Accident & Health Insurance Conversion Policies.

June 23, 1982 SUBJECT: INSURANCE CIRCULAR Letter No. 20 TO: ALL INSURERS, OTHER THAN ARTICLE IX-C CORPORATIONS, LICENSED TO WRITE ACCIDENT AND HEALTH INSURANCE SUBJECT: ACCIDENT AND HEALTH INSURANCE CONVERSION POLICIES Chapter 438, Laws of 1981, which amended Section 162, New York Insurance Law, takes effect July 1, 1982, and mandates new benefit levels for basic hospital and surgical and major medical conversion policies. To assist insurers in their compliance with the amended law, this Circular Letter sets forth guidelines to be followed by insurers for conversion policies. These guidelines relate to (1) Policy Form Approval and Benefit Design, (2) Overinsurance Standards, and (3) Premium Rates for the new benefit levels. Guidelines for premium rates applicable to policies under the 1975 benefit levels are also set forth. 1. Policy Form Approval and Benefit Design a) The minimum standards for a major medical conversion policy are set forth in subsections 5 and 8 of Section 162, and Sections 52.7, 52.54(a) and all other applicable requirements of Department Regulation 62. b) Insurers may design their major medical policy to follow the major medical expense benefit, exclusion, restriction and limitation provisions set forth in Appendices A and B of Circular Letter No. 18 (1975), as modified by Circular Letter No. 10 (1976), so long as such provisions are not less favorable than, and are consistent with, the Insurance Law, Regulation 62, and other Department requirements. For insurers choosing to follow Appendix A of Circular Letter No. 18 (1975), please note: 1) The policy should not include a deductible provision which would permit charges to be included in the deductible which were incurred in a period prior to a 90-day period in the preceding year; 2) The Benefit Period provision cannot be followed verbatim. In particular, the sentence in the Benefit Period provision indicating that the benefit period will terminate at the end of the calendar year in which was incurred the first covered expense in excess of the deductible is inappropriate for an "all cause" policy that permits a "90-day roll-over" from the preceding calendar year. c) At the insurer's option, it may elect to offer either or both of the major medical plans described in Section 162.8. d) Previously-approved hospital and surgical and major medical conversion policies can continue to be used on or after July 1, 1982, if they comply with subsections 5, 7 and 8 of Section 162, and Sections 52.7, 52.54(a) and all other applicable requirements of Department Regulation 62. e) Where an applicant for a conversion policy is entitled to basic coverage and major medical coverage, the insurer may elect to issue separate policies or a single policy, at its option. If, however, the insurer elects to issue separate conversion policies, and if its major medical policy contains a surgical schedule, the surgical schedules of the two policies must be the same and may vary only as to the applicable statutory maximums. f) If a person insured under a New York group major medical policy applies for conversion when a resident of another state, the insurer must offer conversion to a major medical coverage if the applicant's state of residence has a major medical conversion law. Otherwise, the insurer must offer conversion to its most liberal hospital and surgical plan then being offered for conversions in that state. g) The conversion privilege required by Chapter 438, Laws of 1981, should be made available under group policies issued to all policyholders recognized under Section 221.2 of the Insurance Law, except a policy-holder defined in paragraph 2(e). h) Insurers must offer to group major medical convertees one of the statutory major medical plans and, in addition, may voluntarily offer other conversion plans approved by the Superintendent. i) The surgical schedule to be included in conversion policies may be either the Society of Actuaries schedule published in TSA Volume X, at the maximum stated in the law, or the Regulation 62 schedule, at 1.9 times