Minnesota Administrative Rules

CHAPTER 2740, COMPREHENSIVE HEALTH INSURANCE

DEPARTMENT OF COMMERCE

2740.0100 DEFINITIONS.

Subpart 1.

Scope.

All terms used herein that are defined in Minnesota Statutes, chapter 62E shall have the meanings attributed to them therein. For the purpose of Minnesota Statutes, chapter 62E and these rules, the terms defined herein shall have the meanings given to them.

Subp. 2.

Accident only coverage.

"Accident only coverage" means a policy designed to provide coverage solely upon the occurrence of an accidental injury or death.

Subp. 3.

Act.

"Act" means Minnesota Statutes, sections 62E.01 to 62E.16, as amended, which shall be cited as the Minnesota Comprehensive Health Insurance Act of 1976.

Subp. 4.

Actuarial equivalent.

"Actuarial equivalent" or "an actuarially equivalent benefit" means a benefit, the expected value of which when substituted for another benefit or benefits in a plan of health coverage will be the same as the benefit or benefits for which it was substituted, and which will result in the plan of health coverage after substitution of the actuarially equivalent benefit, being the actuarial equivalence of the original plan of health coverage. "Actuarial equivalence" shall be recognized for two plans where, employing the same set of assumptions for the same population, the expected value of benefits provided by the plans is equal. Expected value of benefits shall be measured by the probability of the claim for each benefit multiplied by the average expected amount of each of those benefits.

Subp. 5.

Administrative expenses of the pool.

"Administrative expenses of the pool" means the actual operating and administrative expenses of the association incurred directly in the operation of the reinsurance plan including fees to a reinsurance administrator.

Subp. 6.

Association.

"Association" means the Minnesota Comprehensive Health Association.

Subp. 7.

Board.

"Board" means the board of directors of the association.

Subp. 8.

Calendar year.

"Calendar year" means a 12-month period from January 1 to and including December 31.

Subp. 9.

Certificate of eligibility and enrollment form.

"Certificate of eligibility" or "certificate of eligibility and enrollment form" means the document entitled "certificate of eligibility and enrollment form" or any other document which is used to apply for coverage under the state plan.

Subp. 9a.

Child with a disability; dependent child of any age who is disabled.

"Child with a disability" or a "dependent child of any age who is disabled" means a child, married or unmarried, who is and has been continuously incapable of self-sustaining employment by reason of developmental disability or physical disability and is financially dependent upon the insured, provided proof of such incapacity and dependency is furnished to the insurer or to the association within 31 days of the child's attainment of the limiting age and subsequently as may be required by the insurer or the association, but not more frequently than annually after the two-year period following the child's attainment of the limiting age.

Subp. 10.

Claims expenses; payment of benefits.

"Claims expenses" or "payment of benefits" means all payments to covered persons or providers including payments for hospital, surgical and medical care, and reasonable estimates, as determined by the association and approved by the commissioner, of the incurred but not reported claims of the state plan.

Subp. 11.

Close relative.

"Close relative" means the insured person's spouse, brother, sister, parent or child.

Subp. 12.

Commercial reinsurance; excess of loss reinsurance.

"Commercial reinsurance" or "excess of loss reinsurance" means reinsurance arranged by the association under which the pool pays premiums to a reinsurer which assumes part of the risk of the reinsurance plan.

Subp. 13.

Covered expenses.

"Covered expenses" means the usual and customary charges for the services and articles listed in Minnesota Statutes, section 62E.06, or, with respect to qualified plans, the actuarial equivalence thereof, when prescribed for a covered person by a physician and when the expenses are incurred during a period in which the policy or contract is in effect.

Subp. 14.

Covered person.

"Covered person" means the insured person or an insured dependent.

Subp. 15.

Dental care.

"Dental care" means those services which a person licensed to practice dentistry may provide as defined in Minnesota Statutes, section 150A.05, subdivision 1.

Subp. 16.

[Renumbered Subp. 9a]

Subp. 17.

Employee welfare benefit plan.

"Employee welfare benefit plan" means any plan, fund, or program through which an employer provides, directly or indirectly, accident and health benefits to its employees through a trust, through the purchase of insurance, or through the provision of benefits for medical, surgical, or hospital care.

Subp. 18.

Financially dependent.

A person shall be considered "financially dependent" if that person is chiefly dependent upon the insured person for support and maintenance.

Subp. 19.

Free standing ambulatory surgical or medical center.

"Free standing ambulatory surgical center" or "free standing ambulatory medical center" means a surgical or medical center approved as such by the state of Minnesota.

Subp. 20.

Home health agency.

"Home health agency" means a public or private agency that specializes in giving nursing service and other therapeutic services in the insured person's home and is approved as such by the state of Minnesota.

Subp. 21.

Hospital.

"Hospital" means:

A.

an institution which is operated pursuant to law and which is primarily engaged in providing on an inpatient basis for the medical care and treatment of sick and injured persons through medical, diagnostic, and surgical facilities, under the supervision of a staff of physicians and with 24-hour a day nursing service; or

B.

an institution not meeting all the requirements of item A, but which is accredited as a hospital by the Joint Commission on Accreditation of Hospitals; but

C.

in no event shall the term "hospital" include a nursing home or any institution or part thereof which is used principally as a convalescent facility, rest facility, nursing facility, or facility for the aged.

Subp. 22.

Hospital indemnity coverage.

"Hospital indemnity coverage" means coverage which provides a fixed dollar benefit on the occurrence of the condition precedent that the covered person was confined in a hospital.

Subp. 23.

Illness.

"Illness" means disease, injury, or a condition involving bodily or mental disorder of any kind, and including pregnancy.

Subp. 24.

Independent contractor.

"Independent contractor" means a person who exercises an independent employment and contracts to do certain work without being subject to the control of the employer except as to the results of the work.

Subp. 25.

Individual insured.

"Individual insured" means the covered employee or surviving spouse or surviving dependent of a covered employee as those terms are used in Minnesota Statutes, section 62A.17, subdivision 6.

Subp. 26.

Insured dependent.

"Insured dependent" means an eligible dependent originally named in the policy or contract schedule or otherwise insured subsequent to the effective date of the policy or contract.

Subp. 27.

Insured person.

"Insured person" means the person named in the policy or contract schedule.

Subp. 28.

Interim reinsurance assessment.

"Interim reinsurance assessment" means an assessment at any time other than at the end of a calendar year (or other fiscal year end as determined by the association) of participating members when pooling payments and payments by reinsurers for the year are not sufficient to fund paid and estimated obligations of the pool and administrative expenses of the pool.

Subp. 29.

Licensed and tested insurance agent or insurance agent.

"Licensed and tested insurance agent" or "insurance agent" means an insurance agent as defined in Minnesota Statutes, section 60A.02, subdivision 7, and licensed as such by the commissioner.

Subp. 30.

Losses.

"Losses" means all claims expenses.

Subp. 31.

Major medical expenses.

"Major medical expenses" as used in Minnesota Statutes, section 62E.04 means the covered expenses for services and articles listed in Minnesota Statutes, section 62E.06, subdivision 1, or the actuarial equivalence thereof, provided that the maximum lifetime benefit limit shall not be less than $250,000.

Subp. 32.

Net gains.

"Net gains" means the excess of premiums or contract charges over claims expenses, after the writing carrier's expenses and agent referral fees, not to exceed 15 percent of premiums or contract charges, have been paid as provided in part 2740.4400, subpart 4.

Subp. 33.

Nonqualified policy; unqualified policy or plan.

A "nonqualified policy" or "unqualified policy" or "unqualified plan" means a policy, contract, or plan which has not been certified by the commissioner as qualified pursuant to the terms of the act.

Subp. 34.

Nursing home.

"Nursing home" means an institution meeting the following requirements:

A.

It is operated pursuant to law and is primarily engaged in providing the following services for persons convalescing from illness: room, board, and 24-hour a day nursing service by one or more professional nurses and such other nursing personnel as are needed to provide adequate medical care.

B.

It provides such services under the full-time supervision of a proprietor or employee who is a physician or a registered nurse.

C.

It maintains adequate medical records and has available the services of a physician under an established agreement if not supervised by a physician.

Subp. 35.

Operating and administrative expenses of association.

"Operating and administrative expenses of association" means expenditures reasonably necessary to the operation and administration of the association including but not limited to rents, stationery, telegraph and telephone charges, salaries and expenses of office employees, investigators or adjusters, and legal expenses, as well as expenses of directors of the board of the association relating to the conduct of or attendance at meetings. The operating and administrative expenses of the association do not include the operating and administrative expenses of the writing carrier.

Subp. 36.

Out-of-pocket expenses.

"Out-of-pocket expenses" means any cost or charge in a calendar year for a health service or article that is included in the list of covered services and articles under the qualified plan, qualified Medicare supplement plan, policy or contract of major medical coverage, or state plan policy or contract under which the person is a covered person, and which is not paid or payable if claim were made under any plan of health coverage, Medicare, or other governmental program.

Subp. 37.

Participating members.

"Participating members" means insurer and fraternal members of the association that elect to reinsure risks of issuing certain coverages required under the act through the association under its reinsurance plan.

Subp. 38.

Per diem policies.

"Designed solely to provide payments on a per diem, fixed indemnity or nonexpense incurred basis" means policies that provide benefits upon the occurrence or existence of a condition precedent, without reference to expenses incurred or services provided, for hospital, surgical, or medical care.

Subp. 39.

Policies or contracts of accident and health insurance.

"Policies or contracts of accident and health insurance" means accident and health insurance policies as defined by Minnesota Statutes, section 62E.02, subdivision 11.

Subp. 40.

Pooling payment.

"Pooling payment" means the amount each participating member pays the association or its reinsurance administrator during a given period of time as determined by the association or its reinsurance administrator based on pooling rates and volume of policies and contracts reinsured by the participating member in each category.

Subp. 41.

Pooling rates.

"Pooling rates" means unit rates approved by the association and used as the basis for pooling payments.

Subp. 42.

Preexisting condition.

"Preexisting condition" means an injury, illness, or other physical or mental condition of a covered person that existed prior to the issuance of the covered person's policy or contract.

Subp. 43.

Preexisting conditions limitation.

"Preexisting conditions limitation" means a limitation excluding coverage for an injury, illness, or other physical or mental condition of an applicant that existed prior to the issuance of the applicant's policy or contract.

Subp. 44.

Professional services.

"Professional services" means only services rendered by a physician or at the physician's direction by a private duty, licensed, registered nurse or an allied health professional. Professional services shall not include a service rendered by a close relative.

Subp. 44a.

Qualified Medicare supplement plan.

"Qualified Medicare supplement plan" means a plan of health coverage meeting the requirements of Minnesota Statutes, sections 62A.31, 62E.02, subdivision 5, and 62E.07.

Subp. 45.

Reasonable benefits in relation to cost of covered services.

"Reasonable benefits in relation to cost of covered services" means reasonable benefits in relation to premium charged for coverage under a policy as determined by the minimum anticipated loss ratio requirement of Minnesota Statutes, section 62A.02, subdivision 3.

Subp. 46.

Reimbursable services.

"Reimbursable services" means eligible services under Medicare.

Subp. 47.

Reinsurance administrator.

"Reinsurance administrator" means an entity with which the association contracts for administration of its reinsurance plan.

Subp. 48.

Reinsurance assessment.

"Reinsurance assessment" means a calendar year end (or other fiscal year end as determined by the association) assessment of participating members when pooling payments and payments by reinsurers for the year are not sufficient to fund paid and estimated obligations of the pool and administrative expenses of the pool.

Subp. 49.

Reinsurance plan.

"Reinsurance plan" means any mechanism by which the association undertakes to reinsure the risks which Minnesota Statutes, section 62E.10, subdivision 7 authorizes the association to reinsure.

Subp. 50.

Reinsurance pool; pool.

"Reinsurance pool" or "pool" means the pool or fund into which the association or the reinsurance administrator deposits pooling payments, interim reinsurance assessments and reinsurance assessments paid to the association or its reinsurance administrator by insurer or fraternal members wishing to reinsure certain risks, as well as claims paid by reinsurers under contract for commercial reinsurance with the association, and other receipts, and from which the association or its reinsurance administrator pays premiums for commercial reinsurance, administrative expenses of the pool, and reimbursement for claims paid by insurer or fraternal members that have reinsured all or any portion of risks covered under policies or contracts which have been reinsured pursuant to a reinsurance pooling agreement with the association.

Subp. 51.

Reinsurance pooling agreement.

"Reinsurance pooling agreement" means the agreement between the association and participating members which establishes a reinsurance plan.

Subp. 52.

Reinsurer.

"Reinsurer" means the commercial reinsurance company that contracts with the association to provide excess of loss coverage for the risks which participating members reinsure through the association.

Subp. 53.

Rejection.

