Sponsored by:
Assemblyman ROY FREIMAN
District 16 (Hunterdon, Mercer, Middlesex and Somerset)
SYNOPSIS
Makes certain changes to calculation of minimum loss ratio requirements for health benefits plans in individual and small employer markets.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning minimum loss ratios for certain health benefits plans and amending P.L.1992, c.161 and P.L.1992, c.162.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 8 of P.L.1992, c.161 (C.17B:27A-9) is amended to read as follows:
8. a. (Deleted by amendment, P.L.2008, c.38).
b. The board shall make application on behalf of all carriers for any other subsidies, discounts, or funds that may be provided for under State or federal law or regulation. A carrier may include subsidies or funds granted to the board to reduce its premium rates for individual health benefits plans subject to [this act] P.L.1992, c.161 (C.17B:27A-2 et al.).
c. A carrier shall not issue individual health benefits plans on a new contract or policy form pursuant to [this act] P.L.1992, c.161 (C.17B:27A-2 et al.) until an informational filing of a full schedule of rates which applies to the contract or policy form has been filed with the commissioner. The commissioner shall provide a copy of the informational filing to the Attorney General and the board.
d. A carrier desiring to increase or decrease premiums for any contract or policy form may implement that increase or decrease upon making an informational filing with the commissioner of that increase or decrease, along with the actuarial assumptions and methods used by the carrier in establishing that increase or decrease. The commissioner may disapprove any informational filing on a finding that it is incomplete and not in substantial compliance with P.L.1992, c.161 (C.17B:27A-2 et al.), or that the rates are inadequate or unfairly discriminatory.
e. (1) Rates shall be formulated on contracts or policies required pursuant to section 3 of [this act] P.L.1992, c.161 (C.17B:27A-4) so that the anticipated minimum loss ratio for a contract or policy form shall not be less than 80% of the premium calculated based on a three-year rolling average. The carrier shall submit with its rate filing supporting data, as determined by the commissioner, and a certification by a member of the American Academy of Actuaries, or other individuals in a format acceptable to the commissioner, that the carrier is in compliance with the provisions of this subsection.
(2) Each calendar year, a carrier shall return, in the form of aggregate benefits for all of the policy or contract forms offered by the carrier pursuant to subsection a. of section 3 of P.L.1992, c.161 (C.17:B:27A-4), at least 80% of the aggregate premiums collected for all of the policy or contract forms during that calendar year. Carriers shall annually report, no later than August 1 of each year, the loss ratio calculated pursuant to this section for all of the policy or contract forms for the previous calendar year. The loss ratio for the previous year shall be calculated based on a three-year rolling average. In each case in which the loss ratio fails to comply with the 80% loss ratio requirement, the carrier shall issue a dividend or credit against future premiums for all policy or contract holders, as applicable, in an amount sufficient to assure that the aggregate benefits paid in the previous calendar year plus the amount of the dividends and credits, calculated based on a three-year rolling average, equal 80% of the aggregate premiums collected for the policy or contract forms in the previous calendar year calculated based on a three-year rolling average. All dividends and credits shall be distributed by December 31 of the year following the calendar year in which the loss ratio requirements were not satisfied. The annual report required by this subsection shall include a carrier's calculation of the dividends and credits applicable to all policy or contract forms, as well as an explanation of the carrier's plan to issue dividends or credits. The instructions and format for calculating and reporting loss ratios and issuing dividends or credits shall be specified by the commissioner by regulation. Those regulations shall include provisions:
(a) for the distribution of a dividend or credit in the event of cancellation or termination by a policyholder;
(b) requiring a carriers minimum loss ratio to be calculated by aggregating the data for a three-year period which includes the data for the previous calendar year whose minimum loss ratio is being calculated, including three months of runout through the first quarter of the subsequent year; and the data for the two years immediately preceding the year for which the minimum loss ratio is being calculated;
(c) requiring that the numerator of a carrier's minimum loss ratio for a minimum loss ratio reporting year to be the carriers claims paid plus the carriers expenditures for activities that improve health care quality;
(d) requiring adjustments to be either included in or deducted from incurred claims receipts related to the transitional reinsurance program and net payments or receipts related to the risk adjustment; and
(e) that any new or increased State and federal taxes or assessments initiated after the enactment of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be excluded from premiums for purposes of minimum loss ratio calculation.
f. (Deleted by amendment, P.L.2008, c.38).
(cf: P.L.2008, c.38, s.16)
2. Section 9 of P.L.1992, c.162 (C.17B:27A-25) is amended to read as follows:
9. a. (1) (Deleted by amendment, P.L.1997, c.146).
(2) (Deleted by amendment, P.L.1997, c.146).
(3) (a) For all policies or contracts providing health benefits plans for small employers issued pursuant to section 3 of P.L.1992, c.162 (C.17B:27A-19), and including policies or contracts offered by a carrier to a small employer who is a member of a Small Employer Purchasing Alliance pursuant to the provisions of P.L.2001, c.225 (C.17B:27A-25.1 et al.) the premium rate charged by a carrier to the highest rated small group purchasing a small employer health benefits plan issued pursuant to section 3 of P.L.1992, c.162 (C.17B:27A-19) shall not be greater than 200% of the premium rate charged for the lowest rated small group purchasing that same health benefits plan; provided, however, that the only factors upon which the rate differential may be based are age, gender and geography. Such factors shall be applied in a manner consistent with regulations adopted by the commissioner. For the purposes of this paragraph (3), policies or contracts offered by a carrier to a small employer who is a member of a Small Employer Purchasing Alliance shall be rated separately from the carrier's other small employer health benefits policies or contracts.
(b) A health benefits plan issued pursuant to subsection j. of section 3 of P.L.1992, c.162 (C.17B:27A-19) shall be rated in accordance with the provisions of section 7 of P.L.1995, c.340 (C.17B:27A-19.3), for the purposes of meeting the requirements of this paragraph.
(4) (Deleted by amendment, P.L.1994, c.11).
(5) Any policy or contract issued after January 1, 1994 to a small employer who was not previously covered by a health benefits plan issued by the issuing small employer carrier, shall be subject to the same premium rate restrictions as provided in paragraph (3) of this subsection, which rate restrictions shall be effective on the