ACTUARIALMEMORANDUMandCERTIFICATION

for
TIMEINSURANCECOMPANY
in
Missouri
on
FormsTIM14.POL.ONE.MO,TIM14.POL.IRX.MO,TIM14.POL.OVI.MO,TIM14.POL.RXC.MO,
TIM14.POL.OVC.MO,andTIM14.POL.CAT.MO

Thepurposeofthisannualratefilingistosettheindexrateandanyotherapplicable
adjustmentstotheindexrateforJanuary1st,2015,assetforthintheAffordableCareAct(ACA)
requirements,andtodemonstratethereasonablenessofbenefitsinrelationshiptopremiums.
Thisratefilingisnotintendedforotherpurposes.

AssurantHealthisthemarketingnameofthelegalentitiesTimeInsuranceCompanyandJohn
AldenLifeInsuranceCompany.AssurantHealthwilladminister,issue,andinsurethisblock.
Theselegalentitiesofferidenticalproductswiththesamerates,administrativesystems,and
processes.

1. GeneralInformation:

a. InsuranceCompanyName

TimeInsuranceCompany
b. State

Missouri
c. HIOSIssuerID

14026
d. Market

IndividualMajorMedical
e. EffectiveDates

January1,2015December31,2015

f. PrimaryContactName

RobertAnderson
g. PrimaryContactPhone#

4142996866
h. PrimaryContactEmailAddress
Robert.Anderson1@Assurant.com

i. GeneralPolicyDescription:
Thisratefilingisfornongrandfatheredindividualmajormedicalplanswhichcoverthe
EssentialHealthBenefits(EHB)asrequiredundertheAffordableCareAct(ACA).These
plansareguaranteedissueandguaranteedrenewableasdefinedundertheACAand
HIPAA.Plansaremarketedthroughgeneralagencies,brokers,wholesalearrangements,
anddirecttoconsumer.In2015,AssurantHealthwillonlysellplansoutsideofthe
publichealthexchangesinthisstate.Coveragebeyondage65willbesecondaryto
Medicare.Premiumsareonanattainedagebasisandwillincreasewithage.Premiums
alsovarybyplandesign,tobaccostatusandgeographicarea.In2015,onlytheoldest
threedependentsunderage21willbechargedapremiumrateforagivenpolicy.

2. ProposedRateIncrease:

Theproposedaveragerateincreaseforthisstateis23%.Thisincreaseexcludesattainedage
increases.Therateincreasedoesvarybyplan.Theseadjustmentsaredescribedinfurtherdetail

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insection14ofthismemorandum.AppendixAshowsthedevelopmentofbaseratesforthis
product.Theremainingsectionsofthememorandumdetailtheassumptionsweusedto
developrates.

ReasonsforRateIncrease:Thefollowinglistisabriefdescriptionofthesignificantfactors
drivingtheproposedratechange.Moredetaileddescriptionsofthesefactorsareincludedlater
inthismemorandum.

1.) MedicalTrend:Ourmedicaltrendaccountsfortheeffectsonfutureclaimsduetoinflation,
advancingmedicaltechnologyandtechniques,andincreasedutilizationandcostshifting.

2.) AdditionalFees:Thehealthinsurerfeeassessmentismovingfrom$8billionto$11.3billion
in2015whichresultsinalowertargetlossratio.

3.) AverageMorbidity:Therewillcontinuetobechangesintheprojectedriskpoolduemainly
to,butnotlimitedto,thefollowingfactors:
a.) ContinuedgroupandMedicaidmigration
b.) Continueduninsuredmigration
c.) CurrentIMconsumersforgoingcoverage
d.) Allowanceoftheextensionofnoncompliantnongrandfatheredplans(grand
motheredplans)
e.) Statehighriskpooltermination

4.) PaidtoAllowedRatio:Thedifferencebetweenourprojectedpaidtoallowedratioinour
experienceversusthatofthe2014actuarialvaluecalculatorresultsinanincreasetoour
price.

5.) Reinsurance:TheinitialACAreinsuranceprogramfor2014wastoreimbursecarriers80%of
claimcostsbetween$60,000and$250,000.In2015,thereimbursementwillchangeto50%
ofclaimcostsbetween$70,000and$250,000.However,perrecentguidance,HHShas
suggestedthattheparameterisgoingtobeloweredagainin2015from$70,000to$45,000,
whichwehavetakenintoaccount.

Therateincreasesvarybyproductprimarilyduetobenefitleveragingdifferencesbymetallevel
anddifferencesinPPOnetworkfactors.Theseadjustmentsarewarrantedastheyresultin
actuariallyappropriateratesthatreflectthetruecostdifferencesbetweentheplans.

PleasenotethatourratingmethodologydiffersfromthatoutlinedintheUnifiedRateReview
Template.Rather,theUnifiedRateReviewTemplaterepresentsinformationrequiredbyFederal
Regulationtofacilitatereview.ThefollowingsectionsnoteanydifferencesbetweentheUnified
RateReviewTemplateandthepricingmethodologyweusedtodeveloprates.Pleasereferto
AppendixAforourratedevelopmentmethodology.

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3. ExperiencePeriodPremiumandClaims

WepreparedtheUnifiedRateReviewTemplateusingstateandlegalentityspecificnon
grandfatheredexperienceinordertocomplywithDepartmentofHealthandHumanServices
(HHS)requirements.Forthepurposeofestimatingtheaverageriskofthe2015market,
grandfatheredandnongrandfatheredexperienceofTimeInsuranceCompanyandJohnAlden
LifeInsuranceCompanywasreviewedtogether.Thiscombinedexperiencewasusedinorderto
developanactuariallyappropriatepredictionofthemarketwidepermemberpermonthrisk
andstandardizedclaimcostin2015.Thesameexperiencebasisisusedforboththepricing
methodologyandthedevelopmentoffactorsthatwilladdresstheimpactofourriskrelativeto
themarketandtheimpactthishasonpremiumrates.Thisprocessisdescribedinmoredetail
below.

ExperiencePeriod:TheexperienceperiodisclaimsincurredandpremiumearnedfromJanuary
1,2013throughDecember31,2013.

PaidThroughDate:Thedatethroughwhichpaymentshavebeenmadeonclaimsincurred
duringtheexperienceperiodisFebruary28,2014.

Premiums(NetofMLRRebate)inExperiencePeriod:IntheUnifiedRateReviewTemplate,the
earnedpremiumpriortoMedicalLossRatio(MLR)rebatesfortheCalendarYear2013
experienceperiodwas$17,132,091.Earnedpremiumwasnotadjustedforanyreductions
prescribedwhencalculatingtheMLR,suchastaxesandassessments.TheMLRrebatesforthe
experienceperiodareestimatedat$1,661,266.

ThefinancialactuarialteamatAssurantHealthestimatesaccruedpremiumrefundsrequired
underFederalMinimumLossRatioregulationsfortheIndividualMedicalandGroupMedical
insurancebusiness.Theteamprojectsincurredclaims,earnedpremiums,andotherelements
andappliesadjustmentsasoutlinedinFederallawsandregulations.Theseprojectionsare
performedonastateandmarketlevelbasisandrecentclaimsexperienceisadjustedfor
estimatedclaimsreservesonastatelevelbasis.