"Rejection," for the purpose of state plan eligibility, means refusal by any association member, or any authorized representative, including any insurance agent, acting on behalf of any association member, to issue a qualified plan or a qualified Medicare supplement plan to a person who completes an application for coverage under such qualified plan, or a qualified Medicare supplement plan, as determined by the board.

Subp. 54.

Renewal date.

"Renewal date" means the date specified in a policy or contract on which renewal occurs. In the absence of a specified renewal date in a policy or contract, renewal date shall be determined in reference to the anniversary date specified in the policy or contract and shall occur in intervals of no greater than 12 months duration as determined in reference to the date on which the policy or contract became effective. Renewal of a policy or contract shall be deemed to occur upon the expiration of a renewal date if coverage under the policy or contract is continued.

Subp. 55.

Resident of Minnesota.

"Resident of Minnesota" means a person who is an actual resident of Minnesota, having there his or her principal and permanent abode.

Subp. 56.

Restrictive rider.

"Restrictive rider" means a document or contractual provision adding certain conditions to the policy's or contract's coverage, the effect of which is to substantially reduce coverage from that received by a person who is considered a standard risk.

Subp. 56a.

Self-insurer.

"Self-insurer" means an entity defined by Minnesota Statutes, section 62E.02, subdivision 21, which is a "governmental plan" as defined by United States Code, title 29, section 1002(32) or a "church plan" as defined by United States Code, title 29, section 1002(33)(A) or which is otherwise exempt from or outside of the scope of the provisions of the Employee Retirement Income Security Act of 1974, United States Code, title 29, sections 1001 to 1381, as amended.

Subp. 57.

Student.

"Student" means any unmarried child under the age of 25 who during the calendar year is enrolled in and attends an educational institution as a full-time student and who is financially dependent upon an insured person.

Subp. 58.

Total cost of self-insurance.

"Total cost of self-insurance" includes any direct and indirect administrative expenses incurred that are related to the operation of a plan of self-insurance, plus the sum of any payment made to or on behalf of Minnesota residents for costs or charges for health benefits by a self-insurer under a plan of health coverage, which is not counted as premium by an insurer, except to the extent of such payments made for coverage of the types described in Minnesota Statutes, section 62E.02, subdivision 11, clauses (1) to (8).

Subp. 59.

Usual and customary charge.

"Usual and customary charge" for the purpose of the state plan means the normal charge, in absence of insurance, of the provider for a service or article, but not more than the prevailing charge in the area for a like service or article. A "like service" is of the same nature and duration, requires the same skill and is performed by a provider of similar training and experience. A "like article" is one that is identical or substantially equivalent. "Area" means the municipality or, in the case of a large city, a subdivision thereof, in which the service or article is actually provided or such greater area as is necessary to obtain a representative cross-section of charges for a like service or article.

Statutory Authority:

MS s 62E.09

History:

10 SR 474; 17 SR 1279; L 2005 c 56 s 2

Published Electronically:

October 8, 2007

2740.0200 AUTHORITY, SCOPE, AND PURPOSE.

These rules are promulgated pursuant to Minnesota Statutes, section 62E.09, clause (i) relating to qualified comprehensive health insurance plans and the operations of the Minnesota Comprehensive Health Association. These rules and all future changes herein apply to all insurers (including nonprofit health service plan corporations), self-insurers, fraternals, health maintenance organizations and other organizations that are at the time of adoption of these rules, or at any time in the future, licensed or authorized to do business in or otherwise doing business in this state and thereby subject to the provisions of the Minnesota Comprehensive Health Insurance Act of 1976, as amended. These rules are promulgated to carry out the act, as amended, and to facilitate its full and uniform implementation, enforcement and application to all persons affected thereby.

Statutory Authority:

MS s 62E.09

Published Electronically:

October 8, 2007

QUALIFIED PLAN

2740.1100 DUTIES OF EMPLOYERS.

Subpart 1.

Duty to make available a qualified plan.

An employer shall be deemed to have made available a qualified plan to its employees as required in Minnesota Statutes, section 62E.03, subdivision 1 when participation under a number 2 or number 3 qualified plan or a health maintenance plan is offered to the employee by a self-insurer or through an insurer or health maintenance organization, without regard to whether the cost of such participation is paid directly or indirectly by the employer or by the employee or by their joint payment.

Subp. 2.

Effect of collective bargaining on duty to make available a qualified plan.

An employer whose employees are represented by one or more exclusive bargaining representatives shall be deemed to have complied with the provisions of Minnesota Statutes, section 62E.03, subdivision 1 with respect to all employees within each unit for collective bargaining if the employer makes available qualified plans of health coverage to the exclusive bargaining representatives.

A.

Such employers shall be deemed to have complied with requirements of Minnesota Statutes, section 62E.03, subdivision 1 for each accounting period utilized by the employer for Minnesota income tax purposes during the entire term of any collective bargaining agreement executed after an offer of qualified health coverage has been made.

B.

Nothing in this part shall require the employer to renegotiate any collectively bargained agreement solely for the purposes of compliance with this act.

Subp. 3.

Frequency of required offer.

Except as provided in subpart 2, an employer shall be deemed to have complied with the requirements of Minnesota Statutes, section 62E.03, subdivision 1 if the employer makes available to the employer's employees a plan of health coverage which is certified as a number 2 or number 3 qualified plan or a health maintenance plan at least once during each accounting period utilized by the employer for Minnesota income tax purposes.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.1200 DUTIES OF INSURERS AND FRATERNALS.

Subpart 1.

Exception to definition of accident and health insurance policy.

The exception provided by Minnesota Statutes, section 62E.02, subdivision 11, clause (4) shall apply with respect to hospital indemnity coverage sold by an insurer to an applicant who is, at the time of application for hospital indemnity coverage, covered by a qualified plan, notwithstanding the possibility that the applicant may subsequently terminate coverage under a qualified plan.

A.

The exclusion of Minnesota Statutes, section 62E.02, subdivision 11, clause (4) shall also apply to a hospital indemnity coverage which is sold by an insurer to an applicant who is then currently covered by a health maintenance plan.

B.

Insurers shall be entitled to conclusively rely upon the written statement of an applicant for hospital indemnity coverage that such applicant is, at the time of the application, covered by a qualified plan or a health maintenance plan.

Subp. 2.

Timing of required offer of a qualified plan or qualified Medicare supplement plan.

Timing of required offer of a qualified plan or qualified Medicare supplement plan is as follows:

A.

The offer of each type of qualified plan (that is, a number 1, number 2, and number 3 qualified plan) that is required when an insurer or fraternal is offering an individual policy of accident and health insurance shall occur no later than the date of delivery of such policy to the applicant.

B.

The offer of a qualified Medicare supplement plan that is required when an insurer or fraternal is offering a Medicare supplement policy shall occur no later than the date of delivery of such policy to the applicant.

C.

The offer of each type of qualified plan (that is, a number 1, number 2, or number 3 qualified plan) required when an insurer or fraternal is offering a group policy of accident and health insurance shall occur no later than the date of delivery of such policy to the applicant.

D.

"Each person who applies" and "applicant" for the purposes of Minnesota Statutes, section 62E.04 and this part shall be deemed to be only the individual making an initial application for an individual policy or in the case of a group policy, the corporation, partnership, proprietorship, association or other qualified entity making application for a group policy.

E.

Minnesota Statutes, section 62E.04, subdivisions 1, 2, and 3 shall not be deemed to require an insurer or fraternal to offer a qualified plan or qualified Medicare supplement plan at the time a policy is subject to renewal.

Subp. 3.

No duty to offer particular category of insurance.

For the purposes of the act, individual accident and health insurance, group accident and health insurance, individual Medicare supplement plans, and group medicare supplement plans are recognized as separate and distinct categories of insurance. Nothing in Minnesota Statutes, section 62E.04, subdivisions 1, 2, and 3 shall be construed as requiring an insurer or fraternal to engage in the business of offering or issuing a particular category of accident and health insurance policy or Medicare supplement plan that it does not otherwise offer or issue in this state.

Subp. 4.

Duty to offer major medical coverage.

Each insurer and fraternal shall affirmatively offer, subject to its underwriting standards, coverage of major medical expenses to every applicant for a new unqualified policy at the time of application and annually thereafter to every holder of an unqualified policy of accident and health insurance renewed by the insurer or fraternal as required by Minnesota Statutes, section 62E.04, subdivision 4. "Affirmatively offer" shall mean written advice to the applicant for, or the holder of, an unqualified policy of accident and health insurance, of the availability of coverage for major medical expenses. Such written advice of the availability of the coverage for major medical expenses may be satisfied by a contractual provision in the unqualified policy that gives the insured the contractual right to apply to the insurer or fraternal for a new policy or a rider on an existing unqualified policy that provides coverage for 80 percent of the covered expenses for services listed in Minnesota Statutes, section 62E.06, subdivision 1 or the actuarial equivalence thereof subject to a $5,000 deductible for out-of-pocket expenses, subject to the insurer's or fraternal's underwriting requirements.

Subp. 5.

Effect on foreign contracts.

No provision of the act shall be construed to require any insurer or fraternal to alter or amend any policy or contract issued outside the state of Minnesota.

Subp. 6.

Exclusion of certain foreign conversion policies.

The issuance of individual group conversion policies or contracts in Minnesota pursuant to Minnesota Statutes, section 62A.17 or 62E.16 shall not, in and of itself, constitute the transaction of accident and health insurance business by an insurer or fraternal that has relinquished prior authority to transact such business in Minnesota and that is not otherwise currently issuing policies or contracts in Minnesota.

Subp. 7.

Exceptions to duties for certain policies and contracts.

Exceptions to duties for certain policies and contracts are as follows:

A.

The continuation in force of a policy or contract under which there is no unilateral right of the insurer or fraternal to cancel, nonrenew, amend or change the terms, conditions or premium rate of the policy or contract in any way, shall not be considered a renewal for the purposes of Minnesota Statutes, section 62E.04 and part 2740.2100 if the policy or contract:

(1)

was issued prior to July 1, 1976; or

(2)

was designed solely to provide payments on a per diem, fixed indemnity or nonexpense incurred basis and was issued prior to June 3, 1977.

B.

The issuance or renewal by an insurer or fraternal on or after June 3, 1977, of a policy or contract that is designed solely to provide payments on a per diem, fixed indemnity, or nonexpense incurred basis, shall not be subject to Minnesota Statutes, section 62E.04, except for policies and contracts sold by an insurer to provide payments on a hospital indemnity basis if such coverage is issued to an applicant who is not covered by a qualified plan or a health maintenance plan at the time of issue.

Subp. 8.

Sanction for failure to comply with duties of insurers and fraternals.

Any insurer or fraternal not in compliance with Minnesota Statutes, section 62E.04 shall cease and desist from transacting accident and health insurance business in the state of Minnesota. Nothing in this part shall prohibit such an insurer or fraternal no longer meeting the definition of insurer in Minnesota Statutes, section 62E.02, subdivision 10 or fraternal in Minnesota Statutes, section 62E.02, subdivision 19, from continuing to maintain in force any policies or contracts described in subpart 7, item A.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.1300 QUALIFIED PLAN PREEXISTING CONDITIONS.

A qualified plan may include provisions consistent with generally accepted underwriting practices that provide that any preexisting condition for any person covered under the policy which was diagnosed prior to the effective date of the policy, and for which medical care or treatment was rendered or prescribed during the 90 days immediately prior to the application for such policy, shall not be covered or eligible for the payment of any benefits for care or treatment rendered during a period of time beginning on the effective date of the policy and ending 24 months after the policy has been continuously in force.

Statutory Authority:

MS s 62E.09

Published Electronically:

October 8, 2007

2740.1400 MINIMUM BENEFITS OF QUALIFIED MEDICARE SUPPLEMENT PLANS.

The minimum benefits of qualified Medicare supplement plans shall be as provided in Minnesota Statutes, section 62E.07 and as described for the purposes of the state plan in part 2740.3100.

Statutory Authority:

MS s 62E.09

Published Electronically:

October 8, 2007

2740.1500 CERTIFICATION OF QUALIFIED PLANS.

Subpart 1.

Application for certification.

The application of an insurer, fraternal, or employer for certification by the commissioner of a plan of health coverage as a qualified plan or a qualified Medicare supplement plan under Minnesota Statutes, section 62E.05 shall include the qualification number of the plan for which certification is sought pursuant to the procedures specified in the actuarial equivalence tables set forth in parts 2740.9909 to 2740.9993.

Subp. 2.

Certification by commissioner.

