Texas Administrative Code
Title 28 - INSURANCE
Part 1 - TEXAS DEPARTMENT OF INSURANCE
Chapter 3 - LIFE, ACCIDENT, AND HEALTH INSURANCE AND ANNUITIES
Subchapter GG - MINIMUM RESERVE STANDARDS FOR INDIVIDUAL AND GROUP ACCIDENT AND HEALTH INSURANCE
Section 3.7006 - Specific Standards for Morbidity, Interest, and Mortality
Universal Citation: 28 TX Admin Code § 3.7006
Current through Reg. 50, No. 13; March 28, 2025
(a) Morbidity.
(1) Minimum morbidity standards for valuation
of specified individual contract health insurance benefits are as follows.
(A) Disability income benefits due to
accident or sickness.
(i) Contract reserves.
(I) Contracts issued on or after January 1,
1965, and prior to January 1, 1987: the 1964 Commissioners Disability Table (64
CDT). The 1964 Commissioners Disability Table (64 CDT) is adopted by reference
for use in the manner indicated in these sections.
(II) Contracts issued on or after January 1,
1994: the 1985 Commissioners Individual Disability Tables A (85CIDA); or the
1985 Commissioners Individual Disability Tables B (85CIDB). The 1985
Commissioners Individual Disability Tables A (85CIDA) and the 1985
Commissioners Individual Disability Tables B (85CIDB) are adopted by reference
for use in the manner indicated in these sections.
(III) Contracts issued during the years 1987
through 1993: optional use of either the 1964 table or the 1985
tables.
(IV) Each insurer shall
elect, with respect to all individual contracts issued in any one statement
year, whether it will use Tables A (85CIDA) or Tables B (85CIDB) as the minimum
standard. The insurer may, however, elect to use the other tables with respect
to any subsequent statement year.
(ii) Claim reserves.
(I) For claims incurred after December 31,
2002, the 1985 Commissioners Individual Disability Tables A (85CIDA) with claim
termination rates multiplied by the following adjustment factors:
(II) For
claims incurred on or before December 31, 2002, each insurer may elect to use
item (-a-) or (-b-) of this subclause as the minimum standard for claims
incurred on or before December 31, 2002.
(-a-) The minimum morbidity standard in
effect for the contract reserves on currently issued contracts, as of the date
the claim is incurred, or
(-b-) The
standard as defined in clause (i) of this subparagraph, applied to all open
claims. Once an insurer elects to calculate reserves for all open claims on the
standard defined in clause (i) of this subparagraph, all future valuations must
be on that basis.
(B) Hospital benefits, surgical benefits, and
maternity benefits (scheduled benefits or fixed time period benefits only).
(i) Contract reserves.
(I) Contracts issued on or after January 1,
1955, and before January 1, 1982: the 1956 Intercompany Hospital-Surgical
Tables. The 1956 Intercompany Hospital-Surgical Tables are adopted by reference
for use as indicated in these sections.
(II) Contracts issued on or after January 1,
1982: the 1974 Medical Expense Tables, Table A, Transactions of the Society of
Actuaries, Volume XXX, page 63. Refer to the paper (in the same volume, page 9)
to which this table is appended, including its discussions, for methods of
adjustment for benefits not directly valued in Table A: "Development of the
1974 Medical Expense Benefits," Houghton and Wolf. The 1974 Medical Expense
Tables, Table A is adopted by reference for use in the manner indicated in
these sections.
(ii)
Claim reserves. No specific standard. See subparagraph (E) of this
paragraph.
(C) Cancer
expense benefits (scheduled benefits or fixed time period benefits only).
(i) Contract reserves. Contracts issued on or
after January 1, 1986: the 1985 NAIC Cancer Claim Cost Tables. The 1985 NAIC
Cancer Claim Cost Tables are adopted by reference for use in the manner
specified in these sections.
(ii)
Claim reserves. No specific standard. See subparagraph (E) of this
paragraph.
(D)
Accidental death benefits.
(i) Contract
reserves. Contracts issued on or after January 1, 1965: the 1959 Accidental
Death Benefits Table. The 1959 Accidental Death Benefits Table is adopted by
reference for use in the manner specified in these sections.
