An Act To Improve Oversight of Insurance Rates and Ensure Consistency with Federal Law
Maine Legislature, Session 126, LD 0681
Committee: Insurance and Financial Services
Sponsors: TREAT, SAUCIER, JACKSON, GRATWICK, GOODE, GRANT, LUCHINI, MORRISON, STANLEY, MAZUREK
Amends: 24-A MRSA §2736-C, 24-A MRSA §2808-B

Legislative Document 
No. 681 
H.P. 473 
House of Representatives, February 26, 2013 
An Act To Improve Oversight of Insurance Rates and Ensure 
Consistency with Federal Law 
(EMERGENCY) 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative TREAT of Hallowell. 
Cosponsored by Representative SAUCIER of Presque Isle, Senator JACKSON of Aroostook, 
Senator GRATWICK of Penobscot and Representatives: GOODE of Bangor, GRANT of 
Gardiner, LUCHINI of Ellsworth, MacDONALD of Boothbay, MORRISON of South 
Portland, STANLEY of Medway, Senator: MAZUREK of Knox. 
Emergency preamble. Whereas, acts and resolves of the Legislature do not 
become effective until 90 days after adjournment unless enacted as emergencies; and 
Whereas, health insurance rates for individuals and small employers in certain areas 
of the State have been significantly increased because of changes in rating laws made by 
Public Law 2011, chapter 90; and  
Whereas, individuals and small employers need relief from rising health insurance 
premiums; and 
Whereas, this bill rescinds changes made by Public Law 2011, chapter 90 and 
requires prior approval and advance review of individual and small group health 
insurance rates; and 
Whereas, in the judgment of the Legislature, these facts create an emergency within 
the meaning of the Constitution of Maine and require the following legislation as 
immediately necessary for the preservation of the public peace, health and safety; now, 
therefore, 
Be it enacted by the People of the State of Maine as follows: 
PART A 
Sec. A-1.  24-A MRSA §2736-C, sub-§2-B, as amended by PL 2011, c. 364, §7, 
is further amended to read: 
2-B.  Optional guaranteed loss ratio.  Notwithstanding section 2736, subsection 1 
and section 2736-A, at the carrier's option, rate Rate filings for a carrier's credible block 
of individual health plans may must be filed in accordance with this subsection.  Rates 
filed in accordance with this subsection are filed for informational purposes unless rate 
review is required pursuant to the federal Affordable Care Act. 
A.  A carrier's individual health plans are considered credible if the anticipated 
average number of members during the period for which the rates will be in effect 
meets standards for full or partial credibility pursuant to the federal Affordable Care 
Act. The rate filing must state the anticipated average number of members during the 
period for which the rates will be in effect and the basis for the estimate.  If the 
superintendent determines that the number of members is likely to be less than 
needed to meet the credibility standard, the filing is subject to section 2736, 
subsection 1 and section 2736-A. 
B.  On an annual schedule as determined by the superintendent, the carrier shall file a 
report with the superintendent showing the calculation of rebates as required pursuant 
to the federal Affordable Care Act, except that the calculation must be based on a 
minimum medical loss ratio of 80% if the applicable federal minimum for the 
individual market in this State is lower.  If the calculation indicates that rebates must 
be paid, the carrier must pay the rebates in the same manner as is required for rebates 
pursuant to the federal Affordable Care Act. 
Sec. A-2.  24-A MRSA §2736-C, sub-§5, as amended by PL 2011, c. 90, Pt. D, 
§3, is further amended to read: 
5.  Loss ratios.  Except as provided in subsection 2-B, for For all policies and 
certificates issued on or after the effective date of this section, the superintendent shall 
disapprove any premium rates filed by any carrier, whether initial or revised, for an 
individual health policy unless it is anticipated that the aggregate benefits estimated to be 
paid under all the individual health policies maintained in force by the carrier for the 
period for which coverage is to be provided will return to policyholders at least 65% of 
the aggregate premiums collected for those policies the minimum medical loss ratio 
satisfies the requirements for individual health plans in section 4319, as determined in 
accordance with accepted actuarial principles and practices and on the basis of incurred 
claims experience and earned premiums.  For the purposes of this calculation, any 
payments paid pursuant to former section 6913 must be treated as incurred claims. 
