By Hirschi H.B. No. 913
75R3077 DLF-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to loss ratios for Medicare supplement policies.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 4, Article 3.74, Insurance Code, is
1-5 amended to read as follows:
1-6 Sec. 4. LOSS RATIO STANDARDS. (a) Medicare supplement
1-7 policies shall return to holders of a medicare supplement policy
1-8 benefits which are reasonable in relation to the premium charged.
1-9 A medicare supplement policy must be expected to return to the
1-10 policyholders, in the form of aggregate benefits provided under the
1-11 policy:
1-12 (1) at least 85 percent of the aggregate amount of
1-13 premiums, in the case of group policies; and
1-14 (2) at least 75 percent of the aggregate amount of
1-15 premiums, in the case of individual policies.
1-16 (b) The commissioner [State Board of Insurance] shall issue
1-17 reasonable rules to establish minimum standards for loss ratios of
1-18 medicare supplement policies on the basis of incurred claims
1-19 experience and earned premiums [for the entire period for which
1-20 rates are computed to provide coverage and] in accordance with
1-21 Subsection (a) of this section and with accepted actuarial
1-22 principles and practices.
1-23 (c) [(b)] Every entity providing medicare supplement
1-24 policies or benefits in this state shall file annually its rates,
2-1 rating schedule, and actuarially credible supporting documentation
2-2 demonstrating that it is in compliance with the applicable loss
2-3 ratio standards of this state. The supporting documentation must
2-4 include a report of the ratio of incurred losses to covered
2-5 premiums for the preceding calendar year, illustrated by calendar
2-6 year of issue. The commissioner [board] may adopt rules relating
2-7 to filing requirements for rates, rating schedules, and loss
2-8 ratios.
2-9 (d) [(c)] All filings of rates, rating schedules, and loss
2-10 ratios must demonstrate, using actuarially credible information,
2-11 that the actual and expected losses in relation to premiums comply
2-12 with the requirements of this section and rules adopted by the
2-13 commissioner [board].
2-14 [(d) The State Board of Insurance shall issue reasonable
2-15 rules providing loss ratio standards applicable to rates charged
2-16 for medicare supplement policies to the extent necessary for the
2-17 state to obtain or retain certification as a state with an approved
2-18 regulatory program under 42 U.S.C. Section 1395ss.]
2-19 (e) Before the effective date of any medicare benefit
2-20 changes required by federal law as applicable to existing policies,
2-21 every insurer, health care service plan, or other entity providing
2-22 a medicare supplement insurance or contracts in this state shall
2-23 file with the commissioner[, in accordance with Article 3.42 of
2-24 this code]:
2-25 (1) appropriate premium adjustments necessary to
2-26 produce loss ratios as originally anticipated for the applicable
2-27 policies or contracts, and such supporting documents as necessary
3-1 to justify the adjustment shall accompany the filing; and
3-2 (2) appropriate riders, endorsements, or policy forms
3-3 needed to accomplish the medicare supplement insurance
3-4 modifications necessary to eliminate benefit duplications with
3-5 medicare.
3-6 (f) The [Those] riders, endorsements, or policy forms
3-7 described by Subsection (e)(2) of this section must [shall] provide
3-8 a clear description of the medicare supplement benefits provided by
3-9 the policy or contract.
3-10 (g) [(f)] The commissioner [board] by rule shall provide a
3-11 process for annual review and approval or disapproval of premiums
3-12 for medicare supplement policies or benefits and for review and
3-13 approval or disapproval of proposed premium increases [with respect
3-14 to medicare supplement policies or benefits]. Any rules adopted by
3-15 the board under this subsection must comply with 42 U.S.C. Section
3-16 1395ss and other federal law.
3-17 (h) The commissioner by order may require an insurer, health
3-18 care service plan, or other entity providing a medicare supplement
3-19 policy in this state to reduce the premium for the policy if the
3-20 commissioner finds, after notice and hearing, that the premium does
3-21 not comply with this section or a rule adopted under this section.
3-22 The office of public insurance counsel or any other interested
3-23 person may request that the commissioner take action under this
3-24 section.
3-25 (i) [(g)] The board shall comply with federal requirements
3-26 relating to periodical reporting on loss ratio information to the
3-27 Secretary of Health and Human Services, based on uniform
4-1 methodology for reporting loss ratios, as authorized by federal law
4-2 to the extent necessary for this state to obtain or retain
4-3 certification as a state with an approved regulatory program under
4-4 42 U.S.C. Section 1395ss.
4-5 (j) A medicare supplement policy issued as a result of
4-6 solicitation of individuals through the mail or by mass media
4-7 advertising is subject to Subsection (a) of this section.
4-8 SECTION 2. This Act takes effect September 1, 1997, and
4-9 applies only to a Medicare supplement policy that is delivered,
4-10 issued for delivery, or renewed on or after January 1, 1998. A
4-11 policy that is delivered, issued for delivery, or renewed before
4-12 January 1, 1998, is governed by the law as it existed immediately
4-13 before the effective date of this Act, and that law is continued in
4-14 effect for this purpose.
4-15 SECTION 3. The importance of this legislation and the
4-16 crowded condition of the calendars in both houses create an
4-17 emergency and an imperative public necessity that the
4-18 constitutional rule requiring bills to be read on three several
4-19 days in each house be suspended, and this rule is hereby suspended.