DAR File No. 43692

Insurance, Administration

Rule R590-268

Small Employer Stop-Loss Insurance

Notice of Proposed Rule

(Amendment)

DAR File No.: 43692
Filed: 05/01/2019 10:13:47 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is primarily being changed to standardize the method and content of the annual experience reporting to make the data easier to aggregate. The amendment also changes inconsistent language and eliminates unnecessary language.

Summary of the rule or change:

These changes incorporate a standardized annual experience reporting template by reference, changes the content that is required as part of the annual experience reporting, remove references to the Standard Application that is no longer required, update the instructions and publication date of the disclosure statement, and make grammatical changes.

Statutory or constitutional authorization for this rule:

• Section 31A-43-304

This rule or change incorporates by reference the following material:

• Removes Utah Small Employer Stop-Loss Disclosure, published by Utah Insurance Department, 01/15/2014

Anticipated cost or savings to:

the state budget:

There is no anticipated cost or savings to the state budget. While these rule changes are intended to standardize the content in the annual experience reporting and make the data easier to aggregate, the the decrease in time spent aggregating will be negligible.

local governments:

There is no anticipated cost or savings to local governments. These rule changes govern the relationship between the Insurance Department (Department) and the insurers that it licenses and will not affect local governments.

small businesses:

A negligible cost could result to small businesses if stop-loss insurers pass the cost of compliance on as part of the administrative expense portion of the stop-loss premium. The Department anticipates that this would be a negligible amount per employer, but cannot reasonably estimate the fiscal impact this may have per employer.

persons other than small businesses, businesses, or local governmental entities:

Insurers offering small employer stop-loss coverage may have a small implementation cost to output the experience into the experience template format. The Department anticipates a conservative cost per insurer to be 40 hours for a single employee performing the implementation at $75 per hour (or $3,000 per insurer).

Compliance costs for affected persons:

The Department anticipates a conservative cost per insurer to be 40 hours for a single employee performing the implementation at $75 per hour (or $3,000 per insurer).

Comments by the department head on the fiscal impact the rule may have on businesses:

I. WHETHER A FISCAL IMPACT TO BUSINESS IS EXPECTED AS A RESULT OF THE PROPOSED RULE AND, IF SO, A DESCRIPTION OF WHY: A stop-loss insurer may pass the cost of implementation on to small employers as part of the administration portion of their premium. The Department anticipates that this would be a negligible amount per employer, but cannot reasonably estimate the fiscal impact this may have per employer. II. AN ESTIMATE OF THE TOTAL NUMBER OF BUSINESS ESTABLISHMENTS IN UTAH EXPECTED TO BE IMPACTED: Based on the number of small employers engaged with stop-loss insurers in 2017, the Department estimates 185 small employers could be affected. III. AN ESTIMATE OF THE SMALL BUSINESS ESTABLISHMENTS IN UTAH EXPECTED TO BE IMPACTED: Based on the number of small employers engaged with stop-loss insurers in 2017, the Department estimates 185 small employers could be affected. IV. A DESCRIPTION OF THE SOURCES OF COST OR SAVINGS AS WELL AS THE EXPECTED NET SAVINGS OR COST TO BUSINESS ESTABLISHMENTS AND SMALL BUSINESS ESTABLISHMENTS AS A RESULT OF THE PROPOSED RULE OVER A ONE-YEAR PERIOD, IDENTIFYING ONE-TIME AND ONGOING COSTS: The cost would be one-time. The Department estimates conservatively $3,000 per insurer, with 7 entities currently offering in the small employer stop-loss market and spread among 185 small employers. Or, approximately $114 per small employer with stop-loss coverage. V. DEPARTMENT HEAD'S COMMENTS ON THE ANALYSIS: This analysis represents the Department's best estimate of the fiscal impact that this rule may have on businesses.

Todd E. Kiser, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Insurance
Administration
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Steve Gooch at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

06/14/2019

This rule may become effective on:

06/21/2019

Authorized by:

Steve Gooch, Information Specialist

Appendix 1: Regulatory Impact Summary Table*

Fiscal Costs	FY 2019	FY 2020	FY 2021
State Government	$0	$0	$0
Local Government	$0	$0	$0
Small Businesses	$21,000	$0	$0
Non-Small Businesses	$0	$0	$0
Other Person	$0	$0	$0
Total Fiscal Costs:	$21,000	$0	$0
Fiscal Benefits
State Government	$0	$0	$0
Local Government	$0	$0	$0
Small Businesses	$0	$0	$0
Non-Small Businesses	$0	$0	$0
Other Persons	$0	$0	$0
Total Fiscal Benefits:	$0	$0	$0
Net Fiscal Benefits:	- $21,000	$0	$0

 

*This table only includes fiscal impacts that could be measured. If there are inestimable fiscal impacts, they will not be included in this table. Inestimable impacts for State Government, Local Government, Small Businesses and Other Persons are described in the narrative. Inestimable impacts for Non - Small Businesses are described in Appendix 2.