the statutory maximum. j) If the policy includes an optional provision for reducing benefits during the first two years of the policy, it must also provide for an appropriate adjustment of premium. k) Except for increased benefits and premiums, the basic hospital and surgical coverage in Section 162.7, does not differ from that required by previous law. l) The major medical coverage described in Section 162.8, differs substantially in both benefits and application, from previously required coverage. A sample major medical claim illustration is attached as Appendix A to this Circular Letter. The claim administration procedures outlined in that illustration represent the Department's interpretation of the benefit description contained in the law. It should be noted that: 1) The room and board benefit is to be the lesser of 80% of the hospital's most common semi-private room and board charge or $ 115, in addition to the amount provided under any basic coverage. For example, if the room and board charge was $ 250, the maximum payment for Plan III basic and major medical coverage combined would be $ 230; 2) For surgical coverage under major medical, assuming that the Regulation 62 schedule is used, the maximum covered medical expense is $ 4,750, reflecting a payment of $ 3,800 at 80%, in turn reflecting the use of the 1.9 factor referred to in paragraph (i) above; 3) The $ 2,000 "cap", including deductible and other out of pocket covered medical expenses, must be met by applying the individual room and board and surgical limitations described above. In other words, a maximum of (20% x $ 143.75) per day for Room and Board could be applied toward the $ 2,000 limit. For surgical expenses, the amount applied toward the $ 2,000 limit would be the 20% complement of the actual claim payment as described in Appendix A. m) As stated under previous circular letters, both all cause and each cause major medical plans may be used, with suitable premium adjustments if the all cause plan is used. n) For the first time, specific recognition in the premium structure for major medical is required for an underlying service type hospital coverage (e.g. Blue Cross) with benefits of 21 days or more. Because of the significantly lower premium, and the importance of maintaining such underlying coverage, insurers may develop an optional policy form, which excludes hospital benefits during the first 21 days of any hospitalization if such underlying coverage is not kept in force. Prominent notice of the nature of the policy and the hospital benefit exclusion must be given on the face of the policy and on each premium notice. 2. Overinsurance Standards The amended Section 162 contemplates that each insurer may file with the Superintendent its standards for determining overinsurance or duplication of benefits. Standards no less favorable to insureds than the standards in Appendix C are acceptable and any insurer electing to use them should so state in their submission letter. Attention is called to the restrictions set forth in Section 162.5(e), which limits the insurer's right to request information concerning other insurance coverage to the period of the first two years of the policy. An insurer may non-renew the conversion policy for overinsurance only during this two year period and can do so only on the basis of standards of overinsurance on file with the Superintendent. 3. Premium Rates Rates deemed reasonable for statutory plans are listed in Appendix B. Non-maternity rates in the Appendix were derived as percentages of previously promulgated rates, rather than from first principles. Graduations and other rate structures not listed will be considered for approval by the Department, provided the bases for such variations are consistent with the promulgated rates. Carriers should note that, depending on the level of underlying coverage, there are now three premium levels for major medical benefits. Attained age premiums are provided as an alternative to level premiums, rather than the previously required preliminary term rates. Rates for ages 60 and over represent 120% of