Small Group Health Plans
Subject to Title 24-A M.R.S.A. § 2808-B:
H15G.003, H16G.003A, H16G.003D, H16G.003G, HOrg02G.004E

A.

General Rate Filing Requirements:

Separate Filings:

Rule 940, § 5.A.

Rule 940, § 6.C.

Rule 940, § 5.B.

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 a small group rate filing.

Small group health plan rates must be filed separately from individual or large group rates.

The Superintendent may request additional information as necessary.

B.

Electronic (SERFF) Filing Requirements:

Title 24-A §2839

Title 24-A §2808-B, 2-B. A. & 2-C.A.

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

Small group rate filings are subject to approval by the Superintendent unless they are submitted for informational purposes under the “Guaranteed Loss Ratio” section of Title 24-A, § 2808-B, 2-C, A.

If a filing subject to Title 24-A, § 2808-B, 2-B. A. is found to be in compliance with the applicable requirements, the SERFF record will show the rates as “Approved,” and the record will be closed. If a filing subject to Title 24-A, § 2808-B, 2-C. A. is found to be in compliance with the applicable requirements, the SERFF record will show the rates as “Filed for Information,” and the record will be closed.

C.

Additional Rate Filing Requirements:

Rule 940, § 5. C.

Every rate submission 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 group policies, the number of covered employees, the number of covered insureds, and the annualized premium for the Maine policies which will be affected by the proposed rate revision.

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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 §2808-B, 2-A, B.

Rate filings for small group health plans subject to Title 24-A, § 2808-B 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.

Rate Filing Requirements:

Rule 940, § 5. B. & 6.

This section applies to hospital and medical “expense-incurred” small group health plan* rate filings.

*See Title 24-A §2808-B, 1. G. for definition of “small group health plan.”

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.
Rule 940, § 9. A.

As noted in “A.” above, small group rates must be filed separately from individual or large group rates. The SERFF filing document must clearly identify the filing as a small group 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, §2808-B, 2-A. A.

5. Non-compliant Filing:

Title 24-A, § 2808-B, 2-B, C.

For carriers subject to the 75% loss ratio requirement, if the Bureau requests additional information or finds the rates not to be in compliance rates approved previously must continue to be used.

6. Completeness and Timeliness of Filing:

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 group certificate 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 renewing during the period during which the rates are intended to be in effect. The maximum increase is the largest increase for an in-force policy, including changes due to trend, aging, and changes in demographic, area, industry rating factors, but excluding changes in the covered population under a group policy.

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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 Policy Form (past three years and future anticipated):

Rule 940, § 6. F. 6.

Carriers shall consider experience solely within the State of Maine in developing its 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 the past three calendar years 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 for the past three years.

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16. Renewability Clause:

Rule 940, § 6. F. 9.

Small group 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.

State the anticipated future loss ratio determined according to Title 24-A, §2808-B 2-B. A. and the expected lifetime loss ratio, if applicable.

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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.

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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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E.

Prohibited Rating Practices:

Title 24-A §2808-B, 2-C. 4 & 2. B.

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 eligible group or members of the group.

F.

Permitted Rating
Practices:

A. Area Adjustment Factors:

B. Age and Tobacco Use Factors:

Title 24-A §2808-B, 2. C.

Title 24-A §2808-B, 2. C-1

Title 24-A §2808-B, 2. D-2.

Title 24-A §2808-B, 2. D.

Title 24-A §2808-B, 2. D(4).

Title 24-A §2808-B, 2. D(9).

Subject to rules adopted by the Superintendent, a carrier may vary the premium rate due to occupation and industry, family membership, participation in wellness programs, and group size to the extent permitted by the federal Affordable Care Act.

A carrier may vary the premium rate due to geographic area in accordance with the limitation set out in this paragraph. For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State on or after October 1, 2011, the rating factor used by a carrier for geographic area may not exceed 1.5.

Notwithstanding the above paragraph, rates with respect to employees whose work site is not in this State may be based on area adjustment factors appropriate to that location.

A carrier may vary the premium rate due to age and tobacco use only under the following schedule and within the listed percentage bands.

For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between October 1, 2011 and December 31, 2012, the maximum rate differential due to age filed by the carrier as determined by ratio is 2 to 1. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age. [Note: changes to this ratio are effective 1/1/2013.]

For all policies, contracts, or certificates that are executed, delivered, issued for delivery, continued or renewed in this State on or after October 1, 2011, the maximum rate differential due to tobacco use filed by the carrier as determined by ratio is 1.5 to 1.

G.

Additional Requirements:

Rule 940, § 9.

In addition to the requirements of Rule 940, §5 and, if applicable, §6, small group rate filings subject to Title 24-A M.R.S.A. §2808-B must meet the following requirements.

1. Community Rate, Formulas and Factors:

Rule 940, § 9. B. 1

The filing must include the community rate and any formulas or factors used to adjust that rate.

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2. Group Size Factors:

Rule 940, § 9. B. 2

If rates vary by group size, the filing must disclose those factors and provide support based on expected differences by group size.

