6.6.5036 CALCULATION OF BENEFIT VALUES
(1) For the purposes of determining whether a health benefit plan is a basic health benefit plan under ARM 6.6.5032, a benefit value method may be developed and used by the small employer carrier as contemplated in 33221803 (6) , MCA. The carrier has the option to use the following computations, together with the values listed, to determine a benefit value for major medical health insurance plans. This calculation may not be used for HMO health benefit plans. The values in Table I in (1) (d) of this rule may not be used for any health benefit plans with only partial medical coverage, such as hospitalonly expense plans or hospital and surgical expense plans. The calculation and its result are subject to review and approval by the commissioner.
(a) An optional formula for calculating the benefit value is as follows:
BENEFIT VALUE = DEDUCTIBLE VALUE + COINSURANCE VALUE +
LIFETIME MAXIMUM VALUE
where
DEDUCTIBLE VALUE = DEDUCTIBLE CLAIMS COST x Y x
UTILIZATION (Y) / 0.8
and
COINSURANCE VALUE = COINSURANCESTOPLOSSPLUSDEDUCTIBLE
CLAIMS COST x ([Z x UTILIZATION(Z) ] 
[Y x UTILIZATION(Y) ]} / 0.8.
(b) The variables for the formula are defined as follows:
(i) COINSURANCE STOPLOSS refers to the maximum amount of annual claims to which the coinsurance is applied. For the standard plan, the COINSURANCE STOPLOSS is $5,000.
(ii) DEDUCTIBLE CLAIMS COST is the expected claims cost for a plan with a particular deductible.
(iii) COINSURANCESTOPLOSSPLUSDEDUCTIBLE CLAIMS COST is the expected claim cost for a plan with a "deductible" equal to the amount of the COINSURANCE STOPLOSS plus the DEDUCTIBLE.
(iv) LIFETIME MAXIMUM VALUE is the dollar adjustment to the expected claims cost for a particular lifetime maximum amount.
(v) UTILIZATION(Y) and UTILIZATION(Z) each refer to a factor to apply to the expected claims cost to adjust for expected utilization of a plan with a coinsurance level Y or Z.
(vi) Y is the coinsurance percent applied to claims, up to the amount of the coinsurance stoploss annually.
(vii) Z is the coinsurance percent applied to claims
above the coinsurance stoploss (usually 100%) .
(c) The following calculation of the benefit value
may be used:
(i) Determine the deductible claims cost.
(Table I) ____
(ii) Determine the value of Y, as a decimal.
(coinsurance percentage) ____
(iii) Determine the value of utilization(Y) .
(Table II) ____
(iv) Determine Y x utilization(Y) .
(line [ii] x line [iii]) ____
(v) Determine the deductible value.
(line [i] x line [iv] /0.8) ____
(vi) Determine the coinsurancestoplossplus
deductible. (Coinsurance stoploss amount
+ deductible amount.) ____
(vii) Determine the coinsurancestoplossplus
deductible claims cost. (Interpolate the claims
costs in Table I corresponding to the
deductibles immediately bounding the
coinsurancestoplossplus deductible.) ____
(viii) Determine the value of Z, as a decimal.
(usually, but not always, 1.0) ____
(ix) Determine the value of utilization(Z) .
(Table II) ____
(x) Determine Z x utilization(Z) .
(line [viii] x line [ix]) ____
(xi) Determine the coinsurance value.
(line [vii] x(line [x]  line [iv]/0.8) ____
(xii) Determine the lifetimemaximum
value. (Table III) ____
(xiii) Determine the benefit value.
(line [v] + line [xi] + line [xii]) ____
(d) The following tables, or other tables with actuarially sound values, may be used in calculating benefit values under this rule:
Table I  Claim Costs by Deductible Amount *
Deductible Amount

Claims Cost

Deductible Amount

Claims Cost

Deductible Amount

Claims Cost

$ 0

$124.83

$ 750

$ 89.29

$ 10,000

$ 24.92

100

119.43

1,000

79.77

15,000

20.56

150

116.82

1,500

68.70

20,000

17.38

200

114.23

2,000

60.42

25,000

15.11

250

111.65

2,500

53.69

50,000

9.36

300

109.08

5,000

35.21

100,000

5.38

500

98.81

7,500

30.07

150,000

2.87

Table II  Utilization Rate by Coinsurance *
Coinsurance 
Utilization Rate 
Coinsurance 
Utilization Rate 
100%

1.14

70%

0.93

95%

1.10

65%

0.91

90%

1.07

60%

0.89

85%

1.03

55%

0.87

80%

1.

50% or less

0.86

75%

0.97



Table  III  LifetimeMaximum Values by
Lifetime Maximum Amount
Lifetime Maximum
Amount

Lifetime Maximum
Value

$5,000,000 or more

$ 0.23

2,000,000

0.17

1,000,000

0.00

750,000

0.28

500,000

0.55

250,000

1.78

100,000

7.67

50,000

13.34

25,000

21.54

* Values were constructed by the Montana Insurance Department, using the 1994 Tillinghast Group Medical Insurance Rate Manual as a reference.
(2) Filing of standard and basic health benefit plans for approval by the commissioner must include a description of the small employer carrier's benefit value method, an actuarial certification that the formula's expected claims costs, utilization rates and values used are based on commonly accepted actuarial assumptions, and the calculation of the benefit values of the standard and basic plans being filed.
History: Sec. 331313, 33221812 and 33221822, MCA; IMP, Sec. 33221802, 33221809, 33221811, and 33221812, MCA; NEW, 1994 MAR p. 1528, Eff. 6/10/94; AMD, 1994 MAR p. 2926, Eff. 11/11/94; AMD, 1996 MAR p. 141, Eff. 10/13/95; AMD, 1998 MAR p. 2020, Eff. 6/26/98.