HumanaInsuranceCompany

Missouri
HIOSIdentification:30613
ThisfilingisfortheIndividualmarket,withaneffectivedateof01/01/2015.
ContactInformation:
PrimaryContact:
DanMachmueller
PhoneNumber:
(262)4084514
Email:
dmachmueller1@humana.com
Purpose:
ThepurposeofthisactuarialmemorandumistoprovidesupportingjustificationtotheUnifiedRateReviewtemplate(URRT)withthe
goalofdemonstratingcompliancewiththemarketratingrules,aswellasreasonablenessofanyproposedrates.
Inaddition,thisactuarialmemorandumprovidesrequiredactuarialcertificationsrelatedto:
themethodologyusedtocalculatetheAVMetalValueforeachplan,
theappropriatenessoftheessentialhealthbenefitportionofpremiumuponwhichadvancedpaymentofpremiumtaxcredits
(APTCs)arebased,
developmentoftheindexrateinaccordancewithFederalregulations,anduseoftheindexratealongwithallowablemodifiersin
thedevelopmentoftheplanspecificpremiumrates.
Thisfilingshouldbeusedfornootherpurposes.
Pleasenotethat,tothebestofourknowledge,thisfilingcomplieswithcurrentregulationsandguidance.However,totheextent
thatlaws,rules,orguidancechangeafterthesubmissionofthisfiling,amendingthisfilingmaybenecessary.
Thismemorandumwaspreparedbyaqualifiedactuary,andisintendedtobereviewedbyaqualifiedactuary.
Thememorandumhasthreeprimarysections:
I.URRTProjectionFactorExplanation
II.ReasonsforRateChanges
III.FurtherExplanationofCompliancewithSingleRiskPoolRequirements
TheURRTProjectionFactorExplanationwalksthroughthekeyfactorsusedindevelopingtheprojectedbase2015allowedclaims,
credibilitymanualandapplicablecredibilityweighting,paidtoallowedratiotodeterminethepaidpmpmclaimbasis,risk
adjustmentandreinsuranceassumptionstoadjustpaidclaims,andtheadministrativeexpenses,riskandprofit,andtaxesandfees
usedindevelopingthesingleriskpoolpremium.
TheReasonsforRateChangessectionexpandsontopicscoveredintheURRTProjectionFactorExplanationasitpertainstorate
changedriversbetween1/1/14and1/1/15.
Thisactuarialmemorandumaccommodatesratesdevelopedforproductsnewtothemarketin2014.Theoverallannualaveragerate
changefrom1/1/14to1/1/15associatedwiththisfilingis20.6%.
FinallythememorandumconcludeswithasectiondescribingtheCompany'scompliancewithsingleriskpoolrequirements.This
includesdiscussiononthesingleriskpool,indexrate(alsomarketadjustedandplanadjustedindexrates),actuarialvalues,
membershipprojections,andafewotheritemsthatareprescribedbythememoranduminstructions.

I.URRTProjectionFactorExplanation
ExperiencePeriodPremiumandClaims
Theexperienceperiodusedasastartingpointis2013forpremium,membershipandclaims.Additionaldetailsaboutthedataused
followsbelow.
February28,2014
PaidThroughDate:
30,268
MemberMonths:
$5,157,384
PremiumsnetofMLRrebate:
MLRRebates:
$
EstimatedRebatestobeincluded: $
MethodologyforestimatedRebates:Rebatesaretheyearendaccrualfor2013.Theestimatewasbasedonactualclaimsthrough
theendof2013.The2013rebatesarebasedonthreeyearsworthofdata,whereappropriate.Expenseadjustmentsallowedunder
therebaterulesareestimatedbasedonexpenseexperienceandfutureexpectations.

Claimsthatwereprocessedthrough
theissuer'sclaimsystem
Claimsthatwereprocessedoutside
theissuer'sclaimsystem
Claimsincurredbutnotpaidasof
paidthroughdate

AllowedClaims

IncurredClaims

$4,419,286

$2,671,126

$536,095

$163,649

$67,977

$87,524

Theprocessedclaimsareclaimsincurredin2013andpaidthroughFebruary2014.Theallowedamountcomesdirectlyfromthe
claimssystemaftereligibilityandnetworkdiscountsareapplied.
Toestimateincurredclaims,reservecellsarecategorizedattheproductandtypeofservicedetaillevelbyprocessmonthand
developmentmethodswithvariousaveragingtechniquesareutilized.Themostcommonlyutilizedaveragingtechniquereliesona
sixmonthaverageofhistoricalcompletionfactorsexcludingthehighandlowfactorsinagivenprocessmonth.Smoothing
techniquesareemployed,includingworkdayandseasonalityadjustments.Changesinclaimvolumeareincludedintheseestimates
byadjustingforpendedclaims.
Foreachmonthofincurral,theincurredbutnotreportedamountequalstheincurredclaimsestimateminusclaimspaidtodate.
Followupstudies,includingmonthlyhistoricalreserverestatementanalyses,areregularlyperformedtotesttheaccuracyofthe
reservingmethodologyandtosuggestpossibleimprovements.
Inthebottomrowoftheabovetable,allowedbutnotpaidclaimestimatesaredevelopedindependentlyoftheincurredbutnot
paidestimatesutilizingasimilarapproachtothetriangulationmethod.
BenefitCategories
TheBenefitCategoriesaredefinedasfollows:
InpatientHospital:Includesnoncapitatedservicesformedical,surgical,maternity,mentalhealthandsubstanceabuse,skilled
nursing,andotherservicesprovidedinaninpatientfacilitysettingandbilledbythefacility.TheInpatientHospitalbenefitcategory
usesdaystodeterminetheutilizationper1,000.
OutpatientHospital:Includesnoncapitatedservicesforsurgery,emergencyroom,lab,radiology,therapy,observationandother
servicesprovidedinanoutpatientfacilitysettingandbilledbythefacility.TheOutpatientHospitalbenefitcategoryusesa
combinationofbothvisitsandservicestodeterminetheutilizationper1,000.ForitemssuchasOutpatientSurgeryandEmergency
Room,wheremultipleservicesarerenderedandcanbebilledtogether,visitsareusedforthemeasurementunits.Forsingleitems
thatcanbebilledseparately,suchasOutpatientTherapyorMRI,servicesareusedforthemeasurementunits.
Professional:Includesnoncapitatedprimarycare,specialist,therapy,laboratory,radiology,andotherprofessionalservicesnot
billedbythefacility.TheProfessionalbenefitcategoryusesacombinationofbothvisitsandservicestodeterminetheutilizationper
1,000.ForitemssuchasPrimaryCareorSpecialistOfficevisits,wheremultipleservicesarerenderedandcanbebilledtogether,visits
areusedforthemeasurementunits.Forsingleitemsthatcanbebilledseparately,suchasTherapyorMRI,servicesareusedforthe
measurementunits.

OtherMedical:Includesnoncapitatedambulance,homehealthcare,DME,prosthetics,supplies,visionexams,dentalservicesand
otherservices.TheOtherMedicalbenefitcategoryusesacombinationofbothvisitsandservicestodeterminetheutilizationper
1,000.ForitemssuchasHomeHealthvisits,wheremultipleservicesarerenderedandcanbebilledtogether,visitsareusedforthe
measurementunits.Forsingleitemsthatcanbebilledseparately,suchasDME,servicesareusedforthemeasurementunits.
Capitation:Includesallservicesprovidedunderoneormorecapitatedarrangements.
PrescriptionDrug:Includesdrugsdispensedbyapharmacy.Costsarenetofrebatesreceivedfromdrugmanufacturers,as
required.
ProjectionFactors
ThisactuarialmemorandumaccommodatesratesdevelopedforPPOproductsofferedoffexchangethatwerenewtothemarketin
2014aswellasnew2015onexchangeproducts.
2013experienceforsimilar,butdiscontinuedproducts,wasusedasabasisfortheprojected2015rates.
Thetablebelowlistsasummaryofcomponentsofthechangeinindexrateanddevelopmentofthe2015singleriskpoolpremium.
Followingasummaryoftheprojectioncomponents,wewillwalkthrougheachitem,howitimpacts2015indexrates,andthe
quantification.
2013to2015ProjectionFactorURRTComponents,SupportingMath,andCorrespondingCellLocations
1

Item:
StartingPoint:2013ExperienceAllowedClaimsPMPMbyBenefitCategory
AllowedClaimAdjustments
x(1+MorbidityAdjustment)[A].....
x(1+OtherAdjustment)
15.4%
ChangesinBenefits[B].
2.0%
ChangesinDemographics[C]
11.0%
NetworkImpacts[D].
0.0%
MiscellaneousImpacts[E]

Value :
$165.92

TotalOtherAdjustment..
x(1+ChangeinTrend)2[F].

4.7%
16.2%
79.1%

TotalAdjustmentsfrom2013to2015BaseExperienceAllowedClaims
CredibilityManual2015ProjectedAllowedClaims[G]
CredibilityWeight[H]
WeightedAverage2015AllowedClaims
PaidtoAllowedAdjustmenttoconverttoPaidClaims[I]
AdjustmentstoPaidClaimstoDeriveAppropriatePremium
x(1+ReinsuranceProgram)[J].....
x(1+RiskAdjustment)[K]......
(1AdministrativeExpense,ProfitandRisk,TaxesandFees)[L].
Result:2015SingleRiskPoolPremium
1
Valuesnotedarespecificallydiscussedincommentarytofollow
2
Twoyearsoftrend, 7.8%annually

47.1%

Worksheet1
CellLocation:
H24:H29
J24:J29
K24:K29

L24:M29

29.2%
$315.82
71.3%

T30
Q32
V32
V33

10.5%
19.1%
27.6%
$331.48 3.

T40:T42
V43

47.1%

ChangesintheMorbidityofthePopulationInsured[A]
Thisadjustmentisintendedtocapturethechangeinunderlyingmorbiditybetweenthe2015riskpooland
the2013experienceperiod.Tocalculatethechangeinmorbidity,bothinternalpricinganalysisand
consultantinformationwereutilized.Internalmodelingconsideredtherelativemorbidityofthecurrent
uninsuredmarket,combinedwiththerelativemorbidityofthemembershipenrolledinemployerplansand
theanticipatedmigrationbetweensegments.Basedonthisanalysis,itwasdeterminedthatsmallgroup
populationdataisanappropriatebasisforcalculatingthemorbidityofnonunderwrittennewenrolleesunder
reform.
Humana2013IndividualandSmallGroupmembershipandexperiencedatawasusedtodeterminethe
morbiditydifferencebetweenthecurrentindividualandsmallgrouppopulations.Thedatawasnormalized
forage,gender,duration,geography,andbenefitssothatthemeasurementcapturesthepuremorbidity
differenceandnotconfoundingfactors.Explicitadjustmentsaremadeforthesefactorselsewhereintherate
development,soitisessentialtodothenormalizationtoavoidanydoublecounting.
TheexperiencedatainMissouriistoosmalltoproducecredibleresultsforthisanalysis,sonationwide
experiencewasusedinstead.
Theresultofthisanalysisproducedanindividualtosmallgroupmorbiditydifferentialof58.4%.Thisis
adjustedasdescribedinthefollowingparagraphs.
Itisexpectedthatindividualmarketmorbiditylevelswillultimatelybeslightlyhigherthanthesmallgroup
marketduetogreaterlongtermadverseselectionintheindividualmarket.Smallgroupmarketcoverageis
obtainedasabyproductofbeingemployedwhereasthedecisiontoobtaincoverageintheindividualmarket
isfrequentlybasedonneed.Furthermore,acertainhealthlevelisnecessarytoretainemployment.This
biasesthesmallgrouppopulationtobeslightlyhealthierthanthepostreformindividualpopulation.
Toaccountforthisdynamic,anadjustmentof7.0%wasapplied.Thisisconsistentwithconsultantestimates
ofthisimpact.
HumanahasbeenanactiveparticipantintheriskadjustmentsimulationsperformedbyWakelyConsulting
Group.BasedontheresultsHumanahasdeterminedthatthesmallgroupmembershipishealthierthanthe
overallstatesmallgroupmembership.
PostreformmorbidityforHumanaIndividualbusinessisassumedtobemorecomparabletotheoverall
marketsmallgroupmorbidity,andthereforethemorbiditydifferentialhasbeenadjustedby1.2%.
Thisisdenotedas''HumanaSmallGroupAdj.toMarketLevel''inthetabletofollow.
Theaboveestimatescapturethelongtermrelationshipbetweenindividualandsmallgroupmorbidity.
However,intheshorttermthemorbidityofthenewnonunderwrittenpopulationmayvaryfromthislevel.
Theimpactofthisshorttermselectionphenomenaisestimatedtobe1.7%.
ItisalsonecessarytoaccountfortheadverseselectionbyplantieranticipatedonthePost2014population.
Itisreasonabletoassumelesshealthyindividualswillmorefrequentlyselectplanswithricherbenefitslike
GoldandPlatinumandmorehealthyindividualswillmoreoftenselectplanswithleanerbenefitslikeBronze
andCatastrophic.Basedonactual2014enrollmentandotherprojectionfactors,thelevelofadverseselection
wasprojectedbasedontheplanrichnessoftheHumanamembership.Thisadjustmentisonlyappliedto
membersissued2014orlater.ItisassumedthemembersissuedPost2014consistoftwosegments:1)non
underwrittennewentrants,and2)previouslyunderwrittenindividualsthataresoldnewpolicies.
Thesecondsegmentanticipatesmanyindividualswilldroptheircurrentplanstoobtainsubsidizedcoverage
ontheexchange.
Accountingforthemorbidityduetothisplanmiximpactstheoverallmorbidityby
0.4%and4.2%onthenonunderwrittennewentrantsandunderwrittenindividualssoldnewpolicies,
respectively.

TheseimpactsconsiderHumanasplanofferings,theanticipatedcompetitivenessofthoseplanofferings,and
theplanpreferencesofthenonunderwrittenandpreviouslyunderwrittenpopulations.
ItisexpectedthatthenonunderwrittenpopulationtoselectHumanaplanswillhavearichermixbenefits
thanthemarketoverall.Thisrequirestheprojectedmorbidityforthenonunderwrittencohorttobeadjusted
upward.
ItisalsoexpectedthatthepreviouslyunderwrittenpopulationtoselectHumanaplanswillhavearichermix
benefitsthanthemarketoverall.Thisrequirestheprojectedmorbidityfortheunderwrittencohorttobe
adjustedupward.
TheproductoftheaboveestimatesproducesthemorbiditychangeofthePost2014populationasdepicted
inthetopsectionoftheexhibitbelow.However,todeterminethenetmorbidityimpactacrosstheentirerisk
pool,itisnecessarytodilutetheimpactbasedonthePre2014issuedmembershipintheriskpool.Thisis
accomplishedbyprojectingtheclaimweightedexposureofthenewnonunderwrittenmembershipandthe
previouslyunderwrittenmembership.Akeydriverofunderwrittenexposureistheimpactofthetransitional
policyonthepurchaseoformovementontoACAcompliantplans.
BasedonMissouri'stransitionalpolicyapproachandourprojectedpatternofmembershipmovementtoACA
compliantplansweprojectPre2014underwrittenmembershiptobe8.4%ofthesingleriskpoolin2015.
ThePost2014nonunderwrittenandunderwrittensegmentsare76.0%and15.5%oftheriskpool
respectively.
Inadditiontotheaboveadjustments,itisalsonecessarytoadjustfortheimpactofdurationalaging.A
portionofthemembershipinthe2013experiencebasewasrecentlyunderwrittenandwilldeteriorateasthe
effectofunderwritingwearsoffwithdurationalaging.Thisimpactiscalculatedbycomparingthelossratio
expectedintheexperienceperiodbasedonitsaveragedurationtotheexpectedlifetimelossratio.
InMissouri,thisimpactis2.1%.Notethatthisimpactisapplicabletobothnonunderwrittenandpreviously
underwrittenpopulationsbecauseitisanadjustmenttotheclaimsexperience.
Finally,itisalsonecessarytoaccountfortheadverseorpositiveselectioninthe2013experiencebase.
Healthiermemberstendtoselectplanswithleanerbenefits(positiveselection)andlesshealthymembers
tendtoselectbenefitswithricherbenefits(adverseselection).Thereforeitisnecessarytoaccountforthe
amountofselectionembeddedintheexperiencebaseandadjusttothelevelofastandardindividual
population.Inthiscase,thestandardpopulationusedistheHumanaIndividualnationwide2013experience.
TheMissouriexperienceisadjustedtotheextentithasadifferentbenefitmixthanthenationwide
experience.Thisisestimatedtobea6.1%impact.

