EXAMPLE I

Subpart 1. Use of actuarial equivalence test. A. Question: Is the following plan actuarially equivalent to any Minnesota qualified plan? Surgery Includes Assistant Surgeon and Administration of Anesthesia Deductible: $100 Coinsurance: 80/20 Maximum: $250,000 Maternity: Any complications Student dependents: To age 23 Limits on specified benefits Outpatient mental limited to Minnesota Required benefits -- Excluded care Home health care Out-of-pocket limit $3,000 per year Coordination of benefits Yes, but no COB for no-fault. B. Answer (calculated January 1, 1985): test result is 1186 points. This plan is a Minnesota qualified plan number 2. Subp. 2. Worksheet. Test for actuarial equivalence other than Medicare supplement plans. A. Worksheet. Major Medical Subparts of part 2740.9964 Benefit Basic Superimposed Comprehensive 1. Hospital room and board 363 2. Hospital extras 480 3. Surgery 243 4. Physician care; home, office 215 5. Physician care; hospital 51 6. Maternity 25 7. Diagnostic X-ray and lab 105 8. Drugs and medicine 100 9. Radioactive therapy 15 10. Nursing/convalescent facility 16 11. Home health care 0 12. Physical therapy 10 12. Oxygen 4 12. Prostheses 5 12. Durable medical equipment 5 12. Second opinion surgery 2 12. Home care nursing 2 12. Ambulance 3 13. Hospital room and board in full 14. All hospital expenses in full 15. Major medical maximums -12 Subtotal reasonable and customary medical services 1632 16. Deductible -138 16. Coinsurance -299 Subtotal net of deductible and coinsurance 1195 17. Adjust (comb. medical/dental ded.) 18. COB/No-fault -48 19. Limit on "out-of-pocket" expenses 35 20. Well baby care 21. Emergency and supplemental accident 22. Student dependents 4 23.-25. Superimposed major medical Grand Total 1186 Combined basic and superimposed XXX XXX Equivalent to Minnesota qualified plan number __2__ nonqualified ______ Date _ By _ B. Miscellaneous calculations. (1) The maximum in the policy ($250,000) divided by the COMP factor (1.121) is $223,015. This is 82.01 percent of the difference between the $100,000 and $250,000 maximums in part 2740.9964 , subpart 15. The points would be minus 27 plus .8201 times 15 or -14.70 points. (2) The deductible in the policy ($100) divided by the COMP factor (1.121) is 89.21. This is 78.41 percent of the difference between the $50 and $100 deductibles in part 2740.9964 , subpart 16. Points deducted for the deductible would be 85 plus .7841 times 85 or 151.65. Since the total points in the policy before the deductible is significantly less than 1800, multiply 151.65 by (1632/1800). The result is 137.50. (3) The out-of-pocket maximum is $3,000. The maximum claim when the out-of-pocket is reached is $14,600. This divided by the COMP factor (1.121) is 13,024. This is 10.29 percent of the difference between the $13,000 and $14,400 maximum claim when out-of-pocket is reached. The adjustment for the out-of-pocket limit is 36 minus .1029 times 6 or 35.38.