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H0825......................................................by STATE AFFAIRS SELF-FUNDED HEALTH CARE PLANS - Adds to existing law relating to joint public agency self-funded health care plans to set forth a declaration of purpose; to define terms; to require registration; to set forth exemptions; to provide qualifications for registration; to provide for application for registration; to provide for grants or denials of applications; to provide for trust fund powers and liability; to provide for investment of trust fund moneys; to require reserves; to provide for records, accounts and annual statements; to exempt plans from taxes; to provide for examination of books, records and accounts; to provide for a board of trustees and administrators; to provide for recovery of depleted funds; to provide for termination of registration; to provide for the liquidation of a trust fund; to authorize rules; to set forth penalties; and to set forth mandated coverage provisions. 03/15 House intro - 1st rdg - to printing Rpt prt - to St Aff 03/16 Rpt out - rec d/p - to 2nd rdg 03/17 2nd rdg - to 3rd rdg 03/22 3rd rdg - PASSED - 66-2-2 AYES -- Anderson, Andrus, Barraclough, Bastian, Bayer, Bell, Bilbao, Black, Block, Boe, Bolz, Brackett, Bradford, Cannon, Chadderdon, Clark, Collins, Crow, Deal, Denney, Edmunson, Ellsworth, Eskridge, Field(18), Field(23), Garrett, Hart, Harwood, Henbest, Henderson, Jaquet, Kemp, Lake, LeFavour, Loertscher, Martinez, Mathews, McGeachin, McKague, Miller, Mitchell, Moyle, Nielsen, Nonini, Pasley-Stuart, Pence, Raybould, Ring, Ringo, Roberts, Rusche, Rydalch, Sali, Sayler, Schaefer, Shepherd(2), Shepherd(8), Shirley, Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Stevenson, Trail, Wills NAYS -- Barrett, Wood Absent and excused -- Bedke, Mr. Speaker Floor Sponsor - Black Title apvd - to Senate 03/23 Senate intro - 1st rdg - to Com/HuRes 03/30 Rpt out - rec d/p - to 2nd rdg 03/31 2nd rdg - to 3rd rdg 04/03 3rd rdg - PASSED - 34-0-1 AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett, Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis, Fulcher, Gannon, Geddes, Goedde, Hill, Jorgenson, Kelly, Keough, Langhorst, Little, Lodge, Malepeai, Marley, McGee, McKenzie, Pearce, Richardson, Schroeder, Stegner, Stennett, Werk, Williams NAYS -- None Absent and excused -- Sweet Floor Sponsor - Cameron Title apvd - to House 04/03 To enrol 04/04 Rpt enrol - Sp/Pres signed - To Governor 04/10 Governor signed Session Law Chapter 415 Effective: 07/01/06
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-eighth Legislature Second Regular Session - 2006IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 825 BY STATE AFFAIRS COMMITTEE 1 AN ACT 2 RELATING TO JOINT PUBLIC AGENCY SELF-FUNDED HEALTH CARE PLANS; AMENDING TITLE 3 41, IDAHO CODE, BY THE ADDITION OF A NEW CHAPTER 41, TITLE 41, IDAHO CODE, 4 TO SET FORTH A DECLARATION OF PURPOSE, TO DEFINE TERMS, TO REQUIRE REGIS- 5 TRATION, TO SET FORTH EXEMPTIONS, TO PROVIDE QUALIFICATIONS FOR REGISTRA- 6 TION, TO PROVIDE FOR APPLICATION FOR REGISTRATION, TO PROVIDE FOR GRANTS 7 OR DENIALS OF APPLICATIONS, TO PROVIDE FOR TRUST FUND POWERS, TO PROVIDE 8 FOR TRUST FUND LIABILITY, TO PROVIDE FOR INVESTMENT OF TRUST FUND MONEYS, 9 TO REQUIRE RESERVES, TO PROVIDE FOR RECORDS, ACCOUNTS AND ANNUAL STATE- 10 MENTS, TO EXEMPT PLANS FROM TAXES, TO PROVIDE FOR EXAMINATION OF BOOKS, 11 RECORDS AND ACCOUNTS, TO PROVIDE FOR A BOARD OF TRUSTEES AND ADMINISTRA- 12 TORS, TO PROHIBIT CERTAIN PECUNIARY INTERESTS IN PLAN MANAGEMENT, TO PRO- 13 HIBIT POLITICAL CONTRIBUTIONS, TO PROVIDE FOR RECOVERY OF DEPLETED FUNDS, 14 TO PROVIDE FOR TERMINATION OF REGISTRATION, TO PROVIDE FOR THE LIQUIDATION 15 OF A TRUST FUND, TO AUTHORIZE RULES, TO PROVIDE FOR THE APPLICABILITY OF 16 OTHER PROVISIONS, TO SET FORTH PENALTIES, TO SET FORTH MANDATED COVERAGE 17 PROVISIONS RELATING TO CHILDREN AND PREGNANCY, TO PROVIDE FOR SERVICES 18 PROVIDED BY GOVERNMENTAL ENTITIES AND TO REQUIRE MAMMOGRAPHY COVERAGE. 19 Be It Enacted by the Legislature of the State of Idaho: 20 SECTION 1. That Title 41, Idaho Code, be, and the same is hereby amended 21 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap- 22 ter 41, Title 41, Idaho Code, and to read as follows: 23 CHAPTER 41 24 JOINT PUBLIC AGENCY SELF-FUNDED HEALTH CARE PLANS 25 41-4101. DECLARATION OF PURPOSE. It is the purpose of this chapter to 26 recognize and provide reasonable public supervision of self-funded plans 27 established by public agencies pursuant to a joint powers agreement in accor- 28 dance with chapter 23, title 67, Idaho Code, for provision of health care ser- 29 vice benefits to employees of public agencies in connection with or as an 30 alternative to insurance and other prepayment plans. 