In employee benefits, experience rating refers to the claim history of a medical or dental plan for the preceding plan year (B). At the SPHR level, experience rating is a core concept in understanding how insurance premiums are calculated for employer-sponsored benefit plans.
Under experience-rated plans, the employer’s actual claims experience is used to determine future premium rates. Higher-than-expected claims typically result in increased premiums, while favorable claims experience may reduce costs. This approach contrasts with community-rated or adjusted community-rated plans, where rates are based on broader population risk rather than individual employer experience.
Qualifications of administrators (A) are unrelated to experience rating. Cumulative history since inception (C) is not typically used; insurers rely on recent claims data to reflect current risk. Regional healthcare history (D) applies to community rating, not experience rating.
SPHR exam content stresses that HR leaders must understand how benefit funding and rating methodologies affect cost control, plan design, and risk exposure, particularly when evaluating fully insured versus self-funded plans.
References :
HRCI SPHR Exam Content Outline — Functional Area: Total Rewards (benefits funding; insurance rating).
HRCI SPHR Study Guide — Experience-rated versus community-rated benefit plans.
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