Section 031-275-15 - Filing and Approval of Policies and Certificates and Premium Rates The requirements of this Rule have extraterritorial applicability. The form and rate requirements apply to certificates issued in Maine pursuant to out-of-state group policies.
A. An issuer shall not deliver or issue for delivery a policy or certificate to a resident of this State unless the policy form or certificate form has been filed with and approved by the Superintendent in accordance with filing requirements and procedures prescribed by law. An issuer shall file any riders or amendments to policy or certificate forms to delete outpatient prescription drug benefits as required by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 only in the state in which the policy or certificate was issued.B. An issuer shall not use or change premium rates for a Medicare supplement policy or certificate unless the rates, rating schedule and supporting documentation have been filed with and approved by the Superintendent in accordance with the filing requirements and procedures prescribed by Subsection G.C.(1) Except as provided in Paragraph (2) of this subsection, an issuer shall not file for approval more than one form of a policy or certificate of each type for each standard Medicare supplement benefit plan.(2) An issuer may offer, with the approval of the Superintendent, up to two (2) alternative policy forms or certificate forms of the same type for the same standard Medicare supplement benefit plan, one for each of the following cases: a. The inclusion of new or innovative benefits;b. The addition of either direct response or producer marketing methods.(3) For the purposes of this section, a "type" means an individual policy, a group policy, an individual Medicare Select policy, or a group Medicare Select policy.(4) An issuer filing proposed rate increases for 1990 standardized Medicare supplement benefit plans must describe the relationship of the rates filed to those renewal rates for comparable 2010 standardized Medicare supplement benefit plans.D.(1) Except as provided in Paragraph (1)(a), an issuer shall continue to make available for purchase any policy form or certificate form issued after the effective date of this Rule that has been approved by the Superintendent. A policy form or certificate form shall not be considered to be available for purchase unless the issuer has actively offered it for sale in the previous twelve (12) months.a. An issuer may discontinue the availability of a policy form or certificate form if the issuer provides to the Superintendent in writing its decision at least thirty (30) days prior to discontinuing the availability of the form of the policy or certificate. After receipt of the notice by the Superintendent, the issuer shall no longer offer for sale the policy form or certificate form in this State.b. An issuer that discontinues the availability of a policy form or certificate form pursuant to Subparagraph (a) shall not file for approval a new policy form or certificate form of the same type for the same standard Medicare supplement benefit plan as the discontinued form for a period of five (5) years after the issuer provides notice to the Superintendent of the discontinuance. The period of discontinuance may be reduced if the Superintendent determines that a shorter period is appropriate.(2) The sale or other transfer of Medicare supplement business to another issuer shall be considered a discontinuance for the purposes of this subsection.(3) A change in the rating structure or methodology shall be considered a discontinuance under Paragraph (1) unless the issuer complies with the following requirements: a. The issuer provides an actuarial memorandum, in a form and manner prescribed by the Superintendent describing the manner in which the revised rating methodology and resultant rates differ from the existing rating methodology and existing rates.b. The issuer does not subsequently put into effect a change of rates or rating factors that would cause the percentage differential between the discontinued and subsequent rates as described in the actuarial memorandum to change. The Superintendent may approve a change to the differential which is in the public interest.E.(1) Except as provided in Paragraph (2), the experience of all policy forms or certificate forms of the same type in a standard Medicare supplement benefit plan shall be combined for purposes of the refund or credit calculation prescribed in Section 14 of this Rule.(2) Forms assumed under an assumption reinsurance agreement shall not be combined with the experience of other forms for purposes of the refund or credit calculation.F. Issuers that do not refuse issue of a plan to any individual or group based on health status may provide temporary discounts on that plan to individuals who purchase coverage during their initial period of enrollment in Medicare Part B by reason of age, subject to approval by the Superintendent based on the following standards: (1) The maximum allowable discount an issuer may offer in each of the first three policy years will be determined based on the following table. No discounts will be permitted after the third policy year. AI - AO: | Less than 2 | 2 - 3 | 3 - 4 | 4 - 6 | 6 - 8 | 8 - 10 | 10+ |
Maximum First-Year Discount: | 0 | 5% | 10% | 15% | 20% | 25% | 30% |
Maximum Second-Year Discount: | 0 | 0 | 5% | 10% | 14% | 17% | 20% |
Maximum Third-Year Discount: | 0 | 0 | 0 | 5% | 8% | 9% | 10% |
where:
AI = the adjusted average age, as defined below, of the issuer's in-force block of standardized Medicare supplement business.
AO = the adjusted average age for all other issuers offering coverage in Maine.
(2) The adjusted average age for the issuer (AI) is equal to (A x 90) + (B x 67) + (C x 72) + (D x 77) + (E x 82) + (F x 90) / (A + B + C + D + E + F)
where A, B, C, D, E, and F are the numbers of covered lives in the age categories under 65, 65-69, 70-74, 75-79, 80-84, and 85 and over respectively. The values of A, B, C, D, E, and F for each issuer are those provided in the rate filing as specified in Section 15(G)(10).
