Post on 29-Mar-2015
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Presenters
• Sean Fry, Assistant Director-Accident/Health Section
• Aaron Jenkins, Insurance Specialist-Life, Annuity and Credit Section
• Carol Lo, Actuary, Actuarial Section
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Presentation Overview
• Long Term Care (LTC) Products
• Annuity Nonforfeiture Calculations
• Medicare Supplement Products
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Long Term Care
• LTC Partnership Program
LHL570(LTC)
Insurer Certification Form
(28 TAC § 3.3873(a)(2))
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Long Term Care
• LTC Partnership Program
Policy or Certificate- Must be Tax Qualified
(28 TAC §3.3871(a)(1)(B), 28 TAC §3.3847)
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Long Term Care
• LTC Partnership Program
Policy or Certificate (continued)
Inflation Protection Requirements
(28 TAC §3.3871(a)(1)(C), 28 TAC § 3.3872)
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Long Term Care
• LTC Partnership Program
Policy or Certificate (continued)
Inflation Protection Requirements
Person < 61 years of age = Compound
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Long Term Care
• LTC Partnership Program
Policy or Certificate (continued)
Inflation Protection Requirements
Person >61, but <76 years of age =
Simple or
Compound
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Long Term Care
• LTC Partnership Program
Policy or Certificate (continued)
Inflation Protection Requirements
= or >76 years of age = Not Required,But Must be
Offered
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Great Job!100 % Correct
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Long Term Care
• LTC Partnership Program
Policy or Certificate (continued)
LHL569(LTC)
Required Disclosure Notice
(28 TAC §3.3871(a)(2))
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Long Term Care
• LTC Forms (Mandated Text):
(28 TAC §§ 3.3829(b)(8)(9), 3.3842(i)(2))
LTC Personal Worksheet (LHL560(LTC))
LTC Potential Rate Increase Disclosure Form (LHL561(LTC)) Things You Should Know Before You Buy LTC Insurance (LHL567(LTC))
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Long Term Care
• LTC Forms (Mandated Text): Exception
(28 TAC §§ 3.3829(b)(8)(9), 3.3842(i)(2))
Exception for the LTC Personal Worksheet
Text: “For State of Texas” “Company”
“Noncancellable/Guaranteed Renewable” “Agent”
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Long Term Care
• LTC Web Based Electronic Reporting
Reported each year by June 30
• Link: http://www.tdi.state.tx.us/forms/form10.html
Replacement & Lapse Report: LHL562(LTC)
Rescission Reporting: LHL563(LTC)
Claims Denial Reporting: LHL564(LTC)
Long Term Care Policies Sold: LHL565(LTC)
Suitability Reporting: LHL566(LTC)
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Long Term Care
• Life Policy/Annuity Contracts
A Long-Term Care (LTC) rider is subject to 28 TAC Subchapter Y, Chapter 3. These situations make a rider LTC:
• If payments under the rider are to be used specifically for or restricted to LTC expenses.
• If the rider extends the benefits beyond exhaustion of the contract’s death benefit (extension of benefits)
• If the cash value of a policy or contract increases as the result of LTC or LTC related expenses.
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Long Term Care
Life Policy/Annuity Contracts-Common Omissions
Outline of Coverage not Included
Improper Order or Format of the Outline of Coverage
Exact language of Subchapter Y is not used (extra/deleted language) in the Rider or Outline of Coverage
Rates/(Cost-of-Insurance)/Actuarial requirements not included
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Long Term Care
• Life Policy/Annuity Contracts (continued)
This type of a rider is not considered LTC if:
• It pays a lump sum for benefits
• The payments are not restricted to or conditioned upon the receipt of LTC or LTC related expenses
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Long Term Care
Rating Issues:
Section 1651.053, TIC; 28 TAC 3.3831• Missing actuarial certification• Missing moderately adverse experience assumption• Missing accumulation of at least twelve months actual
experience after implementation of prior rate increase• Combining experiences of pre-rate stabilized and rate
stabilized forms• Proposing a series of rate increases
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Annuity Nonforfeiture Calculations
• House Bill 1919 passed during the 81st Texas legislative session.
• Amends Section 1107.006, Texas Insurance Code.
• Requires all optional and fixed maturity date annuities to adhere to the 70/10 standard.
• The standard is applicable for purposes of the annuity nonforfeiture calculations.
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Annuity Nonforfeiture Calculations
• The 70/10 Standard:– The maturity date of a contract must not be later than the next
anniversary of the annuity contract that follows the annuitant’s 70th birthday or
– The 10th anniversary of the contract
• Effective Date is June 1, 2010
• Before passage of House Bill 1919, Fixed maturity date annuity contracts did not have to comply with the 70/10 standard
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Annuity Nonforfeiture Calculations
• Optional maturity date contracts already have to comply with the 70/10 standard.
• All annuity contracts issued on or after June 1, 2010, must comply with the 70/10 standard.
• Contracts to be issued on or after June 1, 2010, that are not in compliance must be revised.
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Annuity Nonforfeiture Calculations
Sections 1107.006, 1107.057, 1107.101 – 1107.103 TIC
•Retrospective Test (accumulation value)
•Prospective Test (present value)
Maturity Date = later of:
• next anniversary after 70th birthday; or• 10th anniversary of the contract
Prior to 70/10
70/10
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Annuity Nonforfeiture Calculations
• Revise Surrender Charge Schedule
• Revise Issue Age Limit
Revised contract or revised contract page (as an insert page) with new form number
Revised specification page with new form number
Revised actuarial memorandum
Revised nonforfeiture demonstration
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
What’ Supp? Medicare Supplement
• 2010 Standardized Plans (28 TAC § 3.3322)
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
What’s Supp? Medicare Supplement
• 2010 Standardized Plans (28 TAC § 3.3322)
• Outline of Coverage(LHL 050 Rev. 06/09)(28TAC § 3.3308(c))
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
What’s Supp? Medicare Supplement
• 2010 Standardized Plans (28 TAC § 3.3322)
• Outline of Coverage(28TAC § 3.3308(c))
• 1990 Standardized Plans (Discontinued)
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
What’s Supp? Medicare Supplement
• 2010 Standardized Plans (28 TAC § 3.3322)
• Outline of Coverage(28 TAC § 3.3308(c))
• 1990 Standardized Plans (Discontinued)
• Rates/Actuarial Memorandum
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Medicare Supplement
Rating Issues:
• Effective date of rate increase; 28 TAC § 3.3323
• Rate increase on non-credible blocks; 28 TAC § 3.3307(d)
• Rate increase request on plan A disabled
• Experience must be presented separately by plan
Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products
Conclusion & Questions
Contact Information:
Aaron Jenkins (Insurance Specialist)
aaron.jenkins@tdi.state.tx.us
Carol Lo (Actuary)
carol.lo@tdi.state.tx.us
Sean Fry (Assistant Director)
sean.fry@tdi.state.tx.us