N.M. Admin. Code § 13.10.35.9

Current through Register Vol. 35, No. 23, December 10, 2024

Section 13.10.35.9 - GENERAL STANDARDS FOR POLICIES AND BENEFITS

A.For individual plans. The following general standards apply to individual plans.

(1) An individual plan shall have a minimum term of 12 months.

(2) A "noncancellable," "guaranteed renewable," or "noncancellable and guaranteed renewable" individual plan shall not provide for termination of coverage of the domestic co-insured solely because of the occurrence of an event specified for termination of coverage of the covered person, other than nonpayment of premium. In addition, the plan shall provide that in the event of the covered person's death, the domestic co-insured of the covered person, if covered under the plan, shall become a covered person with the issuance of a new policy and completed agreement.

(3) An individual plan shall protect consumer rights as follows:

(a) The terms "noncancellable" or "noncancellable and guaranteed renewable" may only be used in an individual dental or vision plan if the covered person has the right to continue the coverage by timely paying premiums, until the age of 65 or until eligibility for Medicare, whichever is later, during which time the carrier has no unilateral right to change any provision of the plan.

(b) The term "guaranteed renewable" may only be used in a plan where the covered person has the right to continue in force, by timely paying premiums, until the age of 65 or until eligibility for Medicare, whichever is later, during which period the carrier has no unilateral right to change any provision of the plan, other than changes in premium rates by classes.

(c) A plan shall not terminate the coverage of a covered person except for "good cause," as follows:

(i) failure of the covered person or subscriber to pay the premiums and other applicable charges for coverage;

(ii) material failure to abide by the rules, policies or procedures of the plan;

(iii) fraud or misrepresentation affecting coverage;

(iv) policyholder request for cancellation;

(v) policy term ends; or

(vi) a reason for termination or failure to renew that the superintendent determines is not objectionable.

(4) If an individual plan covers domestic co-insureds, the age of the younger insured shall be used as the basis for meeting the age and durational requirements of the definitions of "noncancellable" or "guaranteed renewable." However, this requirement shall not prevent termination of coverage of the older insured upon attainment of the stated age so long as the policy may be continued in force as to the younger spouse to the age or for the durational period specified in the policy.

B.For individual and group plans. The following general standards apply to both individual and group plans.

(1) A carrier may not terminate a plan unless it provides written notice of termination to a covered person one month prior to the coverage renewal date. A notice of termination shall:

(a) be in writing and dated;

(b) state the reason(s) for termination, with specific references to the clauses of the dental or vision plan giving rise to the termination;

(c) state that a covered person's plan cannot be terminated because of health status, need for services, race, gender, or sexual orientation of covered persons under the contract. Age may only be a factor in termination of coverage as outlined in Paragraph (4) of Subsection A and Paragraph (8) of Subsection B of this section;

(d) state that a covered person who alleges that an enrollment has been terminated or not renewed because of the covered person's health status, need for health care services, race, gender, age or sexual orientation may file a complaint with the superintendent by phone or on the OSI's website; and

(e) state that in the event of termination by either the covered person or the plan, except in the case of fraud or deception, the plan shall, within 30 calendar days, return to the covered person or subscriber the pro rata portion of the money paid to the plan that corresponds to any unexpired period for which payment had been received together with amounts due on claims, if any, less any amounts due to the plan, provided, however, that the superintendent may approve other reasonable reimbursement practices.

(2) A plan shall include a notice prominently printed on or attached to the first page of the plan stating that the covered person shall have the right to return the plan within 30 days of its delivery, and to have the premium and any required membership fees refunded, if after examination of the plan the covered person is not satisfied for any reason, provided no claim has been paid.

(3) If a plan includes a conversion privilege, the provision shall be captioned, "Conversion Privilege." The provision shall specify who is eligible for conversion and the circumstances that govern conversion, or may state that the conversion coverage will be provided as an approved plan form used by the carrier for that purpose.

(4) If a carrier requires submission of a claim form as a condition of payment, the carrier, upon receipt of notice of a claim, shall furnish to the covered person a form to be delivered in the manner offered by the carrier that is preferred by the covered person. If the carrier does not furnish a claim form within 15 days after notice of a claim, the claimant shall be deemed to have complied with the requirement to provide proof of loss if the notice of claim contains written proof describing the claim, including the character and extent of the loss of which the claim is made. Adequate proof of loss must be in the possession of the insurance company at the time funds are disbursed in payment of claims.