(3) The adjusted average age for all other issuers (AO) is equal to Click to view image
where:
a. AM is the adjusted average age and TM is the total number of covered lives for all issuers offering coverage in the Medicare supplement market in Maine. AM is equal to 77.4 and TM is equal to 71,393 based on rate filings. Future changes in AM and TM will be determined by the Superintendent based on data provided in rate filings as specified in Section 15(G)(10). When the Superintendent determines that the values have changed significantly, a bulletin will be issued stating new values of AM and TM.b. AI' is the adjusted average age for the issuer as reflected in AM. AI' is calculated the same as AI as defined in paragraph (2) above except that A', B', C', D', E', and F', as defined in subparagraph d below, shall be substituted for A, B, C, D, E, and F.c. TI is the total number of covered lives for the issuer as reflected in TM and is equal to the sum of A', B', C', D', E', and F', as defined in subparagraph d below.d. A', B', C', D', E', and F' are the numbers of covered lives for the issuer in the age categories under 65, 65-69, 70-74, 75-79, 80-84, and 85 and over respectively as reflected in the calculation of AM and TM. The issuer can obtain these values from the Bureau of Insurance.G. Premium rate filings must meet the requirements of this subsection. The filing must be received by the Bureau at least 60 days before the implementation date. Every effort will be made to process filings within 60 days. If the Bureau requests additional information or finds rates not to be in compliance, rates approved previously must continue to be used. The Superintendent may request additional information as necessary. Every rate submission must contain, to the extent applicable based on the type of filing:
(1) Issuer Information: Include the name and address of the issuer. The name, signature, title, and direct phone number of the person responsible for the filing must also be noted.(2) Scope and Purpose of Filing: Specify whether this is a new form filing, a rate revision, or a justification of an existing rate. Clearly describe the reason for any rate revisions.(3) Percentage Change: If this is a rate revision, state the proposed percentage change in rates for each plan and the average increase for all plans.(4) Discounts: State any discounts to be offered pursuant to Subsection F and the anticipated impact on aggregate premium and claims experience.(5) Proposed Effective Date: State the proposed effective date and method of the proposed rate revision implementation (e.g., next anniversary or next premium due date).(6) Description of Benefits: For pre-standardized plans, include a brief description of the benefits provided by each policy form, any attached riders or endorsements, and whether there are any benefit maximums.(7) Pre-existing condition exclusion: Describe the provision.(8) Marketing Method: Provide a brief description of the market and the marketing method. Specify whether the form is still being sold and whether the filing applies only to new business, only to in-force business, or both, and the reasons therefore.(9) Medical Underwriting: Provide a description of the extent to which this product will be medically underwritten, if any, and the expected impact, by duration and in total, on claim costs.(10) In-Force Business: Policy count and annualized premium of Maine policyholders or certificate holders under each plan who will be affected by the proposed rate revision. Also include the following information concerning the ages of covered lives under in-force business for all standardized plans combined, whether or not currently marketed. List the number of covered lives in each age category: under 65, 65-69, 70-74, 75-79, 80-84, and 85 and over.(11) History of Rate Adjustments: List the approval dates, implementation dates and average percentage rate adjustments, both nationwide and in Maine, since inception of the policy form.(12) Target Lifetime Loss Ratios: State the minimum loss ratio determined and the anticipated future and lifetime loss ratios.(13) The filing must include sufficient supporting information to demonstrate that the rates are not excessive, inadequate, or unfairly discriminatory. The supporting documentation shall also demonstrate in accordance with actuarial standards of practice using reasonable assumptions that the appropriate loss ratio standards, as set forth in Section 14(A), can be expected to be met over the entire period for which rates are computed. Such 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. Issuers are required to review their experience no less frequently than annually and to file rate revisions, upward or downward, as appropriate. Upward revisions must be filed in a timely manner to avoid the necessity of large increases.(14) Medical Trend Assumptions: Provide the medical trend used and the assumptions used to calculate the trend.(15) Administrative Expenses: Include a breakdown of the administrative expenses.(16) Commission Schedule: Provide the level of compensation for new issues and renewals.(17) Maine Experience: Issuers shall consider experience solely within the State of Maine in developing its rates. However, if there is insufficient experience within Maine upon which a rate can be based, the issuer may use nationwide experience. If nationwide experience is used, premiums must be adjusted to the Maine rate level and, where appropriate, claims must be adjusted to Maine utilization and price levels. If premiums incorporate area factors that adjust for variations in utilization and price levels such that adjusting experience to Maine levels would result in the same percentage adjustment to both premiums and claims, then neither adjustment need be made. The issuer in its rate filing shall expressly show what geographic experience it is using. Experience from inception for each calendar year and, where appropriate, each policy year, must be displayed, including the following information:f. Incurred claims, reflecting actual claim runoff for periods where the runoff is completeg. Incurred loss ratio, including ratios of incurred losses to earned premiums by policy duration;h. Expected incurred claimsi. Actual-to-expected claims For future years, columns (c), (f), and (g) must be displayed.
(18) The filing must clearly state the assumptions used to project future experience, including: a. Base period of projection and whether based on state or national experiencec. Trend and rationale for trendd. Impact of scheduled or anticipated changes in Medicare, including but not limited to changes in the Part A deductible and changes in provider reimbursement rates.e. Interest rate for discounting and accumulating premiums and claims.(19) National Experience: Same data as for paragraphs 17 and 18.(20) A demonstration that expected claims in relation to premiums comply with the requirements of Section 14 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.(21) Rate sheets: Provide current rate schedule and the proposed rate schedule appropriate for the State. List the percentage difference between the current and proposed rates. Include any additional rating factors such as area factors, smoker/non-smoker factors. State clearly whether any factor rates have been applied to the rates provided. The assumed period for which the rates apply must also be noted.(22) The filing may be prepared in a manner that protects the confidentially of proprietary information by following the confidentiality protocol, available on request from the Bureau of Insurance.(23) Actuarial Certification: Certification by a qualified actuary that to the best of the actuary's knowledge and judgment, the entire rate filing is in compliance with the applicable laws of the State of Maine and with the rules of the Bureau of Insurance. "Qualified actuary," as used herein, means a member in good standing of the American Academy of Actuaries.02-031 C.M.R. ch. 275, § 15