What does the premium denominator exclude?

The premium denominator specifically excludes federal and state taxes because these are not directly related to the costs associated with the deliverable healthcare services or benefits provided under health insurance plans. When calculating a premium denominator, the focus is on the operational costs of the healthcare plan, which include incurred claims and expenses related to patient care.

Taxes are typically a separate financial consideration, as they do not contribute directly to the insurance company's ability to cover member claims or maintain usual operations related to healthcare delivery. Thus, excluding taxes ensures that the premium calculations reflect the true cost of providing benefits without the distortive effect of tax liabilities. This exclusion allows for a clearer understanding of the health plan's financial performance and its capacity to pay for claims.