Individual Health Plans
Subject to Title 24-A M.R.S.A. § 2736-C:
H15I, H16I.005A, H16I.005B, H16I.005C, HOrg02I.005B, HOrg02I.005C

A.

General Rate Filing Requirements:

Separate Filings:

Rule 940, § 5. A.

Rule 940, § 6. C.

A rate filing must be submitted whenever a new policy, rider, or endorsement form that affects benefits is submitted for approval and whenever there is a change in the rates applicable to a previously approved form. Rates must be filed with a form filing rather than separately. The filing must be clearly identified as an individual rate filing.

Individual rates must be filed separately from small group or large group rates.
The Superintendent may request additional information as necessary.

B.

Electronic (SERFF) Filing Requirements:

Title 24-A § 2736, 1.

Effective September 12, 2009, all filings must be filed electronically, using the NAIC System for Electronic Rate and Form Filing (SERFF).
See http://www.serff.com.

If the filing is found to be in compliance with the applicable requirements, the SERFF record will show the rates to be “Approved,” and the record will be closed.

C.

Additional Rate Filing Requirements:

Rule 940, § 5. C.

Every rate submission subject to Title 24-A, § 2736-C must contain the following:

1. Carrier Information:

Rule 940, § 5. C. 1.

The name and address of the carrier, and the name, title, email address and direct phone number of the person responsible for the filing, must be provided in the SERFF “Filing Contact Information” section.

2. Scope and Purpose of Filing:

Rule 940, § 5. C. 2.

Specify whether this is a new form and rate filing, a rate revision, or a justification of an existing rate.

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3. Description of Benefits:

Rule 940, § 5. C. 3.

Include a brief description of the benefits provided by each policy form and any attached riders or endorsements.

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4. In-Force Business and annualized premium:

Rule 940, § 5. C. 4.

Provide the number of Maine policyholders or certificateholders who will be affected by the proposed rate revision and their annualized premium.

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5. Proposed Effective Date(s):

Rule 940, § 5. C. 5.

State the proposed effective date and method of implementation of the proposed rate (e.g., next anniversary or next premium due date).

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6. Confidentiality:

Title 24-A § 2736, 2.

Rate filings for individual health plans subject to Title 24-A, § 2736 and all supporting information are public records, except:

(1) Protected health information required to be kept confidential by state or federal statute must be kept confidential, and

(2) Descriptions of the amount and terms or conditions or reimbursement in a contract between an insurer and a 3rd party may be kept confidential.

Any confidential information should be clearly identified as described in the confidentiality protocol, available on the Bureau of Insurance website.

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D.

Submission Requirements, Individual Health Plans*:

Rule 940, § 6.

This section applies to hospital and medical “expense-incurred” individual health plan* rate filings. Individual health plan rate filings must meet these requirements, unless the Superintendent determines that the requirement is not appropriate for a particular filing.

*See Title 24-A, §2736-C, 1.C. for definition of “Individual health plan.”
Note: Pursuant to Title 24- §2701, 2.C., Title 24-A, §2736, §2736-A, §2736-B, and §2736-C apply to:
(1) Association groups as defined by Title 24-A, §2805-A, except associations of employers;
(1-A) Credit union groups as defined by Title 24-A §2807-A; and
(2) Other groups as defined by Title 24-A, §2808, except employee leasing companies registered pursuant to Title 32, Chapter 125.

1. Rate Filings must Accompany Form Filings:

Rule 940, § 6. A.

Every policy, rider, or endorsement form affecting benefits which is submitted for approval must be accompanied by a rate filing or, if the form does not require a change in the premium, the submission must include a complete explanation of the effect on the anticipated loss ratio. The rate filing must include all rates, rating formulas and revisions. Rates must be filed with the form rather than separately.

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2. Rate Revisions:

Rule 940, § 6. B.

If the filing is a rate revision, the reason for the revision must be stated.

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3. Separate Filings:

Rule 940, § 6. C.

As noted in “A,” above, individual rates must be filed separately from group rates. The SERFF document must clearly identify the filing as an “Individual Health Rate Filing.”

4. 60-day Advance Filing Notice:

Rule 940, § 6. C.

The filing must be received by the Bureau at least 60 days before the implementation date unless the Superintendent waives this requirement pursuant to Title 24-A, §2736, 1.

5. Non-compliant Filing:

Rule 940, § 6. C.

If the Bureau requests additional information or finds rates not to be in compliance, rates approved previously must continue to be used.

6. Completeness and Timeliness of Filings:

Rule 940, § 6. D.

The filing must include sufficient supporting information to demonstrate that the rates are not excessive, inadequate, or unfairly discriminatory.
Carriers 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.

