N.J. Admin. Code § 11:4-48.8

Current through Register Vol. 56, No. 24, December 18, 2024

Section 11:4-48.8 - Discounts and reductions in premium in individual health insurance

(a) In addition to the discounts based solely on savings in expenses due to the method of premium collection as permitted by N.J.S.A. 17B:30-14d and the discounts based solely on the amount of insurance issued to a particular insured as permitted by N.J.S.A. 17B:30-14e, reductions in premiums for individual health insurance policies based on class as described below are permitted if either of the following conditions are met:

1. A reduced premium may be charged under one individual health policy form based on savings in expenses, improved morbidity or increased persistency resulting from differing marketing or underwriting methods utilized for a particular class of individuals who present the same underlying hazard. Such classes may include associations, employers and large cases. Savings in expenses may include a reduction in commissions or other compensation as applied to all policies within the particular class. Each reduction in premium shall be considered a separate class (for example, 10 percent, 15 percent and 20 percent employer-based reductions in premium shall each be considered a separate class); or

2. The reduction in premium is based on additional requirements applied to the discounts allowed by N.J.S.A. 17B:30-14d and 17B:30-14e. For example, list bill discounts with minimum premium requirements, or list bill discounts which vary based on level of participation are considered a separate class subject to the requirements of this section. Each reduction in premium shall be considered a separate class.

(b) The submission of individual health insurance policy forms which provide reductions in premiums to members of particular classes shall include the following:

1. An actuarial memorandum which shall contain a separate section for each class for which reduced rates are available under the form. The actuarial memorandum shall include the following:

i. A complete description of the class of applicants eligible for the reduced premium;

ii. The objective basis for the premium differential which shall include the different expense, morbidity and persistency assumptions that are used to calculate the reduced premium for the class;

iii. The anticipated loss ratio for the class which shall not be less than the minimum anticipated loss ratio required by N.J.A.C. 11:4-18.5. Any variation from the anticipated loss ratio for the form for regular issues shall be based upon differences in expense and persistency assumptions, and shall be consistent with the objective basis for the differential; and

iv. A certification that the loss experience for each class for which reduced premiums are available under the policy form will be maintained separately from the other experience under the policy form for purposes of determining future rate adjustments;

2. A separate rate sheet which sets forth the following information for each class for which reduced rates are available under the form:

i. The amount of reduction in rates when issued to a member of the class as compared to the rate for regular issues;

ii. All riders currently submitted to, pending with, or approved by the Department, which will be used with the form, together with any reduction in premium for the rider when issued to a member of the class as compared to the rate for the rider when issued to an individual who is not a member of the class; and

iii. Any discounts allowed by N.J.S.A. 17B:30-14d and N.J.S.A. 17B:30-14e which will be used with the form, and the basis for the discount; and

3. Questions in the application form pertaining to membership in every class for which a reduced premium is offered. The use of different applications for different classes shall be permitted so long as all applications include questions pertaining to membership in every class for which a reduced premium is available.

(c) If an individual is placed in a class at issue which is eligible for a reduced premium not available to members of the general public, such premium classification shall not be changed after issue. The schedule page and form shall include only the premium for that class and shall not contain any reference to the premium for regular issues. The provisions of this paragraph shall not preclude the termination of any discount allowed by N.J.S.A. 17B:30-14d or 17B:30-14e when the individual no longer meets the requirements for such discount.

(d) If an individual is not placed in a class for which he or she is eligible based on the information disclosed in the application, the insurer shall refund to the individual the amount of any overpayment of premium arising from such misclassification.

(e) Insurers submitting different policy forms with essentially identical benefits but with different premiums based on membership in a class, shall be subject to the provisions of (b) through (d) above. At the time of submission, the insurer shall state whether the form submitted is a reduced premium version of another form which has been filed by, is pending with, or is expected to be submitted to the Department.

N.J. Admin. Code § 11:4-48.8

Recodified from N.J.A.C. 11:4-48.10 by R.2000 d.130, effective 3/20/2000.
See: 31 New Jersey Register 3910(a), 32 New Jersey Register 1024(a).
Former N.J.A.C. 11:4-48.9, Forgiveness of surrender charge, recodified to N.J.A.C 11:4-48.8.
Recodified from N.J.A.C. 11:4-48.9 by R.2003 d.54, effective 2/3/2003.
See: 34 New Jersey Register 3194(a), 35 New Jersey Register 618(a).
Former N.J.A.C. 11:4-48.8, Forgiveness of surrender charge, recodified to N.J.A.C. 11:4-48.7.