§1164 Applicable premium

Summary

Sets how to figure the "applicable premium" people must pay for continuation health coverage. It means the plan’s cost for the same kind of coverage and the same kind of people who did not have a qualifying event, whether the employer or employee normally pays that cost. If the plan pays its own claims (self‑insured), the plan must either use a reasonable cost estimate based on actuarial methods and the factors the Secretary of Labor requires, or the plan administrator can choose to use the cost from the prior determination period adjusted by the percentage change in the implicit price deflator of the gross national product (the number published by the Department of Commerce in the Survey of Current Business) for the 12‑month period ending on the last day of the sixth month of that prior period. The administrator cannot choose that prior‑cost method if there is any significant change in coverage or in the employees covered between the two periods. Each applicable premium is set for a 12‑month period and must be determined before that period begins.