Section 031-940-8 - Individual Health Plans Subject to Title 24-A M.R.S.A. section 2736-CIn addition to the applicable requirements of Section 5, Section 6, Subsection 7(C), Section 12, and Section 13, rate filings subject to Title 24-A M.R.S.A. § 2736-C, which include rate filings for certain group polices specified in Title 24-A M.R.S.A. § 2701(2)(C), must meet the following requirements:
A.Minimum Required Loss Ratio: As applicable, state the minimum required loss ratio for the form as defined in Title 24-A M.R.S.A. § 2736-C. Policies issued before December 1, 1993 are subject to the loss ratio standards of Section 7. This subsection does not apply when the carrier has elected the guaranteed loss ratio option pursuant to Subsection H and rate review is not required pursuant to the ACA.B.Rate Differentials between Plans:Unless the Superintendent grants an exception in accordance with this subsection, rates for different benefit plans that vary based on benefit differences may not exceed the maximum possible difference in benefits. For example, the difference in annual premium between a plan with a $250 deductible and an otherwise identical plan with a $500 deductible may not exceed $250 unless an exception is granted. The Superintendent will grant exceptions based on the following criteria and conditions: 1. The rate differential between plans must be justified based on actual or reasonably anticipated differences in utilization that are independent of differences in health status or demographics. Generally, some of the difference in utilization between richer and leaner benefit plans is due to self-selection (based on health status or demographics) by those choosing one plan over the other, while some of the difference is due to the incentives associated with different cost-sharing levels. While it may not be possible to definitively determine how much of the difference in utilization is related to health status and demographics, the carrier must make a good faith effort to make this distinction.2. In cases where approved rate differences do exceed the maximum possible differences in benefits, it must be clearly disclosed to prospective policyholders and renewing policyholders. A copy of the disclosure to be used and a description of when and how it will be distributed must accompany the proposed rate filing. This subsection does not apply to policies subject to the ACA rating requirements.
C.Modified Community Rating:The filing must include the community rate and any formulas or factors used to adjust that rate. 1. A carrier may not vary the premium rate due to the gender, health status, occupation or industry, claims experience, or policy duration of the individual. 2. A carrier may vary the premium rate due to family membership to the extent permitted by the ACA.3. For rates effective before July 1,2012, any variations based on age and/or tobacco use must result in rates that are no less than 80% and no more than 120% of the community rate.4. Rates for policies, contracts, or certificates that are executed, delivered, issued for delivery, continued, or renewed effective on or after July 1,2012, are subject to the following rating restrictions: a. Except as provided in Subsection D, variations based on age must not exceed the limits set forth in Title 24-A M.R.S.A. § 2736-C(2), paragraph D, subparagraphs 5 through 7.b. Pursuant to the ACA, on or after January 1, 2014, age variations are limited to a ratio of 3 to 1 for plans other than grandfathered health plans as defined under the ACA and for transitional coverage as defined in Subsection 4(I).c. Variations based on geographic area are limited to a ratio of 1.5 to 1.d. Variations based on tobacco use are limited to a ratio of 1.5 to 1.D.Closed Blocks: A carrier that offered individual health plans before July 1, 2012 may close its individual book of business sold before that date and may establish a separate community rate for individuals applying for coverage under an individual health plan on or after that date, subject to the following: 1. Rates are subject to the following rating restrictions: a. Variations based on age must not exceed the limits set forth in Title 24-A M.R.S.A. § 2736-C(2)(I), subparagraphs 1 through 5.b. Pursuant to the ACA, on or after January 1, 2014, age variations are limited to a ratio of 3 to 1 for plans other than grandfathered health plans as defined under the ACA and for transitional coverage as defined in Subsection 4(I).c. Variations based on geographic area are limited to a ratio of 1.5 to 1.d. Variations based on tobacco use are limited to a ratio of 1.5 to 1.2. Pursuant to the ACA, except for enrollees in grandfathered health plans as defined under the ACA, beginning January 1, 2014, a carrier shall consider all enrollees in all individual health plans offered by the carrier to be members of a single risk pool. Therefore, after that date, the separate community rate for the closed block will only apply to grandfathered health plans and to transitional coverage as defined in Subsection 4(I).F.Annual Data Collection:The information described in Appendix A must be submitted annually. This data must be filed separately from any rate filing and must be in an electronic format prescribed by the Superintendent.G.Notice to Policyholders:The filing must include a copy of the form letter to be used to notify policyholders of a rate increase, as required by Title 24-A M.R.S.A. § 2735-A, and the date on which the notices were sent. If they have not yet been sent, state the date they are intended to be sent and provide written confirmation to the Bureau when the notices have been sent.H.Guaranteed Loss Ratio Option1. Each filing must specify whether or not the carrier elects the guaranteed loss ratio option with respect to the filing. If the guaranteed loss ratio option is elected, the election may be changed in subsequent filings. However, if the guaranteed loss ratio option is elected and the election is later changed and the effective date of the rate filing changing the election is other than January 1, then the carrier must guarantee the loss ratio through the end of the calendar year.2. The guaranteed loss ratio option is available only if the Superintendent determines that the carrier's anticipated average number of members in all individual health plans during the period for which the rates will be in effect meets standards for full or partial credibility pursuant to the ACA. The rate filing must state the anticipated average number of members during the period for which the rates will be in effect and the basis for the estimate.3. If the guaranteed loss ratio option is elected, the calculation of the rebates paid pursuant to Section 13 must be based on a minimum MLR of 80%, even if the applicable federal minimum for the individual market in Maine is lower.4. Rates filed pursuant to the guaranteed loss ratio option do not require prior approval unless rate review is required pursuant to the ACA. Rates subject to ACA review must be filed for prior approval. Rates not subject to ACA review must be filed for informational purposes at least 60 days before implementation unless the Superintendent waives this requirement. Informational filings will be reviewed for compliance with subsections A through D and with the requirements of Title 24-A M.R.S.A. § 2736-C. Any deficiencies will be brought to the attention of the carrier. If the rates have already been implemented and do not meet statutory requirements, corrective action may be required. Every effort will be made to process filings within 30 days.5. If the filing does not require prior approval, it must include the following in addition to the items required by Section 5 and Subsections B(2), C, and G of this section: d. A demonstration that the rate revision is not subject to review pursuant to the ACA; ande. A demonstration of compliance with Subsection B.02-031 C.M.R. ch. 940, § 8