PART B 
Sec. B-1.  24-A MRSA §2808-B, sub-§2-A, ¶C, as amended by PL 2007, c. 
629, Pt. M, §6, is repealed. 
Sec. B-2.  24-A MRSA §2808-B, sub-§2-B, as amended by PL 2011, c. 364, 
§15, is further amended to read: 
2-B.  Rate review and hearings.  Except as provided in subsection 2-C, rate Rate 
filings are subject to this subsection. 
A.  Rates subject to this subsection must be filed for approval by the superintendent. 
The superintendent shall disapprove any premium rates filed by any carrier, whether 
initial or revised, for a small group health plan unless it is anticipated that the 
aggregate benefits estimated to be paid under all the small group health plans 
maintained in force by the carrier for the period for which coverage is to be provided 
will return to policyholders at least 75% of the aggregate premiums collected for 
those policies, as determined in accordance with accepted actuarial principles and 
practices and on the basis of incurred claims experience and earned premiums. For 
the purposes of this calculation, any payments paid pursuant to former section 6913 
must be treated as incurred claims. 
B.  If at any time the superintendent has reason to believe that a filing does not meet 
the requirements that rates not be excessive, inadequate or unfairly discriminatory or 
that the filing violates any of the provisions of chapter 23, the superintendent shall 
cause a hearing to be held.  Hearings held under this subsection must conform to the 
procedural requirements set forth in Title 5, chapter 375, subchapter 4.  If a filing 
proposes an increase in rates in a small group health plan, the superintendent shall 
cause a hearing to be held at the request of the Attorney General.  In any hearing 
conducted under this paragraph, the insurer has the burden of proving rates are not 
excessive, inadequate or unfairly discriminatory.  The superintendent shall issue an 
order or decision within 30 days after the close of the hearing or of any rehearing or 
reargument or within such other period as the superintendent for good cause may 
require, but not to exceed an additional 30 days.  In the order or decision, the 
superintendent shall either approve or disapprove the rate filing.  If the superintendent 
disapproves the rate filing, the superintendent shall establish the date on which the 
filing is no longer effective, specify the filing the superintendent would approve and 
authorize the insurer to submit a new filing in accordance with the terms of the order 
or decision. 
C.  When a filing is not accompanied by the information upon which the carrier 
supports the filing or the superintendent does not have sufficient information to 
determine whether the filing meets the requirements that rates not be excessive, 
inadequate or unfairly discriminatory, the superintendent shall require the carrier to 
furnish the information upon which it supports the filing. 
D.  A carrier that adjusts its rate shall account for the savings offset payment or any 
recovery of that savings offset payment in its experience consistent with this section 
and former section 6913. 
Sec. B-3.  24-A MRSA §2808-B, sub-§2-C, as amended by PL 2011, c. 364, 
§16, is repealed. 
PART C 
Sec. C-1.  24-A MRSA §2736-C, sub-§2, ¶C-1, as enacted by PL 2011, c. 90, 
Pt. A, §2, is amended to read: 
C-1.  A carrier may vary the premium rate due to geographic area in accordance with 
the limitation set out in this paragraph.  For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued or renewed in this State on or 
after between July 1, 2012 and June 30, 2013, the rating factor used by a carrier for 
geographic area may not exceed 1.5. 
Sec. C-2.  24-A MRSA §2736-C, sub-§2, ¶D, as amended by PL 2011, c. 364, 
§4, is further amended to read: 
D.  A carrier may vary the premium rate due to age and tobacco use in accordance 
with the limitations set out in this paragraph. 
(1)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between December 1, 1993 and 
July 14, 1994, the premium rate may not deviate above or below the community 
rate filed by the carrier by more than 50%. 
(2)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between July 15, 1994 and July 
14, 1995, the premium rate may not deviate above or below the community rate 
filed by the carrier by more than 33%. 
(3)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between July 15, 1995 and June 
30, 2012, the premium rate may not deviate above or below the community rate 
filed by the carrier by more than 20%. 
(5) For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between July 1, 2012 and 
December 31, 2013 June 30, 2013, the maximum rate differential due to age filed 
by the carrier as determined by ratio is 3 to 1.  The limitation does not apply for 
determining rates for an attained age of less than 19 years of age or more than 65 
years of age. 