Theexhibitbelowdemonstrateshowthecombinedeffectoftheaboveadjustmentsresultinthemorbidity
adjustmentusedinthe2015pricing.
Issued
Pre2014
IssuedPost2014
NonUW1
UW2
UW
Total
58.4%
HumanaIndividualvs.SmallGroup
7.0%
LongTermAdverseSelection
1.2%
HumanaSmallGroupAdj.toMarketLevel
1.7%
ShortTermAdverseSelection
0.4%
4.2%
2015PlanMix
69.4%
4.2%
0.0%
MultiplicativeSubtotal
76.0%
15.5%
8.4%
ClaimWeights
3
53.4%
WeightedAverage
2.1%
Duration
6.1%
2013PlanMix
MultiplicativeGrandTotal

47.1%

Nonunderwrittennewentrants
Previouslyunderwrittenindividualsthataresoldnewpolicies
3
Notetheweightedaveragemorbidityshownpriortothemultiplicativegrandtotalisconsistentwiththe
morbidityvalueintheReasonsforRateChangessection
2

15.4%

ChangesinBenefits[B]
Thisreflectsthechangesinbenefitsavailabletomembershipincludingaddingmaternitybenefits,
modificationforbehavioralhealthservicescostsharing,increasedwomen'spreventivecarebenefitsandstate
mandatedbenefitsasfunctionofthebenchmarkplan.Thedatausedtoderivetheestimatedimpactof
addingmaternitycoveragewasbasedonHumanaSmallGroupdatasincemanyHumanaindividualplansin
theexperienceperioddonotincludematernitycoverageinthestate.Themethodologyemployedcompared
thelevelofmaternityclaimscomparedtothetotalclaims.Thiswasadjustedtoaccountforanticipated
increaseinmaternityincidenceratesgiventhemixofbusinessdifferencesbetweensmallgroupand
individualbyfederalpovertylevels.TheestimatedimpactofthecontraceptivecoverageundertheWomen's
PreventiveCarelegislationwasadditionallytakenintoaccountasanoffsettothehighermaternityincidence
rates.
ItshouldbenotedthatmaternitywasnotcoveredinMissouripriortotheAffordableCareAct.
Thedatausedtoderivetheestimatedimpactofchangesinmembercostsharinglevelsforbehavioralhealth
serviceswasalsobasedonsmallgroupdata.Thisexercisestartedwithananalysisofbehavioralhealthclaims
comparedtototalandcomparedthemarginalbenefitratioofthenewandcurrentplansthatwillresultdue
totheFederalMentalHealthParityrequirements.Statespecificmandatedbenefitsbasedonthebenchmark
plansweredeterminedindividuallyusingsimilarmethodologies.
TheWomensPreventiveCaremandatedbenefitsarepartiallyembeddedinthe2013allowedclaims.The
entireimpactwasnotrealizedduetomembershiprenewaltimingsoanadjustmenthasbeenmadetothe
projected2014allowedclaimstopriceintheremainingmarginalamount.

Inthiscontext,inducedutilizationreferstotheutilizationimpactofmemberbehavioralchangeswhenona
planwithricherbenefits.Thismetricdoesnotincludetheimpactofhealthstatus.
Theinducedutilizationassumptionof6.6%wasdevelopedbyapplyinguniformadjustmentstotheplan
specificfactorsprovidedbyHHSinthe''NoticeofBenefitandPaymentParametersfor2015.''
Itisimportanttonotethattheassumedimpactonlyaccountsfortheincrementalinducedutilizationinexcess
oftheinducedutilizationobservedonanaverageprereformplan.Thisapproachisusedtoavoiddouble
countingtheimpactofinducedutilization.
Theimpactforeachbenefitcomponentisasfollows:
MaternityBenefits
BehavioralHealthServices
Women'sPreventiveCare
OtherEssentialHealthandStateMandatedBenefits
InducedUtilization
TotalChangesinBenefits
2.0%

11.0%

5.3%
0.7%
0.5%
1.6%
6.6%
15.4%

ChangesinDemographics[C]
Age&Gender:Thisfactoraccountsfortheimpacttoallowedclaimswithrespecttothechangesin
demographicsbetweenthebase2013experienceperiodandtheexpecteddemographicmixin2015.The
changewasdeterminedbyusinganationwideallowedclaimPMPMbyageandgender.ThesePMPM
amountswereweightedbythestatespecific2013distributionofmembershipandtheexpected2015
distributionbyageandgender.The2015expectedage/genderdistributionhasbeenadjustedtothe
levelsobservedinthe2014enrollmentdata.
Theimpactofageandgenderchangesbetween2013and2015is3.0%.
Area:Thegeographicaldistributionofmembershiphaschangedfromthedistributioninthe2013
experienceperiod.Unitcostsbyareawereweightedbystateandlegalentityspecific2013membership
distributionsandtheprojected2015distributionbyarea.Thedifferencebetweentheseweightedunit
costamountsproducetheareaimpact.Notethatageandgenderwereheldconstantinthisprocess.
Theimpactofareadistributionchangesbetween2013and2015is1.9%.
Tobacco:Thisfactoraccountsfortheimpacttoallowedclaimswithrespecttotheexpectedchangein
distributionoftobaccousersfrom2013to2015.Tobaccouserscarrywiththemanassumed10%increase
inclaimcosts.Todeterminetheclaimimpactofthechangeintobaccousers,thefollowingformulawas
utilized:
((1.0*%2015NontobaccoUser)+(1.10*%2015TobaccoUser))
((1.0*%2013NontobaccoUser)+(1.10*%2013TobaccoUser))
Ageandgenderwereheldconstantinthisprocess.2015tobaccouserpercentageswerebasedonCDC's
BehavioralRiskFactorSurveillanceBranchdataonthedistributionoftobaccousersbystate.2013
tobaccouserpercentageswerebasedonHumanatobaccouserexposureinthegivenstate.
Theimpactoftobaccodistributionchangesbetween2013and2015is1.0%.
Thecombinedimpactofthesedemographicchangesis:
(1+3.0%)*(1+1.9%)*(1+1.0%)1=2.0%
NetworkImpact[D]
Thisfactorrepresentstheimpacttotheallowedclaimsbecauseofthepresenceofnetworksonproductsin
2015inmanymarketsthatweren'tpreviouslyutilizedinthe2013baseexperience.
DatausedtoevaluatethisclaimimpactisbasedonHumanaclaimsatacorporatelevelaswellasthe
individualmarketlevel.Togeneratetheestimatedimpact,networksavingsweregeneratedrelativetothe
basenetworkunderlyingthecurrentproducts.
AdditionallyfornewhighvaluePPOnetworks,anadjustmentwasmadetoaccountforthepresenceofa
differentpharmacynetworkandformulary.
7

0.0%

MiscellaneousImpacts[E]
Additional adjustments had been included in the prior actuarial memorandum to adjust 2013 claims to
the expected 2015 claim levels for the 90-day grace period and the dependent cap rules prescribed in the
Affordable Care Act.Thesehavebeenremovedfromthe2015claimsbuildupsothisimpactisnow0%.

16.2%

TrendFactors:Cost&Utilization[F]
CostTrend:
TheprimarycosttrendcomponentisProviderPriceIndex(PPI)anditcapturespureunitcostchanges,
calculatedusingthesamebasketofserviceseachperiod,duetoprice/contractnegotiationsandprovider

13.3%

Professionalandothermedicalcosttrendsaredevelopedbasedonhistoricalareaspecificcosttrendsfrom
HumanasIndividualCommercialblockofbusinessdata.Inpatienthospitalandoutpatientservicesare
calculatedfromhistoricalHumanacontractinginformation.Futurecosttrendsaredevelopedbasedon
expectedchangesinHumanasCommercialcontracts.
Pharmacycosttrendsaredevelopedbasedonhistoricalbrand,generic,andspecialtydrugtrendsfrom
HumanasCommercialdata.Futurecosttrendsaredevelopedbasedonexpectedchangesinthesepharmacy
contracts.Thesecontractualimpactswillbeapplicabletoallmembersregardlessofriskclass.
Othercomponentsareaddedtotheproviderpriceindextrendtodevelopthetotalcosttrendprovided.
Theseincludethefollowing:
CatastrophicClaims:Captureschangesinthecostofcatastrophicclaims.Acatastrophicclaimisdefined
asanymonthwhereamembersclaimsaregreaterthanthemonthlythreshold,startingat$25,000in
January2006andtrendedat6%annually.ThesecatastrophicclaimsarethencalculatedonaPMPMbasis
andcomparedyearoveryeartodeterminethetrend.
Influenza:CapturestheimpactofcosttrendduetoinfluenzawhichisidentifiedbyICD9code,and
pneumoniawhichisusingDRGcodes.Thisalsoincludesthechangeincostforpharmacytreatmentand
vaccinationofinfluenza.
HealthTechnologyPipeline(HTP):Capturesthecostimpactofnewhealthtechnologiesandprocedures.
Anexternalconsultingfirmresearchesnewtechnologiesanddevelopspermemberpermonthimpacts.
TheseimpactsarecustomizedtoHumanasCommercialbusinessbasedonmembershipandcoverage
policy.
ThetreatmentofHepatitisCwillbechangingduetotheentranceofanewdrugtothemarketin
December2013.Previoustreatmentincluded48weeksofinjectionswithacorresponding65%curerate.
Thenewdrugconsistsof12weeksofpillsandhasanexpectationofgreaterthana90%curerate.
Treatmentcostsofthisnewdrugregimenwillbeincreasingtoapproximately$175,000.
TheHepatitisCVirusisconcentratedinthebabyboomerpopulation.Humanahasassumedprevalence
ratestovarybysocioeconomiclevels,babyboomer/nonbabyboomerstatus,andgeography.
20.8%ofthe22.2%increasetocosttrendintheHealthTechnologyPipelinecomponentforPharmacyis
fromthisHepatitisCimpact.
ManagementInitiatives(MI):CapturessavingsforHumanainitiativesdesignedtoreducetrendby
managingcost,suchasshiftingemphasistowardsoutpatientsurgery,andensuringclaimsarecoded
correctly.Theseinitiativesareevaluatedbyaninternalactuarialorganizationtaskedwithevaluatingthe
effectivenessoftheinitiatives.Projectedsavingsarecalculatedbydeterminingprospectivechangesto
impactedmetricvalues,whicharedeterminedbyanalyzinghistoricalmetricvaluesaswellasthrough
discussionswithclinicalandoperationalareas.Savingsarereviewedwithleadershiptoensure
appropriatenessofassumptions.

Thisdescribesthedevelopmentofthecorecosttrend.Allimpactsfromhealthcarereformhavebeen
removedandareincludedinthePopulationRisk/MorbidityandOthertrendsectionstopreventdouble
countingofanyimpacts.

HealthCost
Category
Inpatient
Outpatient
Physician
OtherServices

Pharmacy

PPI(i)
5.0%
4.9%
1.0%
0.9%
8.8%

Influenza(ii)
0.1%
0.1%
0.2%
0.1%
0.0%

Catastrophic
Claims(iii)
0.1%
0.1%
0.1%
0.0%
0.0%

HTP(iv)
0.1%
0.1%
0.1%
0.1%
22.2%

MI(v)
0.4%
0.7%
0.4%
0.2%
0.2%

Annualized
CostTrend
Totals*
4.7%
5.5%
0.6%
0.9%
32.7%

*AnnualizedCostTrendTotals=(1+i)*(1+ii)*(1+iii)*(1+iv)*(1+v)1
2.6%

UtilizationTrend:
UsingHumanasTrendQuantificationandProjectionmodel,abaselinetrendisdevelopedusingHumanas
IndividualCommercialblockofbusinesshistoricalmedicalclaimsdatafrom20082013.Thehistorical
baselinetrendisdevelopedbyremovingallknownimpactstoallowedtrendsuchasdemographics,
geography,duration,customerchanges,benefitchanges,influenza,newhealthtechnologies,management
initiatives,andchangesinpertinentdays.Aneconomicregressionmodel,basedonconsumersentiment,
housingprices,employment,personaldisposableincome,hospitalconstruction,andhightechmedical
equipmentspend,isthenfittothishistoricalbaselinedatatoprojectthefutureblockofbusinessbaseline
trendfor2014and2015.
Othercomponentsareaddedtothebaselinetrendtodevelopthetotalutilizationtrendprovided.These
includethefollowing:
Influenza:CapturestheimpactofunittrendduetoinfluenzawhichisidentifiedbyICD9code,and
pneumoniawhichisidentifiedusingDRGcodes.Thisalsoincludesthechangeinutilizationforpharmacy
treatmentandvaccinationofinfluenza.
HealthTechnologyPipeline(HTP):Capturestheutilizationimpactofnewhealthtechnologiesand
procedures.Anexternalconsultingfirmresearchesnewtechnologiesanddevelopspermemberper
monthimpacts.TheseimpactsarecustomizedtoHumanasCommercialbusinessbasedonmembership
andcoveragepolicy.
ManagementInitiatives(MI):CapturessavingsforHumanainitiativesdesignedtoreducetrendby
managingutilization,suchascasemanagement,diseasemanagement,andnurseprograms.These
initiativesareevaluatedbyaninternalactuarialorganizationtaskedwithevaluatingtheeffectivenessof
theinitiatives.Projectedsavingsarecalculatedbydeterminingprospectivechangestoimpactedmetric
values,whicharedeterminedbyanalyzinghistoricalmetricvaluesaswellasthroughdiscussionswith
clinicalandoperationalareas.Savingsarereviewedwithleadershiptoensureappropriatenessof
assumptions.
PertinentDays:Captureschangesinthecalendar,recognizingthathealthcareutilizationvariesbyday
oftheweekandreportingperiodscontainvaryingweekdaymixandcount.Thisimpactisdeveloped
throughtheuseofaninternalmodelwhichisuploadedwithHumanasCommercialclaimsdata.

Thisdescribesthedevelopmentofthecoreutilizationtrend.Allimpactsfromhealthcarereformhavebeen
removedandareincludedinthePopulationRisk/MorbidityandOthertrendsectionstopreventdouble
countingofanyimpacts.

HealthCost
Category
Inpatient
Outpatient
Physician
OtherServices

Pharmacy

Baseline(x)
5.9%
3.5%
0.8%
0.6%
6.6%

Influenza(xi)
0.0%
0.0%
0.1%
0.0%
0.0%

HTP(xii)
0.1%
0.1%
0.1%
0.1%
0.1%

MI(xiii)
0.4%
0.6%
0.2%
0.8%
0.1%

Annualized
PertinentDays Utilization
TrendTotals*
(xiv)
0.0%
5.6%
0.0%
3.1%
0.0%
0.8%
0.0%
1.3%
0.0%
6.5%

*AnnualizedUtilizationTrendTotals=(1+x)*(1+xi)*(1+xii)*(1+xiii)*(1+xiv)1
TotalTrend:
Thecosttrendusedtoproject2015allowedclaimsforMissouriHumanaInsuranceCompanyis6.4%annually
or,13.3%fortwoyears.
Theutilizationtrendusedtoproject2015allowedclaimsforMissouriHumanaInsuranceCompanyis1.3%
annuallyor,2.6%fortwoyears.
Thecombinedcostandutilizationtrendthereforeis7.8%annually,or16.2%fortwoyears.
Items[G],[H],[I],[J],[K],[L]aredelineatedintheirownsectionsonthepagestofollowpermemoranduminstructions.
[G]CredibilityManualcommentaryisinthe"CredibilityManualRateDevelopment"section.
[H]Credibilityweightisdiscussedinthe"CredibilityofExperience"section.
[I]PaidtoAllowedRatiocommentaryisinthe"PaidtoAllowedRatio"section.
[J]Reinsurancecommentaryisinthe"ProjectedReinsuranceRecoveriesNetofReinsurancePremium"section.
[K]Riskadjustmentcommentaryisinthe"ProjectedRiskAdjustmentPMPM"section.
[L]Administrativeexpenses,riskandprofit,andtaxesandfeesareinthe"NonBenefitExpensesandProfitRisk"section.

10

CredibilityManualRateDevelopment[G]
SourceandAppropriatenessofExperienceDataUsed,AdjustmentsMadetotheData,InclusionofCapitationPayments
ThecredibilitymanualratebeginswithHumana'sIndividualMajorMedical2013nationwideallowedclaims(includingcapitation
payments)permemberpermonth,excludingtheexperienceforMissouriHumanaInsuranceCompany(MOHIC).
ThisnationwideallowedpmpmisadjustedinasimilarprocessastheProjectionFactorssectionoutlinedonthepreviouspages,
utilizingslightlymodifiedmorbidityandotheradjustmentstoaccountforthenationwideclaimsstartingpoint.Costandutilization
trendsareidenticalforboththeexperienceprojectionandthecredibilitymanual.
TheadjustmentsmadetothecredibilitymanualareintendedtobringthestartingnationwideallowedclaimsPMPMtoacostbasis
consistentwiththatofMOHIC.
Similartothedescriptionprovidedpreviously,thecredibilitymanualmorbidityassumptionaccountsfortheguaranteedissue
impact,durationalagingand2013planmixdistribution.
Thesefactorsareidenticaltothebaseexperienceperioddevelopment,withtheexceptionthatthedurationalagingadjustmentis
basedontherelativitybetweenthenationwideandstateimpactsandanadditional2013planmixadjustmentisrequiredto
accountforthedifferencebetweenthenationwideHumana2013planmixandthe2013planmixintheMOHICexperience.

ThisadditionalfactorisdevelopedbycomparingthenationwideplanmixtotheMOHIC2013planmix.Anillustrationofthe
credibilitymanualmorbidityfactordevelopmentisincludedin''Exhibit1CredibilityManualDerivation''intheMorbidity
AdjustmentDetailstable.
Toadjustthenationwideallowedpmpmfortheotheradjustment,asimilarprocesswasfollowed.
Thecredibilitymanualotheradjustmentincludestheidenticalnetworkimpact,changesinbenefits,andchangesindemographics
(age/gender,area,tobacco)factors.Inaddition,thereareadditionalage/gender,areaandtobaccoadjustmentstoaccountforthe
differenceindistributionofbusinessbetweennationwideandthisstate'sdistributionofbusiness.Eachofthesearedevelopedby
comparingthenationwidefactorforthegivendemographic(age/gender,area,tobacco)tothestatefactor.Thisadjustmentensures
thattheclaimsarerepresentativeofwhatweexpecttoseeinthestate.Adepictionofthecredibilitymanualotherfactor
developmentisincludedin''Exhibit1CredibilityManualDerivation''intheOtherAdjustmentDetailstable.
Thecostandutilizationtrendvaluesusedinthecredibilityratedevelopmentareidenticaltothosedepictedinthe''TrendFactors:
Cost&Utilization''subsectionoftheProjectionFactorssection.
The2015credibilitymanualratedevelopmentisthentheproductofthisnationwide2013allowedclaimspmpm,credibility
morbidityfactor,credibilityotherfactor,costtrendandutilizationtrend.ThecalculationisillustratedinRow1ofExhibit1.
CredibilityofExperience[H]
Avalueof356,000membermonthsinanexperienceperiodisassumedtobefullycredible.Thisvaluewasderivedbasedon
analyzinghistoricalexperienceandutilizinga95%confidenceintervalthatrequiredactualresultswillbewithin5%ofexpected.
Thecredibilityweightmethodologyutilizesthefollowingequation:squareroot(membermonthsinexperienceperiod/356,000).
Basedonthe30,268membermonths,thecredibilityweightforthebaseexperienceis29.2%.

