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2016 Issues & Trends in Medicare Supplement Insurance
MedicareSupplementCOMPLIANCE101
Presenter:ConstanceD.Rogers,FSA,MAAA
2016 Issues & Trends in Medicare Supplement Insurance
GOALS
• OverviewofMedSup complianceissuesforbeginners
• Lookingatthetopicfrom4perspectives:– Actuarial– Forms– Operations– Marketing
2016 Issues & Trends in Medicare Supplement Insurance
WhatCoverageCanBeIssued?
• “CardstoPlay”ineachState– PlanLevel(11standardized“plans”)
• A,B,C,D,F,F-HD,G,K,L,M,N
– TypeLevel(4“types”)• IndividualStandard• GroupStandard• IndividualSelect• GroupSelect
2016 Issues & Trends in Medicare Supplement Insurance
• FormLevel– Upto5formsallowedperPlan/Typeforvariationsin:
InnovativeBenefitsMarketingMethodUnderwritingMethodCoveringDisabledBeneficiaries
2016 Issues & Trends in Medicare Supplement Insurance
11Plansx 4Typesx 5Variants220optionstheoretically
BUT...veryfewcarriersactuallyoffermorethan2formsperPlan/Type,andfewcarriersofferall11Plans.
2016 Issues & Trends in Medicare Supplement Insurance
GrandfatheredStates
• ThreestatesdonotusetheStandardizedPlandefinitions:
• WI• MA• MN
2016 Issues & Trends in Medicare Supplement Insurance
WhatUnderwritingisAllowed?
Age65• “agingin”• NOUNDERWRITING during
OpenEnrollment(first6monthsafterenrollmentinMedicarePartB)
Ages66+• Inmoststates,FULL
UNDERWRITING isallowedunlessGuaranteedIssuecircumstances(63dwindow).
• InAnniversaryRulestate(MO)orBirthdayRulestates(CA,OR),NOUNDERWRITING for30daysaroundannualpolicyanniversaryorbirthday
2016 Issues & Trends in Medicare Supplement Insurance
Underwriting(cont’d)
• Under-age65– EligibleforMedicareduetoDisabilityorESRD– ManystatesmandateOpenEnrollmentperiod– Statesdifferregardingwhetherall Medicare-eligibleu65sorjustDisabledu65s(excludingESRDs)
– FullUnderwritingisallowedoutsidetheOpenEnrollmentperiod(orinstateswithnoOEmandate).
2016 Issues & Trends in Medicare Supplement Insurance
WhatRatesareAllowed?
• AgeRatingStructure– MoststatesallowIss Age,Attd Age,orCommunity– SomestatesdisallowAttd Age(e.g.,FL,AZ,GA,MO,ID)
– SomestatesrequireCommunity(e.g.,AR,CT)• GenderRating
– Generallyallowed,butsomestates(e.g.,CA)requireuni-genderrating
2016 Issues & Trends in Medicare Supplement Insurance
Rating(cont’d)
• TobaccoRating– Generallyallowed– SomestatesdisallowTobaccoratesforOE/GIissues
• FamilyStatus– Discountsmaybegivenforindividualslivingincommunityorasmembersofamulti-policyhousehold
2016 Issues & Trends in Medicare Supplement Insurance
Rating(cont’d)
• UnderwritingClass– Preferred/Standard/Substandardmaybeassignedoutside ofOE/GIwindows.
– InsideOE/GIwindow,Preferredratesmustbeusedifoffered.
• GeographicRegion– Allowedwithinmoststatesandisgenerallyusedwhereallowed.
2016 Issues & Trends in Medicare Supplement Insurance
Rating(cont’d)
• Under-65s– Statesvary:
• Somerequirefullsubsidization• Othersallowfullrateloads• Manyinbetween
– SomestatesallowseparateratesforDisabled-u65sandESRD-u65s.
2016 Issues & Trends in Medicare Supplement Insurance
Rating(cont’d)
• Cantheratestructurebechanged?– Yes,butneedtodemonstrateactuarialequivalencybetweenthe2structuresandguaranteethatfuturerateincreaseswillbethesameforbothstructures.
– Ifnot,=>discontinuance=>5-yearblackout.
• AnnualFiling– Required,evenifratesarenotchanging
2016 Issues & Trends in Medicare Supplement Insurance
WhatMLRsareRequired?
• Individual:65%lifetimeandpy3+
• Group:75%lifetimeandpy3+
• SameforStandardandSelect
• Primaryenforcementviaannualratefilings
• Secondaryenforcementviaannualrefundfilingreports
2016 Issues & Trends in Medicare Supplement Insurance
WhatCompensationisAllowed?
• Threerequirements:– Commissionforpy1<=200%ofpy2– Renewalcommissionrunsforatleast5years*– Onlyrenewalcommissionspayableforreplacementpolicies
• Somestateshaveuniquerequirements– e.g.INnovariationbyplan
orbyage/gender
2016 Issues & Trends in Medicare Supplement Insurance
What’stheAnnualRegulatoryBurden?
• Rates:Annualratefilings– Mustfileeachyearevenifnotchangingrates– Approvalneededinallstates
• NAICMedSup ExperienceExhibits– Annualreportingofexperienceforthecalendaryear– IncludedatthebackoftheAnnualStatement– FiledforeachuniqueState/Plan/Typecombination– Combineacross1990and2010producteras– UsuallyduetoaccountingdepartmentinlateJanuaryeachyr– Easilyautomatedwithactuarialreviewandsign-off
2016 Issues & Trends in Medicare Supplement Insurance
What’stheAnnualRegulatoryBurden?(cont’d)
• RefundFilings– BenchmarkLossRatioandRefundFilingReports– ComparesITDlossratiotoacalculatedbenchmarklossratio– FiledforeachState/Plan/Type– Combinedacross1990and2010producteras– Credibilityadjustmentsareincluded– MustbesubmittedbyMay31st ofeachyear– Easilyautomatedwithactuarialreviewandsign-off– Shouldformafeedbacklooptoyourpricingactuaries