Current through September 21, 2024
(a) Loss Ratio Standards.
(i) Medicare Supplement Policy Form or
Certificate Form.
(A) 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 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 (75%) of
the aggregate amount of premiums earned in the case of group policies;
or
(II) At least sixty-five percent
(65%) of the aggregate amount of premiums earned in the case of individual
policies;
(B) Loss ratio
standards 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:
(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.
(ii) 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 can be expected to meet the
appropriate loss ratio standards.
(iii) For purposes of applying Subsection
(a)(i) of this section and Subsection (c)(iii) of Section
15 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.
(iv) For
policies issued prior to July 6, 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 Subsection (a)(i)(A)(I) and (II) when combined with
actual experience beginning with July 6, 1992 to date; and
(C) The appropriate loss ratio requirement
from Subsection (a)(i)(A)(I) and (II) over the entire future period for which
the rates are computed to provide coverage.
(b) Refund or Credit Calculation.
(i) An issuer shall collect and file with the
commissioner by May 31 of each year the data contained in the applicable
reporting form contained in Appendix A for each type in a standard Medicare
supplement benefit plan.
(ii) 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.
(iii) For the purposes of this section,
policies or certificates issued prior to the effective date of this rule, 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 the effective date of this amendment. The first report shall
be due by May 31, 2011.
(iv) 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 the
effective date of this amendment 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 commissioner
in accordance with the filing requirements and procedures prescribed by the
commissioner. 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 which is greater than or equal
to the applicable percentage shall be demonstrated for policies or certificates
in force less than three (3) 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
commissioner, in accordance with the applicable filing procedures of this
state:
(i) 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 which 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 commissioner, the commissioner may order premium
adjustments, refunds or premium credits deemed necessary to achieve the loss
ratio required by this section.
(ii) 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
commissioner 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 or after the effective date of this amendment 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 commissioner.