An accident and health insurance policy or plan is deemed certified as a qualified plan or qualified Medicare supplement plan for the purpose of Minnesota Statutes, section 62E.05 if it meets the requirements of these rules and other relevant laws of the state upon the expiration of 90 days after receipt of the request for certification by the commissioner, unless earlier rejected or certified by the commissioner. In the event the commissioner rejects such request, the commissioner shall give written notice of the grounds for rejection to the person submitting the plan, and the insurer, fraternal, or employer has the same rights in the event of such rejection as provided in Minnesota Statutes, section 62A.02.

Subp. 3.

Required benefits under the act.

On or after June 3, 1977 each plan of health coverage, in order to be certified as a number 1, number 2, or number 3 qualified plan, shall provide a limitation of $3,000 per person on total annual out-of-pocket expenses and a maximum lifetime benefit of not less than $250,000, and shall provide all other benefits required under the act that are not subject to substitution of actuarially equivalent benefits under Minnesota Statutes, section 62E.06.

Subp. 4.

Certification of an employer's plan of health coverage.

For purposes of certification of an employer's plan of health coverage pursuant to Minnesota Statutes, section 62E.03, any plan of health coverage that constitutes a qualified plan at the time of issue shall continue to be a qualified plan until the later of the next renewal date of the plan of health coverage or the expiration of an applicable collective bargaining agreement, if any.

Statutory Authority:

MS s 62E.09

History:

17 SR 1279

Published Electronically:

October 8, 2007

2740.1600 TERMINATION OF COVERAGE; CONVERSION PRIVILEGES.

Subpart 1.

[Repealed, L 1998 c 407 art 8 s 14]

Subp. 2.

Duty to offer conversion policy or contract.

Duty to offer conversion policy or contracts:

A.

For the purposes of Minnesota Statutes, section 62E.16, an insurer, health maintenance organization, or self-insurer shall not be required to offer a conversion policy or contract to a person who is then covered by a qualified plan or eligible for Medicare.

B.

An insurer, health maintenance organization, or self-insurer shall not be required to renew a conversion policy or contract issued to a person who, during the prior policy or contract year, became covered by a qualified plan, or became eligible for Medicare.

C.

An insurer, health maintenance organization, or self-insurer that is required to offer conversion coverage to a terminated employee must offer, at the employee's option, a number 1, number 2, or number 3 qualified plan. A policy providing reduced benefits at a reduced premium rate may be accepted by the employee, spouse or a dependent in lieu of the optional coverage otherwise required by Minnesota Statutes, sections 62A.17, subdivision 6 and 62E.16.

Subp. 3.

Due notice of cancellation or termination.

An insurer, health maintenance organization, or self-insurer shall be deemed to have provided "due notice of cancellation or termination" as required in Minnesota Statutes, section 62E.16 if the insurer, health maintenance organization, or self-insurer notifies in writing those employees at their respective addresses as provided to the insurer, health maintenance organization, or self-insurer by the employer pursuant to the terms of Minnesota Statutes, section 62E.16.

Statutory Authority:

MS s 62E.09

History:

10 SR 474; L 1998 c 407 art 8 s 14

Published Electronically:

October 8, 2007

2740.1700 REVISION OF ACTUARIAL EQUIVALENCE TABLES.

The commissioner shall periodically, no less frequently than biennially, review the actuarial equivalence tables set forth in parts 2740.9909 to 2740.9993, and shall require that the relative point values set forth therein be actuarially updated when required to more accurately reflect changes in the relative values of benefits, including copayments. Any revision of relative point values which the commissioner shall make shall be promulgated pursuant to the rulemaking requirements of the Administrative Procedure Act, Minnesota Statutes, chapter 14. Following revision of the actuarial equivalence tables pursuant to this part, recertification of existing plans of health coverage may be required subject to the provisions set forth in parts 2740.1100, 2740.1200, and 2740.1500.

Statutory Authority:

MS s 62E.09

Published Electronically:

October 8, 2007

MINNESOTA COMPREHENSIVE HEALTH ASSOCIATION

2740.2100 DEFINITIONS.

Subpart 1.

Accident and health insurance business.

"Accident and health insurance business" means the issuance or renewal of any accident and health insurance policy as defined in Minnesota Statutes, section 62E.02, subdivision 11.

A.

An insurer is engaged in accident and health insurance business during the period in which any policy or contract which has been issued or renewed remains in effect.

B.

Such business shall not include the issuance or renewal of policies or contracts providing coverage that is:

(1)

limited to disability or income protection coverage for a specified period of time;

(2)

limited to automobile insurance that provides coverage for medical payments as defined and authorized under Minnesota Statutes, section 60A.06, subdivision 1, clause (12);

(3)

supplemental to liability insurance, as defined and authorized in Minnesota Statutes, section 60A.06, subdivision 1, clause (13);

(4)

limited to policies or contracts issued prior to July 1, 1976 under which there is no unilateral right of the insurer or fraternal to cancel, nonrenew, amend, or change the terms, conditions, or premium rate of the policy or contract in any way; provided that all policies and contracts designed solely to provide payments on a per diem, fixed indemnity or nonexpense incurred basis issued prior to June 3, 1977 under which there is no unilateral right of the insurer or fraternal to cancel, nonrenew, amend, or change the terms, conditions, or premium rate of the policy or contract in any way, are also excluded;

(5)

designed solely to provide payment on a per diem, fixed indemnity, or nonexpense incurred basis, except that all policies and contracts designed solely to provide payments on a hospital indemnity basis issued or renewed by an insurer on or after June 3, 1977 are included to the extent that such coverage is issued to an applicant who is not covered by a qualified plan or a health maintenance plan at the time of issue;

(6)

limited to credit accident and health insurance, meaning insurance on a debtor to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is disabled as defined in the policy, as authorized by Minnesota Statutes, chapter 62B;

(7)

designed solely to provide dental or vision care;

(8)

limited to blanket accident and sickness insurance as defined in Minnesota Statutes, section 62A.11; or

(9)

limited to accident-only coverage issued by an insurance agent and that provides reasonable benefits in relation to the cost of covered services.

Subp. 2.

Health maintenance organization business.

"Health maintenance organization business" means the operation of a nonprofit corporation licensed and operated as provided in Minnesota Statutes, chapter 62D.

Subp. 3.

Licensed or authorized to do business.

"Licensed or authorized to do business" means:

A.

licensed by the commissioner to conduct business under Minnesota Statutes, chapter 62A or 62C, or by the commissioner of health under Minnesota Statutes, chapter 62D; or

B.

authorized by the secretary of state to carry on any business in the state of Minnesota or otherwise doing business in this state and acting as an insurer, self-insurer, fraternal, or health maintenance organization.

Subp. 4.

Self-insurance business.

"Self-insurance business" means the provision, directly or indirectly, of a plan of health coverage by a self-insurer. "Self-insurance business" does not include the direct provision of health care services to employees at no charge to them by an employer engaged in the business of providing health care services to the public, nor does it include provision of benefits that, if provided by an insurer doing accident and health insurance business, would be excluded under subpart 1, item B. "Directly or indirectly" for the purposes of parts 2740.2100 to 2740.5500 means that the self-insurer funds the plan of health coverage in any amount or collects any employee contributions which are used to pay for the plan of health coverage.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.2200 MANDATORY MEMBERSHIP.

As a condition of doing accident and health insurance business, self-insurance business, or health maintenance organization business in Minnesota, all insurers, self-insurers, fraternals, and health maintenance organizations licensed or authorized to do business in this state shall become members of the association and maintain their membership therein.

Statutory Authority:

MS s 62E.09

Published Electronically:

October 8, 2007

2740.2300

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.2400 ASSESSMENTS.

Contributing members will be assessed for their proportionate share of the operating and administrative expenses of the association, incurred or estimated to be incurred, together with losses, if any, incurred by the association as a result of operation of the state plan. The total amount of operating and administrative expenses and losses:

A.

shall be determined annually by the board at each fiscal year end;

B.

may, at the recommendation of the board, subject to the approval of the commissioner, consist of a reasonable estimate of the operating and administrative expenses of the association for the succeeding fiscal year, which amount shall be adjusted at the end of the succeeding fiscal year to the amount of actual operating and administrative expenses, and contributing members shall be entitled to credit for any excess or shall be assessed for any deficit in these expenses in future assessments.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.2500 LEVY OF ASSESSMENTS.

Subpart 1.

Annual.

The association shall make an annual determination of each contributing member's liability, if any, and may levy assessments following each fiscal year end. The fiscal year ends on December 31 unless the association establishes a different fiscal year end. Assessments are due and payable 30 days after receipt of a written assessment notice.

Subp. 2.

Interim.

The association may also, upon approval of the commissioner, levy interim assessments when deemed necessary to assure the financial capability of the association to meet the incurred or estimated operating and administrative expenses of the association and losses resulting from the state plan. Interim assessments shall be due and payable within 30 days of receipt by a contributing member of a written interim assessment notice.

Subp. 3.

Member share.

The association shall levy each contributing member's share of the total assessment based on the ratio of: the contributing member's total premium for accident and health insurance business as defined in part 2740.2100, subparts 1 and 2, received from or on behalf of residents of Minnesota, as determined by the commissioner; to the total premium for accident and health insurance business for all contributing members.

Subp. 4.

Costs and charges.

The costs and charges referred to in the ratio in subpart 3 shall, to the extent possible, be determined by reference to a form issued by the association or the commissioner which all contributing members shall submit to the commissioner annually for the preceding calendar year.

A.

If the required information is not available to the commissioner when necessary to levy an assessment, the commissioner may estimate the member's share based on other available information relative to its experience, including but not limited to, the annual statement that all insurers are required to transmit to the commissioner under Minnesota Statutes, section 60A.13.

B.

The commissioner shall have the authority to audit the accounts and records of any contributing member for the purpose of obtaining information necessary to levy an assessment.

Subp. 5.

Discretionary waiver.

The board may, in its discretion, decline to levy assessments against contributing members that owe $10 or less in a given year.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.2600 FAILURE TO PAY ASSESSMENTS.

Any contributing members that fail to pay annual or interim assessments when such assessments become payable will be reported by the association to the commissioner for appropriate action within the discretion of the commissioner.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.2700 ORGANIZATION AND APPROVAL.

Subpart 1.

Powers.

The association shall operate pursuant to the provisions of Minnesota Statutes, chapter 62E, with all the powers of a corporation formed under Minnesota Statutes, chapter 317A, except that if the provisions of the two chapters conflict, Minnesota Statutes, chapter 62E shall govern.

Subp. 2.

Amendments to articles of incorporation.

Amendments to the articles of incorporation shall be submitted to and approved by the commissioner before filing with the secretary of state.

Subp. 3.

Amendments to bylaws.

All amendments to the bylaws of the association shall be submitted to and approved by the commissioner before they become effective.

Subp. 4.

Operating rules.

The board is authorized to adopt and to amend from time to time reasonable operating rules that are not inconsistent with the act and these rules for the management and operation of the association. Upon submission to and approval by the commissioner, these operating rules shall become effective.

Statutory Authority:

MS s 62E.09

History:

L 1989 c 304 s 137

Published Electronically:

October 8, 2007

2740.2800 BOARD OF DIRECTORS.

Subpart 1.

Composition.

The management of the association shall be vested in a board of seven directors who shall be representative of the membership of the association, and be officers, employees, or agents of members of the association during their terms of office, and shall automatically be removed for failure to meet this qualification.

Subp. 2.

Election.

The board shall be elected by members at the annual meeting of the association in accordance with the bylaws of the association, to the extent that such bylaws are consistent with the provisions of Minnesota Statutes, chapters 62E and 317A, and in accordance with the provisions relating to voting rights as outlined in part 2740.2900.

Prior to the election, the association may submit the names of proposed board members to the commissioner for approval. After the annual meeting, the results of the election shall be certified and submitted to the commissioner for approval pursuant to criteria set forth in Minnesota Statutes, section 62E.10, subdivision 2.

Subp. 3.

Duties and compensation.

The duties of the board shall include management of the association in furtherance of its purposes as provided in the act, and as authorized in the articles of incorporation and bylaws of the association.

Members of the board may be reimbursed by the association for expenses incurred by them in attending board or board committee meetings and for other reasonable expenses incurred within the scope of their activities as directors and within guidelines established by the board and approved by the commissioner, but shall not otherwise be compensated for their services.

Subp. 4.

Officers and committees.

The board may elect officers and establish committees as provided in the bylaws of the association. These officers and committees shall be charged with such duties as authorized by the board in accordance with the bylaws of the association.

Statutory Authority:

MS s 62E.09

Published Electronically:

October 8, 2007

2740.2900 DETERMINATION OF MEMBER'S VOTING RIGHTS.

Subpart 1.

Meetings.

Every member is entitled to vote at the annual meeting and at any special meeting of the members.

Subp. 2.

Weighted vote.