the net premium referred to in Section 162.6. These rates are fixed until July 1, 1987. The rates for under age 60 are likewise intended to be sufficient until July 1, 1987, however, such rates may be changed earlier if industry-wide experience deviates substantially from the experience projected by the Department. Carriers will be expected to maintain their group conversion experience separately for each Plan of coverage. For major medical coverage, the experience should be maintained separately for each of the three major medical premium levels. It should be noted, that the premium rates for conversion policies are not intended to be self-supporting. Premiums set forth in this Circular Letter contemplate coverage of normal out-patient services as covered expenses. [SIGNATURE] ALBERT B. LEWIS Superintendent of Insurance Appendix A Sample Major Medical Claim The sample claim chosen for illustration contains the following charges: Amount 1. Room and Board $ 280 per day for 10 days $ 2,800.00 2. Miscellaneous 2,500.00 3. Surgical Procedure 5,000.00 I. Major Medical Without Basic Coverage Since the statute allows limits to the amount payable under Surgical and Room and Board, rather than limits on Covered Expenses, an equivalent amount of covered charges must be deduced. In both cases, "equivalent covered charges" equals the payment divided by 0.8. The calculations resulting from this interpretation are: Charges Covered Expense R & B $ 2,800.00 $ 1,437.50 n1 Misc 2,500.00 2,500.00 Surg 5,000.00 4,687.00 n2 $ 8,625.00 n1 $ 1,437.50 = ($ 115/day) x (10 days)/.8, assuming the hospital's semi-private rate is at least $ 115. n2 $ 4,687.50 - Minimum of: a. $ 5,000.00 (charges) b. $ 4,750.00 - ($ 2,000 Society of Actuaries scheduled amount, assuming a "maximum" procedure) x (1.9, to convert to Reg. 62 schedule)/.8 c. $ 4 587.50 - (75% of $ 5,000 assumed as Reasonable and Customary)/.8 Payment before considering cut-of-pocket limit (o.o.p.) is ($ 8,625.00 - $ 500.00) x .8 = $ 6,500.00 Amount o.o.p. = (covered expenses) - (payment) $ 8,625.00 - $ 6,500.00 = $ 2,125.00 Therefore, an additional $ 125 is payable, for a total claim payment of $ 6,625.00 II. Major Medical With Basic Plan III Coverage: A. Plan III pays: Payment 1. R & B of $ 115 x 10 $ 1,150.00 2. Misc $ 1,100.00 3. Surgical $ 2,850.00 n3 Total $ 5,100.00 n3 ($ 1,500 SOA schedule) x 1.9 - $ 2,850 B. Major Medical: Since the basic payment is $ 5,100, more than $ 500, the basic payment becomes the deductible. Covered Charges Payment 1. Room and Board: The lesser of: a. ($ 280-$ 115) x 10 = $ 1,650.00 b. $ 115 x 10/.8 = $ 1,437.50 $ 1,150.00 n4 c. (hospital's semi-private rate)x 10/.8 2. Misc. ($ 2,500-1,100) = $ 1,400.00 1,120.00 3. Surg: The lesser of: a. ($ 5,000-$ 2,850) - $ 2,150.00 1,720.00 b. $ 2,000 x 1.9/.8 - $ 4,750.00 c. (75% of R & C)/.8 = $ 4,687.50 $ 3,990.00 n4 Assuming the hospital's most common semi-private rate is at least $ 115.00 Amount o.o.p.: ($ 1,437.50 + 1,400.00 + 2,150.00)- $ 3,990.00 = $ 997.50 Therefore, total payment is still $ 3,990.00 under the major medical coverage. APPENDIX B Table of Contents Revised Gross Annual Premiums for Forms Under the Law Prior to July 1, 1982: Basic Plan I B-2 Basic Plan II B-3 Basic Plan III B-4 Major Medical Plan supplementing No Basic Plan or Basic Plans I or II B-5 Major Medical Plan supplementing Basic Plan III or Better B-6 Gross Annual Premiums for Forms Under the Law On of After July 1, 1982: Basic Plan I B-7 Basic Plan II B-8 Basic Plan III B-9 Major Medical Plan supplementing No Basic Plan or Basic Plans I or II B-10 Major Medical Plan supplementing Basic Plan III or Better B-11 Major Medical Plan supplementing a Hospital Service Plan B-12 Assumptions for Maternity Premiums for Group Conversion Policies B-13 PLAN: I ATTAINED AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment in 1st year) Inception Basis Immediate Basis (as increment in 1st year) < 25 61 90 60 15 15 4 25-29 61 97 57 14 14 3 30-34 64 114 33 8 10 2 35-39 74 127 11 3 4 1 40-44 91 150 1 0 1 0 45-49 109 155 0 0 0 0 50-54 131 154 0 0 0 0 55-59 143 139 0 0 0 0 