Medicare Supplement COMPLIANCE 101

Transcription

1 Medicare Supplement COMPLIANCE 101 Presenter: Constance D. Rogers, FSA, MAAA

2 GOALS Overview of MedSup compliance issues for beginners Looking at the topic from 4 perspectives: Actuarial Forms Operations Marketing

3 What Coverage Can Be Issued? Cards to Play in each State Plan Level (11 standardized plans ) A, B, C, D, F, F-HD, G, K, L, M, N Type Level (4 types ) Individual Standard Group Standard Individual Select Group Select

4 Form Level Up to 5 forms allowed per Plan / Type for variations in: Innovative Benefits Marketing Method Underwriting Method Covering Disabled Beneficiaries

5 11 Plans x 4 Types x 5 Variants 220 options theoretically BUT... very few carriers actually offer more than 2 forms per Plan / Type, and few carriers offer all 11 Plans.

6 Grandfathered States Three states do not use the Standardized Plan definitions: WI MA MN

7 What Underwriting is Allowed? Age 65 aging in NO UNDERWRITING during Open Enrollment (first 6 months after enrollment in Medicare Part B) Ages 66+ In most states, FULL UNDERWRITING is allowed unless Guaranteed Issue circumstances (63d window). In Anniversary Rule state (MO) or Birthday Rule states (CA, OR), NO UNDERWRITING for 30 days around annual policy anniversary or birthday

8 Underwriting (cont d) Under-age 65 Eligible for Medicare due to Disability or ESRD Many states mandate Open Enrollment period States differ regarding whether all Medicareeligible u65s or just Disabled u65s (excluding ESRDs) Full Underwriting is allowed outside the Open Enrollment period (or in states with no OE mandate).

9 What Rates are Allowed? Age Rating Structure Most states allow Iss Age, Attd Age, or Community Some states disallow Attd Age (e.g., FL, AZ, GA, MO, ID) Some states require Community (e.g., AR, CT) Gender Rating Generally allowed, but some states (e.g., CA) require uni-gender rating

10 Rating (cont d) Tobacco Rating Generally allowed Some states disallow Tobacco rates for OE / GI issues Family Status Discounts may be given for individuals living in community or as members of a multi-policy household

11 Rating (cont d) Underwriting Class Preferred / Standard / Substandard may be assigned outside of OE / GI windows. Inside OE / GI window, Preferred rates must be used if offered. Geographic Region Allowed within most states and is generally used where allowed.

12 Rating (cont d) Under-65s States vary: Some require full subsidization Others allow full rate loads Many in between Some states allow separate rates for Disabledu65s and ESRD-u65s.

13 Rating (cont d) Can the rate structure be changed? Yes, but need to demonstrate actuarial equivalency between the 2 structures and guarantee that future rate increases will be the same for both structures. If not, => discontinuance => 5-year blackout. Annual Filing Required, even if rates are not changing

14 What MLRs are Required? Individual: 65% lifetime and py3+ Group: 75% lifetime and py3+ Same for Standard and Select Primary enforcement via annual rate filings Secondary enforcement via annual refund filing reports

15 What Compensation is Allowed? Three requirements: Commission for py1 <= 200% of py2 Renewal commission runs for at least 5 years* Only renewal commissions payable for replacement policies Some states have unique requirements e.g. IN no variation by plan or by age/gender

16 What s the Annual Regulatory Burden? Rates: Annual rate filings Must file each year even if not changing rates Approval needed in all states NAIC MedSup Experience Exhibits Annual reporting of experience for the calendar year Included at the back of the Annual Statement Filed for each unique State / Plan / Type combination Combine across 1990 and 2010 product eras Usually due to accounting department in late January each yr Easily automated with actuarial review and sign-off

17 What s the Annual Regulatory Burden? (cont d) Refund Filings Benchmark Loss Ratio and Refund Filing Reports Compares ITD loss ratio to a calculated benchmark loss ratio Filed for each State / Plan / Type Combined across 1990 and 2010 product eras Credibility adjustments are included Must be submitted by May 31 st of each year Easily automated with actuarial review and sign-off Should form a feedback loop to your pricing actuaries