A member's vote shall be a weighted vote based on the member's total cost of self-insurance, accident and health insurance premiums, subscriber contract charges, or health maintenance contract charges derived from or on behalf of residents of Minnesota in the previous calendar year, as determined by the commissioner. To the extent possible, this figure shall be determined by reference to the annual reporting form submitted by contributing members to the commissioner in accordance with part 2740.2500, subpart 4, and similar forms showing all other members' total accident and health insurance premiums, subscriber contract charges (defined as charges for business specified in part 2740.2100, subparts 1 and 2) received from or on behalf of residents of Minnesota, or total cost of self-insurance, as defined in part 2740.0100, subpart 58, as determined by the commissioner.

If the necessary information is not available to the commissioner on the form described in this subpart at the time that voting rights must be determined, the commissioner may estimate the member's weighted vote based on other information available to the commissioner.

Subp. 3.

Voting procedures.

Members are entitled to vote in person, by proxy, or by mail as determined by the board.

When a member elects to vote in person at a members' meeting, the representative casting the vote shall present credentials as required pursuant to the bylaws or operating rules of the association.

When a member elects to vote by proxy, the proxy statement as approved by the board shall be returned on or before the date indicated in the meeting notice sent to the members.

Voting by mail may be permitted as authorized by the bylaws or operating rules of the association, and the meeting notice to members shall so indicate.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.3000 MEETINGS OF ASSOCIATION.

Subpart 1.

Annual meeting.

An annual meeting of the members shall be held for the purpose of electing directors as provided in part 2740.2800, subpart 2 and for the purpose of transacting any other appropriate business of the membership of the association.

The meeting shall be held in the second calendar quarter of each year unless otherwise determined by the board, and shall occur at such date, time, and place as the board determines.

"Appropriate business" includes any activities related to the powers and duties of the association under Minnesota Statutes, chapter 62E or 317A.

Notice and quorum requirements shall be as provided in the articles of incorporation or bylaws of the association or as otherwise authorized by the board.

Subp. 2.

Special meetings.

Special meetings of the members shall be held at the request of the commissioner and may otherwise be held as provided by the articles of incorporation or bylaws of the association for the purpose of conducting any appropriate business of the association.

A special meeting may be held at such date, time, and place designated in the notice of the meeting.

Notice and quorum requirements shall be as provided in the articles of incorporation or bylaws of the association or as otherwise authorized by the board.

Subp. 3.

Open meetings.

All meetings of the association membership, board, and any committees established in accordance with part 2740.2800, subpart 4 shall be held in compliance with the provisions of the open meeting law (Minnesota Statutes, section 13D.01 to 13D.07).

Statutory Authority:

MS s 62E.09

Published Electronically:

October 8, 2007

2740.3100 MINIMUM BENEFITS OF COMPREHENSIVE HEALTH INSURANCE PLANS.

Subpart 1.

Duty to offer.

The association shall offer a number 1 and number 2 qualified plan and a qualified Medicare supplement plan to eligible persons. The association shall offer health maintenance plans in areas of the state where a health maintenance organization has agreed to make the coverage available and has been selected as a writing carrier in accordance with part 2740.4300. The association may provide for coverage for eligible dependents.

Subp. 2.

Benefits of number 1 and number 2 qualified plan.

Benefits shall meet or exceed the requirements of Minnesota Statutes, section 62E.06 or the actuarial equivalence thereof as determined pursuant to the actuarial equivalence tables in parts 2740.9909 to 2740.9993, except where substitution of an actuarially equivalent benefit is not permissible under the act.

A.

The minimum benefits shall be equal to at least 80 percent of the charges for covered expenses in excess of the annual deductible, which shall not exceed $500 for a number 2 qualified plan, or $1,000 for a number 1 qualified plan.

B.

Coverage shall include an annual (calendar year) limitation of not more than $3,000 per covered person on total out-of-pocket expenses, which out-of-pocket expenses shall include the deductible under the state plan policy or contract, and which out-of-pocket expense limitation is not subject to substitution of an actuarially equivalent benefit.

C.

Coverage shall be subject to a maximum lifetime benefit of not less than $250,000 per covered person, less any amount paid to or on behalf of the covered person under any other qualified plan of the state plan. This benefit is not subject to substitution of an actuarially equivalent benefit.

Subp. 3.

Benefits of qualified Medicare supplement plan.

Benefits of a qualified Medicare supplement plan shall meet or exceed the following minimum standards.

A.

The plan shall provide benefits to covered persons by supplementing Medicare through provision of:

(1)

coverage of part A Medicare eligible expenses for hospitalization to the extent not covered by Medicare to at least 50 percent of the deductible and copayment required under Medicare for the first 60 days of any Medicare benefit period;

(2)

coverage of part A Medicare eligible expenses for hospitalization to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period;

(3)

coverage of part A Medicare eligible expenses incurred as daily hospital charges during use of Medicare's lifetime hospital inpatient reserve days to the extent not covered by Medicare;

(4)

upon exhaustion of all Medicare hospital inpatient coverage including the lifetime reserve days, coverage of 90 percent of all Medicare part A eligible expenses for hospitalization not covered by Medicare subject to a lifetime maximum benefit of an additional 365 days;

(5)

coverage of 20 percent of the amount of Medicare eligible expenses under part B regardless of hospital confinement and coverage of at least 100 percent of the Medicare calendar year part B deductible.

B.

The plan shall provide 80 percent of the covered charges for expenses as provided in Minnesota Statutes, section 62E.06, which charges are not paid or payable under Medicare or would not have been paid or payable had the covered person who is or was entitled or eligible to enroll in Medicare been so enrolled or which charges are not paid or payable under item A.

C.

Coverage shall include an annual limitation of $1,000 total out-of-pocket expenses per covered person for covered charges, provided that an annual deductible of not more than $200 is permissible for those covered charges not paid or payable under Medicare or otherwise included in item A or B.

D.

Coverage shall be subject to a maximum lifetime benefit of not less than $100,000 per covered person, less any amount paid to or on behalf of the covered person under any other qualified Medicare supplement plan of the state plan.

E.

The minimum coverage of a qualified Medicare supplement plan required by this subpart is not subject to substitution of actuarially equivalent benefits.

Subp. 4.

Benefits of health maintenance plan.

Benefits of a health maintenance plan shall include those comprehensive health maintenance services required by Minnesota Statutes, chapter 62D and rules promulgated thereunder.

Subp. 5.

Preexisting conditions.

No person who obtains coverage under a policy or contract of the state plan shall be covered for any preexisting condition during the first six months of coverage under the state plan if such covered person was diagnosed or treated for that condition during the 90 days immediately preceding the filing of a completed certificate of eligibility.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.3200 APPROVAL OF STATE PLAN.

Subpart 1.

Submission of proposed state plan.

Members of the association may submit to the association policies or contracts that have been approved by the commissioner for selection by the association as the state plan.

Subp. 2.

Approval of policies or contracts by association.

The association shall select policies or contracts to constitute the state plan from among the proposals submitted by the members or from proposals developed by the association or others. These policies and contracts, or parts thereof, may be used to develop specifications for bids from members that wish to be selected as a writing carrier to administer the state plan.

Subp. 3.

Approval of state plan.

The policies or contracts approved by the association as the state plan shall be approved by the commissioner prior to issuance.

Statutory Authority:

MS s 62E.09

Published Electronically:

October 8, 2007

SOLICITATION, APPLICATION, AND ENROLLMENT

2740.3600 ENROLLMENT.

Subpart 1.

Open enrollment.

The state plan shall be open for enrollment by eligible persons at all times.

Subp. 2.

Eligible person.

"Eligible person," as used in subpart 1, means a resident of Minnesota who submits or on whose behalf is submitted a complete certificate of eligibility and enrollment form to the association or its writing carrier and who is not already covered by another state plan policy or contract.

A.

A complete certificate of eligibility and enrollment form may provide:

(1)

name, address, age, and length of time as a resident of Minnesota;

(2)

name, address, and age of eligible dependents, if any, if they are to be insured. "Eligible dependent" means the insured person's spouse who has not reached age 65 or unmarried child, excluding:

(a)

a legally separated spouse;

(b)

a child who is 19 years old or older unless that child is a student or disabled child;

(c)

a spouse or child who has applied for an individual state plan policy or contract pursuant to any conversion privilege granted to such eligible dependent under the insured person's state plan policy or contract; and

(d)

a spouse or child on active duty in any military, naval or air force of any country;

(3)

evidence of rejection, or a requirement of a restrictive rider, rate-up, or preexisting conditions limitation on a qualified plan or qualified Medicare supplement plan, the effect of which is to substantially reduce coverage from that received by a person who is considered a standard risk, by one association member, or by an authorized representative, including an insurance agent, acting on behalf of an association member, within six months of the date of application. "Substantially reduce coverage from that received by a person who is considered a standard risk" includes any restriction on coverage as a result of an illness, condition, or risk which the association deems substantial, any increase in rates for an applicant based on an illness, condition, or risk, which the association deems substantial, and any preexisting conditions limitation which the association deems substantial.

B.

In lieu of evidence of rejection, or a requirement of a restrictive rider, rate-up, or preexisting conditions limitation on a qualified plan or qualified Medicare supplement plan, as required by item A, subitem (3), a complete certificate of eligibility and enrollment form may provide evidence which meets the requirements of an operating rule adopted by the association of a proposed covered person having been treated within three years of the date of the certificate of eligibility and enrollment form for one or more conditions listed in the operating rule.

C.

Before a person is determined to be an eligible person, the board may require that any items listed in items A and B or, if acting pursuant to provisions of the association's operating rules, other necessary information be submitted to the association or its writing carrier and may also investigate the authenticity of information submitted as a part of the certificate of eligibility.

D.

If a covered person, under a qualified plan of the state plan, upon reaching age 65, or becoming enrolled in Medicare, wishes to purchase a state plan qualified Medicare supplement plan, the requirement that the person obtain one rejection, restrictive rider, rate-up, or preexisting conditions limitation on a qualified Medicare supplement plan, the effect of which is to substantially reduce coverage from that received by a person who is considered a standard risk, from one member of the association, or from an authorized representative, including an insurance agent acting on behalf of an association member, within the preceding six months may be waived by the board if acting pursuant to provisions of the association's operating rules.

E.

A person who is age 65 or older shall be eligible for coverage only under the state plan's qualified Medicare supplement plan and when an insured person under a qualified plan reaches age 65, the board may, if acting pursuant to provisions of the association's operating rules, terminate or refuse to renew coverage under the qualified plan. A person under age 65 who is otherwise eligible for coverage under the state plan and is enrolled in Medicare shall be permitted to purchase a qualified plan 1 or 2 or the qualified Medicare supplement plan of the state plan.

F.

An applicant or any person proposed to be covered under a qualified plan of the state plan who has previously been covered under one or more qualified plans of the state plan and who has exhausted the $250,000 maximum lifetime benefit shall not be an eligible person for coverage under a qualified plan of the state plan; an applicant or any person proposed to be covered under a qualified Medicare supplement plan of the state plan who has previously been covered under one or more qualified Medicare supplement plans of the state plan and who has exhausted the $100,000 maximum lifetime benefit shall not be an eligible person for coverage under a qualified Medicare supplement plan of the state plan.

G.

When a covered person under the state plan no longer meets one or more of the requirements for eligibility for coverage under the state plan, the board may, if acting pursuant to the association's operating rules, terminate or refuse to renew coverage under the state plan.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.3700 ASSOCIATION'S RESPONSE.

Subpart 1.

Time limitation.

Within 30 days of receipt of a complete certificate of eligibility and enrollment form pursuant to part 2740.3600, subpart 2, items A, B, and C, the association or the writing carrier shall accept the certificate of eligibility or shall reject the certificate of eligibility for failure to meet the eligibility requirements.

Subp. 2.

Acceptance.

If the association or its writing carrier accepts the certificate of eligibility, it shall forward a notice of acceptance, billing information, and a policy or contract or certificate that shall evidence coverage under the state plan.

A.

Such policy or contract or certificate of coverage shall include but not be limited to:

(1)

a statement that the person is covered under the state plan from the effective date contained therein;

(2)

specification of the type of state plan under which the person is covered;

(3)

a statement that the plan is provided by the association;

(4)

a description of the benefits provided by the plan, conditions for eligibility, and exclusions and limitations of coverage; and

(5)

provision for an identification card for each insured person indicating the type of state plan and also that coverage is being provided by the association.

B.

When the state plan premium is received by the association or its writing carrier for the first billing period and accepted in accordance with this part, the coverage shall be effective retroactive to the date of receipt by the association or its writing carrier of the completed certificate of eligibility pursuant to part 2740.3600, subpart 2, items A, B, and C unless otherwise requested by the insured person and approved by the board.

Subp. 3.

Nonacceptance.