(5) A grace period of at least 10 days for a monthly premium plan and at least 31 days for any plan billed less frequently shall be granted for the payment of each premium falling due after the first premium. During this grace period, the plan shall continue in force.

(6) A carrier shall not use any untrue statement or inducement not specified in a policy to solicit a prospective plan enrollee.

(a) A statement shall be deemed untrue if it does not conform to fact in any respect and would be considered significant to a person contemplating enrollment with a plan.

(b) Inducements shall meet the requirements of Subsections G and H of Section 59A-16-17 NMSA 1978.

(7) If coverage of dependents is provided, a carrier shall not terminate coverage of an unmarried dependent by reason of the dependent's age before the dependent's 26th birthday, regardless of whether the dependent is enrolled in an educational institution.

(8) A plan may terminate the coverage of a dependent due to limiting age for a dependent per the plan's contracted age limits. However, a plan must offer coverage to dependents, regardless of age, who are physically or mentally disabled prior to reaching the limiting age and are incapable of self-sustaining employment. Coverage for a child who is physically or mentally disabled prior to reaching the limiting age and incapable of self-sustaining employment on the date the child would otherwise age out of coverage shall continue if the child depends on the covered person for support and maintenance. The plan may require that within 31 days of the date the company receives proof of the child's incapacity, the covered person may elect to continue the plan in force with respect to the child.

C.For group coverage.. A group plan that offers dental or vision coverage shall comply with all sections of this rule.

D.Prior approval of forms required. A carrier shall not issue, deliver, or use a form associated with applicable dental and vision plans, unless and until such form has been filed with and approved by the superintendent.

E.Prior approval of rates required. A carrier shall not use rates or modified rates for dental and vision plans unless and until such rates are filed with and approved by the superintendent.

F.Minimum loss ratios for group and individual dental plans. Benefits dental plans shall be subject to a sixty-five percent minimum loss ratio requirement.

G.Minimum loss ratios for group and individual vision plans. Benefits under vision plans shall be subject to a fifty-five percent minimum loss ratio requirement.

H.Rate filing requirements. Each carrier providing dental or vision insurance must provide an actuarial analysis in an actuarial memorandum, certified by a qualified actuary, for each individual or group plan sold in New Mexico. Experience data may be aggregated for those policies or certificates that are rated together due to noncredible experience. A rate filing for a plan which provides both dental and vision benefits under the same policy must provide information in the actuarial memorandum and other supporting documentation to separately identify and support the premiums attributed to the dental and vision coverages. The superintendent shall post on its website requirements for filing actuarial memorandums and rates for rate filing requests. These requirements may differ for:

(1) dental and vision plans;

(2) individual, small group, and large group dental and vision plans;

(3) dental and vision plans sold on and off the health benefits exchange.

I.Calculating the loss ratio for individual and group dental and vision plans. The loss ratio is calculated as the ratio of the numerator to the denominator, as defined in Paragraphs (1) and (2) below. The loss ratio shall be calculated separately for dental and vision coverages, even if both dental and vision benefits are included in a single policy or contract.

(1)Numerator. The numerator is equal to the incurred claims for the loss ratio reporting year.

(2)Denominator. The denominator is the earned premiums for the loss ratio reporting year.

J.Rate revisions. The following requirements shall apply to rate revision requests: With respect to filing rate revisions for a previously approved form, or a group of previously approved forms combined for experience, benefits may be deemed reasonable in relation to premiums provided the revised rates meet the minimum loss ratio requirements of Subsections F or G of this rule, as applicable, and most current standards applicable to rate filings as prescribed by the superintendent, pursuant to Subsection I above based on actual experience and expected experience in the rating period.

K.Rates for new plans. The following requirements shall apply to rates for dental and vision plans not previously offered for sale in New Mexico: with respect to filing rates for a new plan, benefits may be deemed reasonable in relation to premiums provided the proposed rates meet the minimum loss ratio requirements of this rule, as applicable, and most current standards applicable to rate filings as prescribed by the superintendent, based on expected experience in the first three years.

L.Disapproval of forms and rates. The superintendent shall issue a disapproval:

(1) if the benefits provided therein are unreasonable in relation to the premium charged. For purposes of this rule, a dental or vision plan that meets the minimum loss ratio requirements will be considered to have benefits that are reasonable in relation to the premium charged;

(2) If there is misrepresentation of the benefits, advantages, conditions or terms of any plan or if the plan is characterized as more favorable to the covered person than the actual terms of the plan, such as naming coverage for services or conditions for which the primary forms of treatment are listed as exclusions;

(3) If there are false or misleading statements;

(4) If the name or title of a form is misrepresenting the true nature thereof; or

(5) If the plan contains provisions that are contrary to law, discriminatory, deceptive, unfair, impractical, unnecessary or unreasonable.

