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Virginia Administrative Code
Title 14. Insurance
Agency 5. State Corporation Commission, Bureau of Insurance
Chapter 170. Rules Governing Minimum Standards for Medicare Supplement Policies
1/22/2020

14VAC5-170-220:1. Appendix a

8/05

APPENDIX A
MEDICARE SUPPLEMENT REFUND CALCULATION FORM
FOR CALENDAR YEAR _______

TYPE1 ______________________________

SMSBP2 ____________________________

FOR THE STATE OF ___________________________________________________________

Company Name _______________________________________________________________

NAIC Group Code ____________________

NAIC Company Code __________________

Address _____________________________________________________________________

Person Completing This Exhibit ___________________________________________________

Title _______________________________

Telephone Number ____________________

line

(a)
Earned Premium3

(b)
Incurred Claims4

1. Current Year's Experience

a. Total (all policy years)

b. Current year's issues5

c. Net (for reporting purposes 1a - 1b)

____________

___________

2. Past Year's Experience (All Policy Years)

____________

___________

3. Total Experience (Net Current Year + Past Year's Experience)

____________

___________

4. Refund last year (Excluding Interest)

5. Previous Since Inception (Excluding Interest)

____________

___________

6. Refunds Since Inception (Excluding Interest)

7. Benchmark Ratio Since Inception (See Worksheet for Ratio 1)

8. Experienced Ratio Since Inception

Total Actual Incurred Claims (line 3, col b) = Ratio 2

Total Earned Prem. (line 3, col a) - Refunds Since Inception (line 6)

9. Life Years Exposed Since Inception ___________________________________________

If the Experienced Ratio is less than the Benchmark Ratio, and there are more than 500 life years exposure, then proceed to calculation of refund.

10. Tolerance Permitted (obtained from credibility table) _____________________________

Medicare Supplement Credibility Table
Life Years Exposed

Since Inception

Tolerance

10,000 +

0.0%

5,000 - 9,999

5.0%

2,500 - 4,999

7.5%

1,000 - 2,499

10.0%

500 - 999

15.0%

If less than 500, no credibility

11. Adjustment to Incurred Claims for Credibility _________________________

Ratio 3 = Ratio 2 + Tolerance

If Ratio 3 is more than Benchmark Ratio (Ratio 1), a refund or credit to premium is not required.

If Ratio 3 is less than the Benchmark Ratio, then proceed.

12. Adjusted Incurred Claims = ___________________________________

[Total Earned Premiums (line 3, col a) - Refunds Since Inception (line 6)] x Ratio 3 (line 11)

13. Refund = Total Earned Premiums (line 3, col a) - Refunds Since Inception (line 6) - Adjusted Incurred Claims (line 12)

Benchmark Ratio (Ratio 1)__________________________

If the amount on the line 13 is less than .005 times the annualized premium in force as of December 31 of the reporting year, then no refund is made. Otherwise, the amount on line 13 is to be refunded or credited, and a description of the refund and/or credit against premiums to be used must be attached to this form.

If the amount on line 13 is less than .005 times the annualized premium in force as of December 31 of the reporting year, then no refund is made. Otherwise, the amount on line 13 is to be refunded or credited, and a description of the refund and/or credit against premiums to be used must be attached to this form.

1Individual, Group, Individual Medicare Select, or Group Medicare Select Only.

2SMSBP = Standardized Medicare Supplement Benefit Plan - Use P for prestandardized plans.

3Includes modal loadings and fees charged

4Excludes Active Life Reserves

5This is to be used as Issue Year Earned Premium for Year 1 of next year's Worksheet for Calculation of Benchmark Ratios

I certify that the above information and calculations are true and accurate to the best of my knowledge and belief.

Signature

Name - Please Type

Title

Date

8/05

APPENDIX A

REPORTING FORM FOR THE CALCULATION OF
BENCHMARK RATIO SINCE INCEPTION
FOR GROUP POLICIES
FOR CALENDAR YEAR ________

TYPE(1) ____________________________

SMSBP(2) _____________________________

FOR THE STATE OF ___________________________________________________________

Company Name _______________________________________________________________

NAIC Group Code ____________________

NAIC Company Code ____________________

Address _____________________________________________________________________

Person Completing This Exhibit ___________________________________________________

Title _______________________________

Telephone Number ______________________

(a)(3)

(b)(4)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

(j)

(o)(5)

Year

Earned Premium

Factor

(b) x (c)

Cumulative Loss Ratio

(d) x (e)

Factor

(b) x (g)

Cumulative Loss Ratio

(h) x (i)