If the association does not accept the certificate of eligibility, the applicant shall be informed of the reason for the rejection and shall have the opportunity to submit additional information to substantiate eligibility for coverage under the state plan and to request reconsideration of the decision. The board may establish a review mechanism for reviewing requests for reconsideration of rejected certificates of eligibility. The association shall give notice of a final determination of ineligibility to the applicant stating the reasons therefor and advising the applicant of the right to appeal to the commissioner within a reasonable period of time.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.3800 APPEAL TO COMMISSIONER.

Any applicant or covered person who is determined by the association to be ineligible for coverage under the state plan may appeal such determination to the commissioner within a reasonable period of time. Upon receipt of an appeal from a determination of ineligibility, the commissioner may, in the commissioner's discretion, affirm, reverse, or modify the determination of the association.

Statutory Authority:

MS s 62E.09

History:

17 SR 1279

Published Electronically:

October 8, 2007

2740.3900 DISSEMINATION OF INFORMATION CONCERNING STATE PLAN.

Subpart 1.

Plan.

The association shall develop a plan for use by the association, upon approval by the commissioner, to publicize the existence of the state plan and the eligibility requirements and procedures for enrollment, and to maintain public awareness of and participation in the state plan.

Subp. 2.

Forms and instructions.

The association shall prepare and make available certificate of eligibility forms and enrollment instruction forms to members, insurance agents and brokers, and to the general public in Minnesota.

Subp. 3.

Referral fee.

The association shall require the writing carrier to pay a referral fee of $50 for any certificate of eligibility accepted by the association or its writing carrier if the referring agent is licensed by the commissioner as an insurance agent and if the referring agent's signature appears as the agent on the accepted certificate of eligibility. The referral fee shall be paid from the premium received for the state plan. Referring agents shall not be authorized to interpret, amend, or alter the terms of the state plan policy or contract, nor shall referring agents be authorized to bind the association in any way. Referring agents shall not be agents of the association for any purpose, and the association shall not bear responsibility for acts of referring agents.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

WRITING CARRIERS

2740.4300 SELECTION AND APPROVAL OF WRITING CARRIERS.

Subpart 1.

Selection.

The association may select a writing carrier or writing carriers on the basis of criteria for selection which shall include but not be limited to:

A.

the member's proven ability to handle large group accident and health insurance cases;

B.

the efficiency of the member's claim paying capacity;

C.

an estimate of total charges for administering the plan; and

D.

other criteria developed by the association and set forth in its operating rules.

Subp. 2.

Approval.

The writing carrier selected by the association shall be approved by the commissioner prior to the establishment of a contract with the association and prior to the commencement of its duties pursuant to Minnesota Statutes, section 62E.13 and part 2740.4400.

Subp. 3.

Term.

The writing carrier shall serve for a period of three years, unless the commissioner approves an earlier termination at the request of the writing carrier or the association in accordance with the terms of its contract with the writing carrier.

The commissioner shall approve or deny a request for termination within 90 days of receipt of such request. Failure to make a determination within 90 days of receipt of such request shall be deemed to be an approval.

Subp. 4.

Termination.

If termination is approved by the commissioner, the writing carrier shall serve for up to six months from the date of the writing carrier's request for termination, at the discretion of the association, to allow the association to select another writing carrier.

Subp. 5.

Bids for renewal.

Six months prior to the expiration of each three-year period of service by a writing carrier, the association shall invite members of the association, including the current writing carriers, to submit bids to serve as writing carrier for the succeeding three-year period.

Statutory Authority:

MS s 62E.09

History:

10 SR 1265

Published Electronically:

October 8, 2007

2740.4400 OPERATIONS OF WRITING CARRIER.

Subpart 1.

Administrative and claims payment functions.

The writing carrier shall perform all administrative and claims payment functions relating to the state plan.

A.

The writing carrier shall establish a premium billing procedure for collection of premiums from insured persons.

(1)

Billings shall be made on a periodic basis as determined by the board.

(2)

The amount of the premium shall be as determined from time to time by the board pursuant to Minnesota Statutes, section 62E.08.

B.

The writing carrier shall perform all necessary functions to assure timely payment of benefits to covered persons under the state plan.

(1)

The writing carrier shall make available information relating to the proper manner of submitting a claim for benefits under the state plan and shall distribute forms upon which submissions shall be made.

(2)

The writing carrier shall evaluate the eligibility of the claim for payment under the state plan.

(3)

The writing carrier shall determine the usual and customary charges for professional services, supplies, or institutional care for which a claim is made under the state plan policy or contract.

(4)

The writing carrier shall exercise reasonable efforts to advise covered persons, within 60 business days of receipt of a properly completed and executed proof of loss, whether the submitted claim was accepted or rejected by the writing carrier, unless sooner settled.

(5)

The writing carrier may establish an appeals procedure approved by the board to review claims that are denied in whole or in part. When a claim or any portion thereof is denied, the writing carrier shall inform the covered person of the existence of the procedure, including the right to appeal to the commissioner within a reasonable period of time.

Subp. 2.

Monthly reports.

The writing carrier shall submit monthly reports to the commissioner and the board on the operation of the state plan. The content and form of the report shall be as determined by the board and approved by the commissioner.

Subp. 3.

Claims expenses.

The writing carrier shall pay claims expenses from the premium payments received from or on behalf of covered persons under the state plan. If the writing carrier's payments for claims expenses exceed the portion of the state plan premiums allocated by the board for payment of claims expenses, the association shall provide to the writing carrier additional funds for payment of claims expenses. Not less than 85 percent of the state plan premium, as determined by the board, shall be used to pay claims expenses, and not more than 15 percent of the state plan premium shall be used to pay agent referral fees (authorized by Minnesota Statutes, section 62E.15, subdivision 3) and to pay the writing carrier's direct and indirect expenses, as defined and authorized in Minnesota Statutes, section 62E.13, subdivision 7 and described in subpart 5.

Subp. 4.

Direct and indirect expense reimbursement.

The writing carrier shall be paid from time to time as provided in the association's contract with the writing carrier for its direct and indirect expenses incurred in the performance of its services from the state plan premiums received in an amount not to exceed the lesser of:

A.

15 percent of the state plan premium, less agent referral fees payable under part 2740.3900, subpart 3;

B.

direct and indirect operating and administrative expenses incurred in the performance of its services; or

C.

an amount agreed upon by the board and the writing carrier.

Subp. 5.

Direct and indirect expenses.

Direct and indirect expenses shall include that portion of the writing carrier's actual administrative, printing, claims administration, management, building overhead expenses, and other actual operating and administrative expenses approved by the board as allocable to the administration of the state plan.

Subp. 6.

Cost accounting method.

The board shall approve cost accounting methods of the writing carrier, which shall be consistent with generally accepted accounting principles.

Subp. 7.

Audits.

The board shall have the authority to conduct periodic audits to verify the accuracy of financial data and reports submitted by the writing carrier.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.4500 APPEAL TO COMMISSIONER.

Any covered person whose claim for benefits under the state plan is denied, in whole or in part, may appeal such determination to the commissioner within a reasonable period of time. Upon receipt of an appeal from a claim denial, the commissioner may, in the commissioner's discretion, affirm, reverse or modify the determination of the association.

Statutory Authority:

MS s 62E.09

History:

17 SR 1279

Published Electronically:

October 8, 2007

REINSURANCE

2740.5100 AUTHORITY TO MAKE AVAILABLE REINSURANCE.

The association may provide for reinsurance of risks incurred by insurer or fraternal members resulting from such members' issuance of all or any of the following categories of coverage as provided in the act. A member may make a separate election to reinsure each of these categories:

A.

individual qualified plans, but not including group conversions;

B.

individual qualified Medicare supplement plans but not including group conversions;

C.

group conversions on qualified plans; "group conversions" means the conversion policies or contracts required to be issued under Minnesota Statutes, sections 62A.16 and 62A.17 or 62E.16;

D.

group qualified plans which cover fewer than 50 employees or insured persons;

E.

group qualified Medicare supplement plans with fewer than 50 employees or insured persons;

F.

individual major medical coverage; and

G.

group major medical coverage.

Statutory Authority:

MS s 62E.09

Published Electronically:

October 8, 2007

2740.5200 REINSURANCE PLAN.

Subpart 1.

Pool agreement.

The association may enter into reinsurance pooling agreements with insurer and fraternal members to establish a reinsurance plan for risks of categories of coverage described in part 2740.5100. The reinsurance plan may provide for a reinsurance pool.

Subp. 2.

Application and acceptance.

Insurer or fraternal members wishing to participate in the pool shall apply to the association for participation in the pool, specifying the categories of coverage that the member desires to reinsure.

Each member entering into a reinsurance pooling agreement for a particular category or categories of coverage shall offer to place in the pool all policies and contracts that it issues in the category or categories listed in part 2740.5100 that it wishes to reinsure.

Only policies and contracts acceptable to the association or its reinsurance administrator may be accepted for reinsurance. The association is under no obligation to accept any but standard risks in the reinsurance plan.

Subp. 3.

Commercial reinsurance.

The association may obtain commercial reinsurance to reduce the risk of loss through the pool to insurer or fraternal members entering into reinsurance pooling agreements. Any contract for commercial reinsurance entered into between the association and a commercial reinsurer shall be binding on any insurer or fraternal member entering into a reinsurance pooling agreement.

Subp. 4.

Pool administration.

The association may administer the pool directly or through a reinsurance administrator.

The association or its reinsurance administrator may establish underwriting standards with which participating members shall comply and may perform reinsurance underwriting on all policies or contracts submitted for reinsurance.

The association or its reinsurance administrator may perform benefit calculation (claims processing) for all claims eligible for reimbursement to participating members. Only claims paid by participating members and approved by the association or its reinsurance administrator shall be eligible for reimbursement by the association or its reinsurance administrator in accordance with the reinsurance pooling agreement.

Except for underwriting and claims processing functions, the association or the reinsurance administrator shall have no responsibility for other administration functions for any member's reinsured policies or contracts unless otherwise agreed to by the association.

Subp. 5.

Duties of members.

Participating members shall have the duties established in the reinsurance pooling agreement, including but not limited to:

A.

submitting reports that provide all information deemed necessary by the association or its reinsurance administrator for performance of reinsurance, underwriting, and claims processing functions;

B.

paying all pooling payments; and

C.

paying all reinsurance assessments and interim reinsurance assessments as required by the board.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.5300 POOLING PAYMENTS.

The association may require pooling payments from all participating members, to provide for reimbursement to participating members for claims paid under reinsured policies and contracts and for payment of administrative expenses of the pool incurred or estimated to be incurred during the period for which the pooling payment is made. Pooling payments shall be established by the association to provide at least 110 percent of total anticipated expenses for reinsurance and for administration of the policies or contracts which are reinsured.

Statutory Authority:

MS s 62E.09

Published Electronically:

October 8, 2007

2740.5400 ASSESSMENT OF PARTICIPATING MEMBERS.

Subpart 1.

Annual.

At the end of each calendar year (or other fiscal year end established by the association) the board may assess participating members on the basis of the formula established in or as a part of the reinsurance pooling agreement.

Subp. 2.

Interim.

The board may also levy interim reinsurance assessments to assure the financial ability of the association to reimburse participating members for claims paid under reinsured policies and contracts and operating and administrative expenses incurred or estimated to be incurred in the operation of the reinsurance plan until the calendar year end (or other fiscal year end established by the association) reinsurance assessment.

Interim reinsurance assessments shall be due and payable within 30 days of receipt by a participating member of an interim reinsurance assessment notice.

Interim reinsurance assessments shall be credited to each participating member in the year end reinsurance assessment calculation.

Subp. 3.

Time for payment.

Each participating member's reinsurance assessment (net after credit for any interim reinsurance assessment) shall be billed to the member by the association following each calendar year end (or other fiscal year end established by the association) and shall be due and payable within 30 days of receipt by the member of the reinsurance assessment notice.

Statutory Authority:

MS s 62E.09

Published Electronically:

October 8, 2007

2740.5500 EXCESS RECEIPTS.

If pooling payments, reinsurance assessments and other receipts by the association or its reinsurance administrator as a result of the reinsurance plan exceed actual reinsurance losses and administrative expenses of the pool, such excess shall be held at interest and used by the association to offset losses (including but not limited to reserves for incurred but not reported claims) due to claims expenses of the state plan or allocated to reduce state plan premiums.

