April 2010

Maximum Allowed Multi-Option Differential Increased for Network Combinations Effective July 1

The maximum allowed dual differential will increase to 43 percent for plan options with different networks for groups with five or more members beginning with July 1, 2010, effective dates. The differential for dual or triple options with the same network will remain at 35 percent.

For groups with triple option plans with multiple networks, the maximum allowed differential is determined by the combination of the high/low options with the same network or different networks. If the high/low options are on the same network, the standard 35 percent maximum differential applies. If the high/low options are on different networks, then the new 43 percent maximum differential applies.

To calculate the differential between options, please continue to compare the total individual (employee only) rate of each option. A differential calculator tool is available in the BlueAccess section of bcbst.com.

Example 1. Triple Option Offering with Multiple Networks with High/Low Options on Different Networks

• High Option - $500 deductible with network P and $550 individual rate
• Middle Option - $1,000 deductible with network P and $500 individual rate
• Low Option - $1,000 deductible with network S and $450 individual rate

In this example, the high/low options are on different networks, the maximum allowed differential is 43 percent. Based on the calculated differentials below, all options fall within the desired range and may be offered. Option 1 is 10 percent greater than option 2. Option 2 is 11.1 percent greater than option 3. Option 1 is 22.2 percent greater than option 3.

Example 2. Triple Option Offering with Multiple Networks with High/Low Options on the Same Network

• Low Option 1 - $5,000 deductible HDHP with network P and $325.65 individual rate
• Middle Option 2 - $2,500 deductible HDHP with network S and $425.00 individual rate
• High Option 3 - $2,000 deductible PPO with network P and $465.00 individual rate

In this example since the high/low options are on the same network, the maximum allowed differential is 35 percent. Based on the calculated differentials below, this triple option offering is not allowed as the differential between option 3 and option 1 exceeds 35 percent.

The differentials for these options are as follows:

• Option 3 is 9.4 percent greater than Option 2
• Option 3 is 42.8 percent greater than Option 1
• Option 2 is 30.5 percent greater than Option 1

All other multi-option guidelines will remain the same. Renewing groups will not be forced to change their current benefit plan if plan design relativity adjustments have caused them to be non-compliant. However, if renewing groups change their benefits, the new benefits must be in compliance with both the 35 percent and 43 percent differential limits.

If you have any questions, please contact your BlueCross BlueShield of Tennessee representative.