11

PaidtoAllowedRatio[I]
Theanticipatedpaidtoallowedratioovertheprojectionperiodwasdevelopedbyseparatelyconsideringtheanticipatedpaidto
allowedratiosbyplantier.
Oncecalculated,projectedmembermonthweightsforeachplantier(consistentwiththoseprovidedinWorksheet2)wereapplied
tothesepaidtoallowedratiostoproduceanoverallanticipatedpaidtoallowedratioof71.3%.
Theindividualplantierpaidtoallowedratiosweredevelopedbasedonaninternalpricingmodelwithunderlyingutilizationand
costsreflectiveofastandardpopulationequivalenttotheanticipated2015riskpool.Theseestimatesarethenadjustedforthe
morbidityofthepopulationenrollingineachoftheseplantiers.Highmorbidityindividualstendtoselectrichbenefitplansandlow
morbidityindividualstendtoselectleanbenefitplans.Thevarianceinmorbidityincreasesthepaidtoallowedratioobservedonrich
plans,suchasGoldandPlatinumwhilereducingthepaidtoallowedratioonleanplanslikeCatastrophicandBronze.Thesevalues
weredevelopedinaccordancewithgenerallyacceptedactuarialprinciplesandmethodologies.
Anadditionaladjustmentismadetoaccountforthefixedfeeleveragingcomponentofclaimstrend.Fixedfeeleveraging(sometimes
calleddeductibleleveraging)capturestheadditionalnettrendcreatedbecauseallowedclaimstrendatadifferentratethanmember
costsharing.Thiseffectiscalculatedbymeasuringtheimpactofchangesinallowedcosts,holdingmembercostshareconstant.

RiskAdjustmentandReinsurance
ProjectedReinsuranceRecoveriesNetofReinsurancePremium[J]
Reinsurancerecoverieswerecalculatedusingclaimsdatafromthesimulatedpopulationsmentionedabove.HumanaSmallGroup
membershipwasusedtorepresenttheriskofnewenrolleesin2014and2015.Thisisexpectedtobeareasonableapproximationof
thiscohortsriskcharacteristics.HumanaIndividualmembershipwasusedtomodeltheriskofmembersmovingtoACAcompliant
coverageby2015.TherecoveriesincolumnEofExhibit2areablendofthesetwopopulations.Paidclaimswerecalculatedforeach
memberbasedontheirallowedclaimsandtheplanselectedinthesimulation.
AsspecifiedbyHHS,recoverieswerecalculatedformemberswithtotalcalendaryearclaimsexceedingthe$45,000attachment
point.Therecoveriesapplya50%coinsurancerateuptoacapof$250,000.
Inaddition,thecalculationconsidersthelikelihoodofareinsurancefundshortfallandsubsequentprorationofpaymentsbasedon
marketsizeand2015morbiditylevel.
Duetothevolatilenatureoflargeclaims,nationwideclaimexperiencewasusedtoestimatetherecoveries.However,whenusing
nationwideexperienceitisnecessarytoadjustforgeographiccostvariation.Thecostvariationleadstogreaterrecoveriesinhigh
costareasandfewerrecoveriesinlowcostareas.
Toaccountforthisimpact,theallowedclaimswereadjustedtoreflecttherelativecostlevelinMissouri.
Thepaidclaimsandreinsurancerecoverieswerethencalculatedusingtheadjustedallowedclaims.
Aportionofreinsurancerecoveriesareoffsetbythereinsuranceassessmentof$3.67PMPM.
Weexpectrecoveriesnetofassessmentstobe$23.23PMPMwhichresultsina10.5%multiplicativeadjustmenttopremium.
Incompliancewithratingrules,projectedtotalreinsurancerecoveries,netofcontributions,isallocatedacrossallplansasaconstant
percentageofpremium,asdemonstratedincolumnIofExhibit2.

12

ProjectedRiskAdjustmentPMPM[K]
The2015RiskAdjustmentTransferPaymentsaredeterminedviaamodelthatprojectsalllargeissuersinthestate.Thisisnecessary
toestimatethestateaveragepremiumandothernormalizationfactorsrequiredbytheHHStransferformula.Themodelusesthe
formulasandfactorsprescribedbyHHStodeterminethetransferpaymentsincludingstateaveragepremium,GCF(GeographicCost
Factor),IDF(InducedDemandFactor),ARF(AgeRatingFactor),andAV(ActuarialValue).Furthermore,themodelmaintainsseparate
riskadjustmentpoolsforCatastrophicandMetalPlansasdescribedintheregulations.Assumptionsforothercarriersweresetbased
ondataprovidedbyCMSandotherpublicallyavailablesources.Intheabsenceofconcreteinformation,assumptionswereset
universallyacrossissuers.
Membershipbyplan,asshownincolumnAofExhibit2,wasdeterminedbyprojectingmembershipfor2014and2015enrollments.
2014enrolleesareprojectedtoeitherrenewwiththeircurrentinsurerin2015orlapseandpurchasenewcoveragein2015,and
thereforecontributetothe2015riskpool.Theprojectionsarebasedonactualenrollmenttodateandprojectedenrollmentforthe
remainderofthe2014OpenEnrollmentPeriod(OEP)andtheentire2015OEP.Theprojectednewenrolleemembershipis
determinedbysimulatingmemberplanchoicesbymetaltier.
ThesimulationisbasedonHumanaSmallGroupmembership,becausethispopulationshouldreasonablyapproximatetherisk
profileofnewenrollees.Withinthesimulation,amembersutilityforeachoftheplanswasestimatedbasedonthepostsubsidy
premiumandthemembercostsharing(aftersubsidies)giventheirhealthstatus.Thememberselectstheplanwithhighestutility
(subjecttoCatastrophicplaneligibilityrules).Thisapproachcapturestheimpactofadverseselectionbyplan.Inaddition,the
simulationproducesaPlanLiabilityRiskScore(columnC)foreachmemberbasedontheHHSCommercialRiskAdjustmentModel.
Thisriskscoreisusedinthecalculationofrisktransferpayments.
Membersissuedpriorto2014areprojectedtoentertheriskadjustmentpoolbasedonthetransitionalpolicyapproachadoptedby
carrierswithinthestate.Manycarriershavereleasedinformationregardingtheirextensionpolicyandthishasbeenusedtoproject
theriskadjustmentpoolmembershipwherepossible.Thepre2014membershipismodeledbymeasuringriskscoresonthepre
reformHumanaIndividualpopulation.ItisassumedthatthememberswillchooseanACAcompliantplanthatissimilartotheir
currentplan.Allissuersareassumedtohavethesameplanmixfortheirpre2014membership.
Theprimarydriverofissuerspecificriskscoresistheprojectedmixofunderwrittenandnonunderwrittenmembership.Previously
underwrittenmembersarehealthierthanthemembersenrolledunderguaranteedissueandwillresultinlowerriskscores.
Thepercentageofunderwrittenmembership(23%assumedforHumanaand20%assumedfortheoverallmarket)isdetermined
basedonasalesprojectionmodel.
Themodelassumesinitialmembershipforeachissuerbasedonthe2012MLRreport.Newenrolleesareattributedtoeachissuer
basedonactualenrollmentwherepossibleandprojectedenrollment.Theprojectedenrollmentisbasedonassumedprice
competitivenessineachmarketandanIndividualMarketgrowthassumption.The2015pricecompetitivenessisbasedon2014rate
datacombinedwithanticipated2015ratechangesbyeachissuer.TheIndividualMarketgrowthassumptioniscalibratedtothe
enrollmentdataprovidedbyCMSforeachstateexchange.
TheMissouriIndividualmarketisassumedtogrow99%by2015comparedtoprereformlevels.
ForMissouriHumanaInsuranceCompany,theseassumptionsresultinanaboveaverageportionofunderwrittenmembershipand
thereforeabelowaveragePlanLiabilityRiskScore.
InaccordancewithHHSregulations,stateaveragepremiumiscalculatedasamembershipweightedaverageofissuerpremiums.
Premium(columnH)forHumanaiscalculatedtobetheprojectedTotalLiabilityPMPM(columnG)dividedbyatargetlossratioof
80%onaFederalMLRbasis.Premiumforotherissuersiscalculatedbystartingwiththeissuers2014premiumrateandapplyingan
assumed2015ratechange.TotalLiabilityisthesumofpaidclaimsincludinginducedutilization(columnD),projectedrisk
adjustmenttransfers(columnF)andprojectedreinsurancerecoveriesnetofcontributions(columnE).Itisnecessarytoinclude
reinsurancerecoveriesinthecalculationbecausethiswillresultinsubstantiallylowerpremiumsintheIndividualmarket.The
approachdescribedaboveissimilartothemethodusedintheSeptember2011CCIIOwhitepaperonriskadjustment.

13

Basedontheaboveassumptions,RiskAdjustmentTransferPaymentsarecalculatedusingtheHHStransferformula.
Asaresult,HumanaHICexpectsa$38.11PMPMaverageRiskAdjustmentTransferPaymenttoHHS.
Thisproducesa19.1%multiplicativeadjustmenttopremiumtoaccountfortheanticipatedRiskAdjustmentTransfer.
Incompliancewithratingrules,projectedtotalriskadjustmentliabilityisallocatedacrossallplansasaconstantpercentageof
premium,asdemonstratedincolumnJofExhibit2.
NonBenefitExpensesandProfitRisk[L]
Expensesarebasedonaninternalforecastfor2015.Expenseswereestimatedbasedon2013actuals,adjustedforexpected
changesinbusinessoperations(e.g.,reductioninunderwritingfunctions,etc.)andanincreaseinmembership&PMPMpremiumfor
2015.Theseincreasesareusedtoleverageadecreaseinfixedexpensesasapercentageofpremium.
Theseexpensesareloadedasaflatpercentageofpremiumatthispointintimeandonlyvarybyproductorplanbasedonthe
presenceoftheWellness&RewardsBenefit.
16.70% AdministrativeExpenseLoad
4.99% Broker&SalesCommissions:Compensationexpensesassociatedwithbusinessissuedthroughanagentor
agency
1.20% QualityExpenses:ExpensesassociatedwithqualitythatareallowedadjustmentsundertheMedicalLoss
Ratiostandards
0.75% Clinical&NetworkOperations:nonqualityclinicalcosts,providercontracting,andnetworkmaintenance
anddevelopment
2.18% ITExpenses:costsassociatedwithmaintenanceanddevelopmentofsystems
2.38% CustomerService&AccountInstallation:callcenter,customerservice,andaccountmanagement
2.56% CorporateAdministration:sharedfunctionsthatarenotexclusivetoindividualmajormedical,including
corporatefinance,legal,humanresources,etc.
2.06% IndividualAdministration:functionalareasandpersonnelthatsolelyworkonindividualmajormedical
0.58% DirectResponse,Marketing,&AgencyManagement:directtoconsumermarketingexpenses,other
marketingexpensesandagencymanagementexpenses
2.90% Profit(orContributiontoSurplus)andRiskMargin
2.90% Profitmarginisshownonapostincometaxbasisanddoesnotincludeinvestmentincome.Themargin
showndoesnotvarybyproductorplan.
7.98% TaxesandFees
1.05% StatePremiumTax:chargedasapercentageofpremium
1.81% HealthInsurerAnnualFee:assessmentcreatedin2014byPPACA.Estimatedat1.8%ofpremium.Not
incometaxdeductible.
2.37% ExchangeFee:chargedonapercentageofpremiumbasistofundtheexchange
0.10% OtherMisc.Taxes:includesstatelicensingfeesandtheFederalComparativeEffectivenessTax
2.65% IncomeTax:Federalincometax.Estimatedas36%timesthesumofpretaxprofitmarginandthenon
deductibleHealthInsurerAnnualFee
ProjectedLossRatio
TheprojectedlossratiousingtheFederallyprescribedMLRmethodologyisatleast80%.
Demonstration:
(2015Claims/2015Premium)+(QualityExpensesasa%ofPremium))/(1TaxesandFeesasa%ofPremium)
80.0%
((21,646,481/29,890,197)+1.20%)/(17.98%)=
PerCMSguidance,thisprojectionremovestheexpectedimpactofthe'MiscellaneousImpacts'describedabovefromboththeclaims
andthepremium.Wedoexpecttheretobeaclaimsimpactfromtheseitems,whichwouldbringtheexpectedMLRabove80%.

14

II.ReasonsforRateChanges
ProposedRateChanges
Thisactuarialmemorandumaccommodatesratesdevelopedforproductsnewtothemarketin2014.Theoverallannualaveragerate
changefrom1/1/14to1/1/15associatedwiththisfilingis20.6%.
Theratedevelopmentmethodchosenthisyeartodevelop2015ratescloselymirrorstheURRTindexratedevelopmentprocess.
However,thismethodisdifferentfromtheratedevelopmentusedlastyeartodevelop2014rates(duemainlytothetimelineofthe
releaseofregulations,releaseoftemplaterequirements,andsubmissiondeadlines),whichwasapremiumbaseddevelopment
ratherthanallowedclaimsbased.Becauseofthisdifferenceinmethods,anexactreconciliationofratechangedriversisdifficult;
thebestestimatesofeachcomponentareprovidedbelow.
Inadditiontochangingtheratedevelopmentmethod,theitemizationthatfollowsaddressesbothchangestotheactualexperience
base(2012inlastyearsURRTversus2013inthisyears)aswellaschangesinourpricingassumptions.
Thepricingassumptionsmadeinsetting2014ratesweredisruptedbyunexpectedeventssuchastheslowlaunchoftheFederal
ExchangeandthePresidentstransitionannouncementandnewdatasuchasthe2014enrollmenthasbecomeavailable.
ReasonsforRateChangesbyComponent
25.9%
Morbidity.
10.6%
ChangeinExperience
8.8%
Trend
7.2%
ChangesinBenefits
2.4%
Age&Gender
0.0%
Network....
0.5%
MiscellaneousImpacts..
3.9%
ACATaxes&FeesImposedontheInsurer
1.6%
Reinsurance...
11.6%
RiskAdjustment.
4.7%
PaidtoAllowedRatio
20.6%
GrandTotal.
Thedetailsofeachratechangecomponentarepresentedbelow.
Morbidity
The2015morbidityestimateisdifferentthanthe2014estimatebecauseweanticipatethecompositionoftheriskpooltobe
different.First,theIndividualmarketisexpectedtogrowin2015andthenew(nonunderwritten)entrantsareexpectedtohave
adifferentmorbiditythantheexistingpool.Second,thepreviouslyunderwrittenmembershipwillhaveadifferentamountof
exposureinthe2015riskpool.Thisexposurelevelisimpactedbylapserates,renewaltiming,andtransitionalpolicies.2014rates
weresetpriortotheadoptionofearlyrenewalstrategiesandtransitionalpolicyextensions.Recognizingtheeffectsofthese
elementswillhaveanimpactonthecompositionoftheriskpool.
Thechangeinratesfrom2014to2015attributabletomorbidityis25.9%.
21.8%
2014MorbidityAssumption
2015MorbidityAssumption
53.4%
RateChange
25.9%
NotethatthisistheimpacttoratesbeforeconsideringanyoffsettingimpactsfromtheestimatedReinsuranceandRisk
Adjustmenttransfers.

15

ChangeinExperience
Aportionofthe2015ratechangeisduetoachangeinexperience.AsprescribedbytheURRTinstructions,the2014URRTwas
basedon2012claimsexperiencewhile2015pricingisbasedon2013experience.
Thischangeinexperiencebaseresultsina10.6%impacttorates.
Asshownbelow,thechangeinStartingAllowedClaimsissupplementedbyseveralitemstoproducetheoverallChangein
Experience.
NotethattheseadjustmentitemswerecapturedseparatelyinSectionI:URRTProjectionFactorExplanation,butaregrouped
togetherhereforclarity.
Thedurationaladjustmentcapturestheactualimpactofdurationalagingthatoccursbetween2012and2013,relativetowhat
wasassumedlastyear.Similarly,thetrendadjustmentsaccountfortheactualclaimstrendoccurringbetween2012and2013
comparedtowhatwasassumedlastyear.Finally,theplanmixadjustmentaccountsforvariationinadverseselectionbetween
thetwoexperienceperiods.Incombinationthesefactorscapturetherateimpactofyearoveryearchangesinclaimexperience.
Notethatthefiguresbelowarecredibilityblendedwhereappropriate.
StartingAllowedClaims
DurationalAging
20122013Trend
PlanMix
TotalRateChange

2014Pricing
2012:$164.44
8.1%
7.2%
6.1%

2015Pricing
2013:$176.26
3.9%
0.0%
1.3%

Change
7.2%
3.9%
6.7%
7.0%
10.6%

Trend
Inboththe2014and2015pricingweassumedaclaimstrendbetween2013and2014.Whilethisisstillaprojectedvalue,the
estimatehasbeenrevisedbasedonmorerecentclaimsexperience.
The2014trendassumptionwas7.2%andthe2015assumptionforthesametimeperiodisnow8.1%.
Theimpactofallowedclaimstrendfrom2014to2015is8.8%.
20132014Trend
20142015Trend
TotalRateChange

2014Pricing
7.2%
0.0%

2015Pricing
8.1%
7.8%

Change
0.9%
7.8%
8.8%

AsreferencedinSectionI:URRTProjectionFactorExplanation,theimpactofthenewHepatitisCdrugenteringthemarkethas
beenincludedforboth20132014and20142015trendsinthe2015Pricingcolumnabove.
ChangesinBenefits
Aportionofthe2015ratechangeisduetochangesrelatedtobenefits.Thesechangesaregenerallycomprisedofchangesinthe
valuationofEssentialHealthBenefitsandchangestotheestimatedimpactofinducedutilization.
ThefollowingUSPreventiveServicesTaskForce(USPSTF)recommendationswereconsideredinpricing.Forwomenwhoareat
increasedriskforbreastcancer,theyrecommendcoveringriskreducingmedications.Additionally,theyrecommendcoveringan
annualscreeningforlungcancerwithlowdosecomputedtomographyCTscanforadultsaged55to80whohaveahistoryof
smoking.Furthermore,TobaccoCessationproductswillbecoveredaspreventiveduetoUSPSTFrecommendation.In
accordancewiththeFederalMentalHealthParityFinalRules,ResidentialTreatmentfacilitieswillbecoveredwithnolimits.In
total,theestimatedimpactfromthesepreventiveandbehavioralhealthbenefitsisabout0.2%.

