Current through Register Vol. 63, No. 9, September 1, 2024
(1) The following
provisions of this section establish loss ratio standards:
(a) A Medicare supplement policy form or
certificate form shall not be delivered or issued for delivery unless the
policy form or certificate form can be expected, as estimated for the entire
period for which rates are computed to provide coverage, to return the
applicable percentage specified in this section to the policyholder and
certificate holder in the form of aggregate benefits, not including anticipated
refunds or credits, provided under the policy form or certificate form:
(A) At least 75 percent of the aggregate
amount of premiums earned, in the case of group policies; or
(B) At least 65 percent of the aggregate
amount of premiums earned, in the case of individual policies.
(b) A percentage under subsection
(a) of this subsection shall be 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:
(A) Home office and overhead costs;
(B) Advertising costs;
(C) Commissions and other acquisition
costs;
(D) Taxes;
(E) Capital costs;
(F) Administrative costs; and
(G) Claims processing costs.
(c) All filings of rates and
rating schedules shall demonstrate that expected claims in relation to premiums
comply with the requirements of this rule 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 can be expected to meet the appropriate loss ratio
standards;
(d) For purposes of
applying section (1)(a) of this rule and section (3)(c) of OAR
836-052-0151 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 individual policies;
(e) For policies issued prior to September 1,
1993, 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 section (1)(a)(A) and (B) of this rule when combined with actual
experience beginning with April 28, 1996, to date; and
(C) The appropriate loss ratio requirement
from section (1)(a)(A) and (B) of this rule over the entire future period for
which the rates are computed to provide coverage.
(2) The following provisions of
this section apply to refund and credit calculations:
(a) An issuer shall collect and file with the
Director by May 31 of each year the data contained in the applicable reporting
form contained in Exhibit 1 to this rule for each type in a standard Medicare
supplement benefit plan;
(b) 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;
(c) For the purpose of this rule, policies or
certificates issued prior to September 1, 1993, 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 April 28,
1996. The first such report shall be due by May 31, 1998.
(d) 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 negligible level. The refund
must 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 13-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.
(3) An
issuer of Medicare supplement policies and certificates issued before, on or
after July 1, 1992, in this state shall file annually its rates, rating
schedule and supporting documentation, including ratios of incurred losses to
earned premiums by policy duration for approval by the Director in accordance
with the filing requirements and procedures prescribed by the Director. 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. 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 with the Director for approval, in
accordance with the applicable filing procedures of this state the following:
(a)
(A)
Appropriate premium adjustments necessary to produce loss ratios as anticipated
for the current premium for the applicable policies or certificates. 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 to be 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. Except
as provided in OAR 836-052-0138, an insurer may not
increase the rates for a Medicare supplement policy or certificate issued in
this state more than once in a 12-month period. If an issuer intends to
exercise the right to adjust a premium for age attainment under OAR
836-052-0138, and such
adjustment results in more than one increase in a 12-month period, the issuer
must provide written disclosure to the consumer prior to the issuance of the
policy or certificate. The limitation on premium adjustments under this
paragraph does not apply to a premium adjustment that results from a change in
the policy or premium payment terms requested by an insured including but not
limited to changes in the method of payment such as discontinuing payment by a
preauthorized electronic funds transfer.
(C) If an issuer fails to make premium
adjustments acceptable to the Director, the Director may order premium
adjustments, refunds or premium credits that the Director considers necessary
to achieve the loss ratio required by this rule.
(b) 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.
(4) For purposes of this rule,
experience of insureds who qualify for Medicare by reason of disability shall
be combined with experience of insureds who qualify for Medicare by reason of
age.
(5) The Director may 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, on 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 may be made without consideration of any refund or
credit for the reporting period. Public notice of the hearing shall be
furnished as the Director determines to be appropriate.
Exhibits referenced are available from the
agency.
Stat. Auth.: ORS
743.684
Stats. Implemented: ORS
743.010 &
743.684