AllowedandIncurredClaimsDuringtheExperiencePeriod:IntheUnifiedRateReview
Template,theamountofincurredclaimsprocessedthroughourclaimsystemfortheexperience
period2013is$11,221,198.Thebestestimateofexperienceperiodclaimsincurredbutnot
reportedis$400,256fortotalincurredclaimsof$11,621,454.Theamountofallowedclaims
processedthroughourclaimsystemfortheexperienceperiod2013is$19,104,911.Thebest
estimateofexperienceperiodallowedclaimsincurredbutnotpaidasofthepaidthroughdate
shownaboveis$997,969fortotalallowedclaimsof$20,102,880.Allowedclaimsaredeveloped
bysubtractingineligiblechargesanddiscountsfromthetotalproviderbilledamount.Assurant
Healthhasnocapitationagreements.

Thepermemberpermonthexperienceperiodallowedclaimsinourpricingmethodologyis

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baseduponallIndividualMedicalexperiencewithinthestateforAssurantHealth.The
methodologyisdemonstratedinAppendixA.Experienceforlimitedbenefitplanswasnot
included.Furthermore,anadjustmentwasmadeinordertopoollargeclaimsacrossourblock.
Claimsinexcessof$50,000foraspecificmemberandincurredmonthwereremovedfromthe
experience,andthenanationwideaveragepoolingchargewasappliedpermember.Allpricing
components,includingthebaseexperienceperioddata,areappliedconsistentlyacrossthe
singleriskpoolinthestateandmarketfor2015.

OurfinancialactuarialteamdevelopslagtrianglesfornationwideIndividualMedicalexperience.
ThesetrianglesareseparatelydevelopedforMedicalandPrescriptionDrugCardcoverage.
Specificlargeclaimsthatarepartofourcasemanagementprogramareremovedfromthe
Medicaltrianglesandreservedforseparately.Historicalaveragesareusedinordertocalculate
monthlycompletionfactorsfortheremainingclaims.

4. BenefitCategories

Inpatientservicesarethosereceivedduringapatientshospitalstayandareincludedinthe
InpatientHospitalCategory.Outpatientservices(e.g.labtests,Xrays,andsomesurgical
services)arethoserenderedbyafacilitywithinanoutpatientsetting.Professionalservices
includeprimarycare,specialist,therapyandotherprofessionalchargesthatarenotincludedin
facilityfees.OtherMedicalservicesincludechargesforitemsthatdonotfallintothecategories
above,suchasambulanceanddurablemedicalequipment.TheOthercategoryismeasured
basedupondistinctservicesoritemsprovided.Retailandmailorderpharmacyclaimsare
includedinthePrescriptionDrugcategory.

5. ProjectionFactors

ChangesintheMorbidityoftheInsuredPopulation:Therearetwoadjustmentsthatweare
usingtogettoanestimateofthe2015marketrisk.ThefirstisanadjustmenttogetAssurant
specificprereformrisktothemarketaverage.Thesecondistogettheaverageprereform
marketrisktotheexpected2015averagemarketrisk.Bothareexplainedinfurtherdetail
below.

AssurantHealthtoMarketAverage:Toestablishthisestimate,AssurantHealthparticipatedin
theWakelyNationalRiskAdjustmentSimulationProject(WNRASP).InthisprojecttheWakely
ConsultingGroupquantifiedriskusingtheHCCHHSmodelthatHealthandHumanServices
(HHS)developedforimplementationin2014.Wakelyconductedrisksimulationsinindividual
andsmallgroupmarketsonlywhen75%+ofthestatewidemembershipwasrepresented.
Healthplanscoveringthesemembersusedclaimexperiencetodetermineplanliabilityrisk
scoresconsistentwiththeHCCHHSmethodology.Healthplanspecificliabilityriskscoresalong
withallowableratingfactorsarecomparedtothescoresofallmarketparticipantsconsistent
withthemethodologysetforthintheRiskAdjustmentProgram.

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TheWNRASPresultsprovidedtoAssurantHealthquantifythedifferenceintheriskofthe
AssurantHealthbookofbusinessrelativetothestateandmarketaveragerisk.Theestimateof
themarketriskwasadjustedtoapproximateariskscorewhenthemarketincludesboth
grandfatheredandnongrandfatheredexperience.Sinceweusebothgrandfatheredandnon
grandfatheredexperiencewefeelitisappropriatethatthemarketisonthissamebasis.In2012
theWakelyNationalRiskAdjustmentSimulationProject(WNRASP)usedbothgrandfathered
andnongrandfathereddatawhilein2013onlynongrandfathereddatawasused.Tocalculate
anadjustmenttoaccountforincludinggrandfatheredexperienceweusedthe2013marketto
2012marketriskscore.

Thefinalstateresultisadjustedtotheextentthatbaseperioddatawaslessthan100%credible,
inordertobeonaconsistentbasiswiththeindexrateforthestate.Thefinalresultforusein
ourpricingmethodologywasa0.89riskscore.ThisindicatesthatAssurantHealthbusiness
practices(e.g.distributionmethodsandunderwriting)andmemberselectionpatternshave
createdabookofexperiencewith11%lowercosts.Ourpricingwasadjustedbyafactorof
1.0/0.89torepresenttheaverageactuarialrisk,asshowninAppendixA.Thismultiplicative
adjustmentisconsistentlyappliedacrossallplanswithinthestate.

PrereformMarkettoPostReformMarket:TheACAincentivizesvarioussubpopulationsof
MissouritomigrateintooroutoftheACAIMmarket,alteringtheaverageriskoftheinsured
population.Keydriversofthismigrationinclude,butarenotlimitedto:

1.) ThedissolutionoftheMissourihighriskpool,whichwillincentivizethehighriskpool
memberstoentertheACAIMmarket
2.) TheexpansionofMedicaid,whichwillincentivizelowerrisk,lowincomepersonsto
entertheMedicaidmarketratherthantheACAIMmarket
3.) Theavailabilityofsubsidies,whichwillincentivizelowerrisk,formerlyuninsured
personstoentertheACAIMmarket
4.) Theguaranteedissueenvironment,whichwillincentivizemembersoftheuninsured
populationwithpreexistingconditionstoentertheACAIMmarket
5.) Employeeslosinggroupcoverage,whichingeneralwillresultinanincreaseinmorbidity
asthegroupmarketislesshealthythantheprereformIMmarket
6.) Theallowanceoftheextensionofnoncompliant,nongrandfatheredplanspast2014,
whichkeepshealthierlowerriskmembersoutofthemarketandincreasestheaverage
morbidity

Ourfinalestimateisthatthemorbidityofthe2015insuredpopulationinMissouriwillincrease
by53%overthemorbidityofthepreACAinsuredpopulation.Anumberofsourceswereused
tocalculatethismorbidityfactor.FigurespublishedbytheDepartmentofHealth&Human
ServicesinSummaryEnrollmentReportfortheInitialAnnualOpenEnrollmentPeriodwere
acceptedasthedefinitivecountofexchangeapplicationsthroughtheendofMarch.Weused

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dataprovidedbytheWakelyConsultingGroupinconnectionwiththeirNationalRisk
AdjustmentReportingProject(NRAP)todetermineoffexchangeenrollmentthroughtheendof
March,thevolumeofearlyadoptersbothonandoffexchange,andthenumberofinsuredon
noncompliantplansscheduledtorolltoacompliantplanbytheendof2014.Morbiditydata
furnishedbytheSocietyofActuariesintheirCostoftheFutureNewlyInsuredunderthe
AffordableCareAct(ACA)wasusedtocomparethemorbidityofthemigratingpopulationto
themorbidityofthepreACAinsuredpopulation.Otherindustrystudieswereusedtovalidate
thereasonablenessofourresults.

