New Jersey Administrative Code › Title 11 - INSURANCE › Chapter 21 - SMALL EMPLOYER HEALTH BENEFITS PROGRAM › Subchapter 9 - INFORMATIONAL RATE FILING REQUIREMENTS PURSUANT TO THE SMALL EMPLOYER HEALTH BENEFITS PROGRAM › Section 11:21-9.4 - Purchasing alliances

Current through Register Vol. 56, No. 14, July 15, 2024
(a) All carriers providing discounts to small employer purchasing alliances shall file an informational rate filing with the Commissioner prior to the date of providing such discounts, which shall include the following data:
1. A statement that the discount is based on reductions in anticipated expenses and profit margins and not on favorable claims experience;
2. Information regarding the discounts, including:
i. The small employer rate filings ("reference filing") pursuant to 11:21-9.3 to which the discounts apply;
ii. Eligibility requirements that a small employer group must satisfy, including participation requirements or cost-sharing requirements;
iii. The amount of the discounts expressed as a percentage of the non-alliance premium for the same coverage and small employer group. If the same discount is not offered to all purchasing alliances, the criteria for the variation in the discount, which shall not include any of the factors set forth at 11:21-21.4(a);
iv. The contract issue or renewal period to which the discounts apply, the time period for which the discount is guaranteed, and any conditions for maintaining the discount; and
v. A statement that the same discount is available to all members of the purchasing alliance;
3. Information regarding the application of the discount to a particular group, including:
i. A written description in plain language of the method by which the discounted rate is obtained from the reference rate; and
ii. A detailed example calculation, in the proposal format used by the carrier, of the application of the discount to the example calculation found in the reference filing, showing all the steps necessary to develop the discounted premium from the undiscounted premium, and demonstrating the adjustment, if any, to achieve the required 200 percent maximum ratio between the premiums for the highest rated group and the lowest rated group in the State;
4. An actuarial memorandum setting forth the assumptions used in the development of the discount, which shall include:
i. The anticipated claim cost for the purchasing alliances;
ii. A demonstration that the discount is based on the anticipated expenses (including marketing and claims administration expenses) and profit margins, identifying those differences from the anticipated expenses and profit margins in the reference filing that are the only bases for the purchasing alliance discount;
iii. A statement whether or not the policyholder shall or may receive policyholder dividends, other than the dividends required by 17B:27A-25(g)(2). If such dividends are payable, the carrier shall also submit the following:
(1) The detailed assumptions and practices for determining and distributing such dividends; and
(2) A demonstration that such dividends are not in violation of 4iv(4), 4iv(5) or 4iv(6) below, as appropriate; and
iv. A certification signed by a member of the American Academy of Actuaries attesting to the following:
(1) That the filing is accurate and complete, and complies with the provisions of this subchapter;
(2) The issue period for which the discount is applicable;
(3) The anticipated incurred loss ratio for each plan offered to purchasing alliances, which shall not be less than 80 percent of the premium;
(4) That the rating methodology, taking into account both discounted and undiscounted rates, shall not provide rates for the highest group in the State that are greater than 200 percent of the rates (for an individual and each family status) produced for the lowest rated group in this State for each plan and option;
(5) That the rates to be charged to any group do not vary based on a classification factor other than those permitted in 11:21-9.3(a)  2i;
(6) That discounted rates do not result in rates that vary between groups based upon a health status-related factor; and
(7) That the anticipated incurred loss ratio in (a)4iv(3) above exceeds the anticipated incurred loss ratio for the reference filing by an amount that reflects the expense and profit savings attributed to the purchasing alliance.