Current through February, 2024
Section 1.
Authority and Purpose.
This Rule is promulgated under the authority granted to the
Commissioner by Title
8 V.S.A. §
15 and Title
8 V.S.A. §
6015 in order to establish criteria for the
issuance of health care stop loss insurance policies and contracts. Nothing in
this Rule shall be construed as imposing any requirement or duty on any person
other than an insurer or as treating any health care stop loss policy as a
direct policy of health insurance.
Section 2. Scope.
This Rule applies to each health care stop loss insurance
policy or contract that is delivered or issued for delivery by an insurer in
Vermont.
Section 3.
Definitions.
As used in this Rule:
A. "Actuarial Certification" means a written
and signed statement by a member in good standing of the American Academy of
Actuaries, or other individual acceptable to the Commissioner, that an insurer
is in compliance with the provisions of this Rule, based upon the individual's
examination and including a review of the appropriate records and the actuarial
assumptions and methods used by the insurer in establishing attachment points
and other applicable determinations in conjunction with the provision of health
care stop loss insurance coverage.
B. "Attachment Point" means the claims amount
incurred by a group health plan beyond which the health care stop loss insurer
incurs a liability for payment.
C.
"Commissioner" means the Commissioner of the Department of Financial
Regulation.
D. "Department" means
the Vermont Department of Financial Regulation.
E. "Expected Claims" means the amount of
claims that, in the absence of a health care stop loss policy or other
insurance, are projected to be incurred by a group health plan.
F. "Health Care Stop Loss Insurance" means
insurance or other risk-transfer arrangement that is purchased by a group
health plan or by the sponsor or trustee of such plan (or by any guarantor or
indemnitor thereof other than a licensed insurance company or reinsurer), to
limit the exposure of such person against losses sustained by such
plan.
G. "Insurer" means any
insurance company, including a captive insurance company formed or licensed
under Chapter 141 of Title 8, Vermont Statutes Annotated (other than a pure
captive), health maintenance organization, nonprofit hospital service
corporation and nonprofit medical service corporation, and to the extent
permitted by federal law, a risk retention group chartered and licensed in any
state.
H. "Small Employer" has the
same meaning provided in
33 V.S.A.
§
1811(a)(3)(B), as
amended and as may be amended from time to time. For purposes of determining
whether an employer is a small employer under this regulation, this section
shall apply to employers with employees in plans that are grand fathered under
8 V.S.A. §
4080g.
Section 4. Health Care Stop Loss Insurance
Coverage Standards.
A. Each health care stop
loss insurance policy or contract issued or renewed by an insurer must:
a) Have an annual attachment point for claims
incurred per individual which is at least:
i)
$ 33,200; or
ii) $ 40,000 for Small
Employers with 25 or fewer employees.
b) Have an annual aggregate attachment point,
for Small Employers, with more than 25 employees that is at least the greater
of:
i) 120 percent of expected claims;
or
ii) $ 33,200.
c) Have an annual aggregate
attachment point, for Small Employers with 25 or fewer employees, that is at
least the greater of:
i) 120 percent of
expected claims; or
ii) $
40,000
d) Have an annual
aggregate attachment point, for any groups other than Small Employers, that is
at least 110 percent of expected claims;
e) Not provide direct coverage of health care
expenses of an individual; and
f)
For Small Employers, not exclude from coverage any individual or group of
individuals who are covered by the underlying group health plan.
B. The Commissioner shall, every
third year beginning with the year 2020, commission an actuarial study of
appropriate attachment point levels. Upon receiving the actuarial study, the
Commissioner may, consistent with the study, adjust the attachment points set
forth in Paragraph A, above. The Commissioner may amend these dollar amounts in
increments of $ 100; any adjustments made to the dollar amounts set forth in
Paragraph A or Paragraph B, above, must be in increments of $ 100. The
Commissioner shall publish any adjustment to the dollar amounts set forth in
Paragraph A, above, at least six (6) months before the date such adjustment is
to become effective.
C. If the
policy or contract provides for higher attachment points for any individual or
group of individuals within the employer group, such attachment points may not
be changed during the policy period. For Small Employers, no attachment point
for an enrollee shall exceed three times the attachment point chosen for the
policy.
D. Notwithstanding any
provision to the contrary, a stop loss insurer may renew an existing health
care stop loss insurance policy using the annual attachment point for claims
incurred per individual specified in subsection A(a)(i) and the annual
aggregate attachment point specified in subsection A(b). This provision shall
not apply to health care stop loss insurance policies issued after the
effective date of this Rule.