7. Limitation on the application of approved trend factor(s):

Rule 940, § 6. E.

If any rates will be automatically adjusted subsequent to the effective date of the filing based on a trend factor or other factor, this must be clearly disclosed in the filing.

Automatic trend increases must be limited to one year from the effective date. No further automatic trend increases may be implemented unless a new filing is submitted and approved.

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8. Morbidity:

Rule 940, § 6. F. 1.

Describe and explain the morbidity basis for the form. Any substantive adjustments from the source or earlier assumptions must be explained. The morbidity assumed must be adequately justified by supporting data.

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9. Mortality:

Rule 940, § 6. F. 2.

If applicable, the filing must state the mortality basis for the form, and any substantive adjustments from earlier assumptions must be explained.

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10. Issue Age Range:

Rule 940, § 6. F. 3.

Specify the issue age range of the form and whether premiums are on an issue age, attained age, or other basis.

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11. Average Premium and Pre- and Post- Rate Change Monthly Premiums:

Rule 940, § 6. F. 4.

Display the average annual premium per individual policy for both Maine and all states in which the form is or was sold. If a rate adjustment is proposed, the filing must disclose the average percentage increase a policyholder will experience as well as the largest percentage increase that any in-force policy will receive. The average increase must be determined by comparing the aggregate premium before and after the increase (assuming no lapses) for all policies affected by the rate adjustment. The maximum increase is the largest increase for an in-force policy, including changes due to trend, aging, and changes in demographic, area, and/or industry rating factors.

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12. Medical Trend Assumptions:

Rule 940, § 6. F. 5.

Provide the medical trend used and the assumptions used to calculate the trend.

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13. Maine Experience on the Form (Past and Future Anticipated):

Rule 940, § 6. F. 6.

Carriers shall consider experience solely within the State of Maine in developing rates. However, if there is insufficient experience within Maine upon which a rate can be based, the carrier may use nationwide experience. In considering experience outside the State of Maine, as much weight as possible must be given to Maine 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 carrier 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:
(1) Year
(2) Collected premium
(3) Earned premium
(4) Paid claims
(5) Paid loss ratio
(6) Change in claim liability and reserve
(7) Incurred claims
(8) Incurred loss ratio
(9) Expected incurred claims
(10) Actual-to-expected claims
(11) Active Life Reserves

For future years, columns (3), (7), and (8) must be displayed. For periods where the actual claim runoff is complete, that data must be displayed to replace (6).

Past experience must be presented on both an actual basis and a constant premium rate basis.

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14. National Experience:

Rule 940, § 6. F. 7.

If national experience is considered in developing the rates, provide the same data as for “D. 13,” above, for all states in which the form is or was sold.

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15. History of Rate Adjustments:

Rule 940, § 6. F. 8.

List the approval dates and average percentage rate adjustments for the form both nationwide and in Maine since inception of the policy form.

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16. Renewability Clause:

Rule 940, § 6. F. 9.

Individual health plans are guaranteed issue and guaranteed renewal, pursuant to Title 24-A, §2850-B, 3.

17. Minimum Loss Ratio:

Rule 940, § 6. F. 10. & Rule 940, § 8. A.; See Title 24-A, § 2736-C. 5.

State the anticipated future loss ratio and, if applicable, the expected lifetime loss ratio.
Note: For all policies and certificates issued on or after December 1, 1993, the Superintendent shall disapprove any premium rates filed by any carrier, whether initial or revised, for an individual health policy unless it is anticipated that the aggregate benefits estimated to be paid under all the individual health policies maintained in force by the carrier for the period for which coverage is to be provided will return to policyholders at least 65% of the aggregate premiums collected for those policies, as determined in accordance with accepted actuarial principles and practices and on the basis of incurred claims experience and earned premiums. For the purposes of this calculation, any savings offset or access payments paid pursuant to §6913 and/or §6917 must be treated as incurred claims. (See § D.29, below.)

Policies issued before December 1, 1993, are subject to the loss ratio standards of Rule 940, § 7. A. & B.

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18. Rating Attributes:

Rule 940, § 6. F. 11.

State all the attributes upon which the premium rates vary. If the form is area-rated, a complete table of area factors for all states must be included. See Title 24-A, §2736-C, 2., A.-F.

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19. Marketing Method:

Rule 940, § 6. F. 12.

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 therefor.

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20. Medical Underwriting and other Rating Practices:

Title 24-A, §2736-C, 2.B,, 2.C, & 2.D.

A. Prohibited: A carrier may not medically underwrite and/or vary the premium rate due to the gender, health status, claims experience, or policy duration of the individual. Please include statement of compliance with this requirement in the actuarial memorandum.