(ii) Claim reserves. Actual amount
incurred.
(E) Single
premium credit accident and health.
(i)
Contract reserves.
(I) For contracts issued
on or after January 1, 2009:
(-a-) for plans
having less than a 30-day elimination period, the 1985 Commissioners Individual
Disability Table A (85CIDA) with claim incidence rates increased by 12
percent.
(-b-) for plans having a
30-day and greater elimination period, the 85CIDA for a 14-day elimination
period with the adjustment specified in item (-a-) of this subclause.
(II) For contracts issued prior to
January 1, 2009, the minimum contract reserve requirements are specified in
§
3.6101(b) of
this chapter (relating to Policy Reserves).
(ii) Claim reserves. Claim reserves are to be
determined in accordance with §
3.7002(c) of
this subchapter (relating to Claim Reserves).
(F) Other individual contract benefits.
(i) Contract reserves. For all other
individual contract benefits, morbidity assumptions are to be determined as
provided in the reserve standards.
(ii) Claim reserves. For all benefits other
than disability, claim reserves are to be determined as provided in the
standards.
(2) Minimum morbidity standards for valuation
of specified group contract health insurance benefits are as follows.
(A) Disability income benefits due to
accident or sickness.
(i) Contract reserves.
Contracts issued prior to January 1, 1994: the same basis, if any, as that
employed by the insurer as of January 1, 1994. Contracts issued on or after
January 1, 1994: the 1987 Commissioners Group Disability Income Table (87CGDT).
The 1987 Commissioners Group Disability Income Table (87CGDT) is adopted herein
by reference.
(ii) Claim reserves.
For claims incurred on or after January 1, 1994: the 1987 Commissioners Group
Disability Income Table (87CGDT); for claims incurred prior to January 1, 1994:
use of the 87CGDT is optional.
(B) Single premium credit accident and
health.
(i) Contract reserves.
(I) For contracts issued on or after January
1, 2009:
(-a-) for plans having less than a
30-day elimination period, the 1985 Commissioners Individual Disability Table A
(85CIDA) with claim incidence rates increased by 12 percent.
(-b-) for plans having a 30-day and greater
elimination period, the 85CIDA for a 14-day elimination period with the
adjustment specified in item (-a-) of this subclause.
(II) For contracts issued prior to January 1,
2009, the minimum contract reserve requirements are specified in §
3.6101(b) of
this chapter.
(ii) Claim
reserves. Claim reserves are to be determined in accordance with §
3.7002(c) of
this subchapter.
(C)
Other group contract benefits.
(i) Contract
reserves. For all other group contract benefits, morbidity assumptions are to
be determined as provided in the reserve standards.
(ii) Claim reserves. For all benefits other
than disability, claim reserves are to be determined as provided in the
standards.
(b) Interest.
(1) For contract reserves the maximum
interest rate is the maximum rate permitted by law in the valuation of whole
life insurance issued on the same date as the health insurance
contract.
(2) For claim reserves on
policies that require contract reserves, the maximum interest rate is the
maximum rate permitted by law in the valuation of whole life insurance issued
on the same date as the claim incurral date. For claim reserves on policies not
requiring contract reserves, the maximum interest rate is the maximum rate
permitted by law in the valuation of single premium immediate annuities issued
on the same date as the claim incurral date, reduced by one percentage
point.
(c) Mortality.
(1) Except as provided in paragraphs (2),
(3), and (4) of this subsection, the mortality basis used must be according to
a table (but without use of selection factors) permitted by law for the
valuation of whole life insurance issued on the same date as the health
insurance contract.
(2) Other
mortality rates may be used in the calculation of the minimum reserves, if
appropriate for the type of benefits and if approved by the commissioner. The
request for such approval must include the proposed mortality basis and the
reason that the standard specified in paragraph (1) of this subsection is
inappropriate.
(3) For long-term
care insurance individual policies or group certificates the mortality basis
used shall be the 1983 Group Annuity Mortality Table without
projection.
(4) For single premium
credit accident and health insurance using the 85CIDA table, no separate
mortality shall be assumed.
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