Connecticut Administrative Code › Title 38a - Insurance Department › 78 - Connecticut Standard Valuation Law Actuarial Opinion and Memorandum › Minimum Reserve Standards for Individual and Group Health Insurance Contracts › Appendix A - Specific Standards for Morbidity, Interest and Mortality

Current through July 10, 2024
(a) Minimum morbidity standards for valuation of specified
				  individual contract health insurance benefits are as follows (references to
				  Commissioners' Table refers to the valuation table version as opposed to the
				  basic table version as applicable):
(1) Disability Income Benefits Due to Accident or
				  Sickness.
(A) Contract Reserves:
Contracts issued on or after January 1, 1965 and prior to
				  January 1, 1986:
The 1964 Commissioners Disability Table (64 CDT).
Contracts issued on or after January 1, 1994 and before
				  January 1, 2020:
The 1985 Commissioners Individual Disability Tables A
				  (85CIDA); or The 1985 Commissioners Individual Disability Tables B
				  (85CIDB).
Contracts issued during 1986 through 1993:
Optional use of either the 1964 Table or the 1985
				  Tables.
Each insurer shall elect, with respect to all individual
				  contracts issued in any one statement year, whether it will use Tables A or
				  Tables B as in the minimum standard. The insurer may, however, elect to use
				  other tables with respect to any subsequent statement year.
Contracts issued on or after January 1, 2020:
The 2013 IDI Valuation Table with modifiers as described in
				  Actuarial Guideline L, as included in the most current version of the NAIC
				  Accounting Practices and Procedures Manual.
An insurer may begin to use the 2013 IDI Valuation Table with
				  modifiers at a date earlier than January 1, 2020, but not prior to January 1,
				  2017.
Not later than January 1, 2023, or an earlier date that an
				  insurer begins to use the 2013 IDI Valuation Table, the insurer may elect to
				  apply such 2013 IDI Valuation Table for all policies issued subject to other
				  valuation tables, if:
(i) The insurer applies such 2013 IDI Valuation Table to all
				  in-force policies and incurred claims;
(ii) The insurer applies, or elects to apply, the 2013 IDI
				  Valuation Table to all claims incurred regardless of incurred date;
(iii) The insurer maintains adequate policy records on
				  policies issued prior to January 1, 2020, that allow the insurer to apply the
				  2013 IDI Valuation Table appropriately; and
(iv) Once an insurer elects to calculate reserves for all
				  in-force policies based on such 2013 IDI Valuation Table, all future valuations
				  shall be calculated on that basis.
(B) Claim Reserves:
(i) For claims incurred on or after January 1, 2017 and prior
				  to January 1, 2020:
The 1985 Commissioners Individual Disability Table A (85CIDA)
				  with claim termination rates multiplied by the following adjustment
				  factors:
Duration
Adjustment Factor
Adjusted Termination Rates*
Week 1
0.366
0.04831
2
0.366
0.04172
3
0.366
0.04063
4
0.366
0.04355
5
0.365
0.04088
6
0.365
0.04271
7
0.365
0.04380
8
0.365
0.04344
9
0.370
0.04292
10
0.370
0.04107
11
0.370
0.03848
12
0.370
0.03478
13
0.370
0.03034
Month 4
0.391
0.08758
5
0.371
0.07346
6
0.435
0.07531
7
0.500
0.07245
8
0.564
0.06655
9
0.613
0.05520
10
0.663
0.04705
11
0.712
0.04486
12
0.756
0.04309
13
0.800
0.04080
14
0.844
0.03882
15
0.888
0.03730
16
0.932
0.03448
17
0.976
0.03026
18
1.020
0.02856
19
1.049
0.02518
20
1.078
0.02264
21
1.107
0.02104
22
1.136
0.01932
23
1.165
0.01865
24
1.195
0.01792
Year 3
1.369
0.16839
4
1.204
0.10114
5
1.199
0.07434
6 and later
1.000
**
* The adjusted termination rates derived from the application
				  of the adjustment factors to the DTS Valuation Table termination rates shown in
				  exhibits 3a, 3b, 3c, 4 and 5 (Transactions of the Society of Actuaries (TSA)
				  XXXVII, pp. 457-463) is displayed. The adjustment factors for age, elimination
				  period, class, sex and cause displayed in exhibits 3a, 3b, 3c and 4 should be
				  applied to the adjusted termination rates shown in this table.
** Applicable DTS Valuation Table duration rate from exhibits
				  3c and 4 (TSA XXXVII, pp. 462-463).
The 85CIDA table so adjusted for the computation of claim
				  reserves shall be known as 85CIDC (The 1985 Commissioners Individual Disability
				  Table C).
