Membership Premium Calculation

The membership premium is calculated differently using the following pricing:

  • Age-Based Pricing - The system first identifies a list of members which are eligible for premium calculation in a membership. It derives the main subscriber and member persons (i.e. Spouse and Children) which are related to the main subscriber using the relationship type specified in the Age Based pricing rule type. To identify a list of eligible children for premium calculation, the system uses the following characteristics:

    • Maximum Number of Dependents - Used to indicate the maximum number of children which are eligible for premium calculation.

    • Maximum Age Limit for Maximum Dependent Count - Used to indicate the maximum age limit for children which are eligible for premium calculation.

    • Maximum Number of Dependents Order Priority - Used to indicate whether you want to consider the youngest or eldest children during premium calculation. The valid values are - YOUNGEST and ELDEST.

    • Age Calculation Date Basis - Used to indicate whether the member person's age should be calculated using the member person's enrollment date or policy's start or renewal date.

    • Newborn Gift Days - Used to indicate the number of days you want to offer as gift days from the new born child's birth date. As a result, no premium will be calculated for this period.

    • Newborn Gift Days Applicability - Used to indicate whether you want to offer gift days in case of a new born. The valid values are - Y and N.

    • Young Adult Max Age Limit - Used to indicate the maximum age limit for young adults which are eligible for premium calculation.

    • Young Adult Inclusion Applicability - Used to indicate whether you want to consider the young adults during the premium calculation. The valid values are - Y and N.

    Note: Only the Age Calculation Date Basis (C1-AGCAL) characteristic type is shipped with the product. You need to create the remaining characteristic types in the system and set their characteristic entity to the following - Membership Person, Membership, Policy Plan, Policy, and/or State.

    The system searches for these characteristics on the following entities in the specified sequence:

    1. Membership Person

    2. Membership

    3. State where the Membership is issued

    4. Policy Plan

    5. State where the Policy Plan is Issued

    6. Policy

    7. State where the Policy is Issued

    For example, if the Maximum Number of Dependents characteristic is defined for all entities, the system considers the characteristic which is defined at the Member Person level because it is the lowest level. However, if the Newborn Gift Days Applicability characteristic is defined at the Policy Plan and Policy levels, the system considers the characteristic which is defined at the Policy Plan level because it is the lowest level. In other words, the system crawls from the lowest to the highest level while searching for the above characteristics. You can also define the above characteristics on the state where the membership, policy plan and/or policy are issued. For more information, refer to the State of Issue section.

    Once the eligible members for premium are identified, the system derives the base fee and applicable modifier fee which are defined in the pricing rules. The system then calculates the timeline for each membership and price item combination. The timeline is basically calculated to understand the period for which the premium is applicable. For example, if a policy plan named P1 has the following membership:

    Membership M1
    Member Persons P1 and P2
    Membership Start Date 01-01-2019
    Membership End Date 31-12-2019
    P0 Main Subscriber's Start Date 01-01-2019
    P0 Main Subscriber's End Date 31-12-2019
    P1 Member's Start Date 01-01-2019
    P1 Member's End Date 30-06-2019
    P2 Member's Start Date 01-10-2019
    P2 Member's End Date 31-12-2019

    The P1 policy plan is associated with an Age Based pricing rule type which contains the Premium Fee price item. The Age Based pricing rule for the Premium Fee price item is effective from 01-01-2019 to 31-12-2019.

    In this case, the system will create the following timelines when you add P2 member person in the M1 membership:

    Membership Price Item Timeline Start Date (Effective Date) Timeline End Date
    M1 Premium Fee 01-01-2019 30-06-2019 (i.e. P1 Member's End Date)
    M1 Premium Fee 01-07-2019 30-09-2019
    M1 Premium Fee 01-10-2019 (i.e. P2 Member's Start Date) 31-12-2019

    It creates timelines using the membership's start and end dates, member person's start and end dates, and effective date. For each timeline, the system calculates the premium for all eligible member persons in the membership. Let us assume that the effective pricing rule is configured in the following manner:

    Age Band Fee
    0-21 $50
    21-65 $100
    >65 $150

    P0 belongs to the 21-65 age band and P1 and P2 belongs to the 0-21 age band. Therefore, the premium is calculated using the following base fee:

    Membership Price Item Timeline Start Date (Effective Date) Timeline End Date Base Fee
    M1 Premium Fee 01-01-2019 30-06-2019 (i.e. P1 Member's End Date)

    P0: $100

    P1: $50
    M1 Premium Fee 01-07-2019 30-09-2019 P0: $100
    M1 Premium Fee 01-10-2019 (i.e. P2 Member's Start Date) 31-12-2019

    P0: $100

    P2: $50

    Now, let us assume the following characteristics are defined on the P1 policy plan which offers gift days to a new born child:

    Effective Date Characteristic Type Characteristic Value
    01-01-2019 Newborn Gift Days Applicability Y
    01-01-2019 Newborn Gift Days 30

    Now, if the main subscriber adds his child named C1 who is born on 05-03-2019, the system will create the following timelines:

