C.M.R. 02, 031, ch. 130, app 031-130-A
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.
C.M.R. 02, 031, ch. 130, app 031-130-A