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3. Pre- and Post- Rate Change Monthly Premiums:

Rule 940, § 9. B. 3. a.

If a rate adjustment is proposed, the filing must disclose the average percentage increase an employer will experience as well as the largest percentage increase that any employer will receive. The average increase must be determined by comparing the aggregate premium before and after the increase (assuming no lapses) for all policies renewing during the period during which the rates are intended to be in effect. The maximum increase is the largest increase for an employer under a currently in-force policy, including changes due to trend, aging, and changes in demographic, area, industry rating factors, but excluding changes in the covered population.

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4. Representative Plan Rates:

Rule 940, § 9. B. 3. b.

Every small group rate filing must include rates for representative plans. For each representative plan design in Table 1 of Appendix A of Rule 940, select one of your actively-marketed plans which most closely resembles the representative plan and note any material differences. Provide the community rate for a single employee, for an employee and adult dependent, for an employee with child(ren) dependent(s), and for an employee with an adult and child(ren) dependents. The premiums provided should be those which would be quoted by your marketing department to a ten-life group.

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5. Small Group Association Plan Rates (see also G. 13):

Rule 940, § 9. B. 4.

Title 24-A, §2808-B, 2. E.

Rates applicable to small employers in association or trustee groups that differ from rates applicable to other small employers are subject to the following:

a. The use of different community rates for the association or trustee group must have been authorized by the Superintendent pursuant to Title 24-A, §2808-B, 2. E.

b. The rate filing must state the percentage by which the rates for the association or trustee group differ from the rates for other small employers. If the difference is not a flat percentage, the filing must state the range of percentage differences and the average percentage.

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6. Actuarial Certification, non-HMO Rate Filings:

Rule 940, § 9. B. 5.

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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7. 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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8. Notice to Policyholders (rate renewal form letter):

Rule 940, § 9. B. 6.

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, § 2839-A, 1. 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.
Note: A carrier must provide written notice by mail or electronically of a rate increase to all affected policyholders or others who are directly billed for group coverage at least 60 days before the effective date of any increase in premium rates. An increase in premium rates may not be implemented until 60 days after notice is provided. For small group health plan rates subject to Title 24-A, § 2808-B, 2-B, if the increase is pending approval at the time of notice, the disclosure must state that the increase is subject to regulatory approval.

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9. Guaranteed Loss Ratio:

Title 24-A §2808-B, 2-C.

Notwithstanding Title 24-A, § 2808-B, 2-B, rate filings for a credible block of small group health plans may be filed in accordance with this subsection instead of Title 24-A, §2808-B, 2-B. Rates filed in accordance with this subsection are filed for informational purposes:

A block of small group health plans is considered credible if the anticipated average number of members during the period for which the rates will be in effect meets standards for full or partial credibility pursuant to the federal Affordable Care Act. 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. If the superintendent determines that the number of members is likely to be less than needed to meet the credibility standard, the filing is subject to Title 24-A, §2808-B, 2-B.

10. Minimum 75% Loss Ratio Filing Option:

Title 24-A §2808-B, 2-B, A.

Small group policy rates subject to the 75% loss ratio (incurred claims relative to earned premium for the period in which the rates will be in effect), as specified in Title 24-A, § 2808-B. 2-B. A., are subject to approval by the Superintendent.

11. Rate Filing Disapproval:

Title 24-A §2808-B, 2-B. A

The Superintendent shall disapprove any premium rates filed by any carrier, whether initial or revised, for a small group health plan unless it is anticipated that the aggregate benefits estimated to be paid under all the small group health plans maintained in force by the carrier for the period for which coverage is to be provided will return to policyholders at least 75% 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.

12. Small Group Association Rates: (see also G.5):

Rule 940, § 9. F. 2.

Small association and trustee groups are subject to the following:

Filed rates which are applicable to small employers in association or trustee groups that differ from rates applicable to other small employers must include justification for the difference in rates.

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13. Large Blocks of Small Group Business:

Rule 940, § 11.

In addition to the requirements of Rule 940, §5 and, to the extent applicable, §6 & §9, a rate filing for small group health plan policies or contracts not subject to the guaranteed loss ratio provisions referenced in “G. 9” above, which covers or is 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 commissions, other administrative expenses, and profit margin.

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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A carrier that offered small group health plans prior to October 1, 2011 may close its small group book of business sold prior to October 1, 2011 and may establish a separate community rate for eligible groups applying for coverage under a small group health plan on or after October 1, 2011. If a carrier closes its small group book of business as permitted under this paragraph, the carrier may vary the premium rate for that closed book of business only as permitted in Title 24-A, 2808-B, 2.H.:

A. For increases exceeding an average of 10%, the carrier must submit the Part I small group rate increase summary and the Part II written explanation of the small group rate increase as set forth by the Department of Health and Human Services at the time of filing.

B. The filer is reminded to fully complete the documentation in SERFF required by HHS under the ACA.

Completed by:

Date:

Effective: 7/1/2011