Apply a Policy Tier Based Premium
This example shows the configuration for an enrollment product with a policy based premium.
Policy based premium schedules are generally based on premium tier configuration. A tier is a configuration rule that represents a condition that applies to the membership on a policy. Consider the following premium schedule:
Tier | … | Amount | Currency |
---|---|---|---|
Employee |
… |
800.00 |
USD |
Employee + Spouse |
… |
1,400.00 |
USD |
Employee + Child |
… |
1,900.00 |
USD |
Full Family |
… |
2,400.00 |
USD |
This is an example of a policy based premium schedule; the premium is applied once per policy, rather than once per member. There is only one dimension that drives the premium rate. This dimension is called the 'tier'. A premium tier represents a condition on the composition of the membership within the context of the policy. For example, the tier in the first line - called 'Employee' - applies when there is only one single member enrollment on the policy and the member has a policy enrollment of the type 'Employee'.
The tier on the second line applies when there are exactly two members on the policy, one having a policy enrollment of the type 'Employee', the other member having a policy enrollment of the type 'Spouse'.
The last tier on the schedule - called 'Full Family' - applies to a broader range of compositions, for example, it applies to a policy that enrolls a single employee, a single spouse and a single child, but it also applies to a policy that enrolls the employee and 3 children. Note that when evaluating tiers, the application only considers members on the policy that are enrolled on the product for which the policy based premium is calculated.
The example above can be set up with the following configuration. It requires three Enrollment Types and four Premium Tiers.
Setup Enrollment Types and Premium Tiers
Enrollment Type | |
---|---|
Code |
EMPLOYEE |
Display Name |
Employee |
Enrollment Type | |
---|---|
Code |
SPOUSE |
Display Name |
Spouse |
Enrollment Type | |
---|---|
Code |
CHILD |
Display Name |
Child |
Premium Tier | |||||||||
---|---|---|---|---|---|---|---|---|---|
Code |
EMP |
||||||||
Display Name |
Employee |
||||||||
Equation Type |
Exactly |
||||||||
Number of enrollments |
1 |
||||||||
Premium Tier Types |
|
Premium Tier | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Code |
EMP_SPS |
||||||||||||||||
Display Name |
Employee + Spouse |
||||||||||||||||
Equation Type |
Exactly |
||||||||||||||||
Number of enrollments |
2 |
||||||||||||||||
Premium Tier Types |
|
Premium Tier | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Code |
EMP_CHL |
||||||||||||||||
Display Name |
Employee + Child |
||||||||||||||||
Equation Type |
Exactly |
||||||||||||||||
Number of enrollments |
2 |
||||||||||||||||
Premium Tier Types |
|
Premium Tier | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Code |
FAM |
||||||||||||||||
Display Name |
Full Family |
||||||||||||||||
Equation Type |
At Least |
||||||||||||||||
Number of enrollments |
3 |
||||||||||||||||
Premium Tier Types |
|
Step 3 - Setup a Schedule Definition
The premium schedule is set up as follows:
Schedule Definition | |
---|---|
Code |
TIERED_SCHEDULE_DEF_01 |
Type |
Policy Based Premium |
Step 4 - Setup a Premium Schedule
Premium Schedule | |
---|---|
Code |
TIERED_SCHEDULE_01 |
Definition |
TIERED_SCHEDULE_DEF_01 |
Type |
(any) |
Interpretation |
Calculation Period |
Currency |
USD |
Premium Schedule Lines in "TIERED_SCHEDULE_01" | |
---|---|
Premium Tier |
Amount |
EMP |
800.00 |
EMP_SPS |
1,400.00 |
EMP_CHL |
1,900.00 |
FAM |
2,400.00 |
Step 5 - Assign the Premium Schedule
The premium schedule is now complete, but it won’t be applied in the premium calculation until it is assigned to an enrollment product. To complete the example, we set up an enrollment product and link it to the premium schedule that we have just set up.
Enrollment Product | |
---|---|
Code |
Assigned Premium Schedules |
TIER PLAN |
TIER_SCHEDULE_01 |
Calculating Premium
Please refer to the Calculate Premium per Policy of the _Operations Guide (Calculate Premium per Policy section) for an example of the mapping of a policy to a Policy Based Premium schedule.