(6) For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between January 1, 2014 and 
December 31, 2014, the maximum rate differential due to age filed by the carrier 
as determined by ratio is 4 to 1 to the extent permitted by the federal Affordable 
Care Act.  The limitation does not apply for determining rates for an attained age 
of less than 19 years of age or more than 65 years of age. 
(7) For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State on or after January 1, 2015, the 
maximum rate differential due to age filed by the carrier as determined by ratio is 
to 1 to the extent permitted by the federal Affordable Care Act.  The limitation 
does not apply for determining rates for an attained age of less than 19 years of 
age or more than 65 years of age. 
(8)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State on or after between July 1, 2012 
and June 30, 2013, the maximum rate differential due to tobacco use filed by the 
carrier as determined by ratio is 1.5 to 1. 
Sec. C-3.  24-A MRSA §2736-C, sub-§2, ¶D-1 is enacted to read: 
D-1.  A carrier may vary the premium rate due to age, geographic area and tobacco 
use in accordance with the limitations set out in this paragraph.  For all policies, 
contracts or certificates that are executed, delivered, issued for delivery, continued or 
renewed in this State on or after July 1, 2013, the maximum rate differential due to 
age, geographic area and tobacco use filed by the carrier as determined by ratio is 3 to 
1.  The limitation does not apply for determining rates for an attained age of less than 
years of age or more than 65 years of age.  The superintendent shall adopt rules 
regarding rating based on tobacco use setting forth rating methodologies and 
standards that are consistent with the federal Affordable Care Act and do not permit 
rate variation that would penalize an individual who participates in a smoking 
cessation program offered or approved by the carrier or who is not provided the 
opportunity to participate in a smoking cessation program by the carrier.  Rules 
adopted pursuant to this paragraph are routine technical rules as defined in Title 5, 
chapter 375, subchapter 2-A. 
Sec. C-4.  24-A MRSA §2736-C, sub-§2, ¶I, as amended by PL 2011, c. 364, 
§5, is further amended to read: 
I.  A carrier that offered individual health plans prior to July 1, 2012 may close its 
individual book of business sold prior to July 1, 2012 and may establish a separate 
community rate for individuals applying for coverage under an individual health plan 
on or after July 1, 2012.  If a carrier closes its individual book of business as 
permitted under this paragraph, the carrier may vary the premium rate for individuals 
in that closed book of business only as permitted in this paragraph and paragraphs C 
and C-1. 
(1)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between July 1, 2012 and 
December 31, 2012, the maximum rate differential due to age filed by the carrier 
as determined by ratio is 2 to 1.  The limitation does not apply for determining 
rates for an attained age of less than 19 years of age or more than 65 years of age. 
(2)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between January 1, 2013 and 
December 31, 2013 June 30, 2013, the maximum rate differential due to age filed 
by the carrier as determined by ratio is 2.5 to 1. The limitation does not apply for 
determining rates for an attained age of less than 19 years of age or more than 65 
years of age. 
(3)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between January 1, 2014 and 
December 31, 2014 on or after July 1, 2013, the maximum rate differential due to 
age, geographic area and tobacco use filed by the carrier as determined by ratio is 
to 1.  The limitation does not apply for determining rates for an attained age of 
less than 19 years of age or more than 65 years of age.  The superintendent shall 
adopt rules regarding rating based on tobacco use setting forth rating 
methodologies and standards that are consistent with the federal Affordable Care 
Act and do not permit rate variation that would penalize an individual who 
participates in a smoking cessation program offered or approved by the carrier or 
who is not provided the opportunity to participate in a smoking cessation 
program by the carrier.  Rules adopted pursuant to this subparagraph are routine 
technical rules as defined in Title 5, chapter 375, subchapter 2-A. 
(4)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between January 1, 2015 and 
December 31, 2015, the maximum rate differential due to age filed by the carrier 
as determined by ratio is 4 to 1 to the extent permitted by the federal Affordable 
Care Act.  The limitation does not apply for determining rates for an attained age 
of less than 19 years of age or more than 65 years of age. 