Policy Year Loss Ratio

1

2.770

0.507

0.000

0.000

0.46

2

4.175

0.567

0.000

0.000

0.63

3

4.175

0.567

1.194

0.759

0.75

4

4.175

0.567

2.245

0.771

0.77

5

4.175

0.567

3.170

0.782

0.8

6

4.175

0.567

3.998

0.792

0.82

7

4.175

0.567

4.754

0.802

0.84

8

4.175

0.567

5.445

0.811

0.87

9

4.175

0.567

6.075

0.818

0.88

10

4.175

0.567

6.650

0.824

0.88

11

4.175

0.567

7.176

0.828

0.88

12

4.175

0.567

7.655

0.831

0.88

13

4.175

0.567

8.093

0.834

0.89

14

4.175

0.567

8.493

0.837

0.89

15+(6)

4.175

0.567

8.684

0.838

0.89

Total:

(k):___

(l):___

(m):__

(n):___

Benchmark Ratio Since Inception: (l + n)/(k + m):

(1): Individual, Group, Individual Medicare Select, or Group Medicare Select Only.

(2): "SMSBP" = Standardized Medicare Supplement Benefit Plan - Use "P" for pre-standardized plans.

(3): Year 1 is the current calendar year - 1 Year 2 is the current calendar year - 2 (etc.) (Example: If the current year is 1991, then: Year 1 is 1990, Year 2 is 1989, etc.)

(4): For the calendar year on the appropriate line in column (a), the premium earned during that year for policies issued in that year.

(5): These loss ratios are not explicitly used in computing the benchmark loss ratios. They are the loss ratios, on a policy year basis, which result in the cumulative loss ratios displayed on this worksheet. They are shown here for informational purposes only.

(6): To include the earned premium for all years prior to as well as the 15th year prior to the current year.

8/05

APPENDIX A

REPORTING FORM FOR THE CALCULATION OF
BENCHMARK RATIO SINCE INCEPTION
FOR INDIVIDUAL POLICIES
FOR CALENDAR YEAR ___________

TYPE(1) ____________________________

SMSBP(2) _____________________________

FOR THE STATE OF ___________________________________________________________

Company Name _______________________________________________________________

NAIC Group Code ____________________

NAIC Company Code ____________________

Address _____________________________________________________________________

Person Completing This Exhibit ___________________________________________________

Title _______________________________

Telephone Number ______________________

(a)(3)

(b)(4)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

(j)

(o)(5)

Year

Earned Premium

Factor

(b) x (c)

Cumulative Loss Ratio

(d) x (e)

Factor

(b) x (g)

Cumulative Loss Ratio

(h) x (i)

Policy Year Loss Ratio

1

2.770

0.442

0.000

0.000

0.4

2

4.175

0.493

0.000

0.000

0.55

3

4.175

0.493

1.194

0.659

0.65

4

4.175

0.493

2.245

0.669

0.67

5

4.175

0.493

3.170

0.678

0.69

6

4.175

0.493

3.998

0.686

0.71

7

4.175

0.493

4.754

0.695

0.73

8

4.175

0.493

5.445

0.702

0.75

9

4.175

0.493

6.075

0.708

0.76

10

4.175

0.493

6.650

0.713

0.76

11

4.175

0.493

7.176

0.717

0.76

12

4.175

0.493

7.655

0.720

0.77

13

4.175

0.493

8.093

0.723

0.77

14

4.175

0.493

8.493

0.725

0.77

15+(6)

4.175

0.493

8.684

0.725

0.77

Total:

(k):___

(l):___

(m):___

(n):___

Benchmark Ratio Since Inception: (l + n)/(k + m):

(1): Individual, Group, Individual Medicare Select, or Group Medicare Select Only.

(2): "SMSBP" = Standardized Medicare Supplement Benefit Plan - Use "P" for pre-standardized plans.

(3): Year 1 is the current calendar year - 1 Year 2 is the current calendar year - 2 (etc.) (Example: If the current year is 1991, then: Year 1 is 1990, Year 2 is 1989, etc.)

(4): For the calendar year on the appropriate line in column (a), the premium earned during that year for policies issued in that year.

(5): These loss ratios are not explicitly used in computing the benchmark loss ratios. They are the loss ratios, on a policy year basis, which result in the cumulative loss ratios displayed on this worksheet. They are shown here for informational purposes only.

(6): To include the earned premium for all years prior to as well as the 15th year prior to the current year.

Statutory Authority

§§ 12.1-13 and 38.2-223 of the Code of Virginia.

Historical Notes

Derived from Regulation 35, Case No. INS920112, § 19, eff. July 30, 1992; amended, Volume 21, Issue 25, eff. August 15, 2005.

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