For claims incurred on or after January 1, 2020, the 2013 IDI
				  Valuation Table with modifiers and adjustments for company experience as
				  prescribed in the Actuarial Guideline L, as included in the most current
				  version of the NAIC Accounting Practices and Procedures Manual, except for
				  worksite disability policies with benefit periods of twenty-four months or
				  less.
(ii) For worksite disability policies, claim reserves may be
				  calculated using claim run-out analysis or claim triangles, or other methods
				  that place a sound value on the reserves that are appropriate for the business
				  and risks involved.
(iii) Each insurer may elect which of the following to use as
				  the minimum standard for claims incurred prior to January 1, 2017:
(I) The minimum morbidity standard in effect for contract
				  reserves on currently issued contracts, as of the date the claim is incurred;
				  or
(II) The standard as defined in Appendix A, subsection
				  (a)(1)(B)(i) or (ii) of this section I Morbidity, applied to all open
				  non-worksite claims, provided the insurer maintains adequate claim records to
				  allow the insurer to apply the standard defined in Appendix A, subsection
				  (a)(1)(B)(i) or (ii) of this section I Morbidity appropriately. Once an insurer
				  elects to calculate reserves for all open claims on the standard defined in
				  Appendix A, subsection (a)(1)(B)(i) or (ii) of this section I Morbidity, all
				  future valuations shall be on that basis. This option, with respect to Appendix
				  A, subsection (a)(1)(B)(ii) of this section I Morbidity, may be selected only
				  if the insurer maintains adequate claim records for all claims incurred to use
				  the 2013 IDI Valuation Table appropriately.
(2) Hospital Benefits, Surgical Benefits and Maternity
				  Benefits (Scheduled benefits or fixed time period benefits only).
(A) Contract Reserves:
Contracts issued on or after January 1, 1955, and before
				  January 1, 1982:
The 1956 Intercompany Hospital-Surgical Tables.
Contracts issued on or after January 1, 1982:
The 1974 Medical Expense Tables, Table A, Transactions of the
				  Society of Actuaries, Volume XXX, pg. 63. Refer to the paper (in the same
				  volume, pg. 9) to which this table is appended, including its discussions, for
				  methods of adjustment for benefits not directly valued in Table A: "Development
				  of the 1974 Medical Expense Benefits," Houghton and Wolf.
(B) Claim Reserves:
No specific standard. See subdivision (6) of this
				  subsection.
(3) Cancer Expense Benefits .
(A) Contract Reserves:
(i) Contracts issued on or after January 1, 1986 and before
				  January 1, 2019:
The 1985 NAIC Cancer Claim Cost Tables (1985 CCCT).
(ii) Contracts issued on or after January 1, 2019:
(I) For first occurrence and hospitalization benefits:
The 2016 Cancer Claim Cost Valuation Tables (2016
				  CCCVT).
(II) For all other benefits:
Assumptions based on company experience, relevant industry
				  experience, and actuarial judgment. Such assumptions should be appropriate for
				  valuation which considers margin for adverse experience.
(iii) For contracts issued on or after January 1, 2018 and
				  before January 1, 2019, a company may elect to use morbidity basis described in
				  Appendix A, subsection (a)(3)(A)(ii) of this section I Morbidity. Once a
				  company begins use of the 2016 CCVT for new issues, it may not revert to the
				  1985 CCCT.
(B) Claim Reserves:
No specific standard. See subdivision (6) of this
				  subsection.
(4) Accidental Death Benefits.
(A) Contract Reserves:
Contracts issued on or after January 1, 1965:
The 1959 Accidental Death Benefits Table.
(B) Claim Reserves:
Actual amount incurred.
(5) Single Premium Credit Disability.
(A) Contract Reserves:
(i) For contracts issued on or after January 1, 2017:
(I) For plans having less than a thirty-day elimination
				  period, the 1985 Commissioners Individual Disability Table A (85CIDA) with
				  claim incidence rates increased by twelve percent (12%).
(II) For plans having a thirty-day and greater elimination
				  period, the 85CIDA for a fourteen-day elimination period with the adjustment in
				  Appendix A, subsection (a)(5)(A)(i)(I) of this section I Morbidity.
(ii) For contracts issued prior to January 1, 2017, each
				  insurer may elect either subclause (I) or (II) of this clause to use as the
				  minimum standard. If an insurer elects to calculate reserves for all contracts
				  on the standard defined in subclause (II) of this clause, all future valuations
				  shall be on that basis.
(I) The minimum morbidity standard in effect for contract
				  reserves on currently issued contracts, as of the date the contract was issued;
				  or
(II) The standard as defined in Appendix A, subsection
				  (a)(5)(A)(i) of this section I Morbidity, as applied to all contracts.
(B) Claim Reserves:
Claim reserves are to be determined as provided in section
				  38a-78-13(c) of the Regulations of Connecticut State Agencies.
