Current through Register Vol. 35, No. 18, September 24, 2024
A.
Prior
approval of forms required A carrier shall not issue, deliver or use a
form associated with a plan, unless and until such form has been filed with and
approved by the superintendent.
B.
Prior approval of rates required A carrier shall not use rates or
modified rates for an individual or group plan unless and until such rates are
filed with and approved by the superintendent, except for rates for a plan
issued to eligible members of an out-of-state group policyholder defined by
Paragraph (1) of Subsection A of Section
59A-23-3
NMSA 1978. A carrier shall not offer a group coverage plan to New Mexico
residents that are members of a group not defined in Paragraph (1) of
Subsection A of Section
59A-23-3
NMSA 1978 under a plan issued to an out-of-state group policyholder unless the
plan complies with Subsections D and G of this Section. Projected loss ratios
for new plans or products shall be filed prior to sales and be based on
credible data.
C.
Rate filing
requirements The superintendent shall post on its website requirements
for filing actuarial memorandums and rates for rate filing requests.
D.
Minimum loss ratios for group
plans A group product subject to this rule shall be subject to the
following actual minimum loss ratios, adjusted for low or high average premium
forms:
(1)
Definitions of renewal
clause. The following definitions shall be applied to the table:
|
Type of Coverage:
|
OR
|
CR
|
GR
|
NC
|
|
Medical Expense
|
65%
|
60%
|
60%
|
55%
|
|
Loss of Income and Other
|
65%
|
60%
|
55%
|
50%
|
(a)
OR-
Optionally Renewable renewal is at the option of the insurance
company;
(b)
CR- Conditionally
Renewable renewal can be declined by class; by geographic area or for
stated reasons other than deterioration of health;
(c)
GR- Guaranteed Renewable
renewal cannot be declined by the insurance company for any reason, but the
insurance company can revise rates on a class basis;
(d)
NC- Non-Cancelable renewal
cannot be declined nor can rates be revised by the insurance
company.
(2)
Low
average premium forms For a plan form, including riders and
endorsements, under which the actual average annual premium per certificate is
low (as defined below), the appropriate ratio from the table above should be
adjusted downward by the following formula:
RN = R x (I x 500) + X / (I x 750)
where: R is the table ratio;
RN is the resulting guideline ratio;
I is the consumer price index factor; and
X is the average annual premium, up to a maximum of I x
250.
The factor I is determined as follows:
I = CPI-U, Year (N-1) / U, (1982) = CPI-U, Year (N-1) / CPI-
97.9
(a) (N-1) is the calendar year
immediately preceding the calendar year (N) in which the rate filing is
submitted in the state;
(b) CPI-U
is the consumer price index for all urban consumers, for all items, and for all
regions of the U.S. combined, as determined by the U.S. Department of labor,
bureau of labor statistics based on the 1982=100 basis;
(c) the CPI-U for any year (N-1) is taken as
the value of September. For 1982, this value was 97.9;
(d) hence, for rate filings submitted during
calendar year 1983, the value of I is 1.00.
(e) Low average annual premium is defined as
average annual premium less than or equal to I x 250.
(f) High average annual premium is defined as
average annual premium more than or equal to I x 1500.
where:
(3)
High average premium forms For a plan form, including riders and
endorsements, under which the actual average annual premium per certificate is
high (as defined above), the appropriate ratio from the table above should be
adjusted upward by the following formula:
RN = R x (I x 4000) + X / (I x 5500)
where: R is the table ratio
RN is the resulting guideline ratio
I is the consumer price index factor (as defined in Paragraph
(2) above)
X is the average annual premium, not less than I x
1500.
In no event, however, shall RN exceed the lesser of:
(a) R + 5 percentage points, or
(b) 68%.
(4)
Determination of average
premium. A carrier shall determine the average annual premium per form
based on the distribution of business by all significant criteria having a
price difference, such as age, sex, amount, dependent status, rider frequency,
etc., except assuming an annual mode for all certificates (i.e., the fractional
premium loading shall not affect the average annual premium or anticipated loss
ratio calculation).