16

Theestimateofpediatricdentalhasbeenrefinedbasedoninformationlearnedthroughouttheopenenrollmentperiod.
Additionally,EssentialHealthBenefitvaluationshavebeenreestimated,andthebenefitvaluationcalculationsmethodhasbeen
improvedgiventheadditionaltimeforfilingpreparationthisyear.
Thesechangeshaveanincrementalimpactfor2015pricingfromthatwhichwasassumedin2014pricingof0.1%.
Thestatehaspassedlegislationlimitingmembercostshareonorallyadministeredchemotherapymedications.Theestimated
impactis0.5%in2015pricing.
In2015,theestimatedimpactofinducedutilizationhaschangedfortworeasons.First,theanticipatedmixofplanshaschanged.
Thischangedtheoveralllevelofinducedutilization,sincethelevelexpectedoneachplanvarieswithplanrichness.Second,after
the2014ratedevelopment/filingprocesswascompletedwediscoveredaformulaerrorthatproducedunderstatedresults.
Correctingthisissuein2015hasgenerallyproducedhigherinducedutilizationlevels.
Theimpactonratesforchangesinbenefits,includinginducedutilization,from2014to2015is7.2%.
IncreasedBenefits
InducedUtilization
TotalRateChange

2014Pricing
7.6%
0.1%

2015Pricing
8.2%
6.6%

Change
0.6%
6.6%
7.2%

Age&Gender
Astudyof2014enrollmentdatahasrevealedtheactualage/genderdistributionisquitedifferentthanthedistributionassumed
inthe2014pricing.Inparticular,the2014enrollmentisolderandhasagreaterproportionoffemales.Wehaveadjustedthe
assumed2015age/genderdistributiontobeconsistentwiththese2014enrollmentresults.
Thishastwoimpactsonrates.First,theclaimcostsareexpectedtoincreaseduetoamembershipdistributionmoreskewed
towardolderadultsandfemales.
Usinginternalallowedclaimsdatabyage,weestimatea5.1%impacttotheoverallclaimcostlevelasaresultofthisskew.
Second,theprescribedAgeRatingFactorswillgenerateadditionalpremiumfromthisolderdemographictooffsettheadditional
claimcost,ashigherratesmustbechargedtoolderindividuals.ThisimpactiscalculatedbycomparingtheaverageHHSAge
RatingFactorassumedin2014pricingtothatwhichisbeingassumedin2015pricing.
BasedontheslopeprescribedbytheAgeRatingFactors,weareexpectingtocollectmorepremiumthannecessarytooffsetthe
additionalclaimcost.
Thiscreatesanetreductiontotheoverallaveragerate,relativeto2014,asillustratedinthetablebelow.
ThisphenomenaoccursbecausetheHHSAgeRatingFactorshaveaslopethatis4.7:1;whereas,ourdatasuggeststhatclaims
varybya3.4:1ratio.Thesteeperratingfactorslopedrivesthefavorableage/genderratechange.
Change
2014Pricing
2015Pricing
5.1%
5.1%
Age/GenderClaimCosts
0.0%
1.461
.1 HHSAgeRatingFactor
1.356
7.7%
2
. TotalRateChange
2.4%
1 ThechangeintheHHSAgeRatingFactoriscalculatedbydividingthe2015HHSRatingFactorbythe2014HHS
.
RatingFactor.
(1.461/1.356)1=7.7%
.2 ThetotalratechangeiscalculatedbydividingtheAge/GenderClaimsCostsbytheHHSAgeRatingFactor
[(1+5.1%)/(1+7.7%)]1=2.4%

17

Network
NewhighvaluePPOnetworkdealswerecontractedforKansasCity,Joplin,andSpringfieldtosupportproductsintheseareas.
Sincethesenewnetworkssupportnewproducts,theydonotgeneratearatechange.Note,newnetworksdonotimpactthe
reasonsforratechangessectionasthenetworkswerenotpresentlastyear.Thiswillcausevariationbetweennetworkprojection
factorsandtheimpactofnetworkinthereasonsforratechanges.
MiscellaneousImpacts
PerCMSguidance,thedependentcapimpactcannotbeincludedinpricing,soithasbeenremovedfor2015.Noimpactwas
includedforthegraceperiodineither2014or2015.

GracePeriod
DependentCap
TotalRateChange

2014Pricing
0.0%
0.5%

2015Pricing
0.0%
0.0%

Change
0.0%
0.5%
0.5%

ACATaxes&FeesImposedontheInsurer
TherearetwoadditionalACAtaxesandfeesfor2015thatmustbeconsideredinthepricing:
1)1.81%federaltaxfortheHealthInsurerAnnualFee(vs1.4%lastyear)
2)exchangeuserfeeof2.37%ofpremium(vs.0.0%lastyearduetonoonexchangeproductoffering)
Theadditionalfederaltaxisthe$11.3billiontaxassessedontheinsuranceindustryfor2015.Priceadjustmentsarerequiredto
reflecttheliabilitycomparedtotheestimated2015companypremiumrevenue.
Thisisnottaxdeductible,theappropriateincreasedfederalincometaxliabilityiscapturedintheincometaxlineintheexpense
exhibitdiscussedintheURRTProjectionFactorExplanationsubsection''NonBenefitExpensesandProfitRisk.''
Theexchangeuserfeeappliesonlytoonexchangebusinessbutmustbespreadacrossallbusinessinthesingleriskpoolonthe
legalentity.
TheimpactoftheadditionalACAtaxesandfeesiscapturedbychangingthetargetlossratiousedinpricing.
2014TargetLossRatio
2015TargetLossRatio
RateChange(=2014LR/2015LR1)

75.2%
72.4%
3.9%

Reinsurance
Aportionofthe2015ratechangeisduetochangesintheFederalTransitionalReinsuranceProgram.Theprogramparameters
assumedinthe2014pricingwasanattachmentpointof$60,000withacoinsurancerateof80%uptoacapof$250,000.Note
thattheattachmentpointwaslaterchangedto$45,000,butthisdoesnotimpactthe2015ratechange.Onlytheoriginal
parametersassumedinthe2014pricingarerelevant.In2015,thereinsuranceparametersincludeanattachmentpointof
$45,000withacoinsurancerateof50%uptoacapof$250,000.
TheestimatedreinsurancerecoveryisalsoimpactedbythenewcostlytreatmentforHepatitisC.Thenewtreatmentcosts
roughly$175,000whichwillgenerateareinsurancerecoveryoneachmemberreceivingthetreatment.
Thisincreasesourestimateofreinsurancerecoveries.Theestimatealsoreflectsthepossibilityofreinsurancefundsbeing
insufficienttopayallreinsuranceclaims.
Inadditiontotheparameterchanges,thereinsuranceestimateaccountsforthedifferenceinmorbiditybetweenthe2014and
2015riskpools.Furthermore,ourestimateincludesthechangeinthereinsuranceassessmentfrom$5.25PMPMto$3.67PMPM
for2014and2015respectively.
Thetablebelowshowsthevalueofreinsurancerecoveries,netofthecontributions,foreachyearandtheresultingimpacton
theratechange.
9.0%
2014Reinsurance
2015Reinsurance
RateChange

10.5%
1.6%

RiskAdjustment
The2015ratechangeisalsoimpactedbythechangeinanticipatedRiskAdjustmentTransfers.Theexpectedtransfersare
calculatedusingamodelthatestimatesHumanasriskscoreandcomparesittotheprojectedstateriskscore.Keyitemsaffecting
thisestimatearechangesinthemarketsoverallmorbidity,Humanasspecificmorbidity,andchangesinHumanasplanmix.Plan
mixaffectsriskadjustmentbecausehealthyindividualstendtoselectplanswithleanerbenefitsandlesshealthyindividualstend
toselectplanwithricherbenefits.Adisproportionateshareofanymetaltierwillimpactanissuersriskscorerelativetothe
overallmarket.
In2014pricing,weassumedtheexpectedvolumeofnewsaleswoulddriveasmallchangeinmorbidity.
ThismorbidityleveltranslatedtoaHumanariskscorethatwasbelowthestateaverageriskscoreandproducedanexpectedrisk
adjustmentpaymentfor2014.
Wehaveenrolledfewerthan1,000newmembersin2014andanticipateamuchlargervolumeofnewenrollmentsduring2015.
Themembersfromthesecohortswillhavehigherriskscoresthantheprereformmembershipthatwasmedicallyunderwritten.
TheresultingmixofunderwrittenandnonunderwrittenmembershipforHumanacomparedtotherestoftheindividualmarket
(asillustratedinExhibit2)inthestateproducesarelativelylowmorbidityforourmembership.
ThismorbiditylevelleadstoaHumanariskscorethatisbelowthestateaverageriskscoreandproducesanexpectedrisk
adjustmentpaymentfor2015.
Thedifferenceinexpectedriskadjustmenttransfersimpacttheratechangeasshownbelow.Notethatthisimpactisgenerallyan
offsettochangesinassumedmorbidityandthepaidtoallowedratio.
34.7%
2014RiskAdjustment
2015RiskAdjustment
RateChange

19.1%
11.6%

19

PaidtoAllowedRatio
In2014pricingthepaidtoallowedratiowascalculatedassumingastandardpopulation.Thiswasreasonableasweassumedthat
eachissuerwouldgenerallyenrollmembersoneachmetalplanatsimilarrates.However,itisimportanttoconsiderthatplans
withricherbenefitstendtoattractmembersthatarelesshealthythusincreasingthepaidtoallowedratioontheseplansabove
thelevelsuggestedbyastandardpopulation.Conversely,planswithleanerbenefitstendtoattracthealthiermembersand
thereforeproducelowerpaidtoallowedratios.Giventheskewinplanmix,wehaveadjustedtheoverallpaidtoallowedratiofor
thisimpact.Notethatthisonlyimpactsthebaserateandthattheratingfactorsforeachplanaredevelopedassumingastandard
population.
Inadditiontotheadjustmentabovethepaidtoallowedratioalsoreflectsapricingcorrectiononplanswithcopays.The2014
pricingassumedfamilydeductibleaccumulation,andthishasbeencorrectedtoreflectindividualembeddeddeductibleand
OOP.
Changesinplanmixaffectthelevelofpaidclaimsbutthisisoffsetsomewhatbychangesinaveragepremium.Asthemixshifts
towardsplanswithricher/leanerbenefitstheaveragepremiumwillincrease/decreaseaccordingly.
ThisPlanMixFactorhasa12.9%impactonrates.
Asfixedfeeleveragingisspecificallyexcludedfromallowedclaimstrend,thechangeinfixedfeeleveragingassumedfor2012
2014for2014pricingcomparedto20132015for2015pricingissimilarlyreflectedandrequiresadjustmentfor.Thechangeis
limitedtorevaluationof20132014,removalof20122013leveraging,andadditionof20142015leveraging.
Thetablebelowshowsthechangebetweenthe2014and2015paidtoallowedratios,planfactors,andfixedfeeleveraging.Note
thatthisistheimpacttoratesbeforeconsideringanyoffsettingimpactsfromRiskAdjustmentandReinsurance.

PaidtoAllowedRatio
PlanMixFactor1
FixedFeeLeveraging
TotalRateChange2

2014Pricing
58.5%
60.9%
2.7%

2015Pricing
68.4%
68.7%
3.7%

Change
17.1%
12.9%
1.0%
4.7%

ThechangeinthePlanMixFactoriscalculatedbydividingthe2015PlanMixFactorpricingassumptionbythe2014PlanMix
Factorpricingassumption.
(68.7%/60.9%)1=12.9%
2

ThetotalratechangeiscalculatedbydividingthechangeinthePaidtoAllowedRatiobythePlanMixFactorchangeand
multiplyingbythechangeinFixedFeeLeveraging.
[(1+17.1%)/(1+12.9%)]*(1+1.0%)1=4.7%
Product&PlanVariationinRateChanges
Therequestedaggregateannualratechangeinthisfilingwillvarybyproductand/orplan,forthefollowingreason(s):
In2014therewerenoplanspecificinducedutilizationadjustmentstorates.Thisapproachwasusedbecauseweassumedthe
enrollmentplanmixwouldbesimilartothestatewideplanmix.
Actual2014enrollmentisskewedtowardsthericherGoldandPlatinumplans.Thisshiftinplanmixmakestheacrosstheboard
adjustmenttothebaserateinsufficienttocovertheadditionalcost.
Weadjusttheplanfactorstopartiallycovertheimpactofinducedutilizationontheplansgeneratingtheadditionalcost.For
2015ratesthisresultsintheadjustmentstoplanfactorsfoundbelow:
AdjustmentFactor
MetalTier
1.000
Catastrophic
1.000
Bronze
1.000
Silver
1.032
Gold
1.060
Platinum

20

Increasingthecatastrophicplandeductibleandmaximumoutofpocketfrom$6,350to$6,600asrequiredbydirectioninthe
"2015NoticeofBenefitandPaymentParameters,whichhasarateimpactofapproximately1%.Inadditioncatastrophicplans
areimpactedbyachangeinpricingmethodology,andanassociatedchangetotheassumptionsdrivenbytheexpanded
applicationofthehardshipexemption.Thismethodologyandassumptionchangeresultsinanadditional9.4%ratechangeon
thecatastrophicplanfrom2014.
Foranillustrationofthevariationinplanlevelratechangesduetotheseimpacts,pleaseseeWorksheet2oftheUnifiedRateReview
template.
AdditionalReasonsforPremiumChangesatTimeofRenewal
Inadditiontotheyearoveryearchangestotheratesdescribedabove,allrenewingpolicieswillalsoexperienceanattainedage
increaseaspartoftheirannualpremiumincrease.Theimpactofthiswillvarybytheage(s)ofthemember(s)onthepolicy,
accordingtothechange(s)totheagefactor(s)perthestandardagecurve.

21

III.FurtherExplanationofCompliancewithSingleRiskPoolRequirements
SingleRiskPool
TheIndividualSingleRiskPoolforMOHumanaInsuranceCompanyhasbeenestablishedaccordingtotherequirementsin45CFR
part156,156.80(d).
TheSingleRiskPoolreflectsallcoveredlivesforeverynongrandfatheredproduct/plancombinations,includingtransitional
products/plansforpurposesofbaserateexperience.
IndexRate
Theindexratefortheexperienceperiodissimplytheallowedclaimspermemberpermonthin2013forallnongrandfatheredplans,
includingtheexperienceunderanytransitionalproducts/plansthatmayexist.Anadjustmentismadetoremovetheimpactof
nonEHBstatemandatedbenefits(enactedonorafterJanuary1,2012)fromtheexperienceperiodallowedclaims(seebelowfor
details);itisimplicitlyassumedthatallotherallowedclaimsfor2013wereforessentialhealthbenefits.
Theindexratefortheprojectionperiodisthecredibilitymanualweightedallowedclaimspermembermonthmultipliedbythe
proportionofallowedclaimsassociatedwithessentialhealthbenefits,therebyexcludingstatemandatedcoveredbenefits(enacted
onorafterJanuary1,2012)andothercoveredbenefitsinexcessofessentialhealthbenefits.
Therearenostatemandatedcoveredbenefits(formandatesenactedonorafterJanuary1,2012)thatareincludedinallowedclaims
butexcludedfromtheindexrate.
Therearenocoveredbenefitsinexcessofessentialhealthbenefitsandstatemandates(formandatesenactedonorafterJanuary1,
2012)thatareincludedinallowedclaimsbutexcludedfromtheindexrate.
MarketAdjustedIndexRate
ThefollowingmarketwideadjustmentsareappliedtotheprojectedindexratetoproducetheMarketAdjustedIndexRate:
Adjustmentsforthenetimpactsofbothriskadjustmentandreinsurance.Seeearlier"RiskAdjustmentandReinsurance"
sectionformoredetailsofthismarketwideadjustment.
Anadjustmentfortheanticipatedcostofexchangeuserfees.Theuserfeecostof3.5%ofpremiumshasbeenappliedtothe
estimatedpercentageof2014premiumsfrommembershipenrolledontheexchange.
PlanAdjustedIndexRate
ThefollowingplanspecificadjustmentsareappliedtotheMarketAdjustedIndexRatetoproducethePlanAdjustedIndexRates:
AVandCostSharingAdjustment:Theindividualplantierpricingactuarialvalues(AVs)weredevelopedbasedonaninternal
pricingmodelwithunderlyingutilizationandcostsreflectiveofastandardpopulationequaltothatoftheanticipated
membershipintheoverallanticipatedmembershipinthesingleriskpool.ThedatausedtoproducethepricingAVswasbased
onadatasetcomprisedofstandardpopulationofcommerciallyinsuredmembershippurchasedfromathirdpartyvendor.In
ordertoprovidethelevelofdetailnecessaryfortheanalysis,internaldatawasusedtosubdividetheclaimsexperiencebutthe
overallutilizationlevelwascalibratedtoastandardpopulationderivedfromamultitudeofcommercialinsurersacrossabroad
geographicarea.Usingthisdata,aseriatim(memberbymember)modelwasdevelopedwiththestandardpopulationdataand
projected2015annualclaimsbybenefitcategory.Then,the2015plandesignparameterswereappliedtothoseallowedclaims
toproducepaidclaimsandpricingAVs.Thesevaluesweredevelopedinaccordancewithgenerallyacceptedactuarialprinciples
andmethodologies.
Inducedutilizationisalsoacomponentofthepricingactuarialvalue.Inducedutilizationisdescribedindetailinthe"Induced
Utilization"sectionofthismemorandum.Here,themarginaldifferenceininducedutilization(relativetotheoverallaveragelevel
ofinducedutilizationreflectedintheMarketAdjustedIndexrate)iscapturedasadifferencebetweenplans.
ProviderNetwork,DeliverySystemandUtilizationManagementAdjustment:Thedevelopmentoftheindexrateincludesthe
anticipatedaverageunitcostsderivedfromtheprovidernetworksthatwillbeavailableonthislegalentityinthisstate.These
averageunitcostsaretheresultofchargelevels,networkdiscounts,deliverysystemcharacteristicsandutilizationmanagement
practicesacrosstheentirestate,forthislegalentity.Aspermitted,anadjustmentismadetoeachplanratetoaccountforthe
specificcostdifferencesfromeachprovidernetworkcomparedtotheoverallaverageacrossallplans.

