---
kind: "section"
citation: "42 C.F.R. § 403.254"
title: "42"
number: "403.254"
heading: "Calculation of premiums."
url: "https://uscodex.org/cfr/42/403.254"
---

# §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.**

## Notes

### Source

Source: 47 FR 32400, July 26, 1982, unless otherwise noted.

### Authority

Authority: 42 U.S.C. 1302 and 1395hh.