Field guide / Proration

Four correct premiums for the same person

For anyone who has argued with a carrier about a mid-month effective date and lost.

The setup

A new hire's family medical coverage is effective Saturday, August 16. Family rate: $864.61 a month. What does August cost?

That question has at least four defensible answers, and every one of them is in production at some carrier right now:

RuleLogicAugust premium
Full monthAny coverage in the period bills the whole period$864.61
Daily proration16 covered days ÷ 31 days × $864.61$446.25
The 15th ruleEffective on/before the 15th bills the full month; after the 15th bills nothing$0.00
First of followingCoverage administratively begins September 1; August bills nothing$0.00

Spread: $864.61, on one line, with everyone's software working exactly as configured. Variants of the 15th rule use other cutoff days; some contracts prorate in half-month blocks; terminations get a mirrored set of rules that need not match the enrollment side. None of this is exotic — it's the ordinary texture of group billing.

The error is a rule mismatch, not a math mistake

This is the class of error that makes "check the carrier's arithmetic" useless advice. The carrier's arithmetic is usually flawless — for the rule their system applied. The error is that the group's contract specifies daily proration and the carrier's billing system was configured for full-month. Both sides can re-verify their own numbers forever and never disagree with themselves.

You cannot audit proration by looking at the bill. You can only audit it by holding the bill in one hand and the contract's premium provisions in the other, and recomputing. If nobody at your organization can name the proration rule for each carrier contract, nobody is checking it.

It compounds at the edges: the same mismatch that overbills a mid-month enrollment under-credits a mid-month termination — the errors point in the same direction (the carrier's favor) but appear in different sections of the bill, in different months, and no totals-level pattern connects them.

Where it bleeds

See it in the sample audit: member Joshua Rasmussen — family coverage effective August 16 under a daily-proration contract, billed the full $864.61 instead of $446.25. Exception: $418.36. Open the sample audit →
← Volume-rated coverage Next: The adjustment section is designed to be skimmed →

What's your contract's proration rule?

If that took more than ten seconds to answer, send us your last three months of bills. We audit against the rule your contract actually specifies.

taresum@resoluteconcepts.com