Ins 8.11 Note Example

Ins 8.11 Note Assume a school district has a self-insured employee health care benefit plan that covers 250 employees and family members. The plan offers individual specific stop-loss of $25,000 and provides benefits with a $500.00 deductible per person, 80% coinsurance and $1,000.00 out-of-pocket limit per person.

Ins 8.11 Note The plan’s stop-loss coverage and benefit package are the same as that used in Table 7. Therefore, use Table 7 for determining whether the plan meets the requirements in sub. (4).

Ins 8.11 Note In Table 7, use the 125 percent of mean line. Since sub. (4) (a) deals with “125% of expected claims,” refer to the 125% of mean line when using any of the tables.

Ins 8.11 Note To determine whether the probability that aggregate claims will exceed 125% of expected claims is less than 5%, subtract the decimal numbers shown in the tables from the number “1”. For example, for a plan offering the benefits described in Table 7 and having 25 employees, the probability that aggregate claims will exceed 125% of expected claims is 28% (1 minus .72= .28). It is 26% for 50 employees (1 minus .74), 23% for 100 employees (1 minus .77), etc.

Ins 8.11 Note In this example, the plan covers 250 employees. Table 7 shows that at 250 employees, the probability that aggregate claims will exceed 125% of expected claims is 18% (1 minus .82).

Ins 8.11 Note In order to comply with the rule, this probability must be less than 5%. In this example, the probability is 18%. Therefore, the school district or county must purchase aggregate stop-loss insurance at a level sufficient to bring this probability down to less than 5%. Stop-loss insurance is sold at various levels, including a level at which the probability that aggregate claims will exceed 125% of expected claims is less than 5%. At a minimum, the school district or county should purchase stop-loss insurance at this level.

- See PDF for table

- See PDF for table

- See PDF for table

- See PDF for table

- See PDF for table

- See PDF for table

- See PDF for table

- See PDF for table

Ins 8.11(7) (7) Actuary qualifications. The actuarial certification specified in sub. (6) shall be signed by an actuary who satisfies the requirements of s. Ins 6.12.

Ins 8.11 History History: Cr. Register, April, 1988, No. 388, eff. 5-1-88; correction in (1) made under s. 13.93 (2m) (b) 7., Stats., Register October 2002 No. 562.

subch. II of ch. Ins 8 Subchapter II — Employee Benefit Plan Administrators

Ins 8.20 Ins 8.20 Purpose. This subchapter interprets and implements ch. 633, Stats.

Ins 8.20 History History: Cr. Register, April, 1992, No. 436, eff. 5-1-92.

Ins 8.22 Ins 8.22 Definitions. In this subchapter:

Ins 8.22(1) (1) “Administrator” has the meaning given in s. 633.01 (1), Stats.

Ins 8.22(2) (2) “Commissioner” means the commissioner of insurance.

Ins 8.22(3) (3) “Employee” has the meaning given in s. 633.01 (2), Stats.

Ins 8.22(4) (4) “Office” means the office of the commissioner.

Ins 8.22(5) (5) “Plan” has the meaning given in s. 633.01 (4), Stats.

Ins 8.22(6) (6) “Principal” has the meaning given in s. 633.01 (5), Stats.

Ins 8.22 History History: Cr. Register, April, 1992, No. 436, eff. 5-1-92.

Ins 8.24 Ins 8.24 Exemptions.