60-64 166 140 0 0 0 0 ISSUE AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment) Inception Basis Immediate Basis (as increment) 1st yr. Only 1st Yr. Only OR Level Annual < 25 66 101 48 27 12 7 2 25-29 67 112 36 36 9 8 1 30-34 78 127 17 24 5 7 1 35-39 91 140 5 8 2 3 0 40-44 109 152 1 1 0 1 0 45-49 127 155 0 0 0 0 0 50-54 149 155 0 0 0 0 0 55-59 157 144 0 0 0 0 0 60-64 166 140 0 0 0 0 0 Non-Maternity Maternity Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual CHILDREN (one or more) 82 2 1 1 Increase maternity premiums 13% for Regulation 62 surgical schedule. PLAN: II ATTAINED AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment in 1st year) Inception Basis Immediate Basis (as increment in 1st year) < 25 98 142 104 26 26 7 25-29 98 156 99 25 24 6 50-54 104 186 58 14 17 4 35-39 124 206 18 5 7 2 40-44 151 245 2 1 2 0 45-49 184 258 0 0 0 0 50-54 222 254 0 0 0 0 55-59 242 233 0 0 0 0 60-64 284 235 0 0 0 0 ISSUE AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment) Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual 1st yr. Only OR Level Annual < 25 107 162 84 47 11 22 12 3 25-29 110 182 62 62 11 16 14 3 30-34 127 208 30 42 6 9 12 2 35-39 152 230 9 14 2 3 5 1 40-44 181 253 1 2 0 1 1 0 45-49 214 257 0 0 0 0 0 0 50-54 251 258 0 0 0 0 0 0 55-59 265 240 0 0 0 0 0 0 60-64 294 235 0 0 0 0 0 0 Non-Maternity Maternity Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual CHILDREN (one or more) 122 4 1 1 Increase maternity premiums 12% for Regulation 62 surgical schedule. PLAN: III ATTAINED AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment in 1st year) Inception Basis Immediate Basis (as increment in 1st year) < 25 61 90 60 15 15 4 25-29 61 97 57 14 14 3 30-34 64 114 33 8 10 2 35-39 74 127 11 3 4 1 40-44 91 150 1 0 1 0 45-49 109 155 0 0 0 0 50-54 131 154 0 0 0 0 55-59 143 139 0 0 0 0 60-64 166 140 0 0 0 0 ATTAINED AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Immediate Inception Immediate Basis Basis Basis Basis (as increment in 1st year) (as increment in 1st year) < 25 134 191 150 38 38 10 25-29 134 211 143 36 34 9 30-34 144 257 83 21 24 6 35-39 170 284 27 7 10 3 40-44 211 340 3 1 3 1 45-49 256 356 0 0 0 0 50-54 313 355 0 0 0 0 55-59 346 326 0 0 0 0 60-64 413 329 1 0 0 0 ISSUE AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Immediate Basis (as increment) Inception Immediate Basis (as increment) 1st yr. OR Level Annual 1st yr. OR Level Annual < 25 146 218 121 67 16 31 17 4 25-29 152 250 89 90 16 23 20 4 30-34 176 284 44 60 9 14 17 3 35-39 212 318 13 21 3 5 8 1 40-44 254 350 1 3 0 1 2 0 45-49 304 358 0 0 0 0 0 0 50-54 359 361 0 0 0 0 0 0 55-59 382 336 0 0 0 0 0 0 60-64 413 329 0 0 0 0 0 0 Non-Maternity Maternity Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual CHILDREN (one or more) 160 6 1 1 Increase maternity premiums 13% for Regulation 62 surgical schedule. PLAN: Major Medical Supplementing No Basic Plan or Plans I or II ATTAINED AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment in 1st year) Inception Basis Immediate Basis (as increment in 1st year) < 25 195 170 171 26 43 7 25-29 198 262 163 24 39 6 30-34 245 356 95 14 28 4 35-39 321 457 30 5 12 2 40-44 371 568 4 1 3 0 45-49 472 650 0 0 0 0 50-54 711 771 0 0 0 0 55-59 1008 625 0 0 0 0 60-64 1203 894 0 0 0 0 ISSUE AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment) Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual 1st yr. Only OR Level Annual < 25 225 267 137 59 11 35 15 3 25-29 264 361 101 86 11 27 18 3 30-34 336 457 50 59 6 16 16 2 35-39 422 558 14 21 2 6 8 1 40-44 521 655 2 3 0 1 2 0 45-49 689 746 0 0 0 0 0 0 50-54 944 857 0 0 0 0 0 0 55-59 1114 877 0 0 0 0 0 0 60-64 1203 894 0 0 0 0 0 0 Non-Maternity Maternity Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual CHILDREN (one or more) 203 7 1 1 Increase non-maternity premiums 8% for all cause plan. Reduce non-maternity premiums 10% if coverage for private duty nursing, in-hospital psychiatric care, and out-of-hospital drugs are not provided; and there is an inside limit on in-hospital physicians fees. Increase maternity premiums 12% for Regulation 62 surgical schedule. PLAN: