Code of Maine Rules › 02 - DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION › 031 - BUREAU OF INSURANCE › Chapter 130 - MINIMUM RESERVE STANDARDS FOR INDIVIDUAL AND GROUP HEALTH INSURANCE CONTRACTS › Appendix 031-130-A - SPECIFIC STANDARDS FOR MORBIDITY, INTEREST AND MORTALITY

Current through 2024-29, July 17, 2024
I. MORBIDITY
A. Minimum morbidity standards for valuation of specified
				  individual contract health insurance benefits are as follows:
(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, 1987:
The 1964 Commissioners Disability Table (64 CDT).
Contracts issued on or after January 1, 1993:
The 1985 Commissioners Individual Disability Tables A
				  (85CIDA); or The 1985 Commissioners Individual Disability Tables B
				  (85CIDB).
Contracts issued during the years 1987 through 1992:
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 the minimum standard. The insurer may, however, elect to use the
				  other tables with respect to any subsequent statement year.
(b) Claim Reserves:
(i) For claims incurred on or after January 1, 2007:
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).
(ii) For claims incurred prior to January 1, 2007:
Each insurer may elect which of the following to use as the
				  minimum standard for claims incurred prior to [effective date of this
				  amendment]:
(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 Item (i), applied to all open
				  claims.
(III) Once an insurer elects to calculate reserves for all
				  open claims on the standard defined in Item (i), all future valuations must be
				  on that basis.
(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 (6).
(3) Cancer Expense Benefits (Scheduled benefits or fixed time
				  period benefits only).
(a) Contract Reserves:
Contracts issued on or after January 1, 1986:
The 1985 NAIC Cancer Claim Cost Tables.
(b) Claim Reserves:
No specific standard. See (6).
(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, 2007:
(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 12%.
(II) For plans having a thirty-day and greater elimination
				  period, the 85CIDA for a fourteen-day elimination period with the adjustment in
				  Item (I).
(ii) For contracts issued prior to January 1, 2007, each
				  insurer may elect either Item (I) or (II) to use as the minimum standard. Once
				  an insurer elects to calculate reserves for all contracts on the standard
				  defined in Item (i), all future valuations must 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 Item (i), applied to all
				  contracts.
(b) Claim Reserves:
Claim reserves are to be determined as provided in subsection
				  5(C).
(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.
(a) Contract Reserves:
Contracts issued prior to January 1, 1993:
The same basis, if any, as that employed by the insurer as of
				  January 1, 1993;
Contracts issued on or after January 1, 1993:
The 1987 Commissioners Group Disability Income Table
				  (87CGDT).
(b) Claim Reserves:
For claims incurred on or after January 1, 1993:
The 1987 Commissioners Group Disability Income Table
				  (87CGDT);
For claims incurred prior to January 1, 1993:
Use of the 87CGDT is optional.
(2) Single Premium Credit Disability
(a) Contract Reserves:
(i) For contracts issued on or after January 1, 2007:
(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 12%.
(II) For plans having a thirty-day and greater elimination
				  period, the 85CIDA for a fourteen-day elimination period with the adjustment in
				  item (I).
(ii) For contracts issued prior to January 1, 2007, each
				  insurer may elect either Item (I) or (II) to use as the minimum standard. Once
				  an insurer elects to calculate reserves for all contracts on the standard
				  defined in Item (i), all future valuations must 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 Item (i), applied to all
				  contracts.
(b) Claim Reserves:
Claim reserves are to be determined as provided in Subsection
				  5(C).
(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 whole life insurance issued
				  on the same date as the health insurance contract.
B. For claim reserves on policies that require contract
				  reserves, the maximum interest rate is the maximum rate permitted by law in the
				  valuation of whole life insurance issued on the same date as the claim incurral
				  date.
C. For claim reserves on policies not requiring contract
				  reserves, 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 incurral date, reduced by one percentage point.
III. MORTALITY
A. Except as provided in subsections B, C, and D, the
				  mortality basis used 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.
B. For long-term care insurance individual policies or group
				  certificates issued on or after January 1, 1997, but before January 1, 2007,
				  the mortality basis used shall be the 1983 Group Annuity Mortality Table
				  without projection. For long-term care insurance individual policies or group
				  certificates issued on or after January 1, 2007, the mortality basis used shall
				  be the 1994 Group Annuity Mortality Static Table.
C. Other mortality tables adopted by the NAIC and promulgated
				  by the Superintendent may be used in the calculation of the minimum reserves,
				  if appropriate for the type of benefits and if approved by the Superintendent.
				  The request for such approval must include the proposed mortality table and the
				  reason that the standard specified in subsection A is inappropriate.
D. For single premium credit insurance using the 85CIDA
				  table, no separate mortality shall be assumed.