 

Appendix 2: Regulatory Impact to Non - Small Businesses

There are seven non-small businesses in the small employer stop-loss market in Utah. The Insurance Department conservatively estimates that this rule change will result in a one-time implementation cost of $3,000 per insurer, for a total impact of $21,000 across small employer stop-loss market.

 

The head of the Insurance Department, Commissioner Todd E. Kiser, has reviewed and approved this fiscal analysis.

 

 

R590. Insurance Administration.

R590-268. Small Employer Stop-Loss Insurance.

R590-268-1. Authority.

This rule is promulgated pursuant to Section 31A-43-304 wherein the commissioner may make rules to implement Title 31A, Chapter 43.

 

R590-268-2. Scope.

This rule applies to all small employer stop-loss contracts issued or renewed on or after July 1, 2013.

 

R590-268-3. Purpose.

The purpose of this rule is to provide the content of the stop-loss insurance disclosure, prohibit lasering, and establish the form and manner of form and rate filings and of the annual actuarial certification and report on stop-loss experience.

 

R590-268-4. Definitions.

For the purposes of this rule, the commissioner adopts the definitions of Sections 31A-1-301 and 31A-43-102.

 

R590-268-5. Stop-Loss Insurance Disclosure.

(1) Stop-loss insurers marketing to small employers shall use :

(a) the Utah [Small Employer ]Stop-[l]Loss Disclosure dated January 15, 2014, prior to the effective date of this rule; and

(b) the Utah Stop-Loss Disclosure dated July 1, 2019, after the effective date of this rule.

(2) The stop-loss insurer may display the insurer's name, identifying logo, and address on the disclosure.

(3) The [Utah Small Employer Stop-loss Disclosure, published January 15, 2014, is hereby incorporated by reference and is]disclosures are available on the Department's website at https://insurance.utah.gov[/legal-resources/rules/current-rules.php].

(4) The disclosure may be altered for reasons specifically approved by the commissioner.

 

R590-268-6. Lasering.

(1) Subsection 31A-43-301(2)(a) prohibits lasering. For the purpose of this rule lasering includes:

(a) assigning a different attachment point for an individual[s] based on [their]the individual's expected claims or a given diagnosis;

(b) assigning a deductible to an individual that must be met before stop[] -loss coverage applies;

(c) denying stop[] -loss coverage to an individual who is otherwise covered by the small employer's medical plan; and

(d) applying an actively at work exclusion to stop[ ]-loss coverage.

 

R590-268-7. Form and Rate Filings.

(1) A contract filing consists of one contract form[, the application], any related documents, disclosure, rate manual, and actuarial memorandum.

(2) A new or revised rate manual shall:

(a) include a summary of how the rate is calculated;

(b) contain specific area factors applicable in Utah;

(c) be filed 30 days prior to use;

(d) be applied in the same manner for all small employer stop-loss contracts;

(e) describe how the overall rate is reviewed for compliance; and

(f) include an actuarial certification signed by a qualified actuary.

(3) All filings shall be submitted using SERFF.

 

R590-268-8. Annual Actuarial Memorandum and Certification.

(1) The insurer shall submit annually on or before April 1 using SERFF:

(a) stop-loss experience for the previous two years for Utah;

(b) certification of compliance with requirements of section 31A-43-301; and

(c) an actuarial memorandum describing the review done in preparation of the certification.

(2) The insurer's stop-loss experience shall be presented by small employer and experience year and shall include:

(a) a group identifier that uniquely identifies the group and is consistent from year to year for the same employer group;

(b) the effective date of coverage for the policy year for the employer group;

(c) contract type (e.g. 12/24);

(d) employer size including both covered lives count and employee count as of the beginning of the contract;

([b]e) covered lives exposure years and employee exposure years for the experience time period;

([c]f) specific attachment point;

([d]g) expected claims in the absence of stop[ ]-loss insurance;

([e]h) expected claims under the specific attachment point;

([f]i) aggregate attachment point;

([g]j) earned premium; and

([h]k) claims paid by the stop[ ]-loss insurance broken out by specific losses and aggregate losses.

(3)(a)(i) The insurer's stop-loss experience shall be submitted in Excel format using the Utah Stop-Loss Experience Report dated July 1, 2019.

(ii) The Utah Stop-Loss Experience Report dated July 1, 2019, is available on the Department's website at https://insurance.utah.gov.

(b) Experience shall be aggregated over the entire contract incurral period, rather than aggregated by incurral month.

(c) The experience report shall only include those stop-loss contracts where the final claim incurral date is contained within the two calendar years previous to the submission date.

(d) Runout claims that are paid after the submission date shall be updated in the following year's experience submission.

 

R590-268-9. Penalties.

A person found to be in violation of this rule shall be subject to penalties as provided under Section 31A-2-308.

 

R590-268-10. Severability.

If any provision of this rule or its application to any person or situation is held to be invalid, that invalidity shall not affect any other provision or application of this rule which can be given effect without the invalid provision or application, and to this end the provisions of this rule are declared to be severable.

 

KEY: small employer stop-loss

Date of Enactment or Last Substantive Amendment: [December 9, 2015]2019

Authorizing, and Implemented or Interpreted Law: 31A-43-304; Title 31A, Chapter 43