Major Medical Supplementing Basic Plan III or Better ATTAINED AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment in 1st year) Inception Basis Immediate Basis (as increment in 1st year) < 25 161 148 120 18 30 5 25-29 172 228 115 17 27 4 30-34 213 310 67 10 19 3 35-39 280 398 21 3 8 1 40-44 323 495 3 0 2 0 45-49 411 565 0 0 0 0 50-54 628 671 0 0 0 0 55-59 877 718 0 0 0 0 60-64 1047 778 0 0 0 0 ISSUE AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment) Inception Basis Immediate Basis (as increment) 1st yr. OR Level 1st yr. OR Level Annual < 25 196 232 96 42 8 25 10 2 25-29 230 314 71 60 7 19 13 2 30-34 292 398 35 42 4 11 11 1 35-39 368 486 10 14 1 4 5 1 40-44 454 570 1 2 0 1 1 0 45-49 600 649 0 0 0 0 0 0 50-54 821 746 0 0 0 0 0 0 55-59 970 763 0 0 0 0 0 0 60-64 17 778 0 0 0 0 0 0 Non-Maternity Maternity Inception Immediate Basis (as increment) 1st yr. Only OR Level Annual CHILDREN (one or more) 176 5 1 1 Increase non-maternity premiums 8% for all cause plan. Reduce non-maternity premiums if coverage for private duty nursing, in-hospital psychiatric care, and out-of-hospital drugs are not provided; and there is an inside limit on in-hospital physicians fees. Increase maternity premiums 4% for Regulation 62 surgical schedules. PLAN: I ATTAINED AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment in 1st year) Inception Basis Immediate Basis (as increment in 1st year) < 25 116 171 132 33 34 3 25-29 116 185 126 31 30 5 30-34 121 217 73 18 21 5 35-39 141 242 23 6 9 2 40-44 173 285 3 1 2 1 45-49 207 294 0 0 0 0 50-54 249 292 0 0 0 0 55-59 271 264 0 0 0 0 60-64 315 267 0 0 0 0 ISSUE AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Immediate Basis (as increment) Inception Immediate Basis (as increment) 1st yr. Only OR Level Annual 1st yr. Only OR Level Annual < 25 125 192 106 59 14 27 15 1 25-29 128 212 78 79 14 21 17 3 30-34 148 242 38 53 8 12 15 2 35-39 173 267 11 18 3 4 7 1 40-44 207 290 1 3 0 1 2 0 45-49 242 294 0 0 0 0 0 0 50-54 283 294 0 0 0 0 0 0 55-59 299 274 0 0 0 0 0 0 60-64 315 267 0 0 0 0 0 0 Level Non-Maternity Maternity Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual CHILDREN (one or more) 155 5 1 1 Increase maternity premiums 10% for Regulation 62 surgical schedule. PLAN: II ATTAINED AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment in 1st year) Inception Basis Immediate Basis (as increment in 1st year) < 25 187 269 223 56 57 14 25-29 187 296 213 53 51 13 30-34 193 353 124 31 36 9 35-39 235 392 40 10 15 4 40-44 287 465 5 1 4 1 45-49 349 490 0 0 0 0 50-54 422 483 0 0 0 0 55-59 461 442 0 0 0 0 60-64 540 447 0 0 0 0 ISSUE AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment) Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual 1st yr. Only OR Level Annual < 25 203 308 179 100 24 46 25 6 25-29 210 347 132 134 23 35 29 6 30-34 242 394 65 90 14 20 25 4 35-39 290 438 19 31 4 7 11 2 40-44 344 481 2 4 1 2 3 0 45-49 406 488 0 0 0 0 0 0 50-54 477 490 0 0 0 0 0 0 55-59 504 456 0 0 0 0 0 0 60-64 540 447 0 0 0 0 0 0 Non-Maternity Maternity Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual CHILDREN (one or more) 233 9 2 2 Increase maternity premiums 10% for Regulation 62 surgical schedule. PLAN: III ATTAINED AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment in 1st year) Inception Basis Immediate Basis (as increment in 1st year) < 25 255 363 267 67 68 17 25-29 255 401 254 64 61 15 30-34 274 488 148 37 43 11 35-39 324 540 47 12 18 5 40-44 401 645 6 2 4 1 45-49 486 677 0 0 0 0 50-54 595 675 0 0 0 0 55-59 657 620 0 0 0 0 60-64 784 625 0 0 0 0 ISSUE AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment) Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual 1st yr. Only OR Level Annual < 25 278 415 214 119 29 55 30 7 25-29 290 474 158 160 28 41 35 7 30-34 335 540 78 107 16 24 30 5 35-39 404 604 22 37 5 9 14 2 40-44 483 666 3 5 1 2 4 0 45-49 577 679 0 0 0 0 0 0 50-54 682 686 0 0 0 0 0 0 55-59 725 638 0 0 0 0 0 0 60-64 784 625 0 0 0 0 0 0 Non-Maternity Maternity Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual CHILDREN (one or more) 303 10 3 3 Increase maternity premiums 13% for