(6) Other Individual Contract Benefits.
(A) Contract Reserves:
For all other individual contract benefits, morbidity
				  assumptions are to be determined as provided in the reserve standards.
(B) Claim Reserves:
For all benefits other than disability, claim reserves are to
				  be determined as provided in the standards.
(b) Minimum morbidity standards for valuation of specified
				  group contract health insurance benefits are as follows:
(1) Disability Income Benefits Due to Accident or Sickness,
				  where sections
				  38a-78-11 to
				  38a-78-16, inclusive, of the
				  Regulations of Connecticut State Agencies reference this Appendix A; otherwise
				  Actuarial Guideline XLVII, as included in the most current version of the NAIC
				  Accounting Practices and Procedures Manual.
(A) Contract Reserves:
Contracts issued prior to January 1, 1994: The same basis, if
				  any, as that employed by the insurer as of January 1, 1994;
Contracts issued on or after January 1, 1994:
The 1987 Commissioners Group Disability Income Table
				  (87CGDT).
(B) Claim Reserves:
For claims incurred on or after January 1, 1994:
The 1987 Commissioners Group Disability Income Table
				  (87CGDT);
For claims incurred prior to January 1, 1994:
Use of the 87CGDT is optional.
(2) Single Premium Credit Disability.
(A) Contract Reserves:
(i) For contracts issued on or after January 1, 2017:
(I) For plans having less than a thirty day elimination
				  period, the 1985 Commissioners Individual Disability Table A (85CIDA) with
				  claim incidence rates increased by twelve percent (12%).
(II) For plans having a thirty day and greater elimination
				  period, the 85CIDA for a fourteen-day elimination period with the adjustment in
				  Appendix A, subsection (b)(2)(A)(i)(I) of this section I Morbidity.
(ii) For contracts issued prior to January 1, 2017, each
				  insurer may elect either subclause (I) or (II) of this clause to use as the
				  minimum standard. If an insurer elects to calculate reserves for all contracts
				  on the standard defined in subclause (II) of this clause, all future valuations
				  shall be on that basis.
(I) The minimum morbidity standard in effect for contract
				  reserves on currently issued contracts, as of the date the contract was issued;
				  or
(II) The standard as defined in Appendix A, subsection
				  (b)(2)(A)(i) of this section I Morbidity, applied to all contracts.
(B) Claim Reserves:
Claim reserves are to be determined as provided in section
				  38a-78-13(c) of the Regulations of Connecticut State Agencies.
(3) Other Group Contract Benefits.
(A) Contract Reserves:
For all other group contract benefits, morbidity assumptions
				  are to be determined as provided in the reserve standards.
(B) Claim Reserves:
For all benefits other than disability, claim reserves are to
				  be determined as provided in the standards.
II. Interest.
(a) For contract reserves the maximum interest rate is the
				  maximum rate permitted by law in the valuation of annual premium ordinary life
				  insurance for appropriate guarantee duration and issued on the same date as the
				  health insurance contract.
(b) For claim reserves on policies for which contract reserve
				  is required, the maximum interest rate is the maximum rate permitted by law in
				  the valuation of annual premium ordinary life insurance for appropriate
				  guarantee duration and issued on the same day as the claim incurral
				  date.
(c) For claim reserves on policies for which no contract
				  reserve is required, the maximum interest rate is the maximum rate permitted by
				  law in the valuation of single premium immediate annuities issued on the same
				  date as the claim incurred date, such rate reduced by one hundred basis points
				  (1%).
III. Mortality.
(a) Unless subsection (b) or (c) of this section III
				  Mortality applies, the mortality basis used for (1) all policies, except long
				  term care individual policies and group certificates, and for (2) long-term
				  care individual polices or group certificates issued before the effective date
				  of subsection (b)(1)(C)(ii) of section
				  38a-78-15 of the Regulations of
				  Connecticut State Agencies, shall be according to a table (but without use of
				  selection factors) permitted by law for the valuation of whole life insurance
				  issued on the same date as the health insurance contract. For long-term care
				  insurance individual policies or group certificates issued on or after the
				  effective date of subsection (b)(1)(C)(ii) of section
				  38a-78-15 of the Regulations of
				  Connecticut State Agencies, the mortality basis used shall be the 1994 Group
				  Annuity Mortality Static Table.
(b) Other mortality tables adopted by the NAIC and
				  promulgated by the Commissioner may be used in the calculation of the minimum
				  reserves if appropriate for the type of benefits and if approved by the
				  Commissioner. The request for approval shall include the proposed mortality
				  table and the reason that the standard specified in subsection (a) of this
				  section III Mortality is inappropriate.
(c) For single premium credit disability insurance using the
				  85CIDA table, no separate mortality shall be assumed.