42 CFR § 403.254 - Calculation of premiums.

---
identifier: "/us/cfr/t42/s403.254"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "42 CFR § 403.254 - Calculation of premiums."
title_number: 42
title_name: "Public Health"
section_number: "403.254"
section_name: "Calculation of premiums."
chapter_name: "CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES"
subchapter_number: "A"
subchapter_name: "GENERAL PROVISIONS"
part_number: "403"
part_name: "SPECIAL PROGRAMS AND PROJECTS"
positive_law: false
currency: "2026-04-05"
last_updated: "2026-04-05"
format_version: "1.1.0"
generator: "[email protected]"
authority: "42 U.S.C. 1302 and 1395hh."
cfr_part: "403"
---


# 403.254 Calculation of premiums.

(a) *General provisions.* To calculate the amount of “premiums”, calculate the present value on the initial calculation date of expected earned premiums for the loss ratio calculation period.

(b) *Specific provisions.* (1) *Earned premium* for a given period means—

(i) Written premiums for the period; plus—

(ii) The total premium reserve at the beginning of the period; less—

(iii) The total premium reserve at the end of the period.

(2) *Written premiums in a period* means—

(i) Premiums collected in that period; plus—

(ii) Premiums due and uncollected at the end of that period; less—

(iii) Premiums due and uncollected at the beginning of that period.

(3) *Total premium reserve* means the sum of—

(i) The unearned premium reserve;

(ii) The advance premium reserve; and

(iii) The reserve for rate credits.

(4) *Unearned premium reserve* means the portion of gross premiums due that provide for days of insurance coverage after the valuation date.

(5) *Advance premium reserve* means premiums received by the insuring organization that are due after the valuation date.

(6) *Reserve for rate credits* means rate credits on a group policy that—

(i) Accrue by the valuation date of the policy; and

(ii) Are paid or credited after the valuation date.