Health Net of California is offering small group employers that enroll 6 or more employees the lowest possible “Risk Adjustment Factor” (RAF) of 0.90.  Health Net’s RAF Special expires April 15, 2013.

By way of background, the RAF allows insurance companies to charge a different amount for the same policy. Each insurance company sets the standard (1.0 RAF) rate for their small group plans.  An insurance company can charge groups with few enrolling members or ones with serious pre-existing medical conditions 10 percent more for their coverage (RAF1.1).  The lowest possible RAF is 0.90 or 10 percent below the standard rate.

All of the California health insurance companies have “RAF Specials.” What is unique about Health Net’s offer is that a small group’s current RAF does not matter.  Typically, the RAF specials are only available to small group employers (with 2-50 EEs) when their existing RAF is 1.06 or less. With this offer, Health Net will accept groups that have a 1.1 RAF.

The RAF – as a method for insurance companies to price risk – goes away for all plans 1/1/2014 when massive changes to health insurance plans will occur due to the Affordable Care Act (ACA).  I suspect that Health Net sees this as an opportunity to get more business before the ACA removes this strategy.

Please contact us and we can assist you with taking advantage of this savings.

Here is what you’ll need to do to qualify for the discount:

To qualify for the RAF Guarantee Program, sales must be for new AB1672 groups with:

 A minimum of 6 qualifying new subscribers

 Group effective dates of April 1, 2012 through March 15, 2013

 CalCOBRA and COBRA enrollees are excluded

 Qualifying new subscribers are those subscribers effective with the group on the date the group becomes effective.

 Individual health statement are not required.

 The RAF guarantee is for the full 12-month contract period.

 Choice Administrator programs, existing Health Net groups, association groups, Carve-out groups, Hn Options groups and non-guaranteed issue groups are not eligible.

 Groups in San Diego purchasing Smartcare product(s) are not eligible for this RAF program.

 New groups with 2-5 active enrollees are NOT eligible.

 All other standard paperwork and underwriting rules apply.

 Groups not eligible for this RAF program, refer to the Standard RAF Guidelines above.

 Groups that were previously wrapped with another carrier and replace one or both carriers are eligible for the RAF promotion.