Premium Configuration

Oracle Health Insurance Enterprise Policy Administration has several embedded calculation methods to calculate premium. The primary method relies on premium rate schedules and adjustment rules.

Premium Schedules

A premium schedule is a re-usable look-up table for premium amounts. It consists of a header (the premium schedule) and one or more premium schedule lines. Each line consists of a configurable number of fields (dimensions) that represent conditions, and a premium amount field (including the currency). This is the premium amount that applies if all the conditions on the line are met.

The user specifies which properties, on for example the member or enrolled product, are relevant for finding the applicable premium by configuring a schedule defintion and its dimensions.

In the image below the dimension 'Smoking? with possible values 'Yes' and 'No' determine the premium amount.

Premium Schedule Example

The configuration user selects which fields on the member / product / policy are relevant (such as, for example, a 'smoking?' indicator on a member record) and the application will automatically show a corresponding column in the schedule. During the calculation the application will compare the value on the member record with the value in the schedule without the need for any further configuration.

Member Premium or Policy Premium

There are two kinds of premium schedule. The first lists a premium rate per member, for being enrolled on a particular enrollment product. The second lists a premium rate per Policy for having at least one member being enrolled on a particular product.

See the following examples on how to configure a member or a policy bases premium:

The 'type' attribute on the premium schedule’s Schedule definition determines which of these two behaviors apply.

Note that the Policy based premium schedule also has different configuration options; it does not support dimensions that map to dynamic fields on a member level, but it does have an additional premium tier dimension that is not available on member based premium schedules.

Schedules, Functions or Externally Calculated

Besides calculating premium rates based on (discrete) schedules, the application also supports rate calculations through functions or through rates that are externally calculated and stamped on the member policy records.

Adjustments

Premium Adjustments reduce or increase the premium amount if their specified conditions are satisfied. An adjustment rule is similar to a premium schedule, except that it leads to a percentual or absolute adjustment on the premium rather than a base amount.

It is possible to have multiple premium adjustments evaluated and applied in the same calculation. Adjustment rules can base their adjustment on the base premium amount or on the result of another adjustment.

A Surcharges, is applied either before or after the adjustments, based on the surcharge schedule definition’s surcharge rule evaluation. If the surcharge is applied After Adjustment, then the input for the adjustments is the base premium. If the surcharge is applied On Premium, then the input for the adjustments is the base premium including the surcharge amount.

Benefit Plans

A benefit plan can have can have multiple applicable premium schedules and multiple applicable adjustment rules. Adjustment rules can be applied simultaneously or in a configured sequence.

Add-on premiums can apply when the policy-holder or group extends the bare enrollment product coverage with add-ons. Each add-on has premium costs associated with it, specified in assigned premium schedule in the context of an enrollment product or group configuration. These costs can be amounts or derived by dynamic logic function.

A premium schedule or adjustment must be assigned to an enrollment product or group configuration to be considered during premium calculation.

The schedule definition's type determines which schedule or adjustment can be assigned to which object.

  • Premium schedules and Policy Based Premium schedules can be assigned to an enrollment product or to the combination of an enrollment product and add-on.

  • Group Client Adjustments can be assigned to a group client or to a combination of a group client and an enrollment product or enrollment product category.

  • A Group Account Adjustment can be assigned to a group account or to the combination of a group account and an enrollment product category.

  • A Group Account Product Adjustment can be assigned to a group account product.

Surcharges

Surcharges, like adjustments, put an additional charge on the base premium amount during a premium calculation. However surcharge rules are universal configuration rules that do not have to be attached to an enrollment product or group account in order to apply.

Like adjustment rules, which surcharge rules are applied depends on the specified conditions and it is possible to have multiple surcharge rules evaluated and applied in the same calculation.

Commission and Re-insurance

Policies supports the calculation of commission amounts for a broker and/or agent as a flat rate or as a percentage of the policy enrollment product premiums, adjustments and surcharges.

Policies also supports the calculation of reinsurance amounts as a flat rate or as a percentage of the policy enrollment product premiums, adjustments and surcharges.