Regulation 62 surgical schedule. PLAN: Major Medical Supplementing No Basic Plan or Basic Plans I or II ATTAINED AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment in 1st year) Inception Basis Immediate Basis (as increment in 1st year) < 25 272 250 262 39 67 10 25-29 290 385 250 38 60 9 30-34 359 523 145 22 42 6 35-39 472 672 46 7 18 3 40-44 545 835 6 1 4 1 45-49 693 955 0 0 0 0 50-54 1060 1133 0 0 0 0 55-59 1481 1212 0 0 0 0 60-64 1768 1314 0 0 0 0 ISSUE AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment) Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual 1st yr. Only OR Level Annual < 25 330 392 211 91 17 54 22 4 25-29 388 530 156 132 16 41 28 4 30-34 494 672 76 91 10 24 25 3 35-39 621 820 22 32 3 9 12 1 40-44 766 962 3 4 0 2 3 0 45-49 1013 1096 0 0 0 0 0 0 50-54 1387 1260 0 0 0 0 0 0 55-59 1637 1289 0 0 0 0 0 0 60-64 1758 1314 0 0 0 0 0 0 Non-Maternity Maternity Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual CHILDREN (one or more) 298 10 2 2 Increase non-maternity premiums 8% for all cause plan. Reduce non-maternity premiums 10% if coverage for private duty nursing, in-hospital psychiatric care, and out-of-hospital drugs not provided; and there is an inside limit on in-hospital physicians fees. Increase maternity premiums 17% for Regulation 62 surgical schedule. PLAN: Major Medical Supplementing Basic Plan III or Better ATTAINED AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment in 1st year) Inception Basis Immediate Basis (as increment in 1st year) < 25 237 218 215 32 55 8 25-29 253 335 205 31 49 7 30-34 313 455 119 18 35 5 35-39 411 565 38 6 15 2 40-44 474 727 5 1 4 1 45-49 604 831 0 0 0 0 50-54 923 986 0 0 0 0 55-59 1289 1055 0 0 0 0 60-64 1539 1144 0 0 0 0 ISSUE AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment) Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual 1st yr. Only OR Level Annual < 25 288 341 172 74 14 44 16 4 25-29 338 461 127 108 13 33 23 3 30-34 430 585 62 74 8 19 20 2 35-39 540 714 18 26 2 7 0 1 40-44 667 837 2 4 0 2 2 0 45-49 882 954 0 0 0 0 0 0 50-54 1207 1097 0 0 0 0 0 0 55-59 1425 1122 0 0 0 0 0 0 60-64 1539 1144 0 0 0 0 0 0 Non-Maternity Maternity Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual CHILDREN (one or more) 259 8 1 1 Increase non-maternity premiums 8% for all cause plan. Reduce non-maternity premiums 10% if coverage for private duty nursing, in-hospital psychiatric care, and out-of-hospital drugs are not provided; and there is an inside limit on in-hospital physicians fees. Decrease maternity premiums by 16% for Regulation 62 surgical schedule. PLAN: Major Medical Supplementing a Hospital Service Plan Covering 21 Days or More (An additional 8% has been included in the non-maternity premiums for this all cause) ATTAINED AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment in 1st year) Inception Basis Immediate Basis (as increment in 1st year) < 25 176 152 156 23 40 6 25-29 188 249 149 22 36 5 30-34 233 338 86 13 25 4 35-39 306 435 28 4 11 2 40-44 353 541 4 1 3 0 45-49 449 618 0 0 0 0 50-54 686 723 0 0 0 0 55-59 959 785 0 0 0 0 60-64 1144 851 0 0 0 0 ISSUE AGE MALE RATE FEMALE RATE Non-Maternity Maternity Married Unmarried Inception Basis Immediate Basis (as increment) Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual 1st yr. Only OR Level Annual < 25 214 254 125 54 10 32 13 3 25-29 251 343 93 79 10 24 17 2 30-34 320 435 45 54 6 14 15 2 35-39 402 531 13 19 2 5 7 1 40-44 496 623 2 3 0 1 2 0 45-49 656 710 0 0 0 0 0 0 50-54 898 815 0 0 0 0 0 0 55-59 1060 834 0 0 0 0 0 0 60-64 1143 851 0 0 0 0 0 0 Non-Maternity Maternity Inception Basis Immediate Basis (as increment) 1st yr. Only OR Level Annual CHILDREN (one or more) 193 6 1 1 Reduce non-maternity premiums 102 if coverage for private duty nursing, in-hospital psychiatric care, and out-of-hospital drugs are not provided; and there is an inside limit on the hospital physicians fees. Increase maternity premiums 29% for Regulation 62 surgical schedule. Assumptions for Maternity, Premiums for Group Conversion Policies 1. Birth frequencies: 1980 live birth rate per female in New York State excluding New York City. 2. Unmarried frequencies were increased 10% to cover situations where actual marital status is unknown or where it changes from unmarried to married. 