22

BenefitsinadditiontoEHBs:AnadjustmentfortheadditionofnonEHBbenefits(additionalbenefitsweprovideatourown
discretion,aswellasanystatemandatedbenefitsnotreflectedinthebenchmarkplantypicallyindividualmarketonly
mandatesenactedonorafterJanuary1,2012).Thevaluationoftheseextrabenefitsisperformedusingappropriatebroad
populations(forexample,smallgroupmembership)andtheresultingimpactsareapplieduniformlyacrossallplanswiththe
additionalbenefits.
CatastrophicPlanAdjustment:
Anadjustmentismadetocatastrophicplanstoreflectthedifferencesinanticipateddemographicsandmorbidityofthe
catastrophicpopulationascomparedtothesingleriskpoolpopulation.
Thestandardagecurveistakenasrepresentativeofthemorbiditydifferencesbetweenages.Theaverageagefactoris
determinedforthesingleriskpool.
Theaverageagefactorisalsodeterminedforthecatastrophicpopulation,howeverthisisdoneonanationwidebasis;salesdata
indicatesthattheaverageageforcatastrophicmembersisapproximately31yearsold,sotheaverageagefactorforthat
ageisused(thisreflectsthehardshipexemptionforthoseovertheusualageeligibilitylimitof30).
Thecatastrophicplanadjustmentisthencalculatedas(Catastrophicaverageagefactor)/(SingleRiskPoolaverageagefactor).
Distribution&AdminCosts:Expenseestimates(excludingexchangeuserfees)werebasedontheinternalforecastfor2015.
Theywereestimatedbasedoncurrentcosts,modifiedtoaccommodateprojectedvolumechangesandchangesindepartment
workloads.Thesearepresentedasaflatpercentageofpremiumatthispointintimeanddonotvarybyproductorplan.
TobaccoAdjustment:AfinaladjustmentisrequiredtoensurethatthePlanAdjustedIndexRatesareexpressedasnon
tobaccouserrates.Theaveragetobaccouserloadisdeterminedastheaverageexpectedadditionalpremiumloadasa
percentageoftotalexpectednontobaccouserpremiums.ThisaverageloadisusedtoreducetheaveragePlanAdjustedIndex
Ratestonontobaccouserrates.
Calibration
ThePlanAdjustedIndexRatesneedtobecalibratedinordertocalculateConsumerAdjustedPremiumRates.Asinglecalibration
factorforageratingisrequired.Asinglecalibrationfactorforgeographicratingisalsorequired.
Theweightedaverageageassociatedwiththeprojectedsingleriskpool,roundedtoawholenumber,is45.0.
Thisaverageagefactoriscalculatedasthememberweightedageratingfactor,usingtheprojectedagedistributionassumptionsin
thepricingmodel.Theaverageagefactoristhencomparedtothestandardageratingcurve;theagefactorclosesttothecalculated
weightedageratingfactorisusedtoselectthewholenumbercalibrationage.
ThegeographicratingfactorsapplicabletothePlanAdjustedIndexRatesarelistedin''Exhibit3RateDevelopmentandCalibration
Demonstration''intheappendixofthememorandum.
Pleasesee''Exhibit4DevelopmentofGeographicFactors''forthedevelopmentofthegeographicratingfactors,aswellasthe
calibrationadjustment.
''Exhibit3RateDevelopmentandCalibrationDemonstration''alsoillustrateshowthePlanAdjustedIndexRatesareusedwiththe
CalibrationFactorstoproduceConsumerAdjustedPremiumRates.Itisimportanttonotethatratesdevelopedthroughthisprocess
areonlyapproximaterates;theydifferfromthetrueratesduetothecalibrationrequirementofselectingawholenumber
calibrationage.
AnotherreasonforsmalldifferencesisthetreatmentoftheExchangeUserFee,whichisdeterminedasapercentofpremium.
IntheCalibrationDemonstration,ExchangeUserFeesarerequiredtobeincludedinthemarketlevelindexrate,which
whichconsistsofclaimsbasedvalues.WehaveincludedandlabeledformulasinExhibit3RateDevelopmentandCalibration
Demonstrationtotrytoadjustforthisdynamic;however,minorvariationsbetweentheConsumerAdjustedPremiumRatesandthe
trueratesmayexist.

23

ConsumerAdjustedPremiumRateDevelopment
Aspreviouslynoted,pleasesee''Exhibit3RateDevelopmentandCalibrationDemonstration''forademonstrationofhowthePlan
AdjustedIndexRatescanbeusedwiththecalibrationfactorsandallowableratingfactorstoproduceConsumerAdjustedPremium
Rates.
Todetermineratesfortobaccousers,aratingfactorof1.10mustbeapplied.Thisadjustmentfortobaccousageissupportedbythe
findingsofarecentMillimanResearchReport,whichfoundthattobaccouserscostabout9%morethannontobaccousers,when
normalizingforageandgender(Impactofheight,weight,andsmokingonmedicalclaimcosts,MillimanInc.,April2009).
AVMetalValues
TheAVMetalValuesindicatedinWorksheet2ofthePart1UnifiedRateReviewTemplateweredeterminedusingtheAVCalculator
forallplansnewtothemarket2014andlater.
AVPricingValues
TheAVPricingValuesarecalculatedastheratioofeachPlanAdjustedIndexRateandtheMarketAdjustedIndexRate.Thesevalues
reflectdifferencesbetweenplansduetodifferencesinprovidernetwork,costsharingdesigns,inducedutilization,catastrophicplan
eligibilityvariation,andadministrativecosts(lessexchangefees).Inaddition,anadjustmentismadetothePlanAdjustedIndexRate
toremovetheportionofthecostthatisexpectedtobeearnedthroughthetobaccosurcharge.
OneofthemaincomponentsoftheAVPricingValueisthedifferenceincostsharingdesignsbetweenplans.Thisisdeterminedusing
aseriatim(memberbymember)modelonastandardpopulation.Inthismodel,claimsarelistedbybenefitcategory,andtheimpact
ofthebenefitattributesofeachplanisvaluedforthatcohortofexperience.Thisisdonebylookingattheratioofresultingpaid
claimsforthatplandesigntoallowedclaims,therebycreatingastartingpointtovalueeachplan.
InducedutilizationisalsoacomponentoftheAVPricingValue.InducedutilizationisdescribedindetailintheInducedUtilization
sectionofthismemorandum.Here,themarginaldifferenceininducedutilization(relativetotheoverallaveragelevelofinduced
utilizationreflectedintheMarketAdjustedIndexrate)iscapturedasadifferencebetweenplans.
AdditionalmodifiersareappliedtoderivethePlanAdjustedIndexRate,asexplainedintheaboveIndexRatesections.The
progressionfromtheMarketAdjustedIndexRatetothePlanAdjustedIndexRatesisshowninthe''Exhibit3RateDevelopmentand
CalibrationDemonstrationdocument.Eachofthesemodifiersisitemizedinthatdemonstration.TheAVPricingValueshowninthat
demonstrationandinWorksheet2oftheUnifiedRateReviewTemplaterepresentstheratioofeachPlanAdjustedIndexRatetothe
MarketAdjustedIndexRate.
MembershipProjections
Projected2015membershipandexposurevaluesaredevelopedusinganinternalmodelthatconsidersallmajorcarriersinthestate.
Thesecarriersareselectedandmodeled,alongsideHumana,basedontheiranticipatedinfluenceonthe2015riskpool,eitherdueto
alargepre2014blockofunderwrittenbusinessoracompetitivepresenceobservedduringthe2014openenrollmentperiod(OEP).

PartI:2014Projection
Themodelbeginswiththeendof2013andprojectsmembershipthrough2014,bothforpre2014businessrenewing(ifapplicable),
andnewbusinessbeingissued,intotheriskpool.Totheextentpossible,thisportionoftheprojectionhasbeencalibratedtoalign
withknowninformation.SourcesforthisinformationincludeyeartodateHumanaenrollment(onexchangesalesifapplicable,off
exchangesales,renewals,andterminations),aswellasmonthlyexchangeenrollmentreportsmadepubliclyavailablebyCMS.
Similarly,anyinformationonstateorcarrierdecisionsregardingtheoptiontoextendnonACAcompliantcoverageforpre2014
businesshasalsobeenincorporatedintothe2014projection.

24

PartII:2015Projection
Fromthispoint,themodelprojectstheACAriskpoolbusinessthroughtheendof2015,usingacombinationofpersistency,
competitive,andpre2014effectivebusinessrenewalassumptions.Duringthe2015OEP,weassumethatsomemarketdisruption
willtakeplace,assomememberslapsetoseeknewcoverageandothersleavethemarkettoseekalternativestoindividualcoverage
(e.g.,Medicaid,employerbased,nocoverage).Theportionofbusinessthatdoesntlapsecoverageisassumedtorenewon
1/1/2015.
Similarto2014,weassumefurthermarketgrowthtooccurduringthe2015OEP.Thisisareasonableexpectation,giventhe
problematicrolloutoftheexchangesduringthe2014OEP,consumerslackoffamiliarityandknowledgeduringthefirstyear,and
theincreasingindividualmandatepenalty.
Whilewehaveassumedamarketgrowthinthisstateof57%during2014,relativetoending2013marketsizelevels,weare
assumingadditionalmarketgrowthof43%during2015,relativetothesameending2013levels.
Thesemarketgrowthassumptionswereinitiallydevelopedthroughacombinationofinternalandconsultantanalysis.Theyhave
sincebeenrecalibratedusingthemonthlyenrollmentreportspublishedbyCMS,theideabeingthathigherstateexchange
enrollmentcorrespondswithhigherstatemarketgrowth.
Allmembersprojectedbythemodeltopurchasenewcoverageduringthe2015OEPthoselapsingpriorcoverageaswellasthose
enteringthemarketforthefirsttimeareassignedtoacarrierbasedontheexpectedpricecompetitivenessofallavailableoptions
withineachmetaltier.Pricecompetitivenessinthe2015marketisderivedbycombiningknown2014rateinformationwithassumed
ratechangesforeachmodeledcarrier.Itisimportantthattheprojectionisdoneatthislevelofdetailsothatexpectedcarrier
specificbiasesingeographicandmetaltiermix(particularlyforHumana)areappropriatelyreflectedinthevariousclaimandrisk
adjustmentcalculationsdiscussedelsewhereinthememorandum.
Intotal,weareprojecting9,265membersenrolledontheMOHIClegalentityin2015.
Eachofthesemembersisassumedtopersistmonthtomonththroughout2015,withasmallportionlapsingcoverageeachmonth.
Thisresultsin90,172total2015membermonths.
Thetablebelowbreaksdownthesemetricsbyissuecohort,morbiditycohort,andbymetaltier.Themodelmaintainsthedistinction
amongthesecohorts,sothattheexpectedcompositionofthe2015riskpoolforthelegalentityisappropriatelyaccountedforinthe
developmentof2015pricing.
ThetablebelowalsoincludesasummaryofprojectedmembershipwithineachCSRsilvervariantplan.Theseestimateswere
developedbywayofasimulationthatmodelsconsumerbehaviorwithregardtoriskaversion,utility,andaffordability.In
particular,itconsiderseligibilityforthevariouspremiumandcostsharingreductionsubsidiesbyapplyingasingleassumed
nationwideincomedistribution(asapercentofFPL).Thissimulationisdescribedinfullerdetailelsewhereinthememorandum,
underProjectedRiskAdjustmentPMPM.Ingeneral,thesimulationassumesthatmembersfallingintoCSRsubsidyeligibleFPLs
tendtowardtheapplicablesilvervariantplan(73%,87%,or94%),duetotherelativevalueproposition.Thistendencybecomes
lesspronouncedasthepercentofFPLincreases.

25

MissouriHumanaInsuranceCompany:Projected2015ExposureSummary

Cohort
IssueCohort

2015ACA
Members
8,139
492
635
9,265
7,148
2,117
9,265
63
1,259
5,158
794
1,990
9,265
3,205
451
963
539
5,158

SubCategory
2015IssuedMembers
2014IssuedMembers
Transitional/RenewingPre'14IssuedMbrs

MorbidityCohort

MetalTier

CSRSilverVariant

Total
20142015NewMarketEntrants
PreviouslyUnderwrittenBusiness
Total
Catastrophic
Bronze
Silver
Gold
Platinum
Total
70%CSRVariant(250%FPL)
73%CSRVariant(200250%FPL)
87%CSRVariant(150200%FPL)
94%CSRVariant(<150%FPL)
Total

Percentof
Total

2015ACA
Member
Months

Percentof
Total

87.8%
5.3%
6.9%
100.0%
77.2%
22.8%
100.0%

78,369
5,153
6,650
90,172
69,223
20,948
90,172

86.9%
5.7%
7.4%
100.0%
76.8%
23.2%
100.0%

0.7%
13.6%
55.7%
8.6%
21.5%
100.0%
34.6%
4.9%
10.4%
5.8%
55.7%

647
12,516
50,194
7,649
19,165
90,172
31,392
4,341
9,275
5,187
50,194

0.7%
13.9%
55.7%
8.5%
21.3%
100.0%
34.8%
4.8%
10.3%
5.8%
55.7%

Pleasenotethattheprojected2015membermonthssummarizedaboveareconsistentwiththoseusedinpopulatingWorksheets1
and2oftheUnifiedRateReviewTemplate(URRT).Forinstanceswheremultipleplanoptionsexistwithinasinglemetaltierfora
particularproductsuite,projectedmembermonthsareallocateduniformlyacrossthemultipleoptionsavailablewithinthatmetal
tierandproductsuitecombination.WebelievethistobeareasonableapproximationforthepurposesofpopulatingWorksheet2of
theURRT.
TerminatedProducts
IncludedintheterminatedproductscolumnonWorksheet2areHumanaOnePHPEvolutionaryplans.
PlanType
Therearenoperceiveddifferencesbetweentheissuersplanandtheplantypeselected.
WarningAlerts
Worksheet1,CellG16:
AwarninghasbeengeneratedincellG16.Duetorounding,thereisa$0.04differencebetweencellG16andH30.

26

EffectiveRateReviewInformation
Wereviewcapitalandsurplusannuallyatthelegalentitylevelandusethosetargetstodeterminedividendstoorinfusionsofcapital
fromtheHumanaparentcompany.Weconsidercapitalandsurplusinsettingourpricingprofittargets.
Reliance
I,NickMueller,reliedoninformationandunderlyingassumptionsprovidedbyinternallydevelopedpricingandmodelingaswellas
thirdpartyconsultantdataintheestablishmentoftheserates.
ActuarialCertification
I,NickMueller,amanActuaryforHumana.IamamemberoftheAmericanAcademyofActuariesandImeettheQualification
StandardsoftheAmericanAcademyofActuariestorendertheactuarialopinioncontainedherein.
Iherebycertifytothebestofmyknowledgeandjudgmentandbasedupontheinformationpresentedtome:
1.Theprojectedindexrateis:
a.incompliancewithallapplicableStateandFederalStatutesandRegulations(45CFR156.80(d)(1)),
b.developedincompliancewiththeapplicableActuarialStandardsofPractice,
c.reasonableinrelationtothebenefitsprovidedandthepopulationanticipatedtobecovered,
d.andneitherexcessivenordeficient.
2.Thattheindexrateandonlytheallowablemodifiersasdescribedin45CFR156.80(d)(1)and45CFR156.80(d)(2)wereusedto
generateplanlevelrates.
3.ThatthepercentoftotalpremiumthatrepresentsessentialhealthbenefitsincludedinWorksheet2,SectionsIIIandIVwere
calculatedinaccordancewithActuarialStandardsofPractice.
4.ThattheAVCalculatorwasusedtodeterminetheAVMetalValuesshowninWorksheet2ofthePartIUnifiedRateReview
Templateforallplansunlessspecifiedinthecertification.Forplanswhereanalternatemethodologywasusedtocalculatethe
AVMetalValue,acopyoftheactuarialcertificationrequiredby45CFRPart156,156.135hasbeenincluded.Thatcertification
wassignedbyamemberoftheAmericanAcademyofActuaries,whereheorsheindicatedthatthevaluesweredevelopedin
accordancewithgenerallyacceptedactuarialprinciplesandmethodologies.Thatcertificationalsoincludesareasonanda
descriptionofthealternatemethodologythatwasusedforeachapplicableplan.
5.ThatinformationcontainedintheActuarialMemorandumcomplieswiththelawapplicabletothatsection.