31 41-4102. DEFINITIONS. As used in this chapter: 32 (1) "Administrator" means a person, other than a board member, employed 33 by the board to administer a joint public agency self-funded plan. 34 (2) "Beneficiary" means any individual entitled, under the joint public 35 agency self-funded plan, to payment by the trust fund of any part of all of 36 the cost of any health care service rendered to him. 37 (3) "Board of trustees" or "board" is the board of trustees of the trust 38 fund. 39 (4) "Contribution" means the amount paid or payable by the employer or 40 employee into the trust fund. 41 (5) "Director" means the director of the department of insurance of this 2 1 state. 2 (6) "Joint powers agreement" means an agreement entered into between pub- 3 lic agencies pursuant to chapter 23, title 67, Idaho Code. 4 (7) "Joint public agency self-funded plan" or "self-funded plan" or 5 "plan" means any public agency plan established by a joint powers agreement 6 and under which payment for any disability benefits not otherwise provided for 7 under title 72, Idaho Code (worker's compensation and related laws -- indus- 8 trial commission), medical, surgical, hospital, and other services for preven- 9 tion, diagnosis, or treatment of any disease, injury, or bodily condition of 10 an employee is, or is to be, regularly provided for or promised from funds 11 created or maintained in whole or in part by contributions or payments thereto 12 by a public agency employer, or by a public agency employer and the employees 13 of the public agency, and not otherwise covered by insurance or contract with 14 a health care service corporation, health maintenance organization, or similar 15 other third party prepayment plan. 16 (8) "Person" means any individual, corporation, association, firm, syndi- 17 cate, organization or other entity. 18 (9) "Public agency" means any city, county or political subdivision of 19 this state, including, but not limited to: counties; school districts; highway 20 districts; port authorities; instrumentalities of counties, county hospitals, 21 cities or any political subdivision created under the laws of the state of 22 Idaho; and the state of Idaho and any agency of the state government. "Public 23 agency" also means any group of more than one (1) of the above public agencies 24 acting together pursuant to a joint powers agreement in accordance with chap- 25 ter 23, title 67, Idaho Code. 26 (10) "Trust fund" means a fund established under a joint public agency 27 self-funded plan for receipt of contributions of employers and employees and 28 payment of or with respect to health care service costs of beneficiaries. 29 41-4103. REGISTRATION REQUIRED -- EXEMPTIONS -- NOT SUBJECT TO INSURANCE 30 CODE. (1) No joint public agency self-funded plan shall operate in this state 31 except while registered with the director as hereinafter provided. Joint pub- 32 lic agency self-funded plans already in operation as of July 1, 2006, shall so 33 register within ninety (90) days of the effective date of this act. 34 (2) No registration shall be required of: 35 (a) Any plan established and maintained for the purpose of complying with 36 any worker's compensation law or unemployment compensation disability 37 insurance law; or 38 (b) Any plan that is primarily for the purpose of providing first aid 39 care and treatment, at a dispensary of an employer, for injury or sickness 40 of employees while engaged in their employment. 41 (3) Plans while so registered shall not be deemed to be engaged in the 42 business of insurance and shall not be subject to provisions of the Idaho 43 insurance code except as expressly provided in this chapter. 44 (4) The plan shall provide to each employer participant and to each pro- 45 spective employer participant a written notice stating that the plan is not 46 insurance and does not participate in the state guaranty association. 47 41-4104. QUALIFICATIONS FOR REGISTRATION. No joint public agency self- 48 funded plan shall register, and the director shall not register a joint public 49 agency self-funded plan, which is not qualified as provided in this section. 50 (1) The joint powers agreement must require all contributions to be paid 51 in advance and to be deposited in and disbursed from a trust fund duly created 52 and existing under an adequate written irrevocable trust agreement between the 53 employer or employers and the board. 