Section
5. Required Disclosure Provisions.
Each health care stop loss insurance policy or contract shall
include on the first page of the policy or contract, or attached to the policy
or contract, in either contrasting color or in boldfaced type at least equal to
the size of the type used for policy or contract captions, the following
prominent and clear disclosures:
A. A
disclosure indicating whether claims under the policy or contract are paid on a
"run-in", "paid", "run-out" or other basis. To the extent such terms are used,
those terms must be defined in the policy or contract, but the definitions need
not appear with the disclosure provisions required by this Section.
B. If a "terminal liability" option is
available under the policy or contract, a disclosure shall be provided that
shall so state. If a terminal liability option is available, the policy or
contract shall include a clear description of such option, but the description
need not appear with the disclosure provisions required by this
Section.
C. If the policy or
contract restricts covered claims to those that are both incurred and paid by
the insured during the contract period, then a disclosure statement shall be
provided that states:
Only eligible expenses that are both incurred under the group
health plan and paid by the group health plan within the stated contract period
for health care stop loss insurance are reimbursable under this policy.
D. For Small Employers, the
application shall include a prominent statement describing the specific
financial risks of self-insuring, including the risk of claims volatility. If
the policy or contract provides for higher attachment points for any individual
or group of individuals within the employer group, then the application shall
also include a prominent statement describing the specific financial risks
associated with such higher attachment points. The statement(s) must be signed
by a representative of the Small Employer before coverage becomes
effective.
E. For groups other than
Small Employers, if the policy or contract provides for higher attachment
points as described in subsection D or excludes from the policy or contract any
individual or group of individuals covered by the underlying group health plan,
then the application shall include a prominent statement describing the
specific financial risks associated with such higher attachment points or
exclusions. The statement must be signed by a representative of the group
before coverage becomes effective.
Section 6. Form Filing Requirements.
A. Insurers shall file all forms for approval
by the Commissioner prior to use of a stop loss insurance policy form. No form
shall be approved if it contains any provision:
a) which is unjust unfair, inequitable,
misleading, or contrary to the law of this state;
b) which excludes coverage or benefits from
the underlying self-insured plan; or
c) which relates to medical necessity
determinations, utilization management requirements, and usual and customary
charge determinations.
B. Forms, as used in this Rule, shall include
the following: all product forms, including but not limited to, policy forms,
member handbooks, certificates, endorsements, riders, and
applications.
Section 7.
Rate Filing Requirements.
A. Prior to
implementation, carriers shall file for approval rate filings that include, at
a minimum, the following:
a) a certification
by a member of the American Academy of Actuaries which certifies a carrier's
compliance with this Rule. Such certification shall include sufficient detail
for the Commissioner to verify that such certification is appropriate. Carriers
shall provide additional information as requested by the Commissioner in order
to verify representations in the rate filing;
b) a statement by a member of the American
Academy of Actuaries that the rates are reasonable in relation to the benefits
provided, and that they are neither excessive, deficient, nor unfairly
discriminatory;
c) a description of
the methodology for calculating the requested rate;
d) an identification of the effective date
that the rates were designed for and the effective period of the rates; and
e) an explanation of adverse
selection factors considered by the carrier.
B. No rate shall be approved if it is unjust,
unfair, inequitable, misleading or contrary to the law of this state. Notice of
a premium rate increase shall be provided to insureds at least 45 days prior to
implementation, subject to waiver as approved by the Commissioner. In no event
shall rate increases be implemented without at least 30 days written notice to
the insured.
Section 8.
Severability.
If any provision of this Rule or the application thereof to
any person or circumstance is for any reason held to be invalid, the remainder
of the Rule and the application of such provisions to other persons or
circumstances shall not be affected thereby.
Section 9. Effectiveness.
This Rule shall govern health care stop loss insurance
policies with coverage issued or renewed on or after March 1, 2022; provided,
the Commissioner may waive or modify one or more of the provisions of this Rule
for any health care stop loss insurance issued by a captive insurance company
or risk retention group under a plan of operation satisfying the underlying
purposes of this Rule as determined by the Commissioner. Administration and
enforcement of this Rule with respect to Vermont-domiciled captive insurance
companies and Vermont-domiciled risk retention groups shall be by the
Department's Captive Insurance Division consistent with the responsibilities of
the Division and the Commissioner under Chapter 141 and Chapter 142 and Title
8.
STATUTORY AUTHORITY:
8 V.S.A.
§§
15,
6015