Bulletin No. 93-02

Forms with instructions issued pursuant to public act 84 of 1992 - medicare supplement policies and certificate

Issued and entered June 14, 1993 by David J. Dykhouse, Commissioner of Insurance

On June 2, 1992, Public Act 84 was signed by the Governor, amending the Insurance Code of 1956 (Code) by implementing mandated federal requirements for all Medicare supplement policies as delineated in the Omnibus Budget Reconciliation Act of 1990. Pursuant to sections 3852 and 3853 of the Code, MCLA 500.3852 and 500.3853, the attached forms must be submitted to the Michigan Insurance Bureau by all insurers and health care corporations issuing medicare supplement policies and certificates in Michigan. The forms include:

REPORTING FORM FOR THE CALCULATION OF BENCHMARK RATIO SINCE INCEPTION FOR GROUP

POLICIES

MEDICARE SUPPLEMENT REFUND CALCULATION FORM

APPLICABLE LAW

The Reporting Form for the Calculation of Benchmark Ratio Since Inception for Group Policies is due on or before May 31 pursuant to Section 3852 of the Code, MCLA 500.3852, which states:

An insurer shall file by May 31 of each year a reporting form for the calculation of benchmark ratio since inception in a format prescribed by the commissioner for each type in a standard medicare supplement benefit plan.

The Medicare Supplement Refund Calculation Form is due on or before May 31 pursuant to Section 3853 of the Code, MCLA 500.3853, which states:

If on the basis of the experience as reported by an insurer under section 3852 the benchmark ratio since inception (ratio 1) exceeds the adjusted experienced ratio since inception (ratio 3), then a refund or credit calculation is required. The refund calculation shall be done on a statewide basis on a refund calculation form in a format prescribed by the commissioner for each type in a standard medicare supplement benefit plan. For purposes of the refund or credit calculation, only experience on policies issued within the reporting year shall be excluded. A refund or credit shall be made only where the benchmark loss ratio exceeds the adjusted experienced loss ratio and the amount to be refunded or credited exceeds the minimum level. The refund shall include interest from the end of the calendar year to the date of the refund or credit at a rate specified by the secretary of health and human services, but not less than the average rate of interest for 13-week treasury notes. A refund or credit against premiums due shall be made by September 30 following the experience year upon which the refund or credit is based.

FORMS WITH INSTRUCTIONS

These forms must be complete when submitted to the Insurance Bureau. Incomplete forms will be returned to the originator.

1. Complete and return the Reporting Form for the Calculation of Benchmark Ratio Since Inception for each type of medicare supplement policy sold to the address below on or before May 31 of each year.

2. On the basis of the experience reported on the Reporting Form for the Calculation of Benchmark Ratio Since Inception for Group Policies, if the benchmark ratio since inception (ratio 1) exceeds the adjusted experienced ratio since inception (ratio 3), complete and return the Medicare Supplement Refund Calculation Form to the address below on or before May 31 of each year.

Questions regarding the forms should be addressed to the Market Standards Division of the Insurance Bureau at the address below or call 517-373-0224.

Completed forms should be submitted to:

Michigan Insurance Bureau
Market Standards Division
P.O. Box 30220
Lansing, MI 48909-7720