3. No anti-selection was assumed except in the first year for immediate maternity coverage. A 25% increase was assumed in the first year maternity claim costs for the base plans and a 15% increase was assumed in the first year maternity claim costs for the major medical plan. 4. Average hospital stay for normal delivery: 3.6 days. 5. Average hospital miscellaneous charge as of 1/1/83 for normal delivery: $ 750. 6. Average cost for normal delivery (excluding fees for pre-natal and postnatal cure) as of 1/1/83: $ 800. Average cost for physician's services for prenatal and postnatal care as of 1/1/83: $ 500. 7. 75% loss ratio. Appendix C Standards for Overinsurance Involving Converted Policies Issued Under Section 162, N.Y. Ins. Law Definitions . As used in these standards: 1. "health care coverage" means coverage for charges made or services provided for hospital, surgical or medical care, treatment, services or supplies. 2. "converted policy" means any policy or contract issued on exercise of any conversion privilege which has been approved by the applicable governmental agency which regulates insurance as complying with a statute mandating such a privilege to convert terminating health care coverage. 3. "duplicating plan" means any one or more of the following plans which pays benefits or provides services for health care coverage: any other hospital, surgical or medical expense insurance policy, any hospital or medical service subscriber contract, any medical practice or other prepayment plan any other voluntary plan or program whether insured or uninsured, or any other plan or program established to comply with any federal or state law (except Medicaid). 4. "overinsured" means, with respect to any person, that his or her health care coverage under the converted policy and all duplicating plans would be more than the applicable maximum set forth below: (a) As to hospital room and board expense coverage, $ 10 a day in excess of the average cost of semiprivate accommodations in the area where that person lives; (b) As to surgical expense coverage, the usual and customary charges made for surgical procedures in the area where that person lives; and (c) As to major medical expense coverage, another major medical policy other than one providing high deductible catastrophic coverage. Overinsurance will be determined separately for hospital expense, surgical expense and major medical expense coverage. Issue Standard . An Insurer may refuse to cover under a converted policy any person or persons who, if so covered at the date of conversion, would be overinsured. Renewal Standard . An Insurer may refuse to renew an in-force converted policy if . any person or persons covered by it is overinsured, would be overinsured, subject to the following conditions: 1. The Insurer must give the Insured written notice at least 31 days in advance of a renewal date that the Insured may elect, prior to that renewal date, (a) to have such person or persons eliminated from the converted policy's coverage or (b) to have the converted policy terminated or (c) to have the total coverage reduced below the overinsurance standards. If the Insured elects elimination or reduction of benefits, this election or reduction must be evidenced by a rider signed by the Insured and by an appropriate adjustment in premium for the converted policy. 2. The elimination, termination or reduction of coverage will take effect after notice to the Insured and on the first renewal date after such notice in accordance with the provisions of the policy. 3. After the converted policy has been in force for two years, the Insurer can refuse to renew coverage only if: (a) each person whose coverage is to be non-renewed is eligible for Medicare coverage or (b) the governmental agency which regulates insurance in the jurisdiction where the Insured resided on the date of issuance of the converted policy has given advance approval to the non-renewal.