Current through Register Vol. 35, No. 18, September 24, 2024
A.
Loss ratio standards.
(1)
Return of premiums.
(a) A Medicare Supplement policy form or
certificate form shall not be delivered unless the policy form or certificate
form can be expected, as estimated for the entire period for which rates are
computed to provide coverage, i.e., are guaranteed, to return to policyholders
and certificate holders in the form of aggregate benefits (not including
anticipated refunds or credits) provided under the policy form or certificate
form:
(i) At least seventy-five percent of the
aggregate amount of premiums earned in the case of group policies; or
(ii) At least sixty-five percent of the
aggregate amount of premiums earned in the case of individual
policies;
(b) Calculated
on the basis of incurred claims experience or incurred health care expenses
where coverage is provided by a health maintenance organization on a service
rather than reimbursement basis and earned premiums for the period and in
accordance with accepted actuarial principles and practices. Incurred health
care expenses where coverage is provided by a health maintenance organization
shall not include:
(i) home office and
overhead costs;
(ii) advertising
costs;
(iii) commissions and other
acquisition costs;
(iv)
taxes;
(v) capital costs;
(vi) administrative costs; and
(vii) claims processing costs.
(2)
Rate
filings. All filings of rates and rating schedules shall demonstrate
that expected claims in relation to premiums comply with the requirements of
this section when combined with actual experience to date. Filings of rate
revisions shall also demonstrate that the anticipated loss ratio over the
entire future period for which the revised rates are computed to provide
coverage, i.e., are guaranteed, can be expected to meet the appropriate loss
ratio standards.
(3)
Solicited policies. For purposes of applying Paragraph (1) of this
subsection and Paragraph (3) of Subsection C of
13.10.25.21
NMAC only, policies issued as a result of solicitations of individuals through
the mails or by mass media advertising (including both print and broadcast
advertising) shall be deemed to be group policies.
(4)
Combining experience. For
policies issued prior to July 1, 1992, expected claims in relation to premiums
shall meet:
(a) The originally filed
anticipated loss ratio when combined with the actual experience since
inception;
(b) The appropriate loss
ratio requirement from items (i) and (ii) of Subparagraph (a) of Paragraph (1)
of this subsection when combined with actual experience beginning with July 1,
1992 to date; and
(c) The
appropriate loss ratio requirement from items (i) and (ii) of Subparagraph (a)
of Paragraph (1) of this subsection over the entire future period for which the
rates are computed to provide coverage, i.e., are
guaranteed.
B.
Refund or credit calculation.
(1)
Filing Appendix A. Pursuant
to Subsection A of 13.10.26.31 NMAC, for each type in a standard Medicare
Supplement benefit plan, the issuer shall collect and file with the
superintendent by May 31 of each year the data contained in the applicable
reporting form contained in Appendix A as provided in the Model
Regulation To Implement the NAIC Medicare Supplement Insurance Minimum
Standards Model Act - NAIC Model #651, as adopted in
2017.
(2)
Refund
calculation. If on the basis of the experience as reported, the
benchmark ratio since inception (ratio 1) exceeds the adjusted experience ratio
since inception (ratio 3), then a refund or credit calculation is required. The
refund calculation shall be done on a statewide basis for each type in a
standard Medicare Supplement benefit plan. For purposes of the refund or credit
calculation, experience on policies issued within the reporting year shall be
excluded.
(3)
Calculation of
older policies. For the purposes of this section, policies or
certificates issued prior to July 1, 1992, the issuer shall make the refund or
credit calculation separately for all individual policies (including all group
policies subject to an individual loss ratio standard when issued) combined and
all other group policies combined for experience after January 1, 1996. The
first report shall be due by May 31, 1998.
(4)
Refund interest and
distribution. A refund or credit shall be made only when the benchmark
loss ratio exceeds the adjusted experience loss ratio and the amount to be
refunded or credited exceeds a de minimis level. The refund
shall include interest from the end of the calendar year to the date of the
refund or credit at a rate specified by the secretary of health and human
services, but in no event shall it be less than the average rate of interest
for thirteen-week treasury notes. A refund or credit against premiums due shall
be made by September 30 following the experience year upon which the refund or
credit is based.
C.
Annual filing of premium rates. An issuer of Medicare Supplement
policies and certificates issued before or after July 1, 1992, shall annually
file its rates, rating schedule and supporting documentation including ratios
of incurred losses to earned premiums by policy duration for approval by the
superintendent electronically in SERFF or as otherwise designated by the
superintendent, pursuant to Subsection D of Section
59A-17-9,
Subsection D of Section
59A-18-12
and Subsection B of Section
59A-18-13
NMSA 1978. The supporting documentation shall also demonstrate in accordance
with actuarial standards of practice using reasonable assumptions that the
appropriate loss ratio standards can be expected to be met over the entire
period for which rates are computed, i.e., are guaranteed. The demonstration
shall exclude active life reserves. An expected third-year loss ratio that is
greater than or equal to the applicable percentage shall be demonstrated for
policies or certificates in force less than three years. As soon as
practicable, but prior to the effective date of enhancements in Medicare
benefits, every issuer of Medicare Supplement policies or certificates in this
state shall file for approval electronically in SERFF or as otherwise
designated by the superintendent, pursuant to Subsection D of Section
59A-17-9,
Subsection D of Section
59A-18-12
and Subsection B of Section
59A-18-13
NMSA 1978:
(1)
Premium
adjustments.
(a) Appropriate premium
adjustments necessary to produce loss ratios as anticipated for the current
premium for the applicable policies or certificates. The supporting documents
necessary to justify the adjustment shall accompany the filing.
(b) An issuer shall make premium adjustments
necessary to produce an expected loss ratio under the policy or certificate to
conform to minimum loss ratio standards for Medicare Supplement policies and
which are expected to result in a loss ratio at least as great as that
originally anticipated in the rates used to produce current premiums by the
issuer for the Medicare Supplement policies or certificates. No premium
adjustment that would modify the loss ratio experience under the policy other
than the adjustments described herein shall be made with respect to a policy at
any time other than upon its renewal date or anniversary date.
(c) If an issuer fails to make premium
adjustments acceptable to the superintendent, the superintendent may order
premium adjustments, refunds or premium credits deemed necessary to achieve the
loss ratio required by this section.
(2)
Eliminating duplications.
Any appropriate riders, endorsements or policy forms needed to accomplish the
Medicare Supplement policy or certificate modifications necessary to eliminate
benefit duplications with Medicare. The riders, endorsements or policy forms
shall provide a clear description of the Medicare Supplement benefits provided
by the policy or certificate.
D.
Public hearings. The
superintendent may, at the superintendent's discretion, conduct a public
hearing to gather information concerning a request by an issuer for an increase
in a rate for a policy form or certificate form issued before or after July 1,
1992 if the experience of the form for the previous reporting period is not in
compliance with the applicable loss ratio standard. The determination of
compliance is made without consideration of any refund or credit for the
reporting period. Public notice of the hearing shall be furnished in a manner
deemed appropriate by the superintendent.
