[Code of Federal Regulations]

[Title 42, Volume 2]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 42CFR403.253]



[Page 42]

 

                         TITLE 42--PUBLIC HEALTH

 

                    CHAPTER IV--CENTERS FOR MEDICARE

                          & MEDICAID SERVICES,

                        DEPARTMENT OF HEALTH AND

                             HUMAN SERVICES

 

PART 403_SPECIAL PROGRAMS AND PROJECTS--Table of Contents

 

                Subpart B_Medicare Supplemental Policies

 

Sec. 403.253  Calculation of benefits.



    (a) General provisions. (1) Except as provided for in paragraph 

(a)(2) of this section, calculate the amount of ``benefits'' by--

    (i) Adding the present values on the initial calculation date of--

    (A) Expected incurred benefits in the loss ratio calculation period, 

to--

    (B) The total policy reserve at the last day of the loss ratio 

calculation period: and

    (ii) Subtracting the total policy reserve on the initial calculation 

date from the sum of these values.

    (2) To calculate the amount of ``benefits'' in the case of community 

or pool rated individual or group policies rerated on an annual basis, 

calculate the expected incurred benefits in the loss ratio calculation 

period.

    (b) Calculation of total policy reserve--(1) Option for calculation. 

The insuring organization must calculate ``total policy reserve'' 

according to the provisions of paragraph (b) (2) or (3) of this section.

    (2) Total policy reserve: Federal provisions. (i) ``Total policy 

reserve'' means the sum of--

    (A) Additional reserve; and

    (B) The reserve for future contingent benefits.

    (ii) Additional reserve means the amount calculated on a net level 

reserve basis, using appropriate values to account for lapse, mortality, 

morbidity, and interest, that on the valuation date represents--

    (A) The present value of expected incurred benefits over the loss 

ratio calculation period; less--

    (B) The present value of expected net premiums over the loss ratio 

calculation period.

    (iii) Net premium means the level portion of the gross premium used 

in calculating the additional reserve. On the day the policy is issued, 

the present value of the series of those portions equals the present 

value of the expected incurred claims over the period that the gross 

premiums are computed to provide coverage.

    (iv) Reserve for future contingent benefits means the amounts, not 

elsewhere included, that provide for the extension of benefits after 

insurance coverage terminates. These benefits--

    (A) Are predicated on a health condition existing on the date 

coverage ends;

    (B) Accrue after the date coverage ends; and

    (C) Are payable after the valuation date.

    (3) Total policy reserve: State provisions. ``Total policy reserve'' 

means the total policy reserve calculated according to appropriate State 

law or regulation.