Statutory Authority:

MS s 62E.09

Published Electronically:

October 8, 2007

ACTUARIAL EQUIVALENCE OF QUALIFIED PLANS
AND QUALIFIED MEDICARE SUPPLEMENT PLANS

2740.9904 PURPOSE.

Minnesota Statutes, section 62E.02, defines "qualified plans" as health benefit plans that provide the benefits required in Minnesota Statutes, section 62E.06 or "the actuarial equivalent of those benefits." Minnesota Statutes, section 62E.06 describes three qualified plans. These statutes require all plans of health coverage subject to Minnesota Statutes, section 62E.06 to be labeled as qualified or nonqualified. The commissioner may be requested to determine whether a plan is qualified and may take up to 90 days to make that determination. Minnesota Statutes, section 62E.02 defines a qualified Medicare supplement plan as one which has been certified by the commissioner as providing the minimum benefits required by Minnesota Statutes, section 62E.07. Since the definition does not allow the option of an actuarial equivalent plan, the current rules do not include actuarial equivalent tables for Medicare supplement policies.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.9905

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9909 COMPOSITE POINT VALUES FOR QUALIFIED PLAN NUMBER THREE.

The composite point values for a qualified plan number three for 1984 are as shown herein.

Composite Point Values for Minnesota Qualified Plan Number 3
Points	Benefit
363	Hospital room and board, unlimited days, semiprivate.
480	Hospital extras (i.e., hospital services, hospital miscellaneous, hospital special services, or ancillary services) including anesthesia.
243	Surgery, including administration of anesthesia, assistant surgeon and oral surgery but no tooth repair or extractions.
215	Home and office physician care, unlimited.
51	Physician care in hospital, unlimited.
63	Obstetrics, unlimited.
110	Hospital maternity, unlimited.
105	X-rays and laboratory tests, outpatient and out of hospital.
100	Prescription drugs and medicine, outpatient and out of hospital.
15	Radioactive therapy, outpatient and out of hospital.
16	Nursing or convalescent facility.
8	Home health agency care.
10	Physical therapy.
4	Oxygen.
5	Prostheses.
5	Durable medical equipment rental or purchase.
2	Second opinion surgery.
2	Home care nursing.
3	Ambulance.
-12	Adjustment for major medical maximum.
_ 1788	Total reasonable and customary medical services
-245	$150 deductible.
-309	20 percent coinsurance.
_ 1234	Total after deductions for deductible and coinsurance
-49	Coordination of benefits.
-31	Nonduplication with no-fault.
30	3,000 annual "out-of-pocket" expense limit.
8	Well baby care.
0	Emergency accident.
0	Supplement accident.
0	Student dependents.
_ 1192	Grand Total

Statutory Authority:

MS s 62E.09

History:

10 SR 474; L 2014 c 291 art 9 s 5

Published Electronically:

August 12, 2014

2740.9910

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9914 DETERMINATION OF AVERAGE SEMIPRIVATE HOSPITAL ROOM AND BOARD LEVEL OF SURGICAL CHARGES.

Subpart 1.

When values determined.

In December of each year, the commissioner will publish the following values:

A.

the average semiprivate hospital room and board (ASP value);

B.

the value of surgical charges (SURG value);

C.

the ratios of the average semiprivate hospital room and board for the year to that in 1984 (ASP factor);

D.

the ratio of the value of surgical charges for the year to that in 1984 (SURG factor); and

E.

the composite ratio of medical care for the year to that in 1984 (COMP factor).

The commissioner may appoint a service agency to calculate these values on a consistent basis each year.

Subp. 2.

How values determined.

Values will be determined as follows:

A.

The ASP value will be the weighted bed average of semiprivate room and board charges for acute hospitals in Minnesota. The information will be derived from each hospital's latest room and board charge filed with the commissioner or the service agency. A semiprivate room will be defined as a room with two beds.

B.

The SURG value will be the sum of the product of the average charge, filed with the commissioner or the service agency, for each of the surgical operations shown below times the factor shown for that operation. The surgical operations and their factors are shown in part 2740.9919.

C.

The ASP factor will be the ASP value to be published for the year divided by that published for 1984. For 1984, this will be 1.000 by definition.

D.

The SURG factor is the ratio of the SURG value for the year divided by that published for 1984. For 1984, this will be 1.000 by definition.

E.

The COMP factor is the composite factor for medical care. This equals 54 percent times the ASP factor for the year plus 46 percent times the SURG factor for the year.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.9915

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9919 TABLE OF SURGICAL FACTORS TO DEVELOP SURG VALUE.

CPT4 Code	Surgical Factor		Description
SKIN
10060	.7710		Abscess, incision, and drainage, simple
11400	2.0161		Benign lesion removal of (up to 0.5 cm.)
11750	.4368		Nail, permanent removal of
12011	1.9732		Simple wound, simple repair (up to 2.5 cm.)
17100	4.6520		Benign skin lesion, destruction of
MUSCULOSKELETAL
20610	1.9226		Major joint or bursa, injection or aspiration of
27130	.1565		Total hip joint replacement, simple
29425	1.0286		Application walking cast
CARDIOVASCULAR
33512	.1111		Coronary bypass, three arteries
93547	.2166		Left heart catheterization with coronary angiogram
DIGESTIVE SYSTEM
43235	.4514		Gastroscopy, diagnostic
43844	.0569		Stomach bypass for morbid obesity
44950	.2618		Appendectomy
45300	2.7170		Proctosigmoidoscopy, diagnostic
47600	.3765		Gallbladder, removal of
49505	.3086		Inguinal hernia repair, unilateral
URINARY SYSTEM
52601	.1579		Prostate resection (TUR), complete
53670	3.5273		Urinary bladder catheterization
MALE GENITAL
54150	.8509		Circumcision by clamp, newborn
FEMALE GENITAL
58120	.8470		Uterus, dilation and curettage (D & C), nonobstetrical
58150	.4792		Uterus, removal of
58980	.9455		Laparoscopy, diagnostic
NERVOUS SYSTEM
63030	.0694		Laminotomy herniated disc, lumbar
64721	.1988		Carpal tunnel syndrome repair
EYE
66980	.2003		Cataract removal, intraocular lens insertion
EAR
69437	.3934		Tympanostomy with ventilating tube insertion

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

September 18, 2013

2740.9920

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9924 HOW TO USE THE LIST.

Subpart 1.

Basic and comprehensive major medical plans.

The list is used in the following manner:

A.

Determine the ASP value, SURG value, ASP factor, SURG factor, and COMP factor for the calendar year. This is published annually by the commissioner.

B.

List the plan benefits, ignoring deductibles, coinsurance, well baby care, emergency accident, supplemental accident, and student dependents. Include the plan maximum in the plan benefits.

C.

For each benefit, find the appropriate table of equivalent points for basic and major medical plans.

D.

Extract the appropriate point value for the benefit from the table, interpolating as necessary or indicated, and place it opposite the listed benefit. Ignore benefits for which no table exists.

E.

Total the points for these benefits.

F.

List deductible and coinsurance if the plan is a comprehensive major medical plan.

G.

Determine the appropriate point values for deductible, interpolating as necessary, and place the value in the list of points. Calculate the coinsurance points and place the values in the list of points.

H.

Determine the total points after the deduction for deductible and coinsurance.

I.

Determine the deduction for coordination and nonduplication of benefits.

J.

Determine the number of points for the limit on "out-of-pocket" expenses, well baby care, emergency accident, supplemental accident, and student dependents.

K.

Calculate the grand total.

L.

To determine qualification, utilize the grand total in the test for actuarial equivalence in part 2740.9949.

Subp. 2.

Superimposed major medical plans.

The following govern superimposed major medical plans:

A.

Follow steps outlined in subpart 1, items A to D for basic health plan benefits.

B.

Total the points for the basic plan.

C.

Utilize part 2740.9964, subparts 23, 24, and 25 to determine the point value of a Minnesota qualified plan superimposed over the basic plan with the deductible and benefit period of the plan at hand, interpolating as necessary. Put the points in the point column.

D.

Compare the benefits in the superimposed major medical plan with the benefit structure of a Minnesota qualified plan:

(1)

$250,000 lifetime maximum.

(2)

80/20 coinsurance.

(3)

$3,000 annual per person out-of-pocket maximum.

(4)

Eligible expenses are usual and customary expenses for:

(a)

hospital services;

(b)

physician care;

(c)

prescription drugs;

(d)

nursing home care of up to 120 days in one year, commencing within 14 days of hospitalization of at least three days;

(e)

home health care;

(f)

radium and radioactive therapy;

(g)

oxygen;

(h)

anesthetics;

(i)

prostheses;

(j)

rental or purchase of durable medical equipment;

(k)

diagnostic X-rays and laboratory tests;

(l)

oral surgery on impacted teeth, on tooth roots, or on gums and tissues of the mouth when not performed in connection with tooth extraction;

(m)

physical therapy;

(n)

maternity same as any illness;

(o)

Minnesota statutorily mandated benefits; and

(p)

coordination of benefits.

E.

Consult the tables for point adjustments (usually negative for Minnesota qualified plan benefits not in the superimposed major medical plan being tested). Put the adjustments in the point column.

F.

Calculate the total by adding the points for the basic plan (item B), the superimposed major medical plan (item C), and the adjustments (item E).

G.

To determine qualification, utilize the grand total in the test for actuarial equivalence in part 2740.9949.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.9925

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9929 BENEFIT VARIATIONS NOT COVERED BY TABLES.

Only those plan variations that are most common are recognized. For instance, comprehensive plan coinsurance was assumed normally not to exceed 20 percent. Therefore, no points are shown for 25 percent. However, points for such missing benefit variations can be extrapolated or estimated.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.9930

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9934 USE OF TABLES.

Subpart 1.

Certification of plans.

Any insurer, self-insurer, or policyholder may use the test for actuarial equivalence as a guide. To obtain certification of any plan of health benefits as qualified, it must be submitted to the commissioner.

Subp. 2.

Filing with commissioner.

The following must be sent to the commissioner:

A.

The plan document if an uninsured plan or the policy form if an insured plan.

B.

A statement of the grand total from part 2740.9924.

C.

A certification that the plan is qualified as either a plan 1, 2, or 3, or is nonqualified, by using the test of actuarial equivalence in part 2740.9949. The certification must be by a principal or officer, or by a member of the Academy of Actuaries.

D.

If the plan is not a qualified plan by using the test of actuarial equivalence, and the insurer or self-insurer desires to have it certified as a qualified plan, a statement of the specific reasons for the desired qualification.

Subp. 3.

Certification by commissioner.

If the documents required by subpart 2 are filed and the plan is a qualified plan by using the test of actuarial equivalence in part 2740.9949, then the plan will be deemed certified as filed. If the documents required by subpart 2 are filed and the plan is not a qualified plan by using the test of actuarial equivalence in part 2740.9949, then the plan will be qualified upon certification by the commissioner.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.9935

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9939 UPDATE OF TABLES.

Periodically, the tables may be revised as health care costs change. Also, as health care costs change, a plan may automatically lose or change its qualification. Annual revaluation of plans is required. When a plan is revalued and its qualification status changes, the filing procedures in part 2740.9934 will be followed.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.9940

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9944 MISUSE OF TABLES.

The tables of equivalent points are not intended for any other use, especially not for premium calculations. They represent a composite of data and were adjusted to be usable for testing actuarial equivalence. No other use is contemplated.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.9945

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9949 TEST FOR ACTUARIAL EQUIVALENCE FOR PLANS OTHER THAN MEDICARE SUPPLEMENT PLANS.

Subpart 1.

Table for 1984.

If the Grand Total of any Plan is:	Then that Plan is the Actuarial Equivalent of Minnesota Qualified Plan No.
1192 + points	3
911 + points	2
767 + points	1
Less than 767 points	Nonqualified

Subp. 2.

Effect of inflation.

Each year the number of points required for each qualified plan will increase due to the effects of inflation on the benefits. Particular care must be taken to revalue any policy form which contains scheduled benefits or other policy forms which have different deductible or coinsurance provisions.

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.9950

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9954 WORKSHEET FOR OTHER THAN MEDICARE SUPPLEMENT PLANS.

Comprehensive Health Insurance

Test for Actuarial Equivalence

Other than Medicare Supplement Plans

		Major Medical
Subparts of part 2740.9964	Benefit	Basic	Superimposed	Comprehensive
1.	Hospital room and board
2.	Hospital extras
3.	Surgery
4.	Physician care; home, office
5.	Physician care; hospital
6.	Maternity
7.	Diagnostic X-ray and lab
8.	Drugs and medicine
9.	Radioactive therapy
10.	Nursing/convalescent facility
11.	Home health care
12.	Physical therapy
12.	Oxygen
12.	Prostheses
12.	Durable medical equipment
12.	Second opinion surgery
12.	Home care nursing
12.	Ambulance
13.	Hospital room and board in full
14.	All hospital expenses in full
15.	Major medical maximums
Subtotal reasonable and customary medical services
16.	Deductible
16.	Coinsurance
Subtotal net of deductible and coinsurance
17.	Adjust (Comb. medical/dental deductible)
18.	COB/No-Fault
19.	Limit on "out-of-pocket" expenses
20.	Well baby care
21.	Emergency and supplemental accident
22.	Student dependents
23.-25.	Superimposed major medical
Grand Total
Combined Basic and Superimposed			XXX	XXX

Equivalent to Minnesota qualified plan number _____ nonqualified ______

Date _ By _

Statutory Authority:

MS s 62E.09

History:

10 SR 474; L 2014 c 291 art 9 s 5

Published Electronically:

August 12, 2014

2740.9955

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9959 LOCATION OF TABLES OF EQUIVALENT POINTS FOR BASIC AND MAJOR MEDICAL HEALTH PLANS.