Inadditiontotheexpectedchangeintheaverageriskoftheinsuredpopulation,weanticipate
thattherewillbeanincreaseinutilizationrelativetoourexperienceperiodduetothepentup
demandasnewlyinsuredenrolleescontinuetosignupforcoverage.Whenconsumersare
uninsuredorunderinsured,theymayopttodelayhealthcareservices.Historically,
approximately30%ofoursaleshavebeentocustomerswhodidnotpreviouslyhavehealth
insurance.Thesepreviouslyuninsuredcustomershaveclaimexperiencethatissignificantly
worsethanthosewithpriorcoverage.Thisexperiencediscrepancyismostpronouncedinthe
first6monthsofcoverage,whentheexperiencerelativitybetweenthesetwocohortsisupto
20%higherthantheultimaterelativity.Weexpectthatthemandatetopurchaseinsurancemay
temperthepentupdemandofthenewlyinsuredenteringthemarketin2015.Therefore,the
2015utilizationonnewlyinsuredindividualswillnothaveaslargeofaspikeasourhistorical
experience.Ourassumptionisthatanadditional10%ofourblockwillbenewlyinsured
individuals,with10%higherthantypicalutilizationinthefirst6monthsofcoverage.Thisleads
toanadjustmentof0.5%withinourpricingandclaimprojection.

ChangesinBenefits:Thereisanadjustmentof7.0%withinourpricingandclaimprojectionto
includenewandexpandedbenefitsinaccordancewiththeEHBrequirementsoftheACA.The
tablebelowliststheestimatedadditionalcostassociatedwitheachnewbenefit.ThePediatric
Dentalexpensewasestimatedusingcommercialgroupexperiencefor2011and2012fromour
sistersegment,AssurantEmployeeBenefits.Theremainingestimatesarebaseduponpurchased
dataofexperienceofastandardpopulation.

Benefit
Maternity
Mental Health and Substance Abuse
Pediatric Vision
Chiropractic
Private Duty Nursing
Pediatric Dental
GRAND TOTAL

Estimated Additional Cost

3.1%
1.2%
0.4%
0.4%
0.3%
1.6%
7.0%

Wealsomadeanadjustmenttoaccountforthecoverageofadditionalpreventativeitemsthat
willbepaidfirstdollarduetoupdatesbytheUSPSTF.Webelievetheimpactofcoveringthese
additionalfirstdollarbenefitsis1.0%.Thisestimatewasdeterminedbyevaluatingthevolume

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oftheseitemsinourhistoricalexperience.Theadditionalfirstdollarpreventativebenefitsare:

1.)
2.)
3.)
4.)
5.)

AlcoholMisuse
BreastCancerRisk
HepatitisCScreening
HIVScreening
TobaccoUsePreventioninChildrenandAdolescents

Inaddition,itisexpectedthattheaverageactuarialvalueofourblockwillincreasefrom
approximately60%toapproximately69.0%afterthechangetostandardizedBronze,Silver,
GoldandPlatinummetallicplans.Furthermore,approximately30%ofbusinesswithinour
experiencedataisonaplanthathasanactuarialvalueof55%orless.Weexpectthatricher
benefitsin2015willinducedemandforhealthcareservicesthatishigherthantheaverage
utilizationwithinourbaseexperience.WeassumethatfutureSilverplanswillhaveutilization
thatis3%higherthanouraveragecurrentexperience,Goldwillbe8%higher,andPlatinumwill
be15%higher.Baseduponourexpected2015splitofplansbymetallevel,wehaveadjusted
ourexperienceperiodclaimsby2.9%inordertoaccountforthisbenefitleveldrivenincreasein
utilization.Theprojected2015membershipwasusedtodetermineboththeaverageactuarial
valueandutilizationimpact.Themembershipmethodologyisdescribedinmoredetailbelow.

OtherAdjustments:Wemadeanadjustmentofnegative6.1%withinourpricingandclaim
projectioninordertoaccountforexpectedimprovementsinPreferredProviderOrganization
(PPO)discountsin2015relativetothe2013experienceperiod.OurexpectedPPOdiscountsare
developedbyusingacombinationofexperienceandreporteddatafromthenetworksthatwe
lease.ThefutureimprovementisdrivenbyalargershareofbusinessexpectedintheAetna
SignatureAdministrators(ASA)networkin2015relativeto2013.Thisnetworkarrangementis
morefavorableforAssurantHealththanotherleasednetworks.Furthermore,ourrental
networksworktorenegotiateandimprovetheircontractswithprovidersovertimewhichalso
contributestowardstheimprovementindiscounts.TheASAnetworkwasfirstlaunchedin
MissouriinMarch2012.

TrendFactors(cost/utilization):Theeffectsonfutureclaimsofinflation,advancingmedical
technologyandtechniques,andincreasedutilizationandcostshiftingareaccountedforbyan
annualseculartrendassumptionof9.5%.Thisisanallowedclaimstrendfactor.Thistrendwas
developedfromhistoricalexperienceofournationwideblock.Ourhistoricalexperienceshows
slightlyhighertrendbutweareloweringitto9.5%asweanticipatetrendwillbelowerthanour
historicalexperienceduetoamorestandardriskpopulationgoingforward.PleaseseeAppendix
Bforfurtherdetail.Experiencewastrendedfor24months,fromthemidpointof2013tothe
midpointof2015.

AgeShift:Theexpectedageshiftbetween2013and2015isincludedintheindexrate
development.PleaseseeAppendixAfordetails.

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GeographicShift:Theexpectedgeographicshiftbetween2013and2015isincludedintheindex
ratedevelopment.PleaseseeSection15bandAppendixAfordetails.

6. CredibilityManualRateDevelopment

ThemanualratereflectstheAssurantHealthIndividualMedical2013nationwideallowedclaims
permemberpermonth(pmpm).Thisallowedpmpmvaluehasbeenadjustedtoaddressthe
followingneeds:

1. AdjustthenationwideclaimstoreflecttheAssurantHealthdistributionbyageandtobacco
useinMissouri.
2. RemovetheimpactofclaimsexperiencefromMissouri(toavoiddoublecountingthis
experienceintheratedevelopment).
3. AdjusttoreflectthespecificutilizationandchargelevelpatternsofMissouri.

Externaldata,inconjunctionwithclaimsexperiencefrom2012,isusedtodeterminethe
Missouritonationwideexpectedcostrelativity.Inordertodeterminethisrelativityfor2012,
regressionanalysisisusedholdingage,gender,andsmokingstatusconstant.If2012experience
inMissouriisnotfullycredible,thestaterelativecostfactorisblendedwithastaterelativecost
factordevelopedusingTruvenAnalyticsMarketScan2011database.Controllingforageand
gender,regressionanalysisontheTruvendatabaseproducedthestatetonationwideallowed
costrelativity.The2011andTruvenblendedrelativityfactorisreferredtoasthemanualstate
factor.

Aregressionbasedonnationwide2013allowedclaimsexperiencewasusedtosmoothallowed
claimlevelsbyage,gender,andsmokingstatus.Fromthisregression,predictedallowedclaims
werecalculatedateachageandsmokingstatuscombination.Theseallowedpmpmclaimlevels
areappliedtotheMissouridistributionofmembershipbyage,gender,andsmokingstatusand
summed.Inaddition,anadjustmentisappliedtoremovetheinfluenceMissouriclaimshaveon
thenationwideaverageclaims.

Themanualstatefactorismultipliedbyadjusted2013nationalclaimlevelsasdescribedinthe
previousparagraphtocalculatethemanualpmpmallowedclaimsinthestate.Themanualrate
isblendedwiththebaseperiodrateasdescribedinthecredibilitysectionbelow.

Themanualratewasadjustedtothe2015pricingperiodusingtheprojectionfactorslistedin
thesectionabove.