    Membership Price Item Timeline Start Date (Effective Date) Timeline End Date
    M1 Premium Fee 01-01-2019 03-04-2019 (i.e. 05-03-2019 +30 Days)
    M1 Premium Fee 04-04-2019 (New Born Considered for Premium Calculation) 30-06-2019 (i.e. P1 Member's End Date)
    M1 Premium Fee 01-07-2019 30-09-2019
    M1 Premium Fee 01-10-2019 (i.e. P2 Member's Start Date) 31-12-2019

    It creates timelines using the membership's start and end dates, member person's start and end dates, and effective date. For each timeline, the system calculates the premium for all eligible member persons in the membership. In this case, the premium is calculated using the following base fee:

    Membership Price Item Timeline Start Date (Effective Date) Timeline End Date Base Fee
    M1 Premium Fee 01-01-2019 03-04-2019 (i.e. 05-03-2019 +30 Days)

    P0: $100

    P1: $50
    M1 Premium Fee 04-04-2019 (New Born Considered for Premium Calculation) 30-06-2019 (i.e. P1 Member's End Date)

    P0: $100

    P1: $50

    C1: $50
    M1 Premium Fee 01-07-2019 30-09-2019

    P0: $100

    C1: $50
    M1 Premium Fee 01-10-2019 (i.e. P2 Member's Start Date) 31-12-2019

    P0: $100

    P2: $50

    C1: $50

  • Tier Based Pricing - The system first derives the base fee which is defined in the pricing rules. It then calculates the timeline for each membership and price item combination. The timeline is basically calculated to understand the period for which the premium is applicable. For example, if a policy plan named P2 has the following membership:

    Membership M1
    Member Persons P1 and P2
    Membership Start Date 01-01-2019
    Membership End Date 31-12-2019
    Membership Tier ES (Employee + Spouse)

    The P2 policy plan is associated with a Tier Based pricing rule type which contains the Premium Fee price item. The Tier Based pricing rule for the Premium Fee price item is effective from 01-01-2019 to 31-12-2019.

    The system will create the following timeline when the M1 membership is added to the P2 policy plan:

    Membership Price Item Timeline Start Date (Effective date) Timeline End Date
    M1 Premium Fee 01-01-2019 31-12-2019

    It creates timelines using the membership's start and end dates and effective date. For each timeline, the system calculates premium for the membership. Let us assume that the effective pricing rule is configured in the following manner:

    Tier Level Fee
    E (Employee Only) $100
    ES (Employee + Spouse) $200
    F (Family) $350
    EC (Employee+ Children) $150

    The M1 membership belongs to the ES (Employee + Spouse) tier. Therefore, the premium is calculated using the following base fee:

    Membership Price Item Timeline Start Date (Effective Date) Timeline End Date Base Fee
    M1 Premium Fee 01-01-2019 31-12-2019 $200

    Now, let us assume the following characteristics are defined on the P2 policy plan which offers gift days to a new born child:

    Effective date Characteristic Type Characteristic value
    01-01-2019 Newborn Gift Days Applicability Y
    01-01-2019 Newborn Gift Days 30

    Now, if the main subscriber adds his child named C1 who is born on 05-03-2019, the system will create the following timelines:

    Membership Price Item Timeline Start Date (Effective date) Timeline End Date
    M1 Premium Fee 01-01-2019 03-04-2019 (i.e. 05-03-2019 +30 Days)
    M1 Premium Fee 04-04-2019 (New Born Considered for Premium Calculation) 31-12-2019

    In this case, the premium is calculated using the following base fee considering the membership tier has changed from ES (Employee + Spouse) to F (Family):

    Membership Price Item Timeline Start Date (Effective Date) Timeline End Date Base Fee
    M1 Premium Fee 01-01-2019 03-04-2019 (i.e. 05-03-2019 +30 Days) 200
    M1 Premium Fee 04-04-2019 (New Born Considered for Premium Calculation) 31-12-2019 350
The tasks performed through Membership Repricing (C1-MEMBREPRICE) inbound web service are described below:

  • Adding a Membership - Whenever you are creating a membership for a policy or health plan, you need to specify the plan for which you want to create the membership, a person who is the main subscriber of the membership, and the way in which the main subscriber is related to the membership. Once the membership is created, you can add more members (i.e.persons) to the membership.

  • Editing a Membership - Once the membership is created for a policy or health plan, you can edit the membership information such as start date, end date, and characteristics.

  • Viewing the Membership Details - On the Membership page, you can view the membership details, member persons which are added to a membership, and the additional plans of the main subscriber.

  • Adding a Member Person to a Membership - While adding a person to a membership, you need to specify whether the person is the main subscriber of the membership, whether the person is financially responsible for the membership, and how the person is related to the main subscriber. At a time, only one person can be the main subscriber of the membership.

  • Removing a Member Person from a Membership - You cannot remove a member person, who is the main subscriber, from the membership. You can inactivate a member person whenever required. If you inactivate a member person who is the main subscriber of the membership, the system automatically inactivates the membership and all other member persons which are included in the membership.

  • Simulating Membership Premium Calculation

    - You can simulate add and update operations carried-out for a membership, and can also calculate the premium derived from the simulation process. Any set of changes conducted as a part of the simulation process would not impact the actual membership and premium calculation process.

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