(5)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State on or after January 1, 2016, the 
maximum rate differential due to age filed by the carrier as determined by ratio is 
to 1 to the extent permitted by the federal Affordable Care Act.  The limitation 
does not apply for determining rates for an attained age of less than 19 years of 
age or more than 65 years of age. 
(6)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State on or after between July 1, 2012 
and June 30, 2013, the maximum rate differential due to tobacco use filed by the 
carrier as determined by ratio is 1.5 to 1. 
The superintendent shall direct the Consumer Health Care Division, established in 
section 4321, to work with carriers and health advocacy organizations to provide 
information about comparable alternative insurance options to individuals in a 
carrier's closed book of business. 
Sec. C-5.  24-A MRSA §2808-B, sub-§2, ¶C-1, as enacted by PL 2011, c. 90, 
Pt. A, §7, is amended to read: 
C-1.  A carrier may vary the premium rate due to geographic area in accordance with 
the limitation set out in this paragraph.  For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued or renewed in this State on or 
after between October 1, 2011 and June 30, 2013, the rating factor used by a carrier 
for geographic area may not exceed 1.5. 
Sec. C-6.  24-A MRSA §2808-B, sub-§2, ¶D, as amended by PL 2011, c. 638, 
§2, is further amended to read: 
D.  A carrier may vary the premium rate due to age, group size and tobacco use only 
under the following schedule and within the listed percentage bands. 
(1)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between July 15, 1993 and July 
14, 1994, the premium rate may not deviate above or below the community rate 
filed by the carrier by more than 50%. 
(2)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between July 15, 1994 and July 
14, 1995, the premium rate may not deviate above or below the community rate 
filed by the carrier by more than 33%. 
(3)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between July 15, 1995 and 
September 30, 2011, the premium rate may not deviate above or below the 
community rate filed by the carrier by more than 20%. 
(4)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between October 1, 2011 and 
September 30, 2012, the maximum rate differential due to age filed by the carrier 
as determined by ratio is 2 to 1.  The limitation does not apply for determining 
rates for an attained age of less than 19 years of age or more than 65 years of age. 
(5)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between October 1, 2012 and 
December 31, 2013 June 30, 2013, the maximum rate differential due to age and 
group size filed by the carrier as determined by ratio is 2.5 to 1. The limitation 
does not apply for determining rates for an attained age of less than 19 years of 
age or more than 65 years of age. 
(6)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between January 1, 2014 and 
December 31, 2014, the maximum rate differential due to age and group size 
filed by the carrier as determined by ratio is 3 to 1 to the extent permitted by the 
federal Affordable Care Act. The limitation does not apply for determining rates 
for an attained age of less than 19 years of age or more than 65 years of age. 
(7)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between January 1, 2015 and 
December 31, 2015, the maximum rate differential due to age and group size 
filed by the carrier as determined by ratio is 4 to 1 to the extent permitted by the 
federal Affordable Care Act.  The limitation does not apply for determining rates 
for an attained age of less than 19 years of age or more than 65 years of age. 
(8)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State on or after January 1, 2016, the 
maximum rate differential due to age and group size filed by the carrier as 
determined by ratio is 5 to 1 to the extent permitted by the federal Affordable 
Care Act.  The limitation does not apply for determining rates for an attained age 
of less than 19 years of age or more than 65 years of age. 
(9)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State on or after between October 1, 
2011 and June 30, 2013, the maximum rate differential due to tobacco use filed 
by the carrier as determined by ratio is 1.5 to 1. 
Sec. C-7.  24-A MRSA §2808-B, sub-§2, ¶D-3 is enacted to read: 
D-3.  A carrier may vary the premium rate due to age, group size, geographic area 
and tobacco use in accordance with the limitations set out in this paragraph.  For all 
policies, contracts or certificates that are executed, delivered, issued for delivery, 
continued or renewed in this State on or after July 1, 2013, the maximum rate 
differential due to age, group size, geographic area and tobacco use filed by the 
carrier as determined by ratio is 3 to 1.  The limitation does not apply for determining 
rates for an attained age of less than 19 years of age or more than 65 years of age.  