3 1 (2) The plan must: 2 (a) Have, or provide for, a board of trustees in accordance with this 3 chapter for the administration of the plan; 4 (b) Require that all members of the joint powers agreement comply with 5 the provisions of the joint powers agreement; 6 (c) Provide that the administrator or board on behalf of the plan, as the 7 case may be, shall furnish to each employee-beneficiary of the plan a 8 written statement or schedule adequately and clearly stating all benefits 9 currently allowable under the plan, together with all applicable restric- 10 tions, limitations, and exclusions, and the procedure for filing a claim 11 for benefits; and 12 (d) Otherwise be in compliance with the provisions of this chapter. 13 (3) The allocated trust fund must be actuarially sound; that is, assets 14 and income of the fund must be adequate under reasonable estimates for payment 15 of all benefits promised to beneficiaries by the plan. In determining actuar- 16 ial soundness the director shall also give due consideration to: 17 (a) Applicable stop-loss insurance provided or to be provided the plan by 18 an insurer duly authorized to transact disability insurance in this state; 19 (b) Contracts with health care service corporations or health maintenance 20 organizations authorized to conduct such operations in this state and cov- 21 ering certain of the promised benefits; 22 (c) Other applicable insurance or guarantys; and 23 (d) The nature of the participating entities and other plan factors or 24 provisions for prevention or reduction of adverse selection against the 25 plan by those otherwise eligible to become beneficiaries. 26 (4) The plan shall maintain aggregate stop-loss coverage and specific 27 stop-loss coverage provided by an insurance company authorized to transact 28 insurance in this state in accordance with the annual actuarial opinion of the 29 plan. 30 41-4105. APPLICATION FOR REGISTRATION. (1) Application for registration 31 of a joint public agency self-funded plan for public agencies shall be made to 32 the director, on forms furnished and designed by him. The application shall be 33 signed and verified by at least two (2) of the board members. 34 (2) The application shall be accompanied by: 35 (a) A copy of the joint powers agreement under which the joint public 36 agency self-funded plan will exist and operate; 37 (b) A copy of the proposed written statement of benefits referred to in 38 section 41-4104(2), Idaho Code; 39 (c) A financial statement of the trust fund, if already in existence and 40 operating on July 1, 2006. The statement shall be certified by an indepen- 41 dent certified public accountant according to generally accepted account- 42 ing principles; 43 (d) If not already in existence, a written statement of reasonably pro- 44 jected income and disbursements of the trust fund for the twelve (12) 45 month period commencing with date of application and showing also the 46 amount projected as of the end of such period for claims incurred and not 47 paid and incurred and not reported as certified by an actuary having expe- 48 rience in establishing rates for a self-funded plan and the health ser- 49 vices being provided, and who is also a fellow of the society of actuar- 50 ies, a member of the American academy of actuaries, or an enrolled actuary 51 under the employment retirement income security act of 1974; 52 (e) If not already in existence, a copy of a business plan; 53 (f) A copy of an actuarial study determining adequate rates for the plan. 54 The rates shall not be less than the sum of projected incurred claims for 4 1 the year plus costs of operation plus a reasonable portion of any prior 2 year deficiency less any excess surplus; and 3 (g) Such other relevant documentation and information as the director may 4 reasonably require considering that these entities are public agency plans 5 and not private insurance companies. 6 (3) At the time of filing the application the applicant shall pay to the 7 director a nonrefundable filing fee as provided for by rule. 8 (4) The director shall transmit and account for all fees received by him 9 hereunder as provided in section 41-406, Idaho Code. 10 41-4106. GRANT OR DENIAL OF APPLICATION. The director shall act upon an 11 application for registration of a joint public agency self-funded plan with 12 all reasonable promptness. He may make a reasonable investigation of the pro- 13 posal from the public agency. If the director finds that the application is 14 complete and that the plan meets the qualifications stated in section 41-4104, 15 Idaho Code, he shall issue and deliver a certificate of registration in appro- 16 priate form to the applicant; otherwise, the director shall refuse to register 17 the plan and shall give written notice of such refusal to the applicant, stat- 18 ing the reasons therefor. 