Ga. Comp. R. & Regs. R. 120-2-8-.14 - Loss Ratio Standards and Refund or Credit of Premium
(1) Loss Ratio
Standards
(a)
1. A Medicare Supplement policy form or
certificate form 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;
2. 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.
(b) 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.
(c) For
purposes of applying Subsection (1)(a) of this section and Subsection (3)(c) of
Section 120-2-8-.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.
(d) For policies issued prior to July 29,
1992, expected claims in relation to premiums shall meet:
1. The originally filed anticipated loss
ratio when combined with the actual experience since inception;
2. The appropriate loss ratio requirement
from Subsection (1)(a)1.(i) and (ii) when combined with actual experience
beginning with the effective date to date; and
3. The appropriate loss ratio requirement
from Subsection (1)(a)1.(i) and (ii) over the entire future period for which
the rates are computed to provide coverage.
(2) Refund or Credit Calculation.
(a) 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.
(b) 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.
(c) For the purposes of this section,
policies or certificates issued prior to July 29, 1992, 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 regulation. The first report shall be due by May 31,
2007 of this amendment.
(d) 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.
(3) Annual filing of Premium Rates. An issuer
of Medicare supplement policies and certificates issued before or after the
effective date of this regulation 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 that 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:
(a)
1.
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.
2. 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 that 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 that 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.
3. 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.
(b) 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.
(4) 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 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.
Notes
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