7. CredibilityofExperience

Todevelopourfullcredibilitystandard,weconductedastudytoestablishconfidencelevelsat
differentcohortsizes.Inthisstudy,werandomlysampledcohortsfromourinternalblockof
members.Weanalyzed100,000randomlysampledcohortsateachsizetoestablishthevariance

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associatedwithacohortofthatsize.Therequiredcohortsizetobeconsideredfullycredible
wassetatthepointwherewewere95%confidentthatclaimswouldfallwithin4%ofour
target.Thisresultsinafullycrediblestandardof82,000membermonthsforexperiencethathas
hadclaimsinexcessof$50,000permemberpermonthlevelpooledacrosstheblock,asused
withinourpricingmethodology.TheUnifiedRateReviewTemplateutilizesunpooledclaims.
Therefore,baseduponthesame95%confidence,thestandardforfullcredibilityontheUnified
RateTemplateis562,000membermonths.

Partialcredibilityisassignedtotheexperienceperioddatabasedupontheclassicalcredibility
formulalistedbelow:
SquareRoot((ExperienceDataMemberMonths)/(FullCredibilityStandard))

Basedupontheabovecredibilitymethodology,ourMissouripooledexperienceasusedwithin
pricingis100%credible.
Thestatespecificexperiencewasremovedfromthedevelopmentofthemanualrateinorderto
avoidanydoublecountingofthebaseperiodexperience.

GiventhatwedonothavecredibleEHBclaimdatayet,wefeelitisappropriatetoinclude
grandfatheredexperiencewithinourpricingdatainordertodevelopthemostpredictive
estimateoftheaveragemorbidityofthe2015market.Inaddition,pleasenotethatourother
pricingassumptionsweredevelopedonaconsistentbasis.Forexample,wedevelopedour
changeinmarketriskassumptionrelativetothetotalIMcurrentmarket,notrelativetothe
nongrandfatheredcurrentmarket.

SincetheURRTrequiresunpoolednongrandfathereddata,ourpricingapproachwas
incompatiblewiththestandarduseoftheURRT.Therefore,weassigned0%credibilitytothe
unpoolednongrandfathereddatawhichisrequiredintheURRTinordertogivefullcredibilityto
thecredibilitymanualwhichmatchesourpricing.

8. PaidtoAllowedRatio

OurprojectedPaidtoAllowedRatiois69.0%.

Inour2014pricingdevelopment,theActuarialValue(AV)calculatorprovidedbyHHSproduced
valuesthatwereveryclosetoourhistoricalpaidtoallowedratiosonanaggregatebasis.
Therefore,wedetermineditwasreasonabletousetheHHSAVcalculatortodevelopestimates
ofthepaidtoallowedratioofour2014insuredpopulation.However,our2013paidtoallowed
ratiowasslightlyhigherthanthevalueproducedAVcalculator,whichisreasonablegiventhat
underlyingdataintheAVcalculatorwasnotupdatedfromtheprioryear.Therefore,weare
accountingforthisdifferencebyincludingabenefitleveragingfactorinthepricingvaluesofour
plans.Thisfactorwillvarybymetallevelduetothedifferingleveragingeffectsbycostsharing
level.Bronzeplanswillhaveahigherleveragingeffectduetohighercostsharingand

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conversely,Platinumplanswillhavealowerleveragingeffectduetolowercostsharing.

Todeterminetheleveragingfactors,weusedaclaimprobabilitydistributionfromthe2012
MillimanHealthCostGuidelinestomodeltheleveragingeffectonourmetalplans.Thefinal
assumptionsareasfollows:
MetalLevel
Leveraging
Catastrophic
1.035
Bronze
1.035
Silver
1.030
Gold
1.015
Platinum
1.010

Theapproximateaverageleveragingusingthefactorsaboveis3%,whichislowerthanour
historicalbenefitleveragingof4%.Webelievethisdecreaseisappropriategiventhelarge
proportionofourhistoricalbookthathadAVslessthan55%.

TodeveloptheprojectedPaidtoAllowedRatio,weusedourmembershipprojectionto
determinethedistributionofplansbymetallevelin2015.Wethenappliedtheleveraging
factorsbymetalleveltotheactuarialvaluesandaveragedthemtogetatotalprojectedpaidto
allowedratio.Themethodologyofourmembershipprojectionisdescribedinmoredetail
below.

9. RiskAdjustmentandReinsurance

RiskAdjustment:In2014,theACAestablishedaRiskAdjustmentProgramthatwillallowissuers
tosetpremiumsaccordingtotheaverageactuarialriskintheindividualandsmallgroupmarket
withoutrespecttothetypeofriskselectiontheissuerwouldotherwiseexpect.TheACA
establishesastandardquantificationofriskwiththeHCCHHSriskscoringmodel.Untilwegain
furtherknowledgeonthetotalMissourimarketrisk,wearecontinuingtopricetothemarket
averageriskof1.0.Therefore,nomarketwideadjustmentfortheriskadjustmentprogramwas
appliedwhendeterminingthemarketadjustedindexrate.

ReinsuranceRecoveries:In2015,theACAhasaReinsuranceProgramthatwillreimburse
carriers50%ofclaimcostsbetween$70,000and$250,000permember.However,perrecent
guidance,HHShassuggestedthattheparameterisgoingtobeloweredagainin2015from
$70,000to$45,000.Wearetakingthischangeintoaccountwhichresultsinanegative11.0%
adjustmenttoourexpectedclaimcostswithinourpricinginordertoaccountforexpected
reinsurancerecoveries.Thisprojectedreinsuranceadjustmentisappliedtotheindexrateto
developthemarketadjustedindexrateinaccordancewithPartIIIinstructions.Ourreinsurance
recoveryassumptionwasdevelopedusingTruvenHealthMarketScanResearchDatabases,
whichisrepresentativeofastandardpopulationandwithcoveragesimilartotheACAEHB
package.Theexposureandclaimdatawaslimitedtomembersthathadcompletedataand

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wereonanoncapitatedbasis.Inaddition,theclaimdataforeachmemberwastrendedto2015
andautilizationadjustmentwasmadetoscaleclaimstotheappropriatecostsharinglevel.The
reinsuranceformulawasappliedbymember,andtheresultwasdividedbytotalpaidclaimson
thesameadjustedbasis.Thisprocesswasdonetoestimateareinsurancerecoveryfactorfor
eachplanmetallevel.Thefinalcompositefactorabovewasdevelopedbaseduponour
expectedmixofBronze,Silver,GoldandPlatinumbusiness.Thereinsurancerecoveryestimated
in2014wasnegative14%forMissouri.Therefore,thisresultsinanestimatedrateimpactof
3.5%overtheprioryear.

ReinsuranceContributions:TheReinsuranceProgramisfundedbyafeeof$3.67permember
permonth.Wehaveincreasedourexpectedclaimcostswithinourpricingdevelopmentby1.1%
inordertocoverthisfee.Inordertomaintaincompliancewiththerequiredrelativityofprices
byage,wehaveappliedtheadjustmentonamultiplicativebasis.Ouradjustmentfactorwas
developedbydividing$3.67bytheexpectedtotalpermemberpermonthclaimcostsinthe
state.

10. NonBenefitExpensesandProfit&Risk

ThetablebelowliststheexpectedNonBenefitExpensesandTargetProfitforAssurantHealthin
Missouri.Thepricingloadtocovertheseexpensesisappliedconsistentlyacrossproductsand
plans,asdisplayedintheworkupoftheplanadjustedindexrate.Theseitemsarediscussedin
detailinthefollowingparagraphs.

