Current through Register Vol. 56, No. 24, December 18, 2024
(a) In addition
to the discounts based solely on savings in expenses due to the method of
premium collection as permitted by N.J.S.A. 17B:30-14d and the discounts based
solely on the amount of insurance issued to a particular insured as permitted
by N.J.S.A. 17B:30-14e, reductions in premiums for individual health insurance
policies based on class as described below are permitted if either of the
following conditions are met:
1. A reduced
premium may be charged under one individual health policy form based on savings
in expenses, improved morbidity or increased persistency resulting from
differing marketing or underwriting methods utilized for a particular class of
individuals who present the same underlying hazard. Such classes may include
associations, employers and large cases. Savings in expenses may include a
reduction in commissions or other compensation as applied to all policies
within the particular class. Each reduction in premium shall be considered a
separate class (for example, 10 percent, 15 percent and 20 percent
employer-based reductions in premium shall each be considered a separate
class); or
2. The reduction in
premium is based on additional requirements applied to the discounts allowed by
N.J.S.A. 17B:30-14d and 17B:30-14e. For example, list bill discounts with
minimum premium requirements, or list bill discounts which vary based on level
of participation are considered a separate class subject to the requirements of
this section. Each reduction in premium shall be considered a separate
class.
(b) The
submission of individual health insurance policy forms which provide reductions
in premiums to members of particular classes shall include the following:
1. An actuarial memorandum which shall
contain a separate section for each class for which reduced rates are available
under the form. The actuarial memorandum shall include the following:
i. A complete description of the class of
applicants eligible for the reduced premium;
ii. The objective basis for the premium
differential which shall include the different expense, morbidity and
persistency assumptions that are used to calculate the reduced premium for the
class;
iii. The anticipated loss
ratio for the class which shall not be less than the minimum anticipated loss
ratio required by
N.J.A.C. 11:4-18.5. Any variation from the
anticipated loss ratio for the form for regular issues shall be based upon
differences in expense and persistency assumptions, and shall be consistent
with the objective basis for the differential; and
iv. A certification that the loss experience
for each class for which reduced premiums are available under the policy form
will be maintained separately from the other experience under the policy form
for purposes of determining future rate adjustments;
2. A separate rate sheet which sets forth the
following information for each class for which reduced rates are available
under the form:
i. The amount of reduction in
rates when issued to a member of the class as compared to the rate for regular
issues;
ii. All riders currently
submitted to, pending with, or approved by the Department, which will be used
with the form, together with any reduction in premium for the rider when issued
to a member of the class as compared to the rate for the rider when issued to
an individual who is not a member of the class; and
iii. Any discounts allowed by N.J.S.A.
17B:30-14d and N.J.S.A. 17B:30-14e which will be used with the form, and the
basis for the discount; and
3. Questions in the application form
pertaining to membership in every class for which a reduced premium is offered.
The use of different applications for different classes shall be permitted so
long as all applications include questions pertaining to membership in every
class for which a reduced premium is available.
(c) If an individual is placed in a class at
issue which is eligible for a reduced premium not available to members of the
general public, such premium classification shall not be changed after issue.
The schedule page and form shall include only the premium for that class and
shall not contain any reference to the premium for regular issues. The
provisions of this paragraph shall not preclude the termination of any discount
allowed by N.J.S.A. 17B:30-14d or 17B:30-14e when the individual no longer
meets the requirements for such discount.
(d) If an individual is not placed in a class
for which he or she is eligible based on the information disclosed in the
application, the insurer shall refund to the individual the amount of any
overpayment of premium arising from such misclassification.
(e) Insurers submitting different policy
forms with essentially identical benefits but with different premiums based on
membership in a class, shall be subject to the provisions of (b) through (d)
above. At the time of submission, the insurer shall state whether the form
submitted is a reduced premium version of another form which has been filed by,
is pending with, or is expected to be submitted to the Department.