E.
Individual plan minimum loss ratio An individual plan subject to
this rule shall be subject to the following actual minimum loss ratios,
adjusted for low or high average premium forms:
|
Type of Coverage:
|
OR
|
CR
|
GR
|
NC
|
|
Medical Expense
|
60%
|
55%
|
55%
|
50%
|
|
Loss of Income and Other
|
60%
|
55%
|
50%
|
45%
|
(1) Definitions
of renewal clause. The following definitions shall be applied to the table:
(a)
OR- Optionally Renewable
renewal is at the option of the insurance company;
(b)
CR- Conditionally Renewable
renewal can be declined by class, by geographic area or for stated reasons
other than deterioration of health;
(c)
GR- Guaranteed Renewable
renewal cannot be declined by the insurance company for any reason, but the
insurance company can revise rates on a class basis;
(d)
NC- Non-cancelable renewal
cannot be declined nor can rates be revised by the insurance
company.
(2)
Low
average premium forms For a plan form, including riders and
endorsements, under which the actual average annual premium per certificate is
low (as defined below), the appropriate ratio for the table above should be
adjusted downward by the following formula:
RN = R x (I x 500) + X / (I x 750)
where: R is the table ratio;
RN is the resulting guideline ratio;
I is the consumer price index factor; and
X is the average annual premium, up to a maximum of I x
250.
The factor I is determined as follows:
I = CPI-U, Year (N-1) / U, (1982) = CPI-U, Year (N-1) / CPI-
97.9
where:
(a) (N-1) is
the calendar year immediately preceding the calendar year (N) in which the rate
filing is submitted in the state;
(b) CPI-U is the consumer price index for all
urban consumers, for all items, and for all regions of the U.S. combined, as
determined by the U.S. Department of labor, bureau of labor statistics, based
on the 1982=100 basis;
(c) the
CPI-U for any year (N-1) is taken as the value of September. For 1982, this
value was 97.9;
(d) hence, for rate
filings submitted during calendar year 1983, the value of I is
1.00.
(3)
High
average premium forms For a plan form, including riders and
endorsements, under which the actual average annual premium per certificate is
high (as defined above), the appropriate ratio from the table above should be
adjusted upward by the following formula:
RN = R x (I x 4000) + X
where: R is the table ratio
RN is the resulting guideline ratio
I is the consumer price index factor (as defined in Paragraph
(2) above)
X is the average annual premium, not less than I x
1500.
In no event, however, shall RN exceed the lesser of:
(a) R + 5 percentage points, or
(b) 63%.
(4)
Determination of average
premium A carrier shall determine the annual premium per form based on
an anticipated distribution of business by all significant criteria having a
price difference, such as age, sex, amount, dependent status, rider frequency,
etc., except assuming an annual mode for all certificates (i.e., the fractional
premium loading shall not affect the average annual premium or anticipated loss
ratio calculation). The value of X should be determined on the basis of rates
being filed. Thus, where this adjustment is applicable to a rate revision under
Paragraph G, rather than to a new form, X should be determined on the basis of
anticipated average size premium immediately after the revised rates have fully
taken effect.
F.
Rate revisions The following requirements shall apply to rate
revision requests:
(1) With respect to filing
rate revisions for a previously approved form, or a group of previously
approved forms combined for experience, benefits shall be deemed reasonable in
relation to premiums provided the revised rates meet the most current standards
applicable to rate filings; and
(2)
Carriers are urged to review their experience periodically and to file rate
revisions, as appropriate, in a timely manner to avoid non-compliance with this
rule.
G.
Annual
rate certification filing procedures Carriers not filing new or updated
premium rates in any given plan year shall file an actuarial memorandum
demonstrating that minimum loss ratios have been met for all products.
(1)
General requirement Carriers
shall meet the minimum loss ratio ("MLR") established, and in the manner
calculated, under this section of the rule.
