PART 3801 SMALL EMPLOYER CARRIER ACTUARIAL CERTIFICATION AND DOCUMENTATION REQUIREMENTS : Sections Listing

TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER pp: SMALL EMPLOYER HEALTH INSURANCE RATING ACT
PART 3801 SMALL EMPLOYER CARRIER ACTUARIAL CERTIFICATION AND DOCUMENTATION REQUIREMENTS


AUTHORITY: Implementing and authorized by Sections 30(b) and 40 of the Small Employer Health Insurance Rating Act [215 ILCS 93/30(b) and 40].

SOURCE: Adopted at 24 Ill. Reg. 19162, effective December 19, 2000; transferred from the Department of Insurance to the Department of Financial and Professional Regulation pursuant to Executive Order 2004-6 on July 1, 2004; transferred from the Department of Financial and Professional Regulation to the Department of Insurance pursuant to Executive Order 2009-4 on July 1, 2009; recodified from 50 Ill. Adm. Code 5101 to 50 Ill. Adm. Code 3801 at 40 Ill. Reg. 16164.

 

Section 3801.10  Purpose

 

The purpose of this Part is to set standards for the filing and contents of a small employer carrier actuarial certification pursuant to Section 30(b) of the Small Employer Health Insurance Rating Act [215 ILCS 93/30(b)].

 

Section 3801.20  Applicability and Scope

 

This Part shall apply to each health benefit plan for a small employer that is delivered, issued for delivery, renewed or continued in this State after July 1, 2000 that is required to file an annual actuarial certification.  For purposes of this Part, the date a plan is continued shall be the first rating period which commences after July 1, 2000.

 

Section 3801.30  Definitions

 

            Act means the Small Employer Health Insurance Rating Act [215 ILCS 93].

 

            Actuarial Certification means a written statement that the small employer carrier meets the applicable provisions of the Act and this Part by a member of the American Academy of Actuaries or other pre-approved individual acceptable to the Director.

 

            Director means the Director of the Illinois Department of Insurance.

 

            Health Benefit Plan or Plan means any hospital or medical expense-incurred policy, hospital or medical service plan contract, or health maintenance organization subscriber contract.  Health benefit plan shall not include individual, accident-only, credit, dental, vision, Medicare supplement, hospital indemnity, long term care, specific disease, stop loss or disability income insurance, coverage issued as a supplement to liability insurance, workers' compensation or similar insurance, or automobile medical payment insurance.

 

            Review of Appropriate Records means a review conducted in accordance with the Actuarial Standards Board document entitled Actuarial Standards of Practice No. 23 which addresses the Data Quality issue and gives guidance on what level of review would be required in a review of appropriate records.

 

            Small Employer means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least 2 but not more than 50 employees on business days during the preceding calendar year and who employs at least 2 employees on the first day of the plan year.

 

            Small Employer Carrier means a carrier that offers health benefit plans covering employees of one or more small employers in this State.

 

Section 3801.40  Pre-approval of an Individual Who is Not a Member of the American Academy of Actuaries for the purpose of filing an Actuarial Certification

 

The Director may deem an individual who is not a member of the American Academy of Actuaries acceptable for actuarial certification, pursuant to Section 30(b) of the Act and Section 3801.60 of this Part, if the small employer demonstrates through the filing of documentation and information that the individual has the appropriate experience and educational background.  Such information shall be mailed to the address provided in Section 3801.60(l) of this Part and  may include, but is not limited to, the following:

 

a)         Educational degrees or other certifications;

 

b)         Work experience;  and

 

c)         References.

 

Section 3801.50  Small Employer Carrier Rating and Underwriting Record Maintenance

 

A small employer carrier shall maintain and have accessible at its principal place of business for a period of 3 years from the date of actuarial certification the following records and information:

 

a)         A complete and detailed description of its rating practices and renewal underwriting practices;

 

b)         Information and documentation that demonstrates that its rating methods and practices are based upon commonly accepted actuarial assumptions and are in accordance with sound actuarial principles; and

 

c)         Any work papers or other information and documentation prepared in support of the actuarial certification.

 

Section 3801.60  Actuarial Certification and Format

 

An actuarial certification filing, an example of which is set forth in Illustration A of this Part, must contain the following information:

 

a)         The full legal name of the small employer carrier for which the certification is being submitted;

 

b)         The actuary's name, title and company affiliation, if applicable, or the individual's name, title and company affiliation that has been pre-approved pursuant to Section 3801.30 of this Part;

 

c)         A statement as to whether the undersigned actuary is a member of the American Academy of Actuaries and meets the Qualification Standards appropriate for this certification.  If not a member, the individual must indicate when he or she was pre-approved by the Director pursuant to Section 3801.30 of this Part and include a copy of the approval;

 

d)         The period for which the certification is being made;