Actuarysignature:
ActuaryPrintedName:NickMueller,FSA,MAAA
Date:August14,2014

v.20

27

Missouri
HumanaInsuranceCompany
Exhibit1CredibilityManualDerivation

NationwidelessMOHIC

1
1

1,2

2013Allowed
ClaimsPMPM

Morbidity
Adjustment

Other
Adjustment

CostTrend
'13'15

Utilization
Trend
'13'15

2015Allowed
ClaimsPMPM
Projection

$180.50

61.1%

4.3%

13.3%

2.6%

$323.06

F=A*(1+B)*(1+C)*(1+D)*(1+E)

Includesslightroundingadjustmentasthecredibilitymanualdevelopedinpricingwascreatedbasedontheaggregate2013allowed
claimslevel,ratherthandelineatedbyclaimtypecategory.
MorbidityAdjustmentDetails(B)

OtherAdjustmentDetails(C)

WeightedAverage(a)
MorbidityEstimate

53.4%

NetworkImpact(e)

11.0%

DurationalAging(b)

4.6%

ChangeinBenefitsincluding
InducedUtilization(f)

15.4%

ChangeinDemographics

PlanMix
Nationwide2013
vs.MO2013(c)
MO2013vs.
Anticipated2015(d)
CredibilityManualMorbidity
Adjustment(B)3
3
B=(1+a)*(1+b)*(1+c)*(1+d)1

Age/GenderMix

6.9%

Nationwide2013
vs.MO2013(g)
MO2013vs.
Anticipated2015(h)

6.1%
61.1%

2.8%
3.0%

AreaMix
Nationwide2013vs.MO
2013(i)
MO2013vs.
Anticipated2015(j)

11.5%
1.9%

TobaccoMix
Nationwide2013
vs.MO2013(k)
MO2013vs.
Anticipated2015(l)
MiscellaneousImpacts(m)

0.3%
1.0%
0.0%

CredibilityManualOther
4.3%
Adjustment(C)4
4
C=(1+e)*(1+f)*(1+g)*(1+h)*(1+i)*(1+j)*(1+k)*(1+l)*(1+m)1

28

MissouriHumanaInsuranceCompany
Exhibit2PricingImpactsofRiskAdjustmentandReinsurance
Valuesareestimatedbasedonprojected2015mixofmembershipexposure
A

%ofMembers

%
Underwritten

PlanLiability
RiskScore

PaidClaims
PMPM

Net
Reinsurance
PMPM

Catastrophic
Bronze
Silver
Gold
Platinum

1%
14%
56%
8%
21%

6%
43%
22%
17%
17%

0.245
0.469
0.594
0.759
0.842

$114.21
$152.03
$202.04
$262.74
$321.89

$12.99
$24.01
$22.54
$23.45
$24.85

HICTotal
OtherIssuers
MOTotal

5%
95%
100%

23%
20%
20%

0.641
0.743
0.738

$225.18

$23.23

F
Risk
Adjustment
Transfer
Payment
PMPM
$21.31
$39.38
$36.97
$38.47
$40.77
$38.11
$1.81
$0.00

G
=DEF

I
=E/H

J
=F/H

TotalLiability
PMPM

Premium
PMPM2

$122.53
$167.40
$216.48
$277.76
$337.81

$185.36
$342.52
$321.59
$334.55
$354.56

7.0%
7.0%
7.0%
7.0%
7.0%

11.5%
11.5%
11.5%
11.5%
11.5%

$240.06

$331.48
$333.37
$333.29

7.0%

11.5%

Net
Risk
Reinsurance% Adjustment%
ofPremium3
ofPremium4

Differentmixesinage/genderandgeographyareexpectedbyplanin2015(e.g.,loweraverageageonleanerplans).Thisresultsinvaluesabovethatdon'tfollowtherelationshipimpliedby
purebenefitdifferences.
2TheoverallsingleriskpoolpremiumforMOHICispricedtoatargetlossratio,definedas:1AdminLoadProfit/RiskLoadTaxes/FeeLoad.LoadsareprovidedinWorksheet1.
3
ThisrepresentstheportionofpremiumPMPMcomprisedbytheallocatednetreinsurancerecoveryincolumnE.Thisisnotthesameasthepercentimpacttopremiumdiscussedinthe
ProjectionFactorssectionofthememorandum,asthatimpactrepresentsthepercentageofpaidclaims.
4

ThisrepresentstheportionofpremiumPMPMcomprisedbytheallocatedriskadjustmentincolumnF.ThisisnotthesameasthepercentimpacttopremiumdiscussedintheProjection
Factorssectionofthememorandum,asthatimpactrepresentsthepercentageofpaidclaims.

29

MOHumanaInsuranceCompany
Exhibit3RateDevelopmentandCalibrationDemonstration

(a) IndexRate

(b)
(c)
(d)

AllowableMarketwidemodifiers
RiskAdjustment
Reinsurance
ExchangeUserFees

(e)=(a)(b)(c)+(d) MarketAdjustedIndexRate
(f)

(g)
(h)=[(a)(b)(c)]*(g)
(i)
(j)=(h)*(i)
(k)
(l)=(j)*(k)
(m)
(n)=(l)*(m)

(o)=(p)/(e)
(p)=(h)+(d)
(q)=(r)/(p)
(r)=(j)+(d)
(s)=(t)/(r)
(t)=(l)+(d)
(u)=(v)/(t)
(v)=(n)+(d)
(w)=[1/(1admincosts)]
(x)=(v)*(w)
(y)=1/AvgTobaccoLoad
(z)=(x)*(y)

$(38.11)
$23.23
$7.84

2.5%

$338.54

MemberWeights
MetalTier
PlanID
AdjustmentstoClaims
AVandCostSharing

0.0%
Catastrophic
30613MO0570016

0.1%

0.5%

0.1%

0.3%

0.0%

0.2%

0.6%

0.2%

0.3%

0.1%

1.1%

4.2%

0.9%

2.1%

0.0%

0.6%

3.2%

0.6%

Bronze

Silver

Gold

Platinum

Catastrophic

Bronze

Silver

Gold

Platinum

Catastrophic

Bronze

Silver

Gold

Platinum

Catastrophic

Bronze

Silver

Gold

30613MO0570017 30613MO0570018 30613MO0570019 30613MO0570020 30613MO0570021 30613MO0570022 30613MO0570023 30613MO0570024 30613MO0570025 30613MO0570026 30613MO0570027 30613MO0570028 30613MO0570029 30613MO0570030 30613MO0570001 30613MO0570002 30613MO0570003 30613MO0570004

0.6048
$199.99
1.0000
$199.99
1.0157
$203.13
0.7935
$161.18

0.5862
$193.85
1.0000
$193.85
1.0157
$196.89
1.0000
$196.89

0.6910
$228.51
1.0000
$228.51
1.0157
$232.09
1.0000
$232.09

0.7824
$258.73
1.0000
$258.73
1.0157
$262.79
1.0000
$262.79

0.9060
$299.62
1.0000
$299.62
1.0157
$304.32
1.0000
$304.32

0.6048
$199.99
1.0000
$199.99
0.9581
$191.60
0.7935
$152.04

0.5862
$193.85
1.0000
$193.85
0.9581
$185.72
1.0000
$185.72

0.6910
$228.51
1.0000
$228.51
0.9581
$218.92
1.0000
$218.92

0.7824
$258.73
1.0000
$258.73
0.9581
$247.88
1.0000
$247.88

0.9060
$299.62
1.0000
$299.62
0.9581
$287.05
1.0000
$287.05

0.6048
$199.99
1.0000
$199.99
0.9626
$192.51
0.7935
$152.75

0.5862
$193.85
1.0000
$193.85
0.9626
$186.60
1.0000
$186.60

0.6910
$228.51
1.0000
$228.51
0.9626
$219.95
1.0000
$219.95

0.7824
$258.73
1.0000
$258.73
0.9626
$249.05
1.0000
$249.05

0.9060
$299.62
1.0000
$299.62
0.9626
$288.41
1.0000
$288.41

0.6023
$199.20
1.0000
$199.20
1.0157
$202.32
0.7935
$160.54

0.5839
$193.08
1.0000
$193.08
1.0157
$196.11
1.0000
$196.11

0.6882
$227.59
1.0000
$227.59
1.0157
$231.16
1.0000
$231.16

0.7793
$257.70
1.0000
$257.70
1.0157
$261.74
1.0000
$261.74

0.6139
$207.83
1.0000
$207.83
1.0151
$210.97
0.8012
$169.02

0.5958
$201.69
1.0000
$201.69
1.0151
$204.73
1.0000
$204.73

0.6981
$236.35
1.0000
$236.35
1.0152
$239.93
1.0000
$239.93

0.7874
$266.57
1.0000
$266.57
1.0152
$270.63
1.0000
$270.63

0.9082
$307.46
1.0000
$307.46
1.0153
$312.16
1.0000
$312.16

0.6139
$207.83
1.0000
$207.83
0.9596
$199.44
0.8016
$159.88

0.5958
$201.69
1.0000
$201.69
0.9597
$193.56
1.0000
$193.56

0.6981
$236.35
1.0000
$236.35
0.9594
$226.76
1.0000
$226.76

0.7874
$266.57
1.0000
$266.57
0.9593
$255.72
1.0000
$255.72

0.9082
$307.46
1.0000
$307.46
0.9591
$294.89
1.0000
$294.89

0.6139
$207.83
1.0000
$207.83
0.9640
$200.35
0.8016
$160.59

0.5958
$201.69
1.0000
$201.69
0.9640
$194.44
1.0000
$194.44

0.6981
$236.35
1.0000
$236.35
0.9638
$227.79
1.0000
$227.79

0.7874
$266.57
1.0000
$266.57
0.9637
$256.89
1.0000
$256.89

0.9082
$307.46
1.0000
$307.46
0.9635
$296.25
1.0000
$296.25

0.6116
$207.04
1.0000
$207.04
1.0151
$210.16
0.8012
$168.38

0.5935
$200.92
1.0000
$200.92
1.0151
$203.95
1.0000
$203.95

0.6954
$235.44
1.0000
$235.44
1.0151
$239.00
1.0000
$239.00

0.7844
$265.54
1.0000
$265.54
1.0152
$269.58
1.0000
$269.58

Distribution&AdminCosts

1.3346
$225.58

1.3346
$273.24

1.3346
$320.21

1.3346
$361.18

1.3346
$416.61

1.3346
$213.37

1.3346
$258.33

1.3346
$302.64

1.3346
$341.29

1.3346
$393.57

1.3346
$214.33

1.3346
$259.50

1.3346
$304.02

1.3346
$342.85

1.3346
$395.37

1.3346
$224.72

1.3346
$272.19

1.3346
$318.98

1.3346
$359.79

NonTobaccoAdjustment

0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
$223.73 $271.00 $317.58 $358.22 $413.19 $211.62 $256.21 $300.16 $338.49 $390.34 $212.57 $257.37 $301.52 $340.04 $392.13 $222.88 $269.96 $316.36 $356.84

Add'lNonEHBBenefits
NetworkAdjustment
CatastrophicPlanAdj

AdjustmentsAfterInclusionofExchangeUserFees
AVandCostSharing
Add'lNonEHBBenefits
NetworkAdjustment
CatastrophicPlanAdj

(z) PlanAdjustedIndexRates
(z)/(e)
AVPricingValue
(aa)

$315.82

AvgAgeFactor

$223.73
0.6609

$271.00
0.8005

$317.58
0.9381

$358.22
1.0581

$413.19
1.2205

$211.62
0.6251

$256.21
0.7568

$300.16
0.8866

$338.49
0.9998

$390.34
1.1530

$212.57
0.6279

$257.37
0.7602

$301.52
0.8907

$340.04
1.0044

$392.13
1.1583

$222.88
0.6583

$269.96
0.7974

$316.36
0.9345

$356.84
1.0540

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

Age
45
46
45.30
45.0

AgeFactor
1.444
1.5
1.461
Rounded

30

MetalTier
PlanID

Catastrophic
30613MO0570016

CalibrationFactors
Age
Area

(ab)=roundedavgagefactor
(ac)=geographicareafactor

45.0

Area
Factor
1.1411
1.3240
1.0843
1.1303
1.3610
1.4120
1.1238
1.3094
1.3175
1.4697

##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##

1.000
1.000
1.000
1.000
1.004
1.024
1.048
1.087
1.119
1.135
1.159
1.183
1.198
1.214
1.222
1.230
1.238
1.246
1.262
1.278
1.302
1.325
1.357
1.397
1.444
1.500
1.563
1.635
1.706
1.786
1.865
1.952
2.040
2.135
2.230
2.333
2.437
2.548
2.603
2.714
2.810
2.873
2.952

Age
020
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64

Silver

Gold

Platinum

Catastrophic

Bronze

Silver

Gold

Platinum

Catastrophic

Bronze

Silver

Gold

Platinum

Catastrophic

Bronze

Silver

Gold

1.444
1.124

ConsumerAdjustedPremiumRates

RatingArea
RatingArea1
RatingArea2
RatingArea3
RatingArea4
RatingArea5
RatingArea6
RatingArea7
RatingArea8
RatingArea9
RatingArea10

Bronze

30613MO0570017 30613MO0570018 30613MO0570019 30613MO0570020 30613MO0570021 30613MO0570022 30613MO0570023 30613MO0570024 30613MO0570025 30613MO0570026 30613MO0570027 30613MO0570028 30613MO0570029 30613MO0570030 30613MO0570001 30613MO0570002 30613MO0570003 30613MO0570004

NonTobaccoRatesDemonstration
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
1.1238
1.1238
1.1238
1.1238
1.1238
1.3094
1.3094
1.3094
1.3094
1.3094
1.0843
1.0843
1.0843
1.0843
1.0843
1.1238
1.1238
1.1238
1.1238
RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea
RatingArea7
7
7
7
7
8
8
8
8
8
3
3
3
3
3
7
7
7
7
AgeFactor
0.635
1.000
1.000
1.000
1.000
1.004
1.024
1.048
1.087
1.119
1.135
1.159
1.183
1.198
1.214
1.222
1.230
1.238
1.246
1.262
1.278
1.302
1.325
1.357
1.397
1.444
1.500
1.563
1.635
1.706
1.786
1.865
1.952
2.040
2.135
2.230
2.333
2.437
2.548
2.603
2.714
2.810
2.873
2.952
3.000

$98.38
$154.93
$154.93
$154.93
$154.93
$155.55
$158.64
$162.36
$168.40
$173.36
$175.84
$179.56
$183.28
$185.60
$188.08
$189.32
$190.56
$191.80
$193.04
$195.52
$198.00
$201.71
$205.28
$210.23
$216.43
$223.71
$232.39
$242.15
$253.30
$264.30
$276.70
$288.94
$302.42
$316.05
$330.77
$345.49
$361.44
$377.56
$394.75
$403.27
$420.47
$435.34
$445.10
$457.34
$464.78

$ 119.16
$ 187.66
$ 187.66
$ 187.66
$ 187.66
$ 188.41
$ 192.16
$ 196.67
$ 203.99
$ 209.99
$ 212.99
$ 217.50
$ 222.00
$ 224.82
$ 227.82
$ 229.32
$ 230.82
$ 232.32
$ 233.82
$ 236.83
$ 239.83
$ 244.33
$ 248.65
$ 254.65
$ 262.16
$ 270.98
$ 281.49
$ 293.31
$ 306.82
$ 320.15
$ 335.16
$ 349.98
$ 366.31
$ 382.82
$ 400.65
$ 418.48
$ 437.81
$ 457.32
$ 478.15
$ 488.48
$ 509.31
$ 527.32
$ 539.14
$ 553.97
$ 562.98

$ 139.65
$ 219.92
$ 219.92
$ 219.92
$ 219.92
$ 220.80
$ 225.20
$ 230.48
$ 239.05
$ 246.09
$ 249.61
$ 254.89
$ 260.16
$ 263.46
$ 266.98
$ 268.74
$ 270.50
$ 272.26
$ 274.02
$ 277.54
$ 281.06
$ 286.33
$ 291.39
$ 298.43
$ 307.23
$ 317.56
$ 329.88
$ 343.73
$ 359.57
$ 375.18
$ 392.78
$ 410.15
$ 429.28
$ 448.64
$ 469.53
$ 490.42
$ 513.07
$ 535.94
$ 560.35
$ 572.45
$ 596.86
$ 617.97
$ 631.83
$ 649.20
$ 659.76

$ 157.52
$ 248.06
$ 248.06
$ 248.06
$ 248.06
$ 249.05
$ 254.01
$ 259.97
$ 269.64
$ 277.58
$ 281.55
$ 287.50
$ 293.45
$ 297.18
$ 301.14
$ 303.13
$ 305.11
$ 307.10
$ 309.08
$ 313.05
$ 317.02
$ 322.97
$ 328.68
$ 336.62
$ 346.54
$ 358.20
$ 372.09
$ 387.72
$ 405.58
$ 423.19
$ 443.03
$ 462.63
$ 484.21
$ 506.04
$ 529.61
$ 553.17
$ 578.72
$ 604.52
$ 632.06
$ 645.70
$ 673.23
$ 697.05
$ 712.68
$ 732.27
$ 744.18