19 41-4107. TRUST FUND -- POWERS. In addition to the inherent applicable 20 powers of its public agency members and those of a joint powers entity, the 21 trust fund of a joint public agency self-funded plan shall have power: 22 (1) To have and use an appropriate descriptive name; 23 (2) To sue and be sued in its own name; 24 (3) To contract in its own name. All such contracts in writing shall be 25 signed by the chairman of the board or his or her designee; 26 (4) To borrow money and give security therefor; and 27 (5) To engage exclusively in transactions authorized or required by this 28 chapter, or reasonably incidental thereto. 29 41-4108. TRUST FUND LIABILITY. (1) The trust fund of a joint public 30 agency self-funded plan shall be legally liable for payment of all applicable 31 benefits stated in the statement or schedule of benefits in effect at the time 32 a claim thereunder arises and subject to the terms of the joint powers agree- 33 ment. 34 (2) Funds in the trust fund are fiduciary funds, and are not liable for 35 any obligation of any employer participant in the plan, nor subject to gar- 36 nishment or levy for the obligation of the beneficiary. This subsection (2) 37 shall not be deemed to prohibit levy upon the trust fund by any provider 38 thereof, or its assignee, for health care services rendered a beneficiary if 39 the trust fund has theretofore agreed in writing to pay for the same direct to 40 such provider. 41 41-4109. INVESTMENT OF TRUST FUND. (1) The board may invest reserves and 42 other funds available for the purpose in the trust fund of a joint public 43 agency self-funded plan in the following kinds of investments only: 44 (a) General obligations of the United States government, or of any state, 45 district, commonwealth or territory of the United States, or of any munic- 46 ipality, county, or other political subdivision or agency thereof. 47 (b) Obligations, the payment of principal and interest of which is guar- 48 anteed by any such government or agency. 49 (c) Corporate bonds and similar obligations meeting the requirements 50 specified for investment of funds of insurers under section 41-711, Idaho 51 Code. 5 1 (d) Collateral loans, payment of principal and interest of which is ade- 2 quately secured by securities in which the trust fund could lawfully 3 invest directly. 4 (e) Deposits, savings accounts, and share accounts in established banks 5 and savings and loan associations located in the United States. 6 (2) In addition to investments excluded under subsection (1) of this sec- 7 tion, the board is expressly prohibited from investing trust fund moneys in: 8 (a) Any loan to or security of any employer participating in the plan, or 9 to or of any officer, director, subsidiary or affiliate of any such 10 employer. 11 (b) The security of any person in which a member of the board, adminis- 12 trator, or any consultant of the plan has a direct or indirect material 13 pecuniary interest. 14 (c) Real estate or loans thereon. 15 (d) Any personal loan, other than a collateral loan referred to in sub- 16 section (1)(d) of this section, but subject to paragraphs (a) and (b) of 17 this subsection (2). 18 (3) All such investments shall be made and held in the name of the trust 19 fund, and the interest and yield thereon shall inure to the account of the 20 trust fund. 21 (4) No investment shall be made unless authorized in writing by the board 22 and so shown in the records of the trust fund. 23 (5) Any person who authorizes any investment of trust fund moneys in 24 violation of this section shall, in addition to other penalty therefor, be 25 liable for all loss suffered by the trust fund on account of the investment. 26 (6) No investment made in violation of this section shall constitute an 27 "asset" in any determination of the financial condition of the trust fund. 28 41-4110. RESERVES. (1) A joint public agency self-funded plan shall 29 establish and maintain in its trust fund the following reserves: 30 (a) A reserve in an amount as certified by a member of the American acad- 31 emy of actuaries as being necessary for payment of claims against the 32 trust fund for benefits, including both claims reported and not yet paid 33 and claims incurred but not yet reported. Any joint public agency self- 34 funded plan in existence as of July 1, 2006, shall also have three (3) 35 years from the effective date of this act to fund the applicable reserves. 36 (b) If under the plan periodic contributions of either the employer or 37 employees to the trust fund are payable less frequently than monthly, 38 there shall be a reserve for unearned contributions as computed pro rata 39 on the basis of the unexpired portion of the period for which the contri- 40 bution has been paid. 41 (2) In any determination of the financial condition of the trust fund the 42 claims reserve and reserve for unearned contributions shall constitