There is a newer version of the Kentucky Revised Statutes
2009 Kentucky Revised Statutes
Subtitle 17A. Health Benefit Plans
304.17A.095 Insurer issuing health benefit plan must file rates and charges -- Commissioner's approval -- Policy forms -- Administrative regulations -- Hearing.
Download pdfHearing. (1) (a) Notwithstanding any other provisions of this chapter to the contrary, each insurer that issues, delivers, or renews any health benefit plan to any market
segment other than a large group shall, before use thereof, file with the
commissioner its rates, fees, dues, and other charges paid by insureds,
members, enrollees, or subscribers. The insurer shall also submit a copy of the
filing to the Attorney General and shall comply with the provisions of this
section. The insurer shall adhere to its rates, fees, dues, and other charges as
filed with the commissioner. The insurer shall submit a new filing to reflect
any material change to the previously filed and approved rate filing. For all
other changes, the insurer shall submit an amendment to a previously
approved rate filing. (b) Notwithstanding any other provisions of this chapter to the contrary, each insurer that issues, delivers, or renews any health benefit plan to a large group
as defined in KRS 304.17A-005 shall file the rating methodology with the
commissioner and shall submit a copy of the filing to the Attorney General. (2) (a) A rate filing under this section may be used by the insurer on and after the date of filing with the commissioner prior to approval by the commissioner. A
rate filing shall be approved or disapproved by the commissioner within sixty
(60) days after the date of filing. Should sixty (60) days expire after the
commissioner receives the filing before approval or disapproval of the filing,
the filing shall be deemed approved. (b) In the circumstances of a filing that has been deemed approved or has been disapproved under paragraph (a) of this subsection, the commissioner shall
have the authority to order a retroactive reduction of rates to a reasonable rate
if the commissioner subsequently determines that the filing contained
misrepresentations or was based on fraudulent information, and if after
applying the factors in subsection (3) of this section the commissioner
determines that the rates were unreasonable. If the commissioner seeks to
order a retroactive reduction of rates and more than one (1) year has passed
since the date of the filing, the commissioner shall consider the reasonableness
of the rate over the entire period during which the filing has been in effect. (3) In approving or disapproving a filing under this section, the commissioner shall consider:
(a) Whether the benefits provided are reasonable in relation to the premium or fee charged; (b) Whether the fees paid to providers for the covered services are reasonable in relation to the premium or fee charged; (c) Previous premium rates or fees for the policies or contracts to which the filing applies; Page 2 of 4 (d) The effect of the rate or rate increase on policyholders, enrollees, and subscribers; (e) Whether the rates, fees, dues, or other charges are excessive, inadequate, or unfairly discriminatory; (f) The effect on the rates of any assessment made under KRS 304.17B-021; and
(g) Other factors as deemed relevant by the commissioner. (4) The rates for each policyholder shall be guaranteed for twelve (12) months at the rate in effect on the date of issue or date of renewal. (5) At any time the commissioner, after a public hearing for which at least thirty (30) days' notice has been given, may withdraw approval of rates or fees previously
approved under this section and may order an appropriate refund or future premium
credit to policyholders, enrollees, and subscribers if the commissioner determines
that the rates or fees previously approved are in violation of this chapter. (6) Notwithstanding subsection (2) of this section, premium rates may be used upon filing with the department of a policy form not previously used if the filing is
accompanied by the policy form filing and a minimum loss ratio guarantee. Insurers
may use the filing procedure specified in this subsection only if the affected policy
forms disclose the benefit of a minimum loss ratio guarantee. An insurer may not
elect to use the filing procedure in this subsection for a policy form that does not
contain the minimum loss ratio guarantee. If an insurer elects to use the filing
procedure in this subsection for a policy form or forms, the insurer shall not use a
filing of premium rates that does not provide a minimum loss ratio guarantee for
that policy form or forms.
(a) The minimum loss ratio shall be in writing and shall contain at least the following:
1. An actuarial memorandum specifying the expected loss ratio that
complies with the standards as set forth in this subsection; 2. A statement certifying that all rates, fees, dues, and other charges are not
excessive, inadequate, or unfairly discriminatory; 3. Detailed experience information concerning the policy forms; 4. A step-by-step description of the process used to develop the experience
loss ratio, including demonstration with supporting data; 5. A guarantee of a specific lifetime minimum loss ratio, that shall be
greater than or equal to the following, taking into consideration
adjustments for duration as set forth in administrative regulations
promulgated by the commissioner:
a. Sixty-five percent (65%) for policies issued to individuals or for
certificates issued to members of an association that does not offer
coverage to small employers; b. Seventy percent (70%) for policies issued to small groups of two
(2) to ten (10) employees or for certificates issued to members of
an association that offers coverage to small employers; and Page 3 of 4 c. Seventy-five percent (75%) for policies issued to small groups of
eleven (11) to fifty (50) employees; 6. A guarantee that the actual Kentucky loss ratio for the calendar year in
which the new rates take effect, and for each year thereafter until new
rates are filed, will meet or exceed the minimum loss ratio standards
referred to in subparagraph 5. of this paragraph, adjusted for duration; 7. A guarantee that the actual Kentucky lifetime loss ratio shall meet or
exceed the minimum loss ratio standards referred to in subparagraph 5.
of this paragraph; and 8. If the annual earned premium volume in Kentucky under the particular
policy form is less than two million five hundred thousand dollars
($2,500,000), the minimum loss ratio guarantee shall be based partially
on the Kentucky earned premium and other credibility factors as
specified by the commissioner. (b) The actual Kentucky minimum loss ratio results for each year at issue shall be independently audited at the insurer's expense and the audit shall be filed with
the commissioner not later than one hundred twenty (120) days after the end
of the year at issue. The audit shall demonstrate the calculation of the actual
Kentucky loss ratio in a manner prescribed as set forth in administrative
regulations promulgated by the commissioner. (c) The insurer shall refund premiums in the amount necessary to bring the actual loss ratio up to the guaranteed minimum loss ratio. (d) A Kentucky policyholder affected by the guaranteed minimum loss ratio shall receive a portion of the premium refund relative to the premium paid by the
policyholder. The refund shall be made to all Kentucky policyholders insured
under the applicable policy form during the year at issue if the refund would
equal ten dollars ($10) or more per policy. The refund shall include statutory
interest from July 1 of the year at issue until the date of payment. Payment
shall be made not later than one hundred eighty (180) days after the end of the
year at issue. (e) Premium refunds of less than ten dollars ($10) per insured shall be aggregated by the insurer and paid to the Kentucky State Treasury. (f) None of the provisions of subsections (2) and (3) of this section shall apply if premium rates are filed with the department and accompanied by a minimum
loss ratio guarantee that meets the requirements of this subsection. Such
filings shall be deemed approved. Each insurer paying a risk assessment under
KRS 304.17B-021 may include the amount of the assessment in establishing
premium rates filed with the commissioner under this section. The insurer
shall identify any assessment allocated. (g) The policy form filing of an insurer using the filing procedure with a minimum loss ratio guarantee will disclose to the enrollee, member, or
subscriber as prescribed by the commissioner an explanation of the lifetime Page 4 of 4 loss ratio guarantee, and the actual loss ratio, and any adjustments for
duration. (h) The insurer who elects to use the filing procedure with a minimum loss ratio guarantee shall notify all policyholders of the refund calculation, the result of
the refund calculation, the percent of premium on an aggregate basis to be
refunded if any, any amount of the refund attributed to the payment of
interests, and an explanation of amounts less than ten dollars ($10). (i) Notwithstanding the provisions of this subsection, an insurer may amend the policy forms used before March 31, 2005, or may amend the minimum loss
ratio guarantee on policy forms filed with the department and used by the
insurer prior to March 31, 2005, to provide for a minimum loss ratio guarantee
allowed under this subsection for policies issued, delivered, or renewed on or
after March 31, 2005. (7) The commissioner may by administrative regulation prescribe any additional information related to rates, fees, dues, and other charges as they relate to the
factors set out in subsection (3) of this section that he or she deems necessary and
relevant to be included in the filings and the form of the filings required by this
section. When determining a loss ratio for the purposes of loss ratio guarantee, the
insurer shall divide the total of the claims incurred, plus preferred provider
organization expenses, case management and utilization review expenses, plus
reinsurance premiums less reinsurance recoveries by the premiums earned less state
and local premium taxes less other assessments. For purposes of determining the
loss ratio for any loss ratio guarantee pursuant to this section, the commissioner
may examine the insurer's expenses for preferred provider organization, case
management, utilization review, and reinsurance used by the insurer in calculating
the loss ratio guarantee for reasonableness. Only those expenses found to be
reasonable by the commissioner may be used by the insurer for determining the loss
ratio for purposes of any loss ratio guarantee. (8) (a) The commissioner shall hold a hearing upon written request by the Attorney General. The written request shall be based upon one (1) or more of the
reasons set out in subsection (3) of this section and shall state the applicable
reasons. (b) An insurer may request a hearing, pursuant to KRS 304.2-310, with regard to any action taken by the commissioner under this section as to the disapproval
of rates or an order of a retroactive reduction of rates. (c) The hearing shall be a public hearing conducted in accordance with KRS 304.2-310. Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1212, effective July 15, 2010. -- Amended 2005 Ky. Acts ch. 183, sec. 2, effective March 31, 2005. -- Amended 2004
Ky. Acts ch. 59, sec. 3, effective July 13, 2004. -- Amended 2002 Ky. Acts ch. 351,
sec. 3, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 476, sec. 25, effective
January 1, 2001; and 2000 Ky. Acts ch. 521, sec. 14, effective July 14, 2000. --
Amended 1998 Ky. Acts ch. 496, sec. 9, effective April 10, 1998. -- Created 1996
Ky. Acts ch. 371, sec. 16, effective July 15, 1996.
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