Subparts of part 2740.9964	Other than Medicare Supplement Plans Name
1.	Hospital room and board
2.	Hospital extras
3.	Surgery
4.	Home and office physician care
5.	In-hospital physician care
6.	Maternity
7.	Diagnostic X-ray and laboratory
8.	Drugs and medicine
9.	Radioactive therapy
10.	Nursing or convalescent - home care
11.	Home health care agency service
12.	Physical therapy
12.	Oxygen
12.	Prostheses
12.	Durable medical equipment
12.	Second opinion surgery
12.	Home care nursing
12.	Ambulance
13.	Hospital room and board in full
14.	All hospital charges in full
15.	Major medical maximums
16.	Coinsurance and deductibles
17.	Combined dental and health insurance deductible
18.	Coordination and nonduplication of benefits
19.	Limit on "out-of-pocket" expenses
20.	Well baby care
21.	Emergency and supplement accident
22.	Student dependents
23.	Superimposed major medical
24.	Superimposed major medical
25.	Superimposed major medical

Statutory Authority:

MS s 62E.09

History:

10 SR 474; L 2014 c 291 art 9 s 5

Published Electronically:

August 12, 2014

2740.9960

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9964 EQUIVALENT POINTS FOR BASIC AND MAJOR MEDICAL HEALTH PLANS; NOT TO BE USED FOR MEDICARE SUPPLEMENT PLANS.

Subpart 1.

Hospital room and board.

Maximum Days	Room & Board
31	327
70	347
120	351
365	359
Unlimited	363

A.

Room and board is defined to include a semiprivate room, or charges for a private room if prescribed as medically necessary by a physician. If the policy does not pay the additional charges for a private room, then deduct three points from hospital room and board.

B.

If the policy pays the private room charge even though not medically necessary, then add ten points if average charge per day is four percent greater than the average semiprivate room and board charge.

C.

If the policy pays the hospital room and board charge up to a maximum daily benefit which is less than the average semiprivate room and board charge in the area, then multiply the points for the semiprivate room and board at the indicated maximum days by the ratio of the scheduled amount to the ASP value in the area for the year.

Subp. 2.

Hospital extras.

Hospital extras such as hospital services, special hospital services, ancillary services, and hospital therapeutics.

	Anesthesia**
Maximum Amount*	Included	Not Included
$ 500	130	130
1,000	217	216
2,000	317	312
5,000	413	401
10,000	454	433
15,000	469	444
Unlimited	480	451

*Before entering this table, divide the maximum amount in the policy by the ASP factor for the year.

**Anesthesia does not include the administration of anesthesia.

This is for miscellaneous hospital services and includes the cost for inpatient hospital care, the cost for outpatient hospital treatment and the excess cost of intensive care unit or coronary care unit over the average semiprivate room and board.

Subp. 3.

Surgery.

	Administration of Anesthesia
Limit	Included	Not Included
Prevailing Fee with Assistant Surgeon	243	206
Prevailing Fee without Assistant Surgeon	244	187

If the policy pays the reasonable and customary charges up to a maximum in a schedule, then multiply the points for the prevailing fee by the ratio of the value of the schedule used in the policy to the SURG value for the year.

Subp. 4.

Home and office physician care.

	First Visit Accident
Annual Maximum*	First Visit Sickness	Third Visit Sickness
$ 200	111	63
500	141	72
1,000	165	93
Unlimited	215	118

*Before entering this table, divide the annual maximum in the policy by SURG factor for the year.

Subp. 5.

In-hospital physician care.

Maximum Number of Visits	Prevailing Fee
31	46
70	49
120	49
365	50
Unlimited	51

A.

This benefit pays the reasonable and customary charge to the physician (other than the surgeon, assistant surgeon, or anesthetist) while confined in the hospital for medical or surgical reasons.

B.

If the policy pays the greater of this benefit or the surgical benefit, then reduce these points by 30 percent.

C.

A number of policies pay a limited amount per visit (limited to one visit per day) which is less than or equal to the cost for a routine follow-up visit in the hospital. If it is equal to the cost for a routine follow-up visit (assumed to be $24.20*/day in 1984), then deduct 14 points from the above points. If it is less than that, then use a proportional part of the points determined as if the maximum was equal to the cost for a routine follow-up visit.

*Multiply the indicated value by the SURG factor for the year.

Subp. 6.

Maternity.

A.

complications only:

limited to some specified list	20
any complications	25

B.

full maternity (including complications):

Maximum Limit	Deductible	Flat Maternity	Obstetrics	Hospital Maternity
$ 300	None	-	23	28
600	None	49	44	55
1,000	None	81	59	80
2,000	None	149	-	-
Unlimited	None	173	63	110

*Before entering this table, divide maximum limit in the policy by the ASP factor for the year.

Subp. 7.

X-rays and laboratory tests (out of hospital).

Maximum*	Scheduled (Any Scheduled)	Unscheduled
$100	56	70
200	67	89
500	74	101
Unlimited	77	105

*Before entering this table, divide the maximum in the policy by the ASP factor for the year.

Subp. 8.

Prescription drugs and medicine (out of hospital).

Deductible* Per Prescription
$4.00	69
2.00	86
None	100

*Before entering this table, divide the deductible per prescription by the SURG factor for the year.

Subp. 9.

Radioactive therapy (out of hospital).

Scheduled (Any Schedule)	10
Unscheduled	15

Subp. 10.

Nursing or convalescent home care (within 14 days of hospital confinement of at least three days).

Maximum Days
120 or More	16
Less than 120	0

Subp. 11.

Home health care agency services.

Maximum Visits/Year
180 or More	8
Less than 180	0

Subp. 12.

Miscellaneous.

A.

physical therapy (out of hospital), 10;

B.

oxygen (out of hospital), 4;

C.

prostheses (out of hospital), 5;

D.

durable medical equipment rental or purchase (out of hospital), 5;

E.

second opinion surgery, 2;

F.

home care nursing (in hospital only), 2; and

G.

ambulance, 3.

Subp. 13.

Hospital room and board in full to indicated limit (basic and comprehensive major medical plans).

Add these points to the points in subpart 1 if the maximum hospital room and board is the semiprivate room and board. If it is less than the semiprivate room and board, make an appropriate adjustment.

	Plan Deductible*		Limit*
Plan	On All Benefits	$1,000	$2,000	$5,000	Unlimited
Comprehensive	$ 0 - 300	58	60	66	79
Comprehensive	301 - 600	61	63	69	82
Comprehensive	601 - 900	66	68	74	87
Comprehensive	901 - 1200	74	76	82	95

*Before entering the table, divide the deductible and the "in full limit" by the ASP factor for the year.

A.

The above table assumes that the policyholder pays 20 percent after the deductible. If the policyholder pays a different percentage, multiply the above points by the ratio of the percentage being paid by the insured to 20 percent.

B.

This benefit assumes that hospital room and board will be paid at 100 percent and that the deductible will not be applied to it. The deductible will be applied to the other covered expenses. After the limit is attained, any remaining deductible will not be applied but the coinsurance will be applied, to the hospital room and board benefits.

Subp. 14.

All hospital charges in full to indicated limit (basic and comprehensive major medical plans).

Add these points to the total points in subparts 1 and 2 if the maximum hospital room and board is the semiprivate room and board. If it is less than the semiprivate room and board, make an appropriate adjustment.

	Plan Deductible*		Limit*
Plan	On All Benefits	$1,000	$2,000	$5,000	Unlimited
Comprehensive	$ 0 - 300	70	110	121	177
Comprehensive	301 - 600	171	151	162	218
Comprehensive	601 - 900	198	238	249	305
Comprehensive	901 - 1200	343	383	394	450

*Before entering the table, divide the deductible and the "in full limit" by the ASP factor for the year.

A.

The above table assumes that the insured pays 20 percent of the costs after the deductible and that the number of points before the deductible and coinsurance is 1800. If the percentage being paid by the insured is not 20 percent, multiply the above points by the ratio of the percentage being paid by the insured to 20 percent.

B.

This benefit assumes that the hospital room and board and hospital services will be paid at 100 percent and that the deductible will not be applied to them. The deductible will be applied to the other covered expenses. After the limit is attained, any remaining deductible will not be applied but the coinsurance will be applied, to either hospital room and board or hospital services benefits.

Subp. 15.

Major medical maximum (comprehensive and superimposed plans).

Maximum*	Add (+) or Subtract (-)
$ 100,000	-27
250,000	-12
500,000	- 7
1,000,000	- 2

*Before entering the table, divide the maximum in the policy by the COMP factor for the year.

The smallest maximum in a qualified plan is $250,000. The $100,000 maximum as provided must be used in future years to help determine the reduction for a $250,000 plan.

Subp. 16.

Coinsurance and deductibles (comprehensive major medical plans).

A.

This table assumes that the point values for all medical services and supplies are approximately 1800 points before deduction for the maximum on total benefits. If the total points are significantly greater or smaller, then the point values must be adjusted.

Deductible*	Deducted Points
$ 0	0
50	85
100	170
150	245
200	310
500	622
1,000	820

*Before entering this table, divide the deductible in the policy by the COMP factor for the year.

B.

To determine the deduction for the coinsurance, subtract the points deducted for the deductible from the total point value for the benefits and then multiply the result by the coinsurance percentage.

Subp. 17.

Combined dental and health insurance deductible (comprehensive major medical plans).

Deductible*	Added Points
$ 50	75
100	60
150	43
200	38
500	35
1,000	15

*Before entering this table, divide the deductible in the policy by the COMP factor for the year.

Subp. 18.

Coordination and nonduplication of benefits (all plans).

A.

The following percentage of points after deduction for deductible and coinsurance must be subtracted if the policy coordinates benefits with other plans and its pricing assumes that a number of insured will have other policies in force.

(1)

with other health plans, 4.0 percent;

(2)

with no fault, 2.5 percent;

(3)

with both subitems (1) and (2), 6.5 percent; and

(4)

with neither, 0.

B.

The percentage must be applied to the total points after deduction for deductible and coinsurance.

Subp. 19.

Limit on "out-of-pocket" expenses (maximum copayment and deductible per benefit year) -- comprehensive and superimposed major medical plans.

Maximum Claim when Out-of-Pocket is reached*		Points
$ 500		236
1,000		196
2,000		158
3,000		130
4,000		110
11,000		45
13,000		36
14,400		30

*Before entering this table, divide the maximum claim when out-of-pocket limit by the COMP factor for the year.

A.

The above table assumes that the insured pays 20 percent of the costs after the deductible and that the number of points before the deductible and coinsurance is about 1800. If the percentage of claims being paid by the insured is other than 20 percent, multiply the number of points above by the ratio of the coinsurance being paid by the insured to 20 percent.

B.

The above table assumes that the amounts paid by the policyholder for deductible and coinsurance are included in determining the out-of-pocket limitation.

Subp. 20.

Well baby care.

Deductible*	Points
$ 0	17
150	8
500	2
1,000	0

*Before entering this table, multiply the deductible in the policy by the COMP factor for the year.

The above benefit assumes that the deductible and coinsurance are applied to the costs of the newborn.

Subp. 21.

Emergency and supplemental accident (basic plans only).

Maximum*		Emergency	Supplemental
$ 50		10	--
100		15	20
300		--	30
500		--	35
1,000		--	40
Unlimited		20	--

*Before entering this table, divide the maximum in the policy by the SURG factor for the year.

Subp. 22.

Student dependents.

Student Extension Beyond Age 19
None	0
To age 21	2
To age 23	4
To age 25	5

Subp. 23.

Superimposed major medical plans; over basic health plans with less than 500 points.

A.

Calculate point value of a comprehensive major medical plan by using deductible* $200 greater than actual.

B.

Add basic health plan points.

*Before entering the table, divide the deductible in the policy by the COMP factor for the year before adding $200. Do not make any further adjustments to the deductible.

Subp. 24.

Superimposed major medical plans; 80/20 coinsurance; over basic health plans with 500-799 points.

			Calendar Year Plan			Two year benefit period plan
Deductible*			Individual	2 x family		Individual	2 x family
a.	Corridor
$	100		740	780		745	765
	200		665	705		680	700
	300		615	655		630	650
	500		543	582		558	578
	1,000		385	425		400	420
b.	Integrated
$	1,000		615	635		650	670
	2,000		515	525		535	545

Note: Points assume major medical contains Minnesota qualified plan number 3 benefits. Adjust for benefits not included and for variation in coinsurance.