$ 181.69
$ 286.13
$ 286.13
$ 286.13
$ 286.13
$ 287.27
$ 292.99
$ 299.86
$ 311.02
$ 320.17
$ 324.75
$ 331.62
$ 338.49
$ 342.78
$ 347.36
$ 349.65
$ 351.93
$ 354.22
$ 356.51
$ 361.09
$ 365.67
$ 372.54
$ 379.12
$ 388.27
$ 399.72
$ 413.17
$ 429.19
$ 447.21
$ 467.82
$ 488.13
$ 511.02
$ 533.62
$ 558.52
$ 583.70
$ 610.88
$ 638.06
$ 667.53
$ 697.29
$ 729.05
$ 744.79
$ 776.55
$ 804.01
$ 822.04
$ 844.64
$ 858.38

$ 108.43
$ 170.75
$ 170.75
$ 170.75
$ 170.75
$ 171.43
$ 174.85
$ 178.94
$ 185.60
$ 191.07
$ 193.80
$ 197.90
$ 202.00
$ 204.56
$ 207.29
$ 208.65
$ 210.02
$ 211.39
$ 212.75
$ 215.48
$ 218.22
$ 222.31
$ 226.24
$ 231.71
$ 238.54
$ 246.56
$ 256.12
$ 266.88
$ 279.17
$ 291.30
$ 304.96
$ 318.45
$ 333.30
$ 348.33
$ 364.55
$ 380.77
$ 398.36
$ 416.11
$ 435.07
$ 444.46
$ 463.41
$ 479.80
$ 490.56
$ 504.05
$ 512.25

$ 131.27
$ 206.72
$ 206.72
$ 206.72
$ 206.72
$ 207.55
$ 211.69
$ 216.65
$ 224.71
$ 231.32
$ 234.63
$ 239.59
$ 244.55
$ 247.66
$ 250.96
$ 252.62
$ 254.27
$ 255.92
$ 257.58
$ 260.89
$ 264.19
$ 269.15
$ 273.91
$ 280.52
$ 288.79
$ 298.51
$ 310.09
$ 323.11
$ 337.99
$ 352.67
$ 369.21
$ 385.54
$ 403.52
$ 421.72
$ 441.36
$ 460.99
$ 482.29
$ 503.79
$ 526.73
$ 538.10
$ 561.05
$ 580.89
$ 593.92
$ 610.25
$ 620.17

$ 153.78
$ 242.18
$ 242.18
$ 242.18
$ 242.18
$ 243.15
$ 247.99
$ 253.80
$ 263.25
$ 271.00
$ 274.87
$ 280.69
$ 286.50
$ 290.13
$ 294.01
$ 295.94
$ 297.88
$ 299.82
$ 301.76
$ 305.63
$ 309.51
$ 315.32
$ 320.89
$ 328.64
$ 338.33
$ 349.71
$ 363.27
$ 378.53
$ 395.96
$ 413.16
$ 432.53
$ 451.67
$ 472.74
$ 494.05
$ 517.05
$ 540.06
$ 565.01
$ 590.19
$ 617.08
$ 630.40
$ 657.28
$ 680.53
$ 695.78
$ 714.92
$ 726.54

$173.42
$273.11
$273.11
$273.11
$273.11
$274.20
$279.66
$286.22
$296.87
$305.61
$309.98
$316.53
$323.09
$327.18
$331.55
$333.74
$335.92
$338.11
$340.29
$344.66
$349.03
$355.59
$361.87
$370.61
$381.53
$394.37
$409.66
$426.87
$446.53
$465.92
$487.77
$509.35
$533.11
$557.14
$583.09
$609.03
$637.16
$665.57
$695.88
$710.90
$741.22
$767.43
$784.64
$806.22
$819.33

$199.99
$314.95
$314.95
$314.95
$314.95
$316.21
$322.50
$330.06
$342.35
$352.42
$357.46
$365.02
$372.58
$377.30
$382.34
$384.86
$387.38
$389.90
$392.42
$397.46
$402.50
$410.06
$417.30
$427.38
$439.98
$454.78
$472.42
$492.26
$514.94
$537.30
$562.49
$587.37
$614.77
$642.49
$672.41
$702.33
$734.77
$767.52
$802.48
$819.80
$854.76
$885.00
$904.84
$929.72
$944.84

$ 90.18
$ 142.02
$ 142.02
$ 142.02
$ 142.02
$ 142.59
$ 145.43
$ 148.84
$ 154.38
$ 158.92
$ 161.19
$ 164.60
$ 168.01
$ 170.14
$ 172.41
$ 173.55
$ 174.69
$ 175.82
$ 176.96
$ 179.23
$ 181.50
$ 184.91
$ 188.18
$ 192.72
$ 198.40
$ 205.08
$ 213.03
$ 221.98
$ 232.21
$ 242.29
$ 253.65
$ 264.87
$ 277.23
$ 289.72
$ 303.22
$ 316.71
$ 331.34
$ 346.11
$ 361.87
$ 369.68
$ 385.45
$ 399.08
$ 408.03
$ 419.25
$ 426.07

TheaboveNonTobaccoUserConsumerAdjustedPremiumRatesarecalculatedas:
PlanAdjustedIndexRate*SpecificAgeFactor/(ab)AverageAgeFactor*SpecificAreaFactor/(ac)AverageAreaFactor
Todetermineratesfortobaccousers,aratingfactorof1.10mustbeapplied.
Todetermineratesforotherratingareas,theareafactorsontheleftcanbeappliedratherthantheoneshown
atthetopofConsumerAdjustedPremiumRatetable
Thevariationacrosstheplanadjustedindexratesisdrivenbyseveralfactors,suchasaloweraverageageonCatastrophicplans.
Thisresultsinvaluesabovethatdontfollowtherelationshipimpliedbypurebenefitdifferences.
TheseplanleveldifferencesaredescribedintheAVPricingValuessectionoftheactuarialmemorandum.
AllplansshowninthisexhibitarecompliantwithFederalAVrequirementsforthecorrespondingmetaltierillustratedbelowlineitem(f).

31

$ 109.19
$ 171.95
$ 171.95
$ 171.95
$ 171.95
$ 172.64
$ 176.08
$ 180.20
$ 186.91
$ 192.41
$ 195.16
$ 199.29
$ 203.42
$ 206.00
$ 208.75
$ 210.12
$ 211.50
$ 212.88
$ 214.25
$ 217.00
$ 219.75
$ 223.88
$ 227.84
$ 233.34
$ 240.22
$ 248.30
$ 257.93
$ 268.76
$ 281.14
$ 293.35
$ 307.10
$ 320.69
$ 335.65
$ 350.78
$ 367.12
$ 383.45
$ 401.16
$ 419.05
$ 438.13
$ 447.59
$ 466.68
$ 483.18
$ 494.02
$ 507.60
$ 515.85

$ 127.92
$ 201.45
$ 201.45
$ 201.45
$ 201.45
$ 202.26
$ 206.28
$ 211.12
$ 218.98
$ 225.42
$ 228.64
$ 233.48
$ 238.31
$ 241.34
$ 244.56
$ 246.17
$ 247.78
$ 249.39
$ 251.01
$ 254.23
$ 257.45
$ 262.29
$ 266.92
$ 273.37
$ 281.42
$ 290.89
$ 302.17
$ 314.87
$ 329.37
$ 343.67
$ 359.79
$ 375.70
$ 393.23
$ 410.96
$ 430.09
$ 449.23
$ 469.98
$ 490.93
$ 513.29
$ 524.37
$ 546.73
$ 566.07
$ 578.76
$ 594.68
$ 604.35

$ 144.26
$ 227.18
$ 227.18
$ 227.18
$ 227.18
$ 228.09
$ 232.63
$ 238.08
$ 246.94
$ 254.21
$ 257.85
$ 263.30
$ 268.75
$ 272.16
$ 275.80
$ 277.61
$ 279.43
$ 281.25
$ 283.07
$ 286.70
$ 290.34
$ 295.79
$ 301.01
$ 308.28
$ 317.37
$ 328.05
$ 340.77
$ 355.08
$ 371.44
$ 387.57
$ 405.74
$ 423.69
$ 443.46
$ 463.45
$ 485.03
$ 506.61
$ 530.01
$ 553.64
$ 578.85
$ 591.35
$ 616.57
$ 638.38
$ 652.69
$ 670.64
$ 681.54

$ 166.36
$ 261.99
$ 261.99
$ 261.99
$ 261.99
$ 263.03
$ 268.27
$ 274.56
$ 284.78
$ 293.16
$ 297.35
$ 303.64
$ 309.93
$ 313.86
$ 318.05
$ 320.15
$ 322.24
$ 324.34
$ 326.43
$ 330.63
$ 334.82
$ 341.11
$ 347.13
$ 355.52
$ 365.99
$ 378.31
$ 392.98
$ 409.48
$ 428.35
$ 446.95
$ 467.91
$ 488.60
$ 511.40
$ 534.45
$ 559.34
$ 584.23
$ 611.21
$ 638.46
$ 667.54
$ 681.95
$ 711.03
$ 736.18
$ 752.69
$ 773.38
$ 785.96

$ 98.00
$ 154.34
$ 154.34
$ 154.34
$ 154.34
$ 154.95
$ 158.04
$ 161.75
$ 167.76
$ 172.70
$ 175.17
$ 178.88
$ 182.58
$ 184.90
$ 187.37
$ 188.60
$ 189.84
$ 191.07
$ 192.30
$ 194.77
$ 197.24
$ 200.95
$ 204.50
$ 209.44
$ 215.61
$ 222.86
$ 231.51
$ 241.23
$ 252.34
$ 263.30
$ 275.65
$ 287.84
$ 301.27
$ 314.85
$ 329.51
$ 344.17
$ 360.07
$ 376.12
$ 393.25
$ 401.74
$ 418.87
$ 433.69
$ 443.41
$ 455.60
$ 463.01

$ 118.71
$ 186.94
$ 186.94
$ 186.94
$ 186.94
$ 187.69
$ 191.43
$ 195.91
$ 203.20
$ 209.19
$ 212.18
$ 216.66
$ 221.15
$ 223.95
$ 226.94
$ 228.44
$ 229.94
$ 231.43
$ 232.93
$ 235.92
$ 238.91
$ 243.40
$ 247.70
$ 253.68
$ 261.15
$ 269.94
$ 280.41
$ 292.19
$ 305.65
$ 318.92
$ 333.87
$ 348.64
$ 364.91
$ 381.36
$ 399.12
$ 416.88
$ 436.13
$ 455.57
$ 476.32
$ 486.60
$ 507.35
$ 525.30
$ 537.08
$ 551.85
$ 560.82

$ 139.11
$ 219.07
$ 219.07
$ 219.07
$ 219.07
$ 219.95
$ 224.33
$ 229.59
$ 238.13
$ 245.14
$ 248.65
$ 253.90
$ 259.16
$ 262.45
$ 265.95
$ 267.71
$ 269.46
$ 271.21
$ 272.96
$ 276.47
$ 279.97
$ 285.23
$ 290.27
$ 297.28
$ 306.04
$ 316.34
$ 328.61
$ 342.41
$ 358.18
$ 373.74
$ 391.26
$ 408.57
$ 427.63
$ 446.91
$ 467.72
$ 488.53
$ 511.09
$ 533.88
$ 558.19
$ 570.24
$ 594.56
$ 615.59
$ 629.39
$ 646.70
$ 657.22

$156.91
$247.10
$247.10
$247.10
$247.10
$248.09
$253.03
$258.96
$268.60
$276.51
$280.46
$286.39
$292.32
$296.03
$299.98
$301.96
$303.93
$305.91
$307.89
$311.84
$315.79
$321.72
$327.41
$335.32
$345.20
$356.81
$370.65
$386.22
$404.01
$421.55
$441.32
$460.84
$482.34
$504.08
$527.56
$551.03
$576.48
$602.18
$629.61
$643.20
$670.63
$694.35
$709.92
$729.44
$741.30

MOHumanaInsuranceCompany
Exhibit3RateDevelopmentandCalibrationDemonstration

(a) IndexRate

(b)
(c)
(d)

AllowableMarketwidemodifiers
RiskAdjustment
Reinsurance
ExchangeUserFees

(e)=(a)(b)(c)+(d) MarketAdjustedIndexRate
(f)

(g)
(h)=[(a)(b)(c)]*(g)
(i)
(j)=(h)*(i)
(k)
(l)=(j)*(k)
(m)
(n)=(l)*(m)

(o)=(p)/(e)
(p)=(h)+(d)
(q)=(r)/(p)
(r)=(j)+(d)
(s)=(t)/(r)
(t)=(l)+(d)
(u)=(v)/(t)
(v)=(n)+(d)
(w)=[1/(1admincosts)]
(x)=(v)*(w)
(y)=1/AvgTobaccoLoad
(z)=(x)*(y)

$(38.11)
$23.23
$7.84
$338.54

MemberWeights
MetalTier
PlanID
AdjustmentstoClaims
AVandCostSharing

2.3%

0.0%

0.5%

2.4%

0.5%

2.6%

0.1%

4.2%

30.2%

6.2%

13.7%

0.6%

3.6%

3.6%

7.3%

7.3%

Platinum

Catastrophic

Bronze

Silver

Gold

Platinum

Catastrophic

Bronze

Silver

Gold

Platinum

Catastrophic

Bronze

Bronze

Silver

Silver

30613MO0570005 30613MO0570006 30613MO0570007 30613MO0570008 30613MO0570009 30613MO0570010 30613MO0570011 30613MO0570012 30613MO0570013 30613MO0570014 30613MO0570015 30613MO0550001 30613MO0550002 30613MO0550003 30613MO0550004 30613MO0550005

Average
0.9024
$298.43
1.0000
$298.43
1.0157
$303.10
1.0000
$303.10

0.6023
$199.20
1.0000
$199.20
0.9581
$190.84
0.7935
$151.43

0.5839
$193.08
1.0000
$193.08
0.9581
$184.98
1.0000
$184.98

0.6882
$227.59
1.0000
$227.59
0.9581
$218.05
1.0000
$218.05

0.7793
$257.70
1.0000
$257.70
0.9581
$246.89
1.0000
$246.89

0.9024
$298.43
1.0000
$298.43
0.9581
$285.91
1.0000
$285.91

0.6023
$199.20
1.0000
$199.20
0.9626
$191.74
0.7935
$152.15

0.5839
$193.08
1.0000
$193.08
0.9626
$185.85
1.0000
$185.85

0.6882
$227.59
1.0000
$227.59
0.9626
$219.08
1.0000
$219.08

0.7793
$257.70
1.0000
$257.70
0.9626
$248.06
1.0000
$248.06

0.9024
$298.43
1.0000
$298.43
0.9626
$287.26
1.0000
$287.26

0.6246
$206.57
1.0000
$206.57
1.1298
$233.38
0.7935
$185.18

0.5780
$191.14
1.0000
$191.14
1.1298
$215.94
1.0000
$215.94

0.6508
$215.23
1.0000
$215.23
1.1298
$243.17
1.0000
$243.17

0.6797
$224.77
1.0000
$224.77
1.1298
$253.94
1.0000
$253.94

0.6683
$220.99
1.0000
$220.99
1.1298
$249.67
1.0000
$249.67

0.9047
$306.27
1.0000
$306.27
1.0153
$310.94
1.0000
$310.94

0.6116
$207.04
1.0000
$207.04
0.9596
$198.68
0.8016
$159.27

0.5935
$200.92
1.0000
$200.92
0.9597
$192.82
1.0000
$192.82

0.6954
$235.44
1.0000
$235.44
0.9594
$225.89
1.0000
$225.89

0.7844
$265.54
1.0000
$265.54
0.9593
$254.73
1.0000
$254.73

0.9047
$306.27
1.0000
$306.27
0.9591
$293.75
1.0000
$293.75

0.6116
$207.04
1.0000
$207.04
0.9640
$199.58
0.8016
$159.99

0.5935
$200.92
1.0000
$200.92
0.9640
$193.69
1.0000
$193.69

0.6954
$235.44
1.0000
$235.44
0.9638
$226.92
1.0000
$226.92

0.7844
$265.54
1.0000
$265.54
0.9637
$255.90
1.0000
$255.90

0.9047
$306.27
1.0000
$306.27
0.9635
$295.10
1.0000
$295.10

0.6333
$214.41
1.0000
$214.41
1.1250
$241.22
0.8002
$193.02

0.5878
$198.98
1.0000
$198.98
1.1247
$223.78
1.0000
$223.78

0.6589
$223.07
1.0000
$223.07
1.1252
$251.01
1.0000
$251.01

0.6871
$232.61
1.0000
$232.61
1.1254
$261.78
1.0000
$261.78

0.6759
$228.83
1.0000
$228.83
1.1253
$257.51
1.0000
$257.51

Distribution&AdminCosts

1.3346
$414.99

1.3346
$212.57

1.3346
$257.34

1.3346
$301.47

1.3346
$339.97

1.3346
$392.04

1.3346
$213.52

1.3346
$258.51

1.3346
$302.85

1.3346
$341.52

1.3346
$393.84

1.3459
$259.79

1.3459
$301.19

1.3459
$337.83

1.3459
$352.33

1.3459
$346.59

NonTobaccoAdjustment

0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
0.9918
$411.59 $210.82 $255.23 $299.00 $337.18 $388.83 $211.77 $256.39 $300.36 $338.72 $390.61 $257.66 $298.72 $335.06 $349.44 $343.74 $328.76

