N.H. Code Admin. R. Ins 1902.09 - Loss Ratio Standards and Refund or Credit of Premiums

(a) A group medicare supplement policy form or certificate form shall not be advertised, solicited, 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, on the basis of:

(1) Either:

a. Incurred claims experience; or

b. Incurred health care expenses where coverage is provided by a health maintenance organization on a service rather than reimbursement basis; and

(2) Earned premiums for such period in accordance with accepted actuarial principals and practices, to return to policyholders and certificateholders in the form of aggregate benefits, not including anticipated refunds or credits, provided under the policy form at least 75 percent of the aggregate amount of premiums earned.

(b) An individual medicare supplement policy shall not be advertised, solicited, delivered, or issued for delivery unless the policy form can be expected, as estimated for the entire period for which rates are computed to provide coverage, on the basis of:

(1) 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

(2) Earned premiums for such period in accordance with accepted actuarial principles and practices, to return to policyholders in the form of aggregate benefits, not including anticipated refunds or credits, provided under the policy form at least 65 percent of the aggregate amount of premiums earned.

(c) The return to policyholders and certificateholders in the form of aggregate benefits of at least 75 percent of the aggregate amount of premiums earned in the case of group policies and of at least 65 percent of the aggregate amount of premiums earned in the case of individual policies shall be deemed the loss ratio standards established by this rule.

(d) All filings of rates and rating schedules shall:

(1) Demonstrate that expected claims in relation to premiums comply with the requirements of this section when combined with actual experience to date; and

(2) Demonstrate if the filing is for a rate revision, that the anticipated loss ratio over the entire future period for which the revised premiums are computed to provide coverage can be expected to meet the appropriate loss ratio standard as determined by reference to Ins 1902.09(a) in the case of a group policy or to Ins 1902.09(b) in the case of an individual policy.

(e) For policies issued prior to July 1, 1992, expected claims in relation to premium shall meet:

(1) The originally filed anticipated loss ratio when combined with the actual experience since inception;

(2) The appropriate loss ratio requirement from Ins 1902.09(a) or Ins 1902.09(b) when combined with actual experience; and

(3) The appropriate loss ratio requirement from Ins 1902.09(a) or Ins 1902.09(b) over the entire future period for which the rates are computed to provide coverage.

(f) Rules applicable to refund or credit calculation reporting shall be as follows:

(1) With respect to Medicare supplement policies or certificates issued prior to July 1, 1992, the issuer shall make one refund or credit calculation combining the experience of all the issuer's individual policies beginning with experience after 12/31/96 and one refund or credit calculation combining the experience of all the issuer's group policies beginning with experience after December 31, 1996;

(2) Each issuer shall collect the data contained in the applicable reporting form contained in Table 1900.03 and, using this reporting form, file the data with the commissioner;

(3) Reports shall be due on May 31 of each year;

(4) If, on the basis of the experience as reported, the benchmark ratio since inception of the reporting requirement, ratio 1 from line 7 of the reporting form contained in Table 1900.03, exceeds the adjusted experience ratio since inception of the same reporting requirement, ratio 3 from line 11 of the reporting form contained in Table 1900.03, then a refund or credit calculation shall be required. The refund calculation shall be done on a statewide basis;

(5) 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 of $5.00 per individual policy or each individual certificate;

(6) The refund shall include interest pursuant to Ins 1905.13(b)(4) from the end of the calendar year to the date of the refund or credit at a rate specified by the U.S. Secretary of Health and Human Services but in no event shall it be less than the average rate of interest for 13-week Treasury notes; and

(7) 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.

(g) An issuer of medicare supplement policies and certificates in this state shall file annually its premium rates, rating schedule, and supporting documentation including ratios of incurred to earned premiums by policy duration.

(h) For the purpose of this section, policy forms shall be deemed to comply with the loss ratio standards if:

(1) For the most recent year, the ratio of the incurred losses to earned premiums, for policies or certificates which have been in force for 3 years or more is greater than or equal to the applicable percentages contained in this section;

(2) The expected losses in relation to premiums over the entire period for which the policy is rated comply with the requirements of this section; and

(3) An expected 3rd year loss ratio which is greater than or equal to the applicable percentage shall be demonstrated for policies or certificates in force less than 3 years.

(i) 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 the following items:

(1) Appropriate premium adjustments necessary to produce loss ratios as anticipated for the current premium for the applicable policies or certificates;

(2) Such supporting documents as necessary to justify the premium adjustments; and

(3) Any appropriate riders, endorsements or policy forms needed to accomplish the medicare supplement policy or certificate modification necessary to eliminate benefit duplications with medicare.

(j) An insurer shall make such premium adjustments as are necessary to produce an expected loss ratio under such policy or certificate as will conform with minimum loss ratio standards for medicare supplement policies.

(k) Such premium adjustments shall be 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 such medicare policies or certificates.

(l) 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 or certificate at any time other than upon its renewal date or anniversary date.

(m) Riders, endorsements, or policy forms filed pursuant to this section shall provide a clear description of the medicare supplement benefits provided by the policy or certificate.

(n) If presented with a request from an issuer for an increase in a rate for a policy or certificate form for which the experience under the form for the previous reporting period is not in compliance with the applicable loss ratio standard, the commissioner, in order to gather information, shall, prior to any approval or disapproval of the request, conduct a public hearing in accordance with RSA 400-A:17 when:

(1) The issuer requests a public hearing, or

(2) At least 10 policyholders or certificate holders request a public hearing.

Notes

N.H. Code Admin. R. Ins 1902.09

#1900, eff 1-1-82; ss by #4287, eff 7-1-87; ss by #5119, eff 4-25-91; ss by #5656, eff 7-1-93; ss by #7017, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #8555, eff 2-1-06

Amended by Volume XXXVI Number 06, Filed February 11, 2016, Proposed by #11014, Effective 1/8/2016, Expires 1/8/2026.