*Before entering this table, divide the deductible in the policy by the COMP factor for the year.

Subp. 25.

Superimposed major medical plans; 80/20 coinsurance; over basic health plans with 800 or more points.

Add to Basic Plan Points
			Calendar Year Plan			Two year benefit period plan
Deductible*			Individual	2 x family		Individual	2 x family
a.	Corridor
$	100		515	545		525	535
	200		445	475		455	465
	300		405	435		415	425
	500		339	369		349	359
	1,000		215	245		225	235
b.	Integrated
$	1,000		505	525		530	550
	2,000		405	415		420	430

Note: Points assume major medical contains Minnesota qualified plan number 3 benefits. Adjust for benefits not included and for variation in coinsurance.

*Before entering this table, divide the deductible in the policy by the COMP factor for the year.

Statutory Authority:

MS s 62E.09

History:

10 SR 474; L 2014 c 291 art 9 s 5

Published Electronically:

August 12, 2014

2740.9965

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9970

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9979 BASIC BACKGROUND FOR EXAMPLES.

Subpart 1.

Inflation assumptions for 1985.

The examples which follow assume that the actuarial equivalence of a series of plans is being calculated for calendar year 1985. Inflation was assumed to be 15.5 percent and 8.0 percent for hospital related and all other services, respectively.

Subp. 2.

Values published by commissioner for 1985.

ASP value for 1984	190*
ASP value for current year (1985*)	220*
SURG value for 1984	4,000.00
SURG value for current year (1985*)	4,320.00*
ASP factor for 1985*	1.155*
SURG factor for 1985*	1.080*
COMP factor for 1985*	1.121*

*Estimated. Please substitute the actual values.

Subp. 3.

Point values for qualified plans in 1985.

The following are the revised point values used to determine plans which are actuarially equivalent to qualified plans 1, 2, and 3 for 1985.

Qualified Plan Number	If plan has the indicated number of points then plan is actuarially equivalent to the qualified plan in:
	1984	1985
3	1192 + points	1216 + points
2	911 + points	957 + points
1	767 + points	847 + points
Nonqualified	Less than 767	Less than 847

Statutory Authority:

MS s 62E.09

History:

10 SR 474

Published Electronically:

October 8, 2007

2740.9981

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9982

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9983

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9984

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9985

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9986

[Repealed, 10 SR 474]

Published Electronically:

October 8, 2007

2740.9991 EXAMPLE I.

Subpart 1.

Use of actuarial equivalence test.

A.

Question: Is the following plan actuarially equivalent to any Minnesota qualified plan?

Surgery	Includes Assistant Surgeon and Administration of Anesthesia
Deductible:	$100
Coinsurance:	80/20
Maximum:	$250,000
Maternity:	Any complications
Student dependents:	To age 23
Limits on specified benefits	Outpatient mental limited to Minnesota
Required benefits	--
Excluded care	Home health care
Out-of-pocket limit	$3,000 per year
Coordination of benefits	Yes, but no COB for no-fault.

B.

Answer (calculated January 1, 1985): test result is 1186 points. This plan is a Minnesota qualified plan number 2.

Subp. 2.

Worksheet.

Test for actuarial equivalence other than Medicare supplement plans.

A.

Worksheet.

		Major Medical
Subparts of part 2740.9964	Benefit	Basic	Superimposed	Comprehensive
1.	Hospital room and board			363
2.	Hospital extras			480
3.	Surgery			243
4.	Physician care; home, office			215
5.	Physician care; hospital			51
6.	Maternity			25
7.	Diagnostic X-ray and lab			105
8.	Drugs and medicine			100
9.	Radioactive therapy			15
10.	Nursing/convalescent facility			16
11.	Home health care			0
12.	Physical therapy			10
12.	Oxygen			4
12.	Prostheses			5
12.	Durable medical equipment			5
12.	Second opinion surgery			2
12.	Home care nursing			2
12.	Ambulance			3
13.	Hospital room and board in full
14.	All hospital expenses in full
15.	Major medical maximums			-12
Subtotal reasonable and customary medical services				1632
16.	Deductible			-138
16.	Coinsurance			-299
Subtotal net of deductible and coinsurance				1195
17.	Adjust (comb. medical/dental ded.)
18.	COB/No-fault			-48
19.	Limit on "out-of-pocket" expenses			35
20.	Well baby care
21.	Emergency and supplemental accident
22.	Student dependents			4
23.-25.	Superimposed major medical
Grand Total				1186
Combined basic and superimposed			XXX	XXX

Equivalent to Minnesota qualified plan number __2__

nonqualified ______

Date _ By _

B.

Miscellaneous calculations.

(1)

The maximum in the policy ($250,000) divided by the COMP factor (1.121) is $223,015. This is 82.01 percent of the difference between the $100,000 and $250,000 maximums in part 2740.9964, subpart 15. The points would be minus 27 plus .8201 times 15 or -14.70 points.

(2)

The deductible in the policy ($100) divided by the COMP factor (1.121) is 89.21. This is 78.41 percent of the difference between the $50 and $100 deductibles in part 2740.9964, subpart 16. Points deducted for the deductible would be 85 plus .7841 times 85 or 151.65. Since the total points in the policy before the deductible is significantly less than 1800, multiply 151.65 by (1632/1800). The result is 137.50.

(3)

The out-of-pocket maximum is $3,000. The maximum claim when the out-of-pocket is reached is $14,600. This divided by the COMP factor (1.121) is 13,024. This is 10.29 percent of the difference between the $13,000 and $14,400 maximum claim when out-of-pocket is reached. The adjustment for the out-of-pocket limit is 36 minus .1029 times 6 or 35.38.

Statutory Authority:

MS s 62E.09

History:

10 SR 474; L 2014 c 291 art 9 s 5

Published Electronically:

August 12, 2014

2740.9992 EXAMPLE II.

Subpart 1.

Use of actuarial equivalence test.

A.

Question: Is the following plan actuarially equivalent to any Minnesota qualified plan?

Hospital:	$170 per day, 365 days; 80 percent of miscellaneous extras, the cost of anesthesia is included. The policy does not pay for private room even if medically necessary.
Surgery:	$3,000 maximum surgical schedule. Add 15 percent for the administration of anesthesia.
In hospital physicians calls:	$25 per day - 365 day maximum
Maternity:	Any complications
X-ray and lab tests (out of hospital):	$500 maximum - unscheduled

B.

Answer (calculated January 1, 1985): test result is 1004 points. This plan is a Minnesota qualified plan number two.

Subp. 2.

Worksheet.

Test for actuarial equivalence other than Medicare supplement plans.

A.

Worksheet.

		Major Medical
Subpart of part 2740.9964	Benefit	Basic	Superimposed	Comprehensive
1.	Hospital room and board	275
2.	Hospital extras (80 percent)	384
3.	Surgery	189
4.	Physician care; home, office
5.	Physician care; hospital	33
6.	Maternity	25
7.	Diagnostic X-ray and lab	98
8.	Drugs and medicine
9.	Radioactive therapy
10.	Nursing/convalescent facility
11.	Home health care
12.	Physical therapy
12.	Oxygen
12.	Prostheses
12.	Durable medical equipment
12.	Second opinion surgery
12.	Home care nursing
12.	Ambulance
13.	Hospital room and board in full
14.	All hospital expenses in full
15.	Major medical maximums
Subtotal reasonable and customary medical services
16.	Deductible
16.	Coinsurance
Subtotal net of deductible and coinsurance
17.	Adjust (comb. medical/dental ded.)
18.	COB/No-fault
19.	Limit on "out-of-pocket" expenses
20.	Well baby care
21.	Emergency and supplemental accident
22.	Student dependents
23.-25.	Superimposed major medical
Grand Total		1004
Combined basic and superimposed			XXX	XXX

Equivalent to Minnesota qualified plan number __2__

nonqualified ______

Date _ By _

B.

Miscellaneous calculations.

(1)

Policy does not pay extra for private room even if medically necessary. Deduct three points from the 359. Since the ASP value in 1985 is 220, the number of points will be 356 times the ratio of 170 to 220 or 275.09 points.

(2)

The surgical table was evaluated as 3,680.02 points. The points not including administration of anesthesia is 206 times the ratio of 3680.02 to 4620.00 or 164.09 points. For administration of anesthesia, the points are 164 times .15 or 24.6 points.

(3)

Since the maximum per diem cost of in-hospital physicians calls is less than the cost for routine follow-up (24.20 times 1.08 or 26.14), subtract 14 points from the number of points for prevailing fee with 365-day maximum. The result is 35 points. Multiply the 35 points by the ratio of $25 to 26.14 or 33.47 points.

(4)

Since the ASP factor is 1.15, the $200 and $500 maximum shown in part 2740.9964, subpart 7 is now 230 and 575 respectively. Thus the $500 maximum is 78.26 percent of the way between the two maximums. Therefore the point value equals 89 plus .7826 times (101-89) or 98.39 points.

Statutory Authority:

MS s 62E.09

History:

10 SR 474; L 2014 c 291 art 9 s 5

Published Electronically:

August 12, 2014

2740.9993 EXAMPLE III.

Subpart 1.

Use of actuarial equivalence test.

A.

Question: Is the following plan actuarially equivalent to any Minnesota qualified plan?

Hospital:	$80 per day, 120 days, $2,000 extras.
Surgery:	$1,500 maximum surgical schedule, add ten percent for administration of anesthesia.
Coordination of benefits	Yes, does not include no-fault
Superimposed major medical:
Deductible:	$200 corridor per calendar year
Coinsurance:	80/20
Maximum:	$250,000
Maternity:	Any complications
Student dependents:	No
Out-of-pocket limit:	$3,000
Excluded care:	Home health care and skilled nursing care
Limits on specified benefits:
1. Room and board	$200 less basic benefits.
	Unlimited days
Coordination of benefits	Yes, does not include no-fault

B.

Answer (calculated January 1, 1985): test result is 1147 points. This plan is a Minnesota qualified plan number two.

Subp. 2.

Worksheet.

A.

Test for actuarial equivalence other than Medicare supplement plans.

		Major Medical
Subpart of part 2740.9964	Benefit	Basic	Superimposed	Comprehensive
1.	Hospital room and board	128	-26
2.	Hospital extras	290
3.	Surgery	114
4.	Physician care; home, office
5.	Physician care; hospital
6.	Maternity
7.	Diagnostic X-ray and lab
8.	Drugs and medicine
9.	Radioactive therapy
10.	Nursing/convalescent facility		-13
11.	Home health care		-6
12.	Physical therapy
12.	Oxygen
12.	Prostheses
12.	Durable medical equipment
12.	Second opinion surgery
12.	Home care nursing
12.	Ambulance
13.	Hospital room and board in full
14.	All hospital expenses in full
15.	Major medical maximums
Subtotal reasonable and customary medical services		532
16.	Deductible
16.	Coinsurance
Subtotal net of deductible and coinsurance
17.	Adjust (comb. medical/dental ded.)
18.	COB/No-fault	21
19.	Limit on "out-of-pocket" expenses
20.	Well baby care
21.	Emergency and supplemental accident
22.	Student dependents
23.-25.	Superimposed major medical		681
Grand Total		511	636
Combined basic and superimposed		1147	XXX	XXX

Equivalent to Minnesota qualified plan number __2__

nonqualified ______

Date _ By _

B.

Miscellaneous calculations.

(1)

Since the room and board limit is less than the ASP factor, the number of points will equal 351 times the ratio of 80 to 220.

(2)

The $2,000 maximum divided by 1.155 is 1731.60. This is 73.16 percent of the difference between the $1,000 and $2,000 maximums in the table. The points would be 217 plus .7316 times (317 - 217) or 290.16 points.

(3)

The surgical schedule is the same as in example II in part 2740.9992 value. The value of the table is 1840.1 for the $1,500 maximum. The points excluding administration of anesthesia is 243 times 1840.1 divided by 4320.00 or 103.51 points. The administration of anesthesia would add 10.35 points.

(4)

The $200 corridor deductible would be adjusted before entering part 2740.9964, subpart 24. The adjusted deductible would be 200 divided by 1.121 or 178.41. Since this is 78.41 percent of the way between the $100 and $200 deductibles, the points would be 740 minus .7841 times (740-665) or 681.19 points.

(5)

Home health care and skilled nursing home care are excluded. Therefore we should deduct 80 percent of their points shown in part 2740.9964, subparts 10 and 11.

(6)

Hospital room and board is limited to $200 per day less what the basic benefit pays. The adjustment should equal .8 (363 times 20 divided by 220) or 26.4 points.

Statutory Authority:

MS s 62E.09

History:

10 SR 474; L 2014 c 291 art 9 s 5

Published Electronically:

August 12, 2014