Group 24 Small Group

Question 1

Small group compliance testing

Answer 1

1. Data that is needed in certification review process
   
   1. 1 small group rate manuals
   2. 2 policy and certification forms used
   3. 3 listing of groups in force, including: actual rates charged, group size, value of case characteristics for each group, value of any change in benefit
2. Sampling techniques
3. Intra-class range testing
   
   3. 1 verification that each group’s rate is within +/- 25
   4. 2 Express group rates consistently through normalization
4. Between class testing - limited to 20% between highest and lowest index rates
5. Testing premium rates for actuarial soundness
   
   5. 1 projected premiums in aggregate adequate to cover for all expected costs
   6. 2 ACA: if MLR in a state less than 80%, the excess must be rebated back to the insureds
6. Underwriting Requirements Verification. Must adhere to:
   
   6. 1 Guaranteed issue (except for allowed exceptions)
   7. 2 Guaranteed Renewability (except for allowed exception)
   8. 3 Prohibits singling out individual EE’s for special treatment
   9. 4 apply rating factors and underwriting procedures on a consistent basis

Question 2

Adherence to fair marketing requirements

Answer 2

1. Any plan offered by a carrier must be available to all small ERs of same class
2. Carriers actively selling must offer plans mandated by state regulation
3. In sales materials, carrier discloses right to change rates, pre-existing provisions
4. Commissions cannot vary by health status, claims experience, industry etc
5. Commissions for state mandated plans must be reasonable
6. Carriers cannot make contract contingent on health, claim experience, occupation
7. Denial of an application must be in writing with the reasons for denial stated

Question 3

Premium rate

1. Certification
2. Filing requirements

Answer 3

1. Premium rate certification
   
   1. 1 indicate whether opinion non-qualified or qualified
   2. 2 also indicate if providing a limited certification
2. State version of the law - be familiar with deviations from NAIC law from state to state
3. Premium rate filing requirements
   
   3. 1 states require policy forms, certificates, applications, disclosures, rates be filed
   4. 2 ACA: all small group prem rate increases must be filed with each state
      
      3. 2.1 if rate increase >= 10%, must file additional info with federal and state

Question 4

Small group annual rate certification

Answer 4

1. Each small-employer carrier must file an annual actuarial certification
2. Must be signed by an MAAA
3. Any exceptions to compliance must be stated
4. Certification may expand beyond the rates
5. Actuary must qualify the opinion if necessary
6. ACA also requires annual filing of rate increases being implemented