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:

Table 1. Apply a Policy Tier Based Premium

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

Table 2. Setup Enrollment Types and Premium Tiers

Enrollment Type
Code	EMPLOYEE
Display Name	Employee

Table 3. Setup Enrollment Types and Premium Tiers - 2

Enrollment Type
Code	SPOUSE
Display Name	Spouse

Table 4. Setup Enrollment Types and Premium Tiers - 3

Enrollment Type
Code	CHILD
Display Name	Child

Table 6. Setup Enrollment Types and Premium Tiers - 4

Premium Tier
Code	EMP
Display Name	Employee
Equation Type	Exactly
Number of enrollments	1
Premium Tier Types	Table 5. Setup Enrollment Types and Premium Tiers - 5 Premium Tier Type Equation Type Exactly Number of enrollments 1 Enrollment Type EMPLOYEE

Table 9. Setup Enrollment Types and Premium Tiers - 6

Premium Tier
Code	EMP_SPS
Display Name	Employee + Spouse
Equation Type	Exactly
Number of enrollments	2
Premium Tier Types	Table 7. Setup Enrollment Types and Premium Tiers - 7 Premium Tier Type Equation Type Exactly Number of enrollments 1 Enrollment Type EMPLOYEE Table 8. Setup Enrollment Types and Premium Tiers - 8 Premium Tier Type Equation Type Exactly Number of enrollments 1 Enrollment Type SPOUSE

Table 12. Setup Enrollment Types and Premium Tiers - 9

Premium Tier
Code	EMP_CHL
Display Name	Employee + Child
Equation Type	Exactly
Number of enrollments	2
Premium Tier Types	Table 10. Setup Enrollment Types and Premium Tiers - 10 Premium Tier Type Equation Type Exactly Number of enrollments 1 Enrollment Type EMPLOYEE Table 11. Setup Enrollment Types and Premium Tiers - 11 Premium Tier Type Equation Type Exactly Number of enrollments 1 Enrollment Type CHILD

Table 15. Setup Enrollment Types and Premium Tiers - 12

Premium Tier
Code	FAM
Display Name	Full Family
Equation Type	At Least
Number of enrollments	3
Premium Tier Types	Table 13. Setup Enrollment Types and Premium Tiers - 13 Premium Tier Type Equation Type Exactly Number of enrollments 1 Enrollment Type EMPLOYEE Table 14. Setup Enrollment Types and Premium Tiers - 14 Premium Tier Type Equation Type At least Number of enrollments 1 Enrollment Type CHILD

Step 3 - Setup a Schedule Definition

The premium schedule is set up as follows:

Table 16. Step 3 - Setup a Schedule Definition

Schedule Definition
Code	TIERED_SCHEDULE_DEF_01
Type	Policy Based Premium

Step 4 - Setup a Premium Schedule

Table 17. Step 4 - Setup a Premium Schedule

Premium Schedule
Code	TIERED_SCHEDULE_01
Definition	TIERED_SCHEDULE_DEF_01
Type	(any)
Interpretation	Calculation Period
Currency	USD

Table 18. Step 4 - Setup a Premium Schedule Lines

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.

Table 19. Step 5 - Assign the Premium Schedule

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.