ExpenseCategory
%ofPremium
GeneralandAdministrative
12.0%
CommissionsandSalesBonus
5.0%
ManagedCareandCostContainment
2.5%
QualityImprovement
0.9%
NetInvestmentIncome
2.5%
Taxes,FeesandStateAssessments
2.4%
ACAHealthInsurerFee
1.7%
FederalIncomeTaxes
2.1%
ProfitandRiskMargin(AfterTax)
1.5%

Total
25.5%

Ourpricedforlossratiois74.5%inMissouri,whichisapproximatelyan80%MedicalLossRatio
asdefinedbytheACA.ThecalculationoftheMedicalLossRatioisshownintheProjectedLoss
Ratiosection.ThefinalpricedforTotalNonBenefitExpensesandProfitis25.5%.However,as
demonstratedinthetableabove,ourprojected2015totalnonbenefitexpensesandprofitare
28.0%.Thiswillresultinanactualmarginforriskandprofitthatislowerthanthetargetshown
above.

ActuarialMemorandumMissouriFormsTIM14.POL.ONE.MO,
TIM14.POL.ONE.MO,TIM14.POL.IRX.MO,TIM14.POL.OVI.MO,
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Page12

Inaddition,pleasenotethatexpensesforeachfunctionalareawithinthecompanyarerecorded
atanationwidelevel.Expenseassumptionsforastateandproductareallocatedand
representedonapercentofpremiumbasis.Thispercentofpremiumrepresentationof
expensesisconsistentwithouractualtoexpectedlossratiopricingmethodology.

AdministrativeExpenseLoads:GeneralandAdministrativeExpenses:Thiscategoryaccountsfor
theexpensesofadministeringthebusiness,suchasclaimpaymentexpenses.Theassumption
wasderivedfromactualexpensesin2013relativetoactualrevenue.Indevelopingthisexpense
assumption,underwritingexpenseswereadjustedduetothereductionofstaffwithinthe
underwritingfunctionalareathatoccurredinresponsetothe2014marketrules.

CommissionsandSalesBonus:Thisisavariableexpensethatrepresentsthecostofacquiring
business.Ourcommissionschedulesandbonuscampaignswillbesetto5.0%ofpremium.

ManagedCareandCostContainmentExpenses:Thisisavariableexpensethataccountsfor
expensesincurredinordertoreduceclaimscosts,suchasaccessfeespaidtothePreferred
ProviderOrganizationNetworksthatareleasedonbehalfofourcustomers.Thisexpense
assumptionwasderivedfromactualexpensesin2013relativetoactualrevenue.

QualityImprovementExpenses:Thiscategoryaccountsforexpensesincurredinorderto
improvethequalityofhealthcare.QualityImprovementExpensesareaddedtoclaimpayments
intheMedicalLossRatioCalculation.Thisexpenseassumptionwasderivedfromactual
expensesin2013relativetoactualrevenueandadjustedtoaccountforadditionalQIexpenses
expectedin2015.

NetInvestmentIncome:Thiscategoryaccountsforinvestmentincomeearnedonreservesand
surplus.Thisassumptionwasderivedfromouractualcurrentnetinvestmentincomeratio.

Profit&RiskMargin:Ourtargetedaftertaxmarginforriskandprofitis3%ofpremium.The
pricingloadforthis3%aftertaxmarginisappliedconsistentlyacrossproducts.

TaxesandFees:HealthInsurerFee:$8billionwillbecollectednationallyforthisfeein2014and
$11.3billionin2015.Thefeeisbasedonourshareofthetotalmarketpremium.Itisestimated
thatthisfeewillbe1.7%ofpremium.Furthermore,thisfeeisnotdeductiblefromfederal
incometaxes.

StatePremiumTaxesandAssessments:Thisisestimatedatapproximately2.4%ofpremium
basedupon2013experience.Anadjustmentwasmadetohistoricalexperienceinorderto
reduceanyComprehensiveHealthAssociationassessments.Inaddition,anadjustmentof
approximately0.05%hasalsobeenmadetoaccountforthe$2permemberperyearPCORIfee.
Theminimalimpactofthe$0.08permemberpermonthRiskAdjustmentProgram
administrationfeehasbeenremovedfromthissectionandisincludedintheprojectedrisk
adjustmentperthePartIIIActuarialMemoandCertificationInstructions.

ActuarialMemorandumMissouriFormsTIM14.POL.ONE.MO,
TIM14.POL.ONE.MO,TIM14.POL.IRX.MO,TIM14.POL.OVI.MO,
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IncomeTaxes:FederalIncomeTaxesareexpectedtobe2.1%ofpremium,calculatedas((3.6%
+1.7%)X40%),where3.6%isthepretaxprofitmargin,1.7%isthenondeductibleACAhealth
insurerfeecostand40%isanapproximationofthefederalincometaxrateforAssurantHealth.
Pleasenotethatoureffectivefederalincometaxrateisexpectedtobegreaterthanthe
standard35%duetothenondeductibilityofcertaininternalandexternalindividual
compensation.Thisnondeductiblecompensationisprimarilyincurredwithinnonhealth
insurancelinesofbusinessfromourparentcompany,Assurant,Inc.

ExchangeUserFees:Assurantwillonlyissuebusinessofftheexchangeinthisstatein2015.
Therefore,noexchangeuserfeehasbeenappliedtotherates.

11. ProjectedLossRatio

Theprojectedfuturelossratiofortheperiodof1/1/2015through12/31/2015is74.8%.Our
premiumratewasdevelopedbydividingprojectedincurredclaimsbythepricedforlossratio.

Ourpricedforlossratiois74.5%inMissouri.However,attherequestofHHS,weremovedour
0.4%loadtocoverthecostofnotchargingpremiumforchilddependentsbeyondthree.With
thisadjustment,ourprojectedlossratiois74.8%,whichisapproximatelyan80%MedicalLoss
RatioasdefinedbytheAffordableCareAct.AcalculationoftheprojectedMedicalLossRatio
(MLR)isshownbelow:

MLR =(Claims+QualityImprovementExpense)/(PremiumTaxesandFees)
=(A+B)/(CDEF)
=(74.8%+0.9%)/(100%2.4%1.7%1.1%)
=80%

Where:

AisIncurredClaims,netofReinsuranceandRiskAdjustmentTransfers

BisExpensesforImprovementintheQualityofHealthcare

Cispremium
Disstatepremiumtaxesandotherassessmentsandfees

EistheHealthInsurerFee

FisFederalIncomeTaxes(excludingtaxesonprofitduetoInvestmentIncome)

12. SingleRiskPoolandIndexRate

Thesingleriskpoolreflectsallcoveredlivesforeverynongrandfatheredproduct/plan
combinationforthisstateandmarket.

TheIndexRateistheestimatedtotalallowedclaimspermemberpermonthforallnon

ActuarialMemorandumMissouriFormsTIM14.POL.ONE.MO,
TIM14.POL.ONE.MO,TIM14.POL.IRX.MO,TIM14.POL.OVI.MO,
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Page14

grandfatheredplansforallessentialhealthbenefitswithinthestate.Thisfiguredoesnot
includeadjustmentsforReinsurance,RiskAdjustmenttransfers,orexchangeuserfees.There
arenomaterialcoveredbenefitsinexcessoftheEssentialHealthBenefits.PleaseseeAppendix
Afordetailontheprojected2015IndexRatecalculation.Also,pleaseseetheMarketAdjusted
IndexRateandPlanAdjustedIndexRateExplanationSectionsbelowfordetailsonhowratesare
calculatedrelativetotheIndexRate.Theexperienceusedtodeveloptheprojectedindexrate
includestheexperienceoftransitionalplans.

