New Jersey Administrative Code
Title 11 - INSURANCE
Chapter 4 - ACTUARIAL SERVICES
Subchapter 56 - SELF-FUNDED MULTIPLE EMPLOYER WELFARE ARRANGEMENTS AND INSURED MULTIPLE EMPLOYER ARRANGEMENTS
Section 11:4-56.6 - Rating requirements of self-funded MEWAs

Universal Citation: NJ Admin Code 11:4-56.6

Current through Register Vol. 56, No. 18, September 16, 2024

(a) Prior to issuing benefit plans to small employers, a self-funded MEWA shall prepare, maintain and make available to the Department upon request, an exhibit showing the methodology for calculating assessments for small employer members. The exhibit shall contain:

1. A plan schedule describing each plan of benefits offered, which shall specify:
i. The benefit options available for each plan;

ii. The delivery system for each plan; and

iii. The in-network and out-of-network deductibles, coinsurance, and/or copays;

2. A rate manual containing:
i. The basic rates or rating factors applicable to each plan and option, including the difference when Medicare is primary or secondary, based on actual employee or spouse Medicare coverage status. Reduced rates or rating factors shall be provided when Medicare is primary coverage for an employee eligible for Medicare by reason of age;

ii. The numerical value of the classification factors used in the calculation of a small employer's assessment, limited to age, gender, geographic location, effective date, and rating tier of the covered persons in accordance with 11:21-7.1 4;

iii. A description of the assessment methodology in sufficient detail to allow the determination of the assessment by any particular small employer from the basic rates in (a)2i above; and

iv. A detailed example calculation for a representative plan showing all of the steps to develop the assessment for a small employer;

3. An actuarial memorandum setting forth the assumptions and methods used in the development of the assessment methodology;

4. The effective dates (beginning and ending) of rates in the exhibit. The beginning date cannot predate the date of the exhibit, and the ending date cannot be more than a year from the beginning date; and

5. The signature of the actuary who prepared the exhibit, and the date the exhibit was prepared.

(b) Whenever an exhibit is prepared or modified, a certification signed by a qualified actuary shall be filed with the Department, which shall state the following:

1. That an exhibit, which is accurate and complete and complies with all of the requirements of (a) above, has been prepared and will be maintained;

2. The beginning and ending effective dates, which dates shall not be more than 12 months apart, and with the beginning date not preceding the date of the certification;

3. That the certification is being filed with respect to an initial or revised exhibit, or that no changes have been made to the methodology since the previous exhibit and certification, specifying the effective dates of such prior exhibit and certification;

4. That a new exhibit and certification will be prepared if there is any change to the assessment methodology, but in any event with an effective date no later than one year from the effective date of the within exhibit and certification;

5. The anticipated incurred loss ratio, which shall not be less than 75 percent;

6. That for self-funded MEWAs that provided benefits in New Jersey prior to April 6, 2002:
i. For benefits provided between April 6, 2002 and April 5, 2003, the assessment methodology shall not result in assessments (for an individual and each family status) for the highest rated small employer which are greater than 300 percent of the assessments produced for the lowest rated small employer for each plan and option;

ii. For benefits provided between April 6, 2003 and April 5, 2004, the assessment methodology shall not result in assessments (for an individual and each family status) for the highest rated small employer which are greater than 250 percent of the assessments produced for the lowest rated small employer for each plan and option; and

iii. For benefits provided after April 6, 2004, the assessment methodology shall not result in assessments (for an individual and each family status) for the highest rated small employer which are greater than 200 percent of the assessments produced for the lowest rated small employer for each plan and option;

7. That for self-funded MEWAs that did not provide benefits in New Jersey prior to April 6, 2002, the assessment methodology shall not result in assessments (for an individual and each family status) for the highest rated small employer which are greater than 200 percent of the assessments produced for the lowest rated small employer for each plan and option; and

8. That the assessments to be charged for any group do not vary based on any classification factor other than those permitted in (a)2ii above.

(c) Certifications described in (b) above shall be submitted to the Department at the following address:

MEWA Small Group Assessment Certifications

Office of Life and Health

New Jersey Department of Banking and Insurance

20 West State Street

PO Box 325

Trenton, NJ 08625-0325

(d) A self-funded MEWA that provided benefits to small employers in New Jersey at any time during the preceding calendar year shall file with the Department an annual loss ratio report of its small employer business on the form set forth in this subchapter as Appendix B, incorporated herein by reference.

1. The loss ratio report shall be completed and filed with the Department on or before August 1 of the reporting year for the preceding calendar year.

2. Loss ratio reports shall be sent to the same address as the certifications referred to in (c) above.

3. If the preceding calendar year loss ratio is less than 75 percent, the self-funded MEWA shall include with the loss ratio report a plan to be approved by the Department for the distribution of all dividends and credits against future assessments for all members in the preceding calendar year. Such distribution amount shall be sufficient to assure that the claims in the preceding calendar year, plus the amount of dividends and credits, shall equal 75 percent of the assessment in the preceding calendar year.

4. The dividends or credits shall be issued to each small employer who was covered for any period in the preceding calendar year.

5. The dividend or credit amount per participant shall be determined by multiplying AxB, where A is the assessment for each participant, and B is the percentage calculated by dividing the total dividend or credit by the total assessment; or on the basis of a practical and equitable alternate methodology filed by the self-funded MEWA in accordance with (a) above.

6. All dividends and credits shall be distributed by December 31 of the reporting year. A certification that all dividends have been paid shall be provided to the Department within 30 days of the payment.

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