M.Disclosure and reporting compliance with minimum loss ratio requirements. By July 31^st following each reporting year, carriers providing dental or vision benefit coverage must submit to the superintendent an actuarial memorandum prepared by a qualified actuary, which discloses the actual loss ratio for each plan, form or certificate subject to this rule. The annual filing shall, at a minimum, include rates, rating schedules, and supporting documentation, including ratios of incurred claims to earned premiums for each calendar year since issue. Information shall be in the form prescribed by the superintendent and shall demonstrate that each plan complies with the minimum loss ratio standards. Carriers that provide dental or vision insurance coverage that acquire a line or block of business from another carrier during a reporting year are responsible for submitting the required information and reports for the assumed business, including for that part of the reporting year that preceded the acquisition.

(1)General. Carriers shall meet the minimum loss ratio established, and in the manner calculated, under this section of the rule.

(2)Aggregation. Experience data may be aggregated for those policies or certificates that are rated together due to noncredible experience.

(3)Measurement period. Compliance with the minimum loss ratio shall be measured over the last three calendar years of experience and for each calendar year of experience utilized in the rate determination process, but never less than the last three calendar years, after the initial transition period (2024 to 2026). The initial measurement period shall be calendar year 2024; the second measurement year shall be calendar years 2024 and 2025; the third measurement period shall be calendar years 2024, 2025 and 2026. Each year thereafter, the subsequent calendar year shall be added to the rolling three-year period and the oldest calendar year shall be removed. For example, the fourth measurement period shall be calendar years 2025, 2026, and 2027.

(4)Frequency. Loss ratios shall be calculated annually by carriers that issue vision or dental plans specified in this rule, beginning with the 2024 reporting year.

(5)Timeline. The evidence of compliance with the minimum loss ratio requirements shall be filed with the superintendent by July 31 of the year following the reporting year. For noncredible blocks of business, the company may request a waiver of the requirement. The request shall be made annually and must be accompanied by a letter indicating the nature of the filing, the type of plan, and the reason for the request.

(6)Methodology. For existing plans, actual loss ratios shall be calculated using company historical claim data including an estimate for claims incurred but not reported, as appropriate.

(a) The superintendent shall assure that reserves are reasonable and based on sound actuarial principles with respect to the aggregate dollar amount of reserves for claims that are incurred but not yet paid, and for claims that are incurred but not yet reported.

(b) The claims will be reported for each calendar year of experience utilized in the rate determination process, but never less than the last three years after the third year of experience is available.

(c) A plan shall be deemed to comply with the purposes of this section if the expected losses in relation to expected premiums over the entire period for which the plan is rated comply with the requirements of this section and either of the following applies:

(i) For policies or certificates that have been in force for three years or more, for the last three years, the ratio of incurred losses to earned premiums is greater than or equal to the minimum loss ratios established by this rule.

(ii) For policies or certificates that have been in force for fewer than three years, the expected third-year loss ratio can be demonstrated to be greater than or equal to the minimum loss ratio.

(7)Credibility. The certifying actuary shall include a statement related to the credibility of the data and the methodology used to determine such credibility in accordance with the applicable actuarial standards of practice.

(8)Compliance with minimum loss ratios. Each carrier shall submit to the superintendent an exhibit showing the calculation of the applicable loss ratios and:

(a) a statement signed by a qualified actuary that the minimum loss ratio requirements have been met; or

(b) a rate filing to justify the rates, revise rates, modify benefits through a benefit endorsement or to return excess premium.

(9)Corrective action plan. The superintendent may require a corrective action plan to return excess premiums or increase benefits if the minimum loss ratio requirements are not met.

(a) A carrier shall not return excess premiums per the above guidelines, until the carrier files a corrective action plan and obtains approval of such plan by the superintendent.

(b) If, in the opinion of the superintendent, a plan's failure to meet the minimum loss ratio requirements is due to unusual reserve fluctuations, economic conditions, or other nonrecurring conditions, the superintendent may elect not to issue a corrective action plan. Any such exemption shall be in writing.

N.M. Admin. Code § 13.10.35.9

Adopted by New Mexico Register, Volume XXXII, Issue 11, June 8, 2021, eff. 1/1/2022, Amended by New Mexico Register, Volume XXXIII, Issue 24, December 27, 2022, eff. 1/1/2024