13. MarketAdjustedIndexRate

TheMarketAdjustedIndexRateiscalculatedastheIndexRateadjustedforallallowable
marketwidemodifiersdefinedinthemarketratingrules,45CFRPart156,156.80(d)(1).
Theseadjustmentsinclude:

Federalreinsuranceprogram
Riskadjustment
Exchangeuserfee

Pleaseseesection9ofthismemoforadescriptionofthereinsuranceandriskadjustment.
Pleaseseesection10ofthismemoforadescriptionoftheexchangeuserfeeadjustment.The
calculationoftheMarketAdjustedIndexRatecanbefoundinAppendixA.

14. PlanAdjustedIndexRate

ThePlanAdjustedIndexRateiscalculatedastheMarketAdjustedIndexRateadjustedforall
allowableplanlevelmodifiersdefinedinthemarketratingrules,45CFRPart156,156.80(d)(2).
Theseadjustmentsaredescribedbelow.ThecalculationofthePlanAdjustedIndexRatecanbe
foundintheattachedrateexhibits.

ActuarialValueandCostSharing:
o ActuarialValuePleaseseesection17ofthismemoforadescriptiononhow
theactuarialvalueswerecalculated.
o PaidtoAllowedLeveragingFactorPleaseseesection8ofthismemofora
descriptiononhowthepaidtoallowedleveragingfactorwascalculated.
o UtilizationWeexpectthatricherbenefitsin2015willinduceutilizationfor
healthcareservicesthatishigherthantheaverageutilizationwithinourbase
experience.WeassumethatfutureSilverplanswillhaveutilizationthatis3%
higherthanouraveragecurrentexperience,Goldwillbe8%higher,and
Platinumwillbe15%higher.ThesefactorsaretheprescribedHHSinduced
utilizationfactorsusedintheHHSriskadjustmentcalculations.
o DependentFactorThedependentfactorwasdevelopedtospreadthecostof
covering4ormoredependentsunder21.Thisfactorisconstantacrossall
plans.

ActuarialMemorandumMissouriFormsTIM14.POL.ONE.MO,
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NontobaccoUserAdjustmentThenontobaccouserfactorisusedtoputthe
marketadjustedindexrateonanontobaccobasis.Thisfactorisconsistent
acrossallplans.Thetobaccocalibrationfactoristhereciprocalofthefollowing
calculation:

(NontobaccoMemberMonths+TobaccoMemberMonths*TobaccoLoad)

TotalMemberMonths

ProviderNetworkPPOfactorsweredevelopedusinginternalcompanydiscount
experienceinconjunctionwithreporteddiscountsfromthenetwork.Thefactorsreflect
thedifferencefromtheaveragediscountinthestate.
CatastrophicPlanAdjustmentForthecatastrophicplan,wecontinuetoassumethe
populationwillalmostentirelyconsistofconsumersunderage30,thus,theyounger
consumersonthisplanwillnotneedtosubsidizeolderconsumers.Therefore,to
developourCatastrophicPlanadjustmentfactor,wehaveestimatedandremovedthe
impacttothe1830yearoldpricethatwasspecificallyduetothechangefromour
currentageslopetothenewstatespecified3:1ageslope.Webelievethatthehardship
exemptionwillhavelittletonoeffectonthecatastrophicpopulationsowehavenot
madeanadjustmentforit.
AdministrativeCostsTheadministrativecostfactoristhereciprocalofourprojected
lossratio.Pleaseseesection11foradescriptiononhowourprojectedlossratiowas
calculated.Theadministrativecostfactorisconstantacrossallplans.

15. Calibration

a. AgeCurveCalibration

TheagecurvecalibrationisusedtoadjustPlanAdjustedIndexRatetoa21yearold.The
agecurvecalibrationiscalculatedas:

1/AverageAgeRatingFactorWeightedbyAgeMembershipSplit

Theaverageageratingfactoristhestandardagecurveweightedbyourmembership
distributioninthestate.Theagecurvecalibrationisapplieduniformlytoallplansandis
demonstratedinAppendixA.

Duringthefilingreviewprocess,theexpectedageshiftbetween2013and2015was
incorporatedintheindexratedevelopment.

b. GeographicFactorCalibration

Theratingareafactorsusedinour2014pricingwereusedinthedevelopmentoffactors
for2015,withtheexceptionofadjustmentsinRatingAreas2,3,and10.Tocalibrate,we

ActuarialMemorandumMissouriFormsTIM14.POL.ONE.MO,
TIM14.POL.ONE.MO,TIM14.POL.IRX.MO,TIM14.POL.OVI.MO,
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Page16

firstused2013membershipandbalancedtheoverallstateareafactortoa1.0togetthe
areafactorsonthebasisofour2013pricingexperienceperiod.Secondly,weusedthe
projected2015membershipbyratingareaandreweightedtheareafactorsagainto
determinetheprojectedstateaverage.Theresultingstateaveragefactorinthisstate
was0.983.Thismarketwidecalibrationfactoristhenappliedafterthedeterminationof
theplanadjustedindexratesandtheindividualareafactorsaredividedbyittocalibrate
themarketaveragebacktoa1.0.

Thetablebelowshowstheresultingweightedaveragegeographicfactorof1.000forthe
statealongwithrelativityfactorsforeachratingareawithinthestateandtheir
correspondingprojectedmemberdistributions.

Rating
Area

2015IM
Member
Distribution

1
2
3
4
5

8.1%
10.0%
18.5%
4.3%
17.0%

2015
Weighted
IMArea
Factors
0.93
1.06
1.00
1.08
1.00

6
7
8
9
10

6.1%
3.7%
17.0%
8.2%
7.2%

1.10
0.94
0.94
0.92
1.11

Total
100%
1.000

Duringthefilingreviewprocess,thisgeographicshiftbetween2013and2015was
incorporatedintheindexratedevelopment.Thegeographiccalibrationisnow1.0.

16. ConsumerAdjustedPremiumRate

TheConsumerAdjustedPremiumRateisthefinalpremiumrateforaplanthatischargedtoan
individualorfamily.TheConsumerAdjustedPremiumRateisdevelopedbycalibratingthePlan
AdjustedIndexRatetotheagecurveandgeographythenapplyingtheratingfactorsspecifiedby45
CFRPart147,147.102.Theseratingfactorsaredescribedbelow.Theratingfactorscanbefoundin
theattachedrateexhibitfile.

AreaFactorsSeeaboveforanexplanationofthedevelopmentoftheareafactors.The
Areafactorisconstantacrossallplansandisbalancedtoequal1.0intotalforthestate,as

ActuarialMemorandumMissouriFormsTIM14.POL.ONE.MO,
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Page17

describedabove.
AgeFactorsTheagecurveusedtosettheagefactorsisthestandardagecurvesetbyHHS.
Theagefactorsaresetrelativetotheprojectedaverageageusedintheagecurve
calibrationabove.
TobaccoStatusAregressionbasedonnationwide2012and2013experiencewasusedto
calculateacompositesmokerfactorof1.20.Thenontobaccouserfactoris1.0.

