fr age, area, and tbacc status. The calculatins are shwn belw, and the weighted average is based n the prjected membership by plan, as previusly utlined in the Paid-t-Allwed Rati sectin f this memrandum. Plan Name Plan Adjusted Index Rate (a) Age Curve Calibratin (b) Platinum Cpay Select $ Gld Cpay Select $ Silver HSA 100 $ Silver Cpay Select 1 $ Silver Cpay Select 2 $ Silver Cpay Select 3 $ Brnze HSA 100 $ Brnze Cpay Select 1 $ Brnze Cpay Select 2 $ Select Saver $ Weighted Average $ The figures abve may nt tally exactly due t runding f the display. Gegraphic Factr Calibratin (c) Calibrated Premium Rate (d) = a /(b*c) Page 11 f 15

12 Cnsumer Adjusted Premium Rate Develpment The cnsumer adjusted premium rate is the final premium rate fr each plan that is charged t an individual. It is develped by calibrating the plan adjusted index rate t the average age and gegraphic rating factrs, and applying the cnsumer specific age, gegraphic, and tbacc status rating factrs. Sample calculatins are shwn belw and represent cnsumer adjusted premium rates fr a 25-year ld cnsumer, residing in rating regin 1, with tbacc user status. The weighted average is based n the prjected membership by plan, as previusly utlined in the Paidt-Allwed Rati sectin f this memrandum. Plan Name Calibrated Premium Rate (a) 25-Year-Old Age Factr (b) Platinum Cpay Select Gld Cpay Select Silver HSA 100 Silver Cpay Select 1 Silver Cpay Select 2 Silver Cpay Select 3 Brnze HSA 100 Brnze Cpay Select 1 Brnze Cpay Select 2 Select Saver Weighted Average The figures abve may nt tally exactly due t runding f the display. Regin 1 Area Factr (c) 25-Year-Old Tbacc Factr (d) Cnsumer Adjusted Premium Rate (e) = a*b*c*d AV Metal Values Sme plans within this prtfli have cst sharing features that differ between individual and family cverage (i.e. when tw r mre peple are cvered by the plan). Fr all plans, we have used nly the cst sharing prvisins applicable fr individual cverage in the actuarial value (AV) calculatin. Cpays Paid in Cnjunctin with Cinsurance Sme f ur plan designs include cpays that are paid in cnjunctin with cinsurance in the cst-sharing range. This benefit design is nt directly cmpatible with the AV calculatr, s the alternate methdlgy described in 45 CFR (b)(2) was used fr the AV calculatin. In rder t mdify the AV calculatr input fr a cpay paid in cnjunctin with cinsurance, the fllwing frmula was used t estimate the insurer s cst share. Member Cpay Effective Insurer Cinsurance Rate = ( 1 ) * ( 1 Member Cinsurance Rate) Average Unit Cst The benefit was then marked as Subject t Deductible and Subject t Cinsurance with a Cinsurance, if different equal t the effective insurer cinsurance rate as calculated abve. The average unit cst was calculated based n the claims data included within the AV calculatr cntinuance tables fr each metal level. If the plan was expected t fall within a Silver Metal Tier, the average unit cst was calculated frm the Silver cntinuance tables. All enrllees within a cntinuance table were included in the calculatin f the average unit cst fr each benefit type. The chart belw utlines which benefits fr the assciated plans were impacted by the abve methdlgy. Page 12 f 15

13 Plan Name Brnze Cpay Select 2 Benefit Categries including Cpays Paid in Cnjunctin with Cinsurance Inpatient Hspital Services Prescriptin Drug Benefits Our prescriptin drug benefits are based n a drug categrizatin f Tier 1 t Tier 4, instead f the categries presented in the AV calculatr (i.e. Generic, Preferred Brand, Nn-Preferred Brand, and Specialty). In additin, ur Tier 3 and Tier 4 prescriptin drug benefits incrprate cinsurance rates alng with minimum cpay amunts. Based n histrical experience f affiliated carriers and ur expectatins regarding the rganizatin f brand and generic drugs int Tiers, the prescriptin drugs were re-categrized t match the parameters f the AV calculatr, and the benefits were cnverted t equivalent member cpays fr each categry. Belw is the list f plan in the filed prtfli that utilizes this methdlgy. Plan Name Platinum Cpay Select Gld Cpay Select Silver Cpay Select 1 Silver Cpay Select 2 Silver Cpay Select 3 Brnze Cpay Select 2 AV Pricing Values The AV pricing values represent the cumulative effect f adjustments made by the issuer t mve frm the market adjusted index rate t the plan adjusted index. The AV pricing values are shwn belw. Each f the allwable mdifiers t mve frm the market adjusted index rate t the plan adjusted index rate were previusly discussed in the Plan Adjusted Index Rates sectin f this memrandum. The weighted average is based n the prjected membership by plan, as previusly utlined in the Paid-t-Allwed Rati sectin f this memrandum. Plan Name Market Adjusted Index Rate Plan Adjustment Index Rate AV Pricing Value (b) Platinum Cpay Select $ Gld Cpay Select $ Silver HSA 100 $ Silver Cpay Select 1 $ Silver Cpay Select 2 $ Silver Cpay Select 3 $ Brnze HSA 100 $ Brnze Cpay Select 1 $ Brnze Cpay Select 2 $ Select Saver $ Weighted Average $ The figures abve may nt tally exactly due t runding f the display. Page 13 f 15