(2)
Aggregation Loss ratios
shall be calculated on a consolidated level across policies with the same
product type and benefit design.
(3)
Measurement period Compliance with the minimum loss ratio shall be
measured over all years of issue combined and for each calendar year of
experience utilized in the rate determination process (but never less than the
last three years). A filing for a new pool shall be based on credible data from
generally recognized industry sources. Separate filings shall be made for
separate rating pools.
(4)
Frequency Actual loss ratios shall be calculated annually by
carriers that issue excepted benefits products specified in this rule,
beginning in 2023.
(5)
Timeline The evidence of compliance with the minimum loss ratio
requirements shall be filed with the superintendent on the anniversary date
when the product or the product's most recent rate filing was
approved.
(6)
Methodology Actual loss ratios shall be calculated using company
claim data including an estimate for claims incurred but not reported. The
claims will be reported for all years of issue combined and for each calendar
year of experience utilized in the rate determination process (but never less
than the last three years after the third year of experience is available). The
actual accumulated loss ratio over the measurement period (A) will be compared
to original pricing accumulated loss ratios over the measurement period (E) as
a method of justifying the minimum loss ratio is being met or showing the need
for remedial action if (A)/(E) is below the threshold specified in Paragraph
(8) of this subsection.
(7)
Waiver For noncredible blocks of business on a nationwide basis,
the company may request a waiver of the requirement. The request shall be made
annually and must be accompanied by a letter indicating the nature of the
filing, the type of product, and the reason for the request.
(8)
Compliance with minimum loss
ratios Each carrier shall submit to the superintendent an exhibit
showing the calculation of the applicable loss ratios and:
(a) a statement signed by a qualified actuary
that the minimum loss ratio requirements have been met; or
(b) a rate filing to justify the rates,
revise rates, modify benefits through a benefit endorsement or to return excess
premium, if the actual accumulated loss ratio divided by the expected
accumulated loss ratio (A/E) over the measurement period is below eighty-five
percent.
(9) The
superintendent may require a plan to return excess premiums or increase
benefits proportionately if the ratio of the actual accumulated experience to
the expected accumulated experience (A/E) is below eighty percent.
(10) A carrier shall not return excess
premiums per the above guidelines, until the carrier files a refund plan and
calculation with and obtains approval of the plan by the
superintendent.
H.
Disapproval of forms and rates The superintendent shall disapprove
a form:
(1) if the benefit provided therein is
unreasonable in relation to the premium charged; or
(2) that misrepresents the benefits,
advantages, conditions or terms of any plan or that unfairly characterizes the
plan as more favorable to the covered person than the actual terms of the plan,
such as naming coverage for specific diseases whose primary forms of treatment
are then listed as exclusions;
(3)
that uses any false or misleading statements;
(4) that uses any name or title of any plan
or class of plans misrepresenting the true nature thereof, including
misrepresenting the plan as major medical coverage; or
(5) that is contrary to law, discriminatory,
deceptive, unfair, impractical, unnecessary or
unreasonable.
I.
Variable MLR A carrier shall not offer a plan subject to this rule
to any person unless each possible plan design selectable by that person meets
the MLR requirements as reflected in an approved rate filing. For variable
forms, a carrier cannot satisfy MLR requirements with average premiums for the
form as a whole. The carrier must base MLR calculations on the average premium
for each possible combination of benefits and levels offered by demographics
used for underwriting. The superintendent reserves the right to reject a plan
that has no meaningful difference from another plan offered by the same
carrier. The requirements of this rule do not apply to a non-contributory
plan.
J.
Premium
increases A carrier shall not increase a covered person's premium under
any plan, other than a disability income plan, during the first two years that
the covered person's coverage is in force except in cases where one or more
persons are added to the policy as covered persons during this two year period.
The new premium resulting from the addition of a covered person(s) shall not
change for the first two years the policy with the added lives is in
force.