17. AVMetalValues

TheHHSActuarialValueCalculator(AVC)wasusedtogeneratetheAVvaluesandmetalvalues
forthemajorityoftheplansinourportfolio.ThereareaselectnumberofAssurantHealthplans
thatuseanacceptablealternativemethodologytogenerateAVs.Themethodologyusedto
developtheseplansAVsisdetailedbelow.Pleasenotethatthesearethesameadjustments
thatwereusedinourpriorfiling,whichwefeelisappropriategiventhattheAVChasnotbeen
updated.
1.SpecialtyHighCostDrugs
ApplicablePlans:Bronze4,Bronze5

SpecialtyDrugsforAssurantHealthplanswithaseparateRxdeductible/coinsurancewillgo
towardsthemedicaldeductible/coinsurance.TheHHSAVCdoesnotallowfortheusertospecify
thatspecialtydrugsshouldgotothemedicaldeductibleandcoinsurancewheninputtingaplan
designwithaseparatedrugdeductible.Thefollowingisatabledetailingtheaveragecostand
scriptsfromtheBronzeRxcontinuancetableintheHHSAVC:

AvgCostper
Avg
%ofTotal
RxCategory
EE
Scripts
Scripts
Generics
$178.03
5.94
59.2%
PreferredBrand
$534.99
3.55
35.4%
NonPreferredBrand
$117.58
0.51
5.1%
SpecialtyHighCost
$102.41
0.04
0.3%
Total
$933.01
10.04
100%

Sincethefrequencyofspecialtyhighcostdrugsisverylowcomparedtotheotherdrug
categories,Iamcertifyingthattheimpactofthespecialtyhighcostdrugsbeingsubjectto
medicaldeductible/coinsuranceinsteadofdrugdeductible/coinsurancewillbeinsignificantto
theAV.

2.RxBrandDeductibleAccumulation
ApplicablePlans:Bronze4,Bronze5

BasedonthedocumentationintheHHSAVC,servicesthathavebothdeductiblesandcopays
willbevaluedasthoughthecopayispaidfirst,withtheremaindergoingtowardsthe
deductible.However,forourplanswithaseparatedrugdeductible,thecopayswillonlyapply

ActuarialMemorandumMissouriFormsTIM14.POL.ONE.MO,
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afterthedeductibleisreached.Toaccountforthis,wehavedeterminedtheequivalent
coinsurancerateforthebranddrugsandusedthatinplaceofthebrandcopays.

Plan
BrandCopay(pref/nonpref)
AVw/noRxDed
EquivalentCoins
Bronze4
$50/$75
62.1%
61%/61%
Bronze5
$50/$75
62.8%
61%/61%

3.OfficeVisitLimits
ApplicablePlans:Bronze2,Silver2,Silver4

OfficevisitcopaylimitsforAssurantHealthplanswillapplytoprimarycareandspecialtycare
officevisitsintotal.TheHHScalculatoronlyallowsfortheusertoapplycopaylimitstoprimary
carevisits.Theaveragefrequenciesforofficevisitsfromthebronzeandsilvercopaylimitsare
detailedbelow:

AvgFrequency AvgFrequency

PCP
SP
Total
PCP%ofTotal
BronzeCombinedTable
1.36
0.90
2.26
60%
SilverCombinedTable
1.57
0.94
2.51
63%
AssumedPCP

%ofTotal
60%

Usingtheassumptionthat60%ofofficevisitsareprimarycare,thetablebelowdetailsthe
numberofvisitsthatwouldbeprimarycarevs.specialtyfora4totalvisitlimitanda10total
visitlimit.
VisitLimit PCP%
PCPVisits
SPVisits
4
60%
2
2
10
60%
6
4

Therefore,foraplanwitha4copaylimit,a2copaylimitwasinputtedforprimarycare,and
likewisefora10visitlimit,a6copaylimitwasinputted.Thevaluecalculatedbelowforthe
Bronze2planwassubtractedfromtheHHSAVtoaccountforthevisitlimitsonspecialtycare.
Forthesilverplans,movingfromanunlimitedPCPcopaytoa4copaylimithasanegligible
effectontheAV.Therefore,IamcertifyingthattheAVimpactofaspecialistcopaylimitonthe
Silver2andSilver4planswillbeinsignificant.

Bronze2
AVNoCopay(a)
59.0%
AVUnlimited$35PCPCopay(b)
61.3%
AV2Visit$35Copay(c)
60.2%
ImpactofNocopaytounlimited(d=ba)
2.3%

ActuarialMemorandumMissouriFormsTIM14.POL.ONE.MO,
TIM14.POL.ONE.MO,TIM14.POL.IRX.MO,TIM14.POL.OVI.MO,
TIM14.POL.RXC.MO,TIM14.POL.OVC.MO,andTIM14.POL.CAT.MO

ImpactofNocopaytoXvisitlimit(e=ca)
NetImpact(f=(de)/d)

AVUnlimited$35SPCopay(g)
Est.AVImpactof2VisitSPLimit(h=(ga)*f)

Page19

1.2%
48%

60.5%
0.7%

Plan
Bronze2
Silver2
Silver4

AVImpact
0.7%
0.0%
0.0%

4.$500FirstDollarD/X/LBenefit
ApplicablePlans:Silver3,Silver4

AssurantHealthwillhavetwosilverplansthathavea$500firstdollarLabandXRaybenefit.In
ordertoevaluatetheactuarialvalueofthisbenefit,anewcontinuancetablehadtobecreated
sincetheHHSAVCcannotcalculatetheimpactoffirstdollarbenefits.
TheclaimcostbasiswasselectedastheactuarialcontinuancetablesoftheHHSAVC.The
continuancetablesoftheHHSactuarialtablesarecomprisedofclaimcostssegregatedby
servicecategory,plusanallowanceforadditionalclaimcostsexpectedfromhighriskpools.
Continuancetableswerebuilttoremovetheadditionalcostofthehighrisktables.Thevalue
addedtothetableswasasetdollaramount,withoutallocationtotheseparateservicecategory
claimcosts.Twoaggregatetableswerebuilt,onereflectingallservicecategoriesandthesecond
reflectingallservicecategorieswithoutLabandXRay,bothofthesetablesexcludingthehigh
riskpooladditionalcosts.

Expectedclaimcostsweredevelopedforeachmetallevelatadeductiblelevelthatgenerates
theprescribedmetalactuarialvalue,withanintegratedmedicalanddrugdeductible.

AcontinuancetableofLabandXRaybenefitswasbuiltfromdatafromMilliman.Thetablewas
adjustedsothattotalclaimcostsofLabandXraybenefitswereequaltotheamountofclaims
forLabandXRaysundereachmetalbenefitlevel.Thecontinuancetablewassplitinto
professionalandtechnicalbytheuseofalevelproportionacrossallaverageclaimlevels.

Thecontinuancetablewasutilizedtoderivea$500firstdollarcoveragebenefit.Remaining
claimswerethenappliedtothebaseplandeductible.Eachmetalplancontinuancetablewas
reliedontoderivethisvalue.

Belowarethecalculationsofthe$500firstdollarlabandXraybenefitresultingfromthe
processdescribedabove:

ActuarialMemorandumMissouriFormsTIM14.POL.ONE.MO,
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Silver3
$3,136

Silver4
$2,889

ClaimCostofPlanatMetalLevel(a)
includesallmedicalandpharmacybenefits

ClaimCostofPlanatMetalLevel(b)
$2,854
$2,617
nobenefitsforLabandXRay

ValueofLabandXRay(c)
$164
$164
firstdollarbenefits,upto$500

AdditionalValueofLabandXRay,appliedagainstdeductible(d)
$166
$154
includesanestimateofimpactofdeductible

NewEstimateofMedicalClaimCoste=(b+c+d)
$3,183
$2,935

RiderAddonCost(e/a1):
1.5%
1.6%

Plan
AVImpact

Silver3
1.5%

Silver4
1.6%

5.OneDeductiblePlans
Affectedplans:1DedBronze1,1DedBronze2

TheOneDeductibleproductdesignconsistsofasinglefamilydeductibleforplanswithmore
than1member.ThescopeofthisproductdesignisoutsidethoseallowedbytheHHSAVC.