14 Membership Prjectins Ttal membership prjectins fr the 2016 plan year were prvided by UnitedHealthcare s finance department. Membership distributin by metal level was estimated based n 2015 individual business enrllment. The prjected membership by plan is utlined in the Paid-t-Allwed Rati sectin f this memrandum. Metal Level Member Distributin Platinum 13.8% Gld 21.0% Silver 18.6% Brnze 33.1% Catastrphic 13.5% Terminated Plans Existing nn-grandfathered business will be terminated fr Gld Cpay Select 2 (HIOS Plan ID: 59809AL ). These plans will be terminated n later than December 31, Members frm Gld Cpay Select 2 will be mapped t 59809AL fr the 2016 plan year, which is als a gld level cpay plan. Plan Type A plan type f PPO has been selected, which describes the plans exactly. Warning Alerts There are n Warning Alerts in Wrksheet 2 f the Unified Rate Review Template. Reliance Due t respnsibility allcatin, I have relied upn ther members within the UnitedHealthcare rganizatin t prvide certain assumptins. Althugh I have reviewed the infrmatin fr reasnableness and cnsistency, I have nt reviewed the methdlgy in detail due t the substantial amunt f additinal time required. I have therefre relied upn the expertise f thse individuals wh have develped the assumptins. A list f reliances is included belw. UnitedHealthcare Finance Department Prjected SG&A Assumptin Prjected Member Mnths UnitedHealthcare Actuaries Respnsible fr Small Grup Rate Develpment Affiliated Small Grup Rate Develpment Page 14 f 15

15 Actuarial Certificatin I,, am an Assciate Directr and Actuary fr UnitedHealthcare's individual line f business, which includes UnitedHealthcare Life Insurance Cmpany s health insurance prducts marketed t individuals. I am a member f the American Academy f Actuaries, and I meet the Academy's qualificatin standards fr rendering statements f actuarial pinin with respect t the filing f rates fr health insurance prducts. T the best f my knwledge and judgment, I certify that: The prjected index rate is: In cmpliance with all applicable State and Federal Statutes and Regulatins (45 CFR (d)(1)), Develped in cmpliance with the applicable Actuarial Standards f Practice, Reasnable in relatin t the benefits prvided and ppulatin anticipated t be cvered, Neither excessive, deficient, nr unfairly discriminatry. The index rate and nly the allwable mdifiers as described in 45 CFR (d)(1) and 45 CRF (d)(2) were used t generate plan level rates. Only EHB s are ffered fr 2016 plans. The percent f ttal premium that represents essential health benefits included in Wrksheet 2, Sectins III and IV were calculated in accrdance with actuarial standards f practice. Gegraphic factrs reflect nly the differences in csts f delivery and d nt reflect differences in mrbidity. The AV calculatr was used t determine the AV metal values shwn in Wrksheet 2 f the Part I Unified Rate Review Template fr all plans. Sme f ur plan designs include pst deductible cpays in additin t perccurrence cpay paid in cnjunctin with cinsurance rates. These benefit designs are nt directly cmpatible with the AV calculatr. Therefre, the alternate methdlgy described in 45 CFR (b)(2) was used t fit the parameters f the AV calculatr. The values were develped in accrdance with generally accepted actuarial principles and methdlgies. The unique plan design actuarial certificatin required by 45 CFR Part 156, has been separately attached. The Part I Unified Rate Review Template des nt demnstrate the prcess used by the issuer t develp their rates. Rather, it represents infrmatin required by federal regulatin t be prvided in supprt f the review f rate increases, fr certificatin f qualified health plans fr federally facilitated exchanges, and fr certificatin that the index rate is develped in accrdance with federal regulatin and used cnsistently and nly adjusted by the allwable mdifiers. Assciate Directr and Actuary Page 15 f 15 06/26/2015 Date

16 Unique Plan Design Supprting Dcumentatin and Justificatin Please fill in the fllwing infrmatin. HIOS Issuer ID: HIOS Prduct IDs: 59809AL AL , 59809AL , Applicable HIOS Plan IDs (Standard Cmpnent): 59809AL , 59809AL , 59809AL , 59809AL Reasns the plan design is unique (benefits that are nt cmpatible with the parameters f the AV calculatr and the materiality f thse benefits): Plan designs include cpays paid in cnjunctin with cinsurance in the cst-sharing range and drug categrizatin f Tier 1 t Tier 4, instead f the categries presented in the AV calculatr. Acceptable alternate methd used per (b)(2) r (b)(3): The alternate methd described in 45 CFR (b)(2) was used fr the AV calculatin. Cnfirmatin that nly in-netwrk cst sharing, including multitier netwrks, was cnsidered: Only in-netwrk cst sharing was cnsidered fr the alternate methdlgy mentined abve. Versin

17 Descriptin f the standardized plan ppulatin data used: Claims and enrllment data enclsed in the AV calculatr cntinuance tables were used fr the metal level. If the methd described in (b)(2) was used, a descriptin f hw the benefits were mdified t fit the parameters f the AV calculatr: Please refer t the 'AV Metal Values' sectin f the Federal Part III Actuarial Memrandum. If the methd described in (b)(3) was used, a descriptin f the data and methd used t develp the adjustments: Nt applicable. Only the methd described in 45 CFR (b)(2) was used fr the AV calculatin. Certificatin Language: The develpment f the actuarial value is based n ne f the acceptable alternative methds utlined in (b)(2) r (b)(3) fr thse benefits that deviate substantially frm the parameters f the AV Calculatr and have a material impact n the AV The analysis was (i) cnducted by a member f the American Academy f Actuaries; (ii) perfrmed in accrdance with generally accepted actuarial principles and methdlgies; Actuary signature: Actuary Printed Name: Date: 04/22/2015 Versin