Administrative Rules of Montana › Department 6 - STATE AUDITOR › Chapter 6.6 - INSURANCE DEPARTMENT › Subchapter 6.6.50 - Small Employer Health Insurance Rules › Rule 6.6.5036 - CALCULATION OF BENEFIT VALUES

Current through Register Vol. 13, July 5, 2024
(1) For the
				purposes of determining whether a health benefit plan is a basic health benefit
				plan under ARM
				6.6.5032, a benefit value method
				may be developed and used by the small employer carrier as contemplated in
				33-22-1803(6),
				MCA. The carrier has the option to use the following computations, together
				with the values listed, to determine a benefit value for major medical health
				insurance plans. This calculation may not be used for HMO health benefit plans.
				The values in Table I in (1) (d) of this rule may not be used for any health
				benefit plans with only partial medical coverage, such as hospital-only expense
				plans or hospital and surgical expense plans. The calculation and its result
				are subject to review and approval by the commissioner.
(a) An optional formula for calculating the
				benefit value is as follows:
BENEFIT VALUE = DEDUCTIBLE VALUE + COINSURANCE VALUE +
				  LIFETIME MAXIMUM VALUE
where
DEDUCTIBLE VALUE = DEDUCTIBLE CLAIMS COST x Y x UTILIZATION
				  (Y) / 0.8
and
COINSURANCE VALUE = COINSURANCE-STOPLOSS-PLUS-DEDUCTIBLE
				  CLAIMS COST x ([Z x UTILIZATION(Z) ] - [Y x UTILIZATION(Y) ]} /
				  0.8.
(b) The variables for
				the formula are defined as follows:
(i)
				COINSURANCE STOPLOSS refers to the maximum amount of annual claims to which the
				coinsurance is applied. For the standard plan, the COINSURANCE STOPLOSS is
				$5,000.
(ii) DEDUCTIBLE CLAIMS COST
				is the expected claims cost for a plan with a particular deductible.
(iii) COINSURANCE-STOPLOSS-PLUS-DEDUCTIBLE
				CLAIMS COST is the expected claim cost for a plan with a "deductible" equal to
				the amount of the COINSURANCE STOPLOSS plus the DEDUCTIBLE.
(iv) LIFETIME MAXIMUM VALUE is the dollar
				adjustment to the expected claims cost for a particular lifetime maximum
				amount.
(v) UTILIZATION(Y) and
				UTILIZATION(Z) each refer to a factor to apply to the expected claims cost to
				adjust for expected utilization of a plan with a coinsurance level Y or
				Z.
(vi) Y is the coinsurance
				percent applied to claims, up to the amount of the coinsurance stoploss
				annually.
(vii) Z is the
				coinsurance percent applied to claims above the coinsurance stoploss (usually
				100%).
(c) The following
				calculation of the benefit value may be used:
(i) Determine the deductible claims cost.
(Table I) ____
(ii) Determine the value of Y, as a decimal.
(coinsurance percentage) ____
(iii) Determine the value of utilization(Y).
(Table II) ____
(iv) Determine Y x utilization(Y).
(line [ii] x line [iii]) ____
(v) Determine the deductible value.
(line [i] x line [iv] /0.8) ____
(vi) Determine the
				coinsurance-stoploss-plus-deductible. (Coinsurance stoploss amount + deductible
				amount.) ____
(vii) Determine the
				coinsurance-stoploss-plus- deductible claims cost. (Interpolate the claims
				costs in Table I corresponding to the deductibles immediately bounding the
				coinsurance-stoploss-plus deductible.) ____
(viii) Determine the value of Z, as a
				decimal.
(usually, but not always, 1.0) ____
(ix) Determine the value of utilization(Z).
(Table II) ____
(x) Determine Z x utilization(Z).
(line [viii] x line [ix]) ____
(xi) Determine the coinsurance value.
(line [vii] x(line [x] - line [iv]/0.8) ____
(xii) Determine the
				lifetime-maximum value. (Table III) ____
(xiii) Determine the benefit value.
(line [v] + line [xi] + line [xii]) ____
(d) The following tables, or other
				tables with actuarially sound values, may be used in calculating benefit values
				under this rule:
Table I - Claim Costs by Deductible Amount
*
Deductible Amount
Claims Cost
Deductible Amount
Claims Cost
Deductible Amount
Claims Cost
$ 0
$124.83
$ 750
$ 89.29
$ 10,000
$ 24.92
100
119.43
1,000
79.77
15,000
20.56
150
116.82
1,500
68.70
20,000
17.38
200
114.23
2,000
60.42
25,000
15.11
250
111.65
2,500
53.69
50,000
9.36
300
109.08
5,000
35.21
100,000
5.38
500
98.81
7,500
30.07
150,000
2.87
Table II - Utilization Rate by Coinsurance
*
Coinsurance
Utilization Rate
Coinsurance
Utilization Rate
100%
1.14
70%
0.93
95%
1.10
65%
0.91
90%
1.07
60%
0.89
85%
1.03
55%
0.87
80%
1.
50% or less
0.86
75%
0.97
Table - III - Lifetime-Maximum Values by
Lifetime Maximum
Amount
Lifetime Maximum Amount
Lifetime Maximum Value
$5,000,000 or more
$ 0.23
2,000,000
0.17
1,000,000
0.00
750,000
-0.28
500,000
-0.55
250,000
-1.78
100,000
-7.67
50,000
-13.34
25,000
-21.54
* Values were constructed by the Montana Insurance
				  Department, using the 1994 Tillinghast Group Medical Insurance Rate Manual as a
				  reference.