The superintendent shall adopt rules regarding rating based on tobacco use setting 
forth rating methodologies and standards that are consistent with the federal 
Affordable Care Act and do not permit rate variation that would penalize an 
individual who participates in a smoking cessation program offered or approved by 
the carrier or who is not provided the opportunity to participate in a smoking 
cessation program by the carrier.  Rules adopted pursuant to this paragraph are 
routine technical rules as defined in Title 5, chapter 375, subchapter 2-A. 
Sec. C-8.  24-A MRSA §2808-B, sub-§2, ¶H, as amended by PL 2011, c. 638, 
§3, is further amended to read: 
H.  A carrier that offered small group health plans prior to October 1, 2011 may close 
its small group book of business sold prior to October 1, 2011 and may establish a 
separate community rate for eligible groups applying for coverage under a small 
group health plan on or after October 1, 2011.  If a carrier closes its small group book 
of business as permitted under this paragraph, the carrier may vary the premium rate 
for that closed book of business only as permitted in this paragraph and paragraphs C 
and C-1. 
(1)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between October 1, 2011 and 
September 30, 2012, the maximum rate differential due to age filed by the carrier 
as determined by ratio is 2 to 1.  The limitation does not apply for determining 
rates for an attained age of less than 19 years of age or more than 65 years of age. 
(2)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between October 1, 2012 and 
December 31, 2013 June 30, 2013, the maximum rate differential due to age and 
group size filed by the carrier as determined by ratio is 2.5 to 1.  The limitation 
does not apply for determining rates for an attained age of less than 19 years of 
age or more than 65 years of age. 
(3)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between January 1, 2014 and 
December 31, 2014 on or after July 1, 2013, the maximum rate differential due to 
age, geographic area, tobacco use and group size filed by the carrier as 
determined by ratio is 3 to 1 to the extent permitted by the federal Affordable 
Care Act.  The limitation does not apply for determining rates for an attained age 
of less than 19 years of age or more than 65 years of age.  The superintendent 
shall adopt rules regarding rating based on tobacco use setting forth rating 
methodologies and standards that are consistent with the federal Affordable Care 
Act and do not permit rate variation that would penalize an individual who 
participates in a smoking cessation program offered or approved by the carrier or 
who is not provided the opportunity to participate in a smoking cessation 
program by the carrier.  Rules adopted pursuant to this subparagraph are routine 
technical rules as defined in Title 5, chapter 375, subchapter 2-A. 
(4) For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between January 1, 2015 and 
December 31, 2015, the maximum rate differential due to age and group size 
filed by the carrier as determined by ratio is 4 to 1 to the extent permitted by the 
federal Affordable Care Act.  The limitation does not apply for determining rates 
for an attained age of less than 19 years of age or more than 65 years of age. 
(5)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State on or after January 1, 2016, the 
maximum rate differential due to age and group size filed by the carrier as 
determined by ratio is 5 to 1 to the extent permitted by the federal Affordable 
Care Act.  The limitation does not apply for determining rates for an attained age 
of less than 19 years of age or more than 65 years of age. 
(6)  For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State on or after between October 1, 
2011 and June 30, 2013, the maximum rate differential due to tobacco use filed 
by the carrier as determined by ratio is 1.5 to 1. 
Emergency clause.  In view of the emergency cited in the preamble, this 
legislation takes effect when approved. 
SUMMARY 
Part A of this bill restores the statutory process for advance review and prior approval 
of individual health insurance rates and repeals the changes to the rate review process for 
individual health insurance made by Public Law 2011, chapter 90. 
Part B of the bill extends the same process for advance review and prior approval for 
small group health insurance rates. 
Part C of the bill merges the rating bands for age, geographic area and tobacco use so 
that the combined rate differential due to age, geographic area and tobacco use may not 
exceed a ratio of 3 to 1 beginning July 1, 2013 for all individual and small group health 
insurance policies.  The bill authorizes the Superintendent of Insurance to adopt rules 
regarding rating based on tobacco use that set appropriate methodologies and standards 
that are consistent with the federal Patient Protection and Affordable Care Act, as 
amended by the federal Health Care and Education Reconciliation Act of 2010, and do 
not permit rate variation that would penalize an individual who participates in a smoking 
cessation program or who is not provided the opportunity to participate in one.