B. Permitted: A carrier may vary the premium rate due to family membership, and smoking status.

C. Permitted with limits: A carrier may vary the premium rate due to age and geographic area such that the resulting rates are no less than 80% and no more than 120% of the community rate.” See § D.27, below.

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21. Actuarial Certification, non-HMO Rate Filings:

Rule 940, § 6. F. 14.

Include a 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.

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22. Actuarial Certification, HMO Rate Filings:

Rule 940, § 10.

HMO rate filings must include a certification by a qualified actuary that the rates are not excessive, inadequate, or unfairly discriminatory, along with adequate supporting information. “Qualified actuary,” as used herein, means a member in good standing of the American Academy of Actuaries.

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23. Rate Revisions, No Longer Actively Marketed Blocks:

Rule 940, § 7. C. 1.

If the form is no longer actively marketed, a statement must be included as to whether a similar form is actively marketed. If so, a discussion of equity between the two forms, including a comparison of the benefits and premium rates, must also be included. Rates for individual policy forms for closed blocks should not significantly exceed rates for an open block unless the difference is justified by differences in benefits or other conditions, or unless the fact that renewal rates would exceed new business rates was disclosed at issue. The Superintendent may approve exceptions to this requirement if the enrollees are permitted to change to the new form and the Superintendent determines that the change would be in the best interest of the enrollees.

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24. Rate Revisions, Combination of Forms:

Rule 940, § 7. C. 2.

When a block of business in force under a form no longer being sold has declined to a size such that the number of actual claims nationally in a twelve month period is less than two hundred, then the business under such form must be combined with other blocks of business in the same class, which are on a consistent rate basis, for rating and monitoring purposes. The Superintendent may approve exceptions to this requirement if the enrollees are permitted to change to a new form and the superintendent determines that the change would be in the best interest of the enrollees.

25. Rate Revisions, Reasonableness of Revised Premiums for Certain Forms:

Rule 940, § 7. C. 3.

Revised premiums other than those subject to Rule 940, § 11. will be presumed reasonable in relation to benefits if demonstrations are provided which show that both the following loss ratios meet minimum standards as set forth in Rule 940, § 7. B. or in Rule 940, § 8., whichever is applicable:

1. An anticipated loss ratio calculated over the future lifetime of the form;

2. An anticipated loss ratio derived by dividing (i) by (ii) where

(i) is the sum of the accumulated benefits from the original effective date of the form to the effective date of the revision, and the present value of future benefits, and

(ii) is the sum of the accumulated premiums from the original effective date of the form to the effective date of the revision, and the present value of future premiums.

The Superintendent may accept alternative demonstrations where appropriate, particularly for small blocks with no credible experience.

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26. Rate/Benefit Relationships:

Rule 940, § 8. B.

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:

A. 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.

B. 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.

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27. Community Rate, Formulas, and Factors:

Rule 940, § 8. C. & Title 24-A 2736-C, 2. A.

For individual health plans issued after December 1, 1993, the filing must include the community rate and any formulas or factors used to adjust that rate.

Any variations based on age and geographic area must result in rates that are no less than 80% and no more than 120% of the community rate. Please include statement of compliance with this requirement in the actuarial memorandum.

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28. Standardized Plan Rates:

Rule 940, § 8. D.

If rates for the standardized plans are not included in a rate revision filing because they were previously filed and are not changing, the filing must reference the date on which those rates were filed.

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29. Savings Offset or Access Payments:

Title 24-A § 6917

For purposes of loss ratio calculations, any savings offset payments or access payments paid or anticipated to be paid pursuant to Title 24-A. §6913 or §6917 must be treated as incurred claims.

30. Notice to Policyholders:

Rule 940, § 8. G.

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, § 2735-A, 1. & 1. A., and the date on which the notices were sent. If the letters 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. The notice must also inform policyholders of their right to request a hearing pursuant to Title 24-A, § 229. The notice must show the proposed rate and state that the rate is subject to regulatory approval. See Bulletin 311 for suggested language.

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31. Special Requirements for Large Blocks:

Rule 940, § 11.

In addition to the requirements of Rule 940, § 5, and, to the extent applicable, § 6, § 7, and § 8, a rate filing or a group of related rate filings for individual policies or contracts covering or expected to cover more than two thousand (2,000) Maine residents is subject to the following:

A. Expenses: Include a description of any expense assumptions used, including, for example, per policy and percentage of premium expense for acquisition, maintenance and commissions.

B. Investment income: Include an estimate of investment income attributable to the affected policies and how it is reflected in the rates.

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Completed by:

Date:

Rev. 8/16/2010