Add'lNonEHBBenefits
NetworkAdjustment
CatastrophicPlanAdj

AdjustmentsAfterInclusionofExchangeUserFees
AVandCostSharing
Add'lNonEHBBenefits
NetworkAdjustment
CatastrophicPlanAdj

(z) PlanAdjustedIndexRates
(z)/(e)
AVPricingValue
(aa)

$315.82

AvgAgeFactor

$240.39
$240.39
$240.39
$240.06

0.7332
$248.23
$248.23
$248.23
$247.90

$331.48

$411.59
1.2158

$210.82
0.6227

$255.23
0.7539

$299.00
0.8832

$337.18
0.9960

$388.83
1.1485

$211.77
0.6255

$256.39
0.7573

$300.36
0.8872

$338.72
1.0005

$390.61
1.1538

$257.66
0.7611

$298.72
0.8824

$335.06
0.9897

$349.44
1.0322

$343.74
1.0154

$328.76

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

1.461

32

MetalTier
PlanID

Platinum

CalibrationFactors
Age
Area

(ab)=roundedavgagefactor
(ac)=geographicareafactor

Catastrophic

Bronze

Silver

Gold

Platinum

Catastrophic

Bronze

Silver

Gold

Platinum

Catastrophic

Bronze

Bronze

Silver

Silver

30613MO0570005 30613MO0570006 30613MO0570007 30613MO0570008 30613MO0570009 30613MO0570010 30613MO0570011 30613MO0570012 30613MO0570013 30613MO0570014 30613MO0570015 30613MO0550001 30613MO0550002 30613MO0550003 30613MO0550004 30613MO0550005

45.0

1.444
1.124

ConsumerAdjustedPremiumRates
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
1.1238
1.3094
1.3094
1.3094
1.3094
1.3094
1.0843
1.0843
1.0843
1.0843
1.0843
1.1411
1.1411
1.1411
1.1411
1.1411
RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea RatingArea
7
8
8
8
8
8
3
3
3
3
3
1
1
1
1
1
RatingArea
RatingArea1
RatingArea2
RatingArea3
RatingArea4
RatingArea5
RatingArea6
RatingArea7
RatingArea8
RatingArea9
RatingArea10

Area
Factor
1.1411
1.3240
1.0843
1.1303
1.3610
1.4120
1.1238
1.3094
1.3175
1.4697

##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##
##

1.000
1.000
1.000
1.000
1.004
1.024
1.048
1.087
1.119
1.135
1.159
1.183
1.198
1.214
1.222
1.230
1.238
1.246
1.262
1.278
1.302
1.325
1.357
1.397
1.444
1.500
1.563
1.635
1.706
1.786
1.865
1.952
2.040
2.135
2.230
2.333
2.437
2.548
2.603
2.714
2.810
2.873
2.952

Age
020
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64

AgeFactor
0.635
1.000
1.000
1.000
1.000
1.004
1.024
1.048
1.087
1.119
1.135
1.159
1.183
1.198
1.214
1.222
1.230
1.238
1.246
1.262
1.278
1.302
1.325
1.357
1.397
1.444
1.500
1.563
1.635
1.706
1.786
1.865
1.952
2.040
2.135
2.230
2.333
2.437
2.548
2.603
2.714
2.810
2.873
2.952
3.000

$180.98
$285.01
$285.01
$285.01
$285.01
$286.15
$291.85
$298.70
$309.81
$318.93
$323.49
$330.33
$337.17
$341.45
$346.01
$348.29
$350.57
$352.85
$355.13
$359.69
$364.25
$371.09
$377.64
$386.76
$398.17
$411.56
$427.52
$445.48
$466.00
$486.23
$509.04
$531.55
$556.35
$581.43
$608.51
$635.58
$664.94
$694.58
$726.22
$741.89
$773.53
$800.89
$818.85
$841.36
$855.04

$ 108.01
$ 170.10
$ 170.10
$ 170.10
$ 170.10
$ 170.78
$ 174.18
$ 178.27
$ 184.90
$ 190.34
$ 193.07
$ 197.15
$ 201.23
$ 203.78
$ 206.50
$ 207.86
$ 209.23
$ 210.59
$ 211.95
$ 214.67
$ 217.39
$ 221.47
$ 225.38
$ 230.83
$ 237.63
$ 245.63
$ 255.15
$ 265.87
$ 278.12
$ 290.19
$ 303.80
$ 317.24
$ 332.04
$ 347.01
$ 363.17
$ 379.33
$ 396.85
$ 414.54
$ 433.42
$ 442.78
$ 461.66
$ 477.99
$ 488.70
$ 502.14
$ 510.31

$ 130.77
$ 205.93
$ 205.93
$ 205.93
$ 205.93
$ 206.76
$ 210.88
$ 215.82
$ 223.85
$ 230.44
$ 233.73
$ 238.68
$ 243.62
$ 246.71
$ 250.00
$ 251.65
$ 253.30
$ 254.95
$ 256.59
$ 259.89
$ 263.18
$ 268.13
$ 272.86
$ 279.45
$ 287.69
$ 297.37
$ 308.90
$ 321.87
$ 336.70
$ 351.32
$ 367.80
$ 384.07
$ 401.98
$ 420.10
$ 439.67
$ 459.23
$ 480.44
$ 501.86
$ 524.72
$ 536.04
$ 558.90
$ 578.67
$ 591.65
$ 607.92
$ 617.80

$ 153.19
$ 241.25
$ 241.25
$ 241.25
$ 241.25
$ 242.21
$ 247.04
$ 252.83
$ 262.24
$ 269.96
$ 273.82
$ 279.61
$ 285.40
$ 289.02
$ 292.88
$ 294.81
$ 296.74
$ 298.67
$ 300.60
$ 304.46
$ 308.32
$ 314.11
$ 319.65
$ 327.37
$ 337.02
$ 348.36
$ 361.87
$ 377.07
$ 394.44
$ 411.57
$ 430.87
$ 449.93
$ 470.92
$ 492.15
$ 515.07
$ 537.98
$ 562.83
$ 587.92
$ 614.70
$ 627.97
$ 654.75
$ 677.91
$ 693.11
$ 712.17
$ 723.75

$ 172.75
$ 272.05
$ 272.05
$ 272.05
$ 272.05
$ 273.14
$ 278.58
$ 285.11
$ 295.72
$ 304.43
$ 308.78
$ 315.31
$ 321.84
$ 325.92
$ 330.27
$ 332.45
$ 334.63
$ 336.80
$ 338.98
$ 343.33
$ 347.68
$ 354.21
$ 360.47
$ 369.18
$ 380.06
$ 392.85
$ 408.08
$ 425.22
$ 444.81
$ 464.12
$ 485.89
$ 507.38
$ 531.05
$ 554.99
$ 580.83
$ 606.68
$ 634.70
$ 663.00
$ 693.19
$ 708.16
$ 738.35
$ 764.47
$ 781.61
$ 803.10
$ 816.16

$ 199.21
$ 313.72
$ 313.72
$ 313.72
$ 313.72
$ 314.98
$ 321.25
$ 328.78
$ 341.02
$ 351.06
$ 356.08
$ 363.61
$ 371.14
$ 375.84
$ 380.86
$ 383.37
$ 385.88
$ 388.39
$ 390.90
$ 395.92
$ 400.94
$ 408.47
$ 415.68
$ 425.72
$ 438.27
$ 453.02
$ 470.59
$ 490.35
$ 512.94
$ 535.21
$ 560.31
$ 585.10
$ 612.39
$ 640.00
$ 669.80
$ 699.60
$ 731.92
$ 764.55
$ 799.37
$ 816.62
$ 851.45
$ 881.56
$ 901.33
$ 926.11
$ 941.17

$ 89.84
$ 141.48
$ 141.48
$ 141.48
$ 141.48
$ 142.05
$ 144.88
$ 148.27
$ 153.79
$ 158.32
$ 160.58
$ 163.98
$ 167.38
$ 169.50
$ 171.76
$ 172.89
$ 174.02
$ 175.16
$ 176.29
$ 178.55
$ 180.82
$ 184.21
$ 187.47
$ 191.99
$ 197.65
$ 204.30
$ 212.23
$ 221.14
$ 231.33
$ 241.37
$ 252.69
$ 263.87
$ 276.18
$ 288.63
$ 302.07
$ 315.51
$ 330.08
$ 344.80
$ 360.50
$ 368.28
$ 383.99
$ 397.57
$ 406.48
$ 417.66
$ 424.45

33

$ 108.77
$ 171.29
$ 171.29
$ 171.29
$ 171.29
$ 171.98
$ 175.40
$ 179.52
$ 186.20
$ 191.68
$ 194.42
$ 198.53
$ 202.64
$ 205.21
$ 207.95
$ 209.32
$ 210.69
$ 212.06
$ 213.43
$ 216.17
$ 218.91
$ 223.02
$ 226.96
$ 232.45
$ 239.30
$ 247.35
$ 256.94
$ 267.73
$ 280.07
$ 292.23
$ 305.93
$ 319.46
$ 334.37
$ 349.44
$ 365.71
$ 381.99
$ 399.63
$ 417.44
$ 436.46
$ 445.88
$ 464.89
$ 481.34
$ 492.13
$ 505.66
$ 513.88

$ 127.43
$ 200.67
$ 200.67
$ 200.67
$ 200.67
$ 201.48
$ 205.49
$ 210.31
$ 218.13
$ 224.55
$ 227.77
$ 232.58
$ 237.40
$ 240.41
$ 243.62
$ 245.22
$ 246.83
$ 248.43
$ 250.04
$ 253.25
$ 256.46
$ 261.28
$ 265.89
$ 272.31
$ 280.34
$ 289.77
$ 301.01
$ 313.65
$ 328.10
$ 342.35
$ 358.40
$ 374.26
$ 391.72
$ 409.38
$ 428.44
$ 447.50
$ 468.17
$ 489.04
$ 511.32
$ 522.36
$ 544.63
$ 563.89
$ 576.54
$ 592.39
$ 602.02

$143.70
$226.30
$226.30
$226.30
$226.30
$227.21
$231.73
$237.17
$245.99
$253.23
$256.85
$262.28
$267.72
$271.11
$274.73
$276.54
$278.35
$280.16
$281.97
$285.59
$289.21
$294.65
$299.85
$307.09
$316.14
$326.78
$339.45
$353.71
$370.00
$386.07
$404.18
$422.05
$441.74
$461.66
$483.16
$504.65
$527.96
$551.50
$576.62
$589.07
$614.19
$635.91
$650.17
$668.05
$678.91

$ 165.72
$ 260.97
$ 260.97
$ 260.97
$ 260.97
$ 262.01
$ 267.23
$ 273.50
$ 283.67
$ 292.03
$ 296.20
$ 302.46
$ 308.73
$ 312.64
$ 316.82
$ 318.91
$ 320.99
$ 323.08
$ 325.17
$ 329.34
$ 333.52
$ 339.78
$ 345.79
$ 354.14
$ 364.58
$ 376.84
$ 391.46
$ 407.90
$ 426.69
$ 445.21
$ 466.09
$ 486.71
$ 509.41
$ 532.38
$ 557.17
$ 581.96
$ 608.84
$ 635.98
$ 664.95
$ 679.31
$ 708.27
$ 733.33
$ 749.77
$ 770.38
$ 782.91

$ 115.04
$ 181.17
$ 181.17
$ 181.17
$ 181.17
$ 181.90
$ 185.52
$ 189.87
$ 196.93
$ 202.73
$ 205.63
$ 209.98
$ 214.33
$ 217.04
$ 219.94
$ 221.39
$ 222.84
$ 224.29
$ 225.74
$ 228.64
$ 231.54
$ 235.89
$ 240.05
$ 245.85
$ 253.10
$ 261.61
$ 271.76
$ 283.17
$ 296.22
$ 309.08
$ 323.57
$ 337.89
$ 353.65
$ 369.59
$ 386.80
$ 404.01
$ 422.68
$ 441.52
$ 461.63
$ 471.59
$ 491.70
$ 509.09
$ 520.51
$ 534.82
$ 543.52

$ 133.38
$ 210.04
$ 210.04
$ 210.04
$ 210.04
$ 210.88
$ 215.08
$ 220.13
$ 228.32
$ 235.04
$ 238.40
$ 243.44
$ 248.48
$ 251.63
$ 254.99
$ 256.67
$ 258.35
$ 260.03
$ 261.71
$ 265.07
$ 268.44
$ 273.48
$ 278.31
$ 285.03
$ 293.43
$ 303.30
$ 315.06
$ 328.30
$ 343.42
$ 358.33
$ 375.14
$ 391.73
$ 410.00
$ 428.49
$ 448.44
$ 468.40
$ 490.03
$ 511.88
$ 535.19
$ 546.74
$ 570.06
$ 590.22
$ 603.45
$ 620.05
$ 630.13

$ 149.60
$ 235.59
$ 235.59
$ 235.59
$ 235.59
$ 236.54
$ 241.25
$ 246.90
$ 256.09
$ 263.63
$ 267.40
$ 273.05
$ 278.71
$ 282.24
$ 286.01
$ 287.90
$ 289.78
$ 291.67
$ 293.55
$ 297.32
$ 301.09
$ 306.74
$ 312.16
$ 319.70
$ 329.13
$ 340.20
$ 353.39
$ 368.23
$ 385.20
$ 401.92
$ 420.77
$ 439.38
$ 459.88
$ 480.61
$ 502.99
$ 525.38
$ 549.64
$ 574.14
$ 600.30
$ 613.25
$ 639.40
$ 662.02
$ 676.86
$ 695.48
$ 706.78

$ 156.03
$ 245.71
$ 245.71
$ 245.71
$ 245.71
$ 246.69
$ 251.61
$ 257.50
$ 267.09
$ 274.95
$ 278.88
$ 284.78
$ 290.67
$ 294.36
$ 298.29
$ 300.26
$ 302.22
$ 304.19
$ 306.15
$ 310.09
$ 314.02
$ 319.91
$ 325.56
$ 333.43
$ 343.26
$ 354.80
$ 368.56
$ 384.04
$ 401.73
$ 419.18
$ 438.84
$ 458.25
$ 479.62
$ 501.25
$ 524.59
$ 547.93
$ 573.24
$ 598.79
$ 626.07
$ 639.58
$ 666.86
$ 690.44
$ 705.92
$ 725.33
$ 737.13

$ 153.48
$ 241.70
$ 241.70
$ 241.70
$ 241.70
$ 242.67
$ 247.50
$ 253.30
$ 262.73
$ 270.46
$ 274.33
$ 280.13
$ 285.93
$ 289.56
$ 293.43
$ 295.36
$ 297.29
$ 299.23
$ 301.16
$ 305.03
$ 308.89
$ 314.70
$ 320.25
$ 327.99
$ 337.66
$ 349.02
$ 362.55
$ 377.78
$ 395.18
$ 412.34
$ 431.68
$ 450.77
$ 471.80
$ 493.07
$ 516.03
$ 538.99
$ 563.89
$ 589.03
$ 615.86
$ 629.15
$ 655.98
$ 679.18
$ 694.41
$ 713.50
$ 725.11

Missouri
HumanaInsuranceCompany
Exhibit4DevelopmentofGeographicFactors
InordertocomplywithFederalmarketratingrules,ourarearatingreflectsonlydifferencesinunderlyingunitcostandanyanticipatednetworksavings.Areviewofunitcostandproviderpracticepatternswas
completedfortheallowedratingregions.Differencesinunitcostareintendedtoreflectunderlyinggeographicchargelevelvariation.Thecomponentrelatedtonetworkreflectsanydifferencesinexpected
networksavingsandefficiency.

Thefinalproposedgeographicnetworkfactors,thedevelopmentofwhichisillustratedbelow,willapplytonongrandfathered,ACAcompliantbusinessonthislegalentityin2015.Theapplicabilityofthese
factorsconformstothestandardizedratingareadefinitions.
E
Rating
Area
1
2
3
4
5
6
7
8
9
10

Final
Geographic
Factors
1.1411
1.3240
1.0843
1.1303
1.3610
1.4120
1.1238
1.3094
1.3175
1.4697
1.1239

ReferenceMarketName
KansasCityOuterMO
NortheasternMO
KansasCityInnerMO
KansasCitySoutheastMO
ColumbiaJeffersonCity
St.Louis
Joplin
Springfield
SoutheasternMO
CapeGirardeau
Overall

Thefinalgeographicareafactorsareproducedbytakingunitcostdifferencesbetweenratingareasforabase
networkinanarea(sectionA),adjustingforanticipatedrelativenetworksavings(sectionB),andnormalizingto
anaverageoverallfactorof1.0acrossallnetworksonthelegalentity(sectionD).Lastly,thefactorsforthebase
network(s)areusedasthefinalgeographicfactors(sectionE).Theapplicabilityofthesefactorsconformsto
thestandardizedratingareadefinitions.
InaccordancewiththeActuarialMemoranduminstructions,issuerswithmultiplenetworkswithinagivenrating
areawhodesiretodeveloppremiumsspecificforeachnetworkmusthaveaseparateplanforeachnetwork.
ThefinalgeographicfactorsinsectionErepresentonebasenetwork,andtheratingrelativityduetonetwork
savingsreflectedintheplanlevelvariationasinstructed.Therefore,whilesectionDaveragesoutto1.0across
allnetworks,sectionEdoesnot.ThiscreatestheneedforCalibrationbasedonthisaveragefactorinsectionE,
whichcanbeseenintheRateDevelopmentandCalibrationDemonstration.

34