AHHScontinuancetablewasadjustedthatreplicatedresultsoftheBronzelevelAVsfromthe
HHSAVC,usinganintegrateddeductible.

ThisBronzelikecontinuancetablewasconjugatedwithitselftorepresenttheexpectedclaims
of2,3,4,5,6,or7membersunderaunifiedfamilydeductible.

ExpectedmemberlevelAVsarethendevelopedfromaninputtedplandesign,foreachof
sevendifferentcontinuancetables.AnaggregateplanlevelActuarialValueisdevelopedfroma
businessweightingbyfamilysize.Thefollowingtableshowsthecalculationoftheaggregate.

Numberof
Members
MixofBusiness
1DedBronze1AVs
1DedBronze2AVs
1
43%
61.0%
61.4%
2
19%
51.3%
51.9%
3
13%
55.4%
56.0%
4
15%
59.4%
59.7%
5
7%
63.1%
63.2%

ActuarialMemorandumMissouriFormsTIM14.POL.ONE.MO,
TIM14.POL.ONE.MO,TIM14.POL.IRX.MO,TIM14.POL.OVI.MO,
TIM14.POL.RXC.MO,TIM14.POL.OVC.MO,andTIM14.POL.CAT.MO

6
7+

2%
1%

Page21

66.3%
69.1%

66.5%
69.6%

AggregateActuarialValue:
58.5%
58.9%

TheplanportfolioforAssurantHealthisincludedinAppendixC.ScreenshotsoftheAV
calculationscanbefoundinAppendixD.

18. AVPricingValues

TheAVpricingvaluesincludetheAVs,calculatedasdescribedabove,inadditiontoan
adjustmentforutilizationdifferencesweexpectduetoplancostsharingdesign.Whilewe
understandthedifficultyindifferentiatingincreasedutilizationfromanincreasedriskprofile,
wedofeelitisappropriatetoadjustlowermembercostsharingplansforincreasedutilization.
IntheActuarialValueCalculatorMethodologydocumentreleasedbyHHS,HHSstatesthat
spendingisaffectedbyplandesignthroughinduceddemand,andtheyinturnhaveexplicitly
differentiatedandestimatedtheimpactofinducedutilizationbymetallevel.Aninternalstudy
hasconfirmedthatinducedutilizationisrelevantandsuggeststhattheHHSdefinedinduced
utilizationfactorsmaybeconservative.Resultsfromtheinternalstudyareasfollows.

BronzePlanLiabilityRiskScore
LOB
IM

<$5,000
Ded(a)

>=$5,000
Ded(b)

0.50 0.42

AllowedPerMemberPerYear

Increase
(c=a/b1)

<$5,000Ded
(d)

>=$5,000
Ded(e)

Increase
(f=d/e)

InducedUtilization
(g=(1+f)/(1+c)1)

17%

$2,897

$2,059

41%

20%

Sincewedonthaveenoughcredibilitytodetermineseparateinducedutilizationfactorsfor
eachmetallevel,weareapplyingtheprescribedHHSinducedutilizationfactorsusedintheHHS
riskscoretoourplans.

Theothervaluesusedindeterminingtheplanadjustedindexrateareexplainedinthe
applicablesectionabove.Pleaseseetheattachedrateexhibitsfortheportionofthevaluethat
isduetotheallowedplanmodifiers.

19. MembershipProjections

PleaseseeAppendixEforprojectedexperiencein2015.Ourprojectionof2015membermonths
wasdevelopedbycombiningthefollowingpiecesofinformation:

2014openenrollmentsalesandexpected2015openenrollmentsales
PoliciesthathaverolledtoanACAcompliantplanthrough4/1/2014

ActuarialMemorandumMissouriFormsTIM14.POL.ONE.MO,
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PoliciesthatweexpecttorolltoanACAcompliantplanthroughtheendof2014,
includingthosethatmaykeeptheircurrentNonACAcomplaintplanin2014androllto
anACAcompliantplanin2015
QualifiedLifeEventsalesoutsideofopenenrollmentexpectedeachyear

Wemodeledthemembershiponamonthlybasisthroughtheendof2015usingourmonthly
lapseratesbymetallevelandexpectedrolldateforeverypolicywithinthestatethatisnotyet
onanACAcompliantplan.Theexpectedmembercountduring2015foreachmonthisthen
addeduptoarriveatthetotalmembermonthsexpectedin2015.Anydifferencesbetweenthe
currentdistributionofprojectedmembermonthsandcurrentmetallicmembershipdistribution
wouldbeattributedtoanymetallicrollsduringtheyearandadditionalexchangesales,if
applicable.

20. TerminatedProducts

NongrandfatheredproductsonformsTIM.CER.MO,227,244,and553willbediscontinued
beginning1/1/2014.Theseproductsareincludedintheexperienceperioddata.

Inthisstate,policyholdershavetheoptiontocontinuetheirplanunderthePresident's
transitionalmemorandum,exceptthoseonForm554.Theseproductsareincludedinthe
experienceperioddata.

21. PlanType

All2015IndividualMedicalPlanswillbePPOplans.

22. WarningAlerts
Adescriptionofthewarningalertsfromtheunifiedratereviewtemplateisbelow:

1. Awarningappearsbecausehistoricalrateincreaseswerenotenteredforourterminated
products.Theinstructionsfortheunifiedratereviewtemplatespecificallystatethatthese
arenotrequired.

23. EffectiveRateReviewInformation

None.

24. Reliance

IndevelopingthisratefilingIrelieduponinformationprovidedbyotherswithinmydepartment,
aswellasoninformationprovidedbyotherdepartmentswithintheorganization.Ihave
reviewedthisinformationforreasonableness,andIconsiderittobereliable.

ActuarialMemorandumMissouriFormsTIM14.POL.ONE.MO,
TIM14.POL.ONE.MO,TIM14.POL.IRX.MO,TIM14.POL.OVI.MO,
TIM14.POL.RXC.MO,TIM14.POL.OVC.MO,andTIM14.POL.CAT.MO

Page23

25. ActuarialCertification

IamamemberoftheAmericanAcademyofActuaries.Tothebestofmyknowledgeand
judgment,

1. Thisratefilingisincompliancewiththeapplicablelawsandregulationsconcerning
premiumratedevelopmentinthisstateandthebenefitsarereasonableinrelationshipto
premiums.
2. Theprojectedindexrateis:
a. IncompliancewithallapplicableStateandFederalStatutesandRegulations.
b. DevelopedincompliancewiththeActuarialStandardsofPractice.
c. Reasonableinrelationtothebenefitsprovidedandthepopulationanticipatedtobe
covered.
d. Neitherexcessivenordeficient.
3. Theindexrateandonlytheallowablemodifiersasdescribedin45CFR156.80(d)(1)and45
CFR156.80(d)(2)wereusedtogenerateplanlevelrates.
4. Thepercentoftotalpremiumthatrepresentsessentialhealthbenefitsincludedin
Worksheet2,SectionsIIIandIVwerecalculatedinaccordancewithactuarialstandardsof
practice.Tothebestofmyknowledge,thepercentoftotalpremiumthatrepresentsEHBs
is100%.
5. TheHHSAVCalculatorwasusedtodeterminetheAVMetalValuesforallplansshownin
Worksheet2ofthePartIUnifiedRateReviewTemplateexceptforthosedocumentedin
thismemorandum.TheAVvaluesforthosedocumentedinthememorandumwere
developedbasedononeoftheacceptablealternativemethodsandareinaccordancewith
generallyacceptedactuarialprinciplesandmethodologies.

______________
BrentWiskirchen,FSA,MAAA
AssociateActuaryReformPricing
10/2014