 

e)         If appropriate, a statement indicating on whom the actuary relied for data.  The actuary may rely on company personnel for data, but may not rely on another actuarial opinion.  The nature and extent of reliance must be disclosed in the statement.  The extent of reliance is subject to the Actuarial Standards of Practice No. 23 on Data Quality.  A sample statement to be completed by the person on whom the actuary relied is shown in Illustration B of this Part;

 

f)         The number of classes contained in the actuarial certification shall be the number in existence as of the end of the certification period.  In the case of multiple classes, the certification must contain a list of the classes and a description of the substantial differences that support the establishment of each class.  Refer to Section 20(a)(1), (2) and (3) of the Act [215 ILCS 93/20] for information concerning the allowable criteria that support the establishment of each class.  This must include the criteria by which groups are assigned to each class;

 

g)         The actuarial certification must contain a statement that the small employer carrier's rates either were or were not in compliance with Section 25 of the Act [215 ILCS 93/25];

 

h)         If the actuary determines that the small employer carrier's rates and rating factors in the rating manuals did not comply with statutory requirements under subsection (g) of this Section, the certification must include a detailed description of the instances of noncompliance, steps taken to correct or detailed plans to correct the areas of noncompliance;

 

i)          If the actuary determines that the small employer carrier's actual rates did not agree with the rates provided in the rating manual(s), the certification must include a detailed description of the instances of noncompliance, steps taken to correct or detailed plans to correct the areas of noncompliance;

 

j)          The annualized premium dollar amount for small employer groups in force at the end of the certification period and the annualized premium dollar amount for groups whose actual premium rates were tested to verify that the rates charged were in accordance with the rating manuals;

 

k)         A certification that the actuary completed the work in compliance with Actuarial Standards of Practice 23, Data Quality, and 26, Compliance with Statutory and Regulatory Requirements for the Actuarial Certification of Small Employer Health Benefits (1100 Seventeenth Street, N.W., 7th Floor, Washington, D.C. 20006), and all applicable laws.

 

l)          The actuarial certification required by this Part must be submitted to:

 

            Illinois Department of Insurance

            Life Actuarial Section

            320 West Washington Street

            Springfield, Illinois  62767-0001




 

Section 3801.ILLUSTRATION A   Actuarial Certification

 

The following illustrates an acceptable actuarial certification:

I,

 

(name) am an officer/employee of

 

(carrier

name) OR am associated with the firm of

 

(employer name)

and am a member of the American Academy of Actuaries and meet the Qualification Standards appropriate for this certification.

(or)

I,

 

(name) am an officer/employee of

 

(carrier

name) OR am associated with the firm of

 

(employer name)

and am not a member of the American Academy of Actuaries. I meet the definitional standards of the "Other Individual Acceptable to the Director" and have received the Director's prior

approval on

 

(date) pursuant to 50 Ill. Adm. Code 3801.30.

I am completing the small employer carrier actuarial certification for

 

(carrier name). I am familiar with the applicable statutory provisions of 215 ILCS 93/1 through 99 and requirements of 50 Ill. Adm. Code 3801 and the Company Bulletins issued by the Director of Insurance.

This certification is for the period from

 

through

 

.

I relied on listings (summaries, rate manuals, etc.) of relevant data prepared by

 

(name and title of company officer responsible for preparing the underlying records). Attached is a (are) statement(s) by the indicated company officer(s) on whom I relied.

The Carrier had

 

separate class(es) of business at the end of the certification

period. (If more than one, list the classes and the substantial differences which qualified each as a separate class.  For each class, list the criteria by which groups are assigned to the class.)

The Carrier had small employer group annual premium volume of $

 

in force

at the end of the certification period. I tested the rates of small employer groups whose annual

premium volume totaled $

 

to verify that the rates actually charged were in

accordance with the rating manual(s).

Based upon my review, I find that the small employer carrier

 

(was or was

not) in compliance with Section 25 of the Small Employer Health Insurance Rating Act [215 ILCS 93/25]. (If not in compliance, include required additional paragraph, detail of instances of noncompliance and a description of the small employer carrier's plan to correct the areas of noncompliance.)

In other respects, my examination included a review of the actuarial methods in order to assure that the rating methods of the small employer carrier were actuarially sound.

Actuarial methods, considerations and analysis used in forming my opinion to conform the appropriate Actuarial Standards Board's Standards of Practice (ASOP), which form the basis of the statement of opinion.

 

 

Actuary name or the pre-approved individual's name (typewritten)

 

Signature

 

Date

 


 

 

Section 3801.ILLUSTRATION B   Statement of the Company Officer

 

The following illustrates an acceptable statement to be filed when the opining actuary or pre-approved individual has indicated reliance on data provided by company personnel:

I [name of officer], [title], of [name of carrier], hereby affirm that the listings (summaries, rate manuals, etc.) of relevant data prepared for and submitted to [name of appointed actuary] were prepared under my direction and, to the best of my knowledge and belief, are substantially accurate and complete.

 

 

Name of Officer of the Carrier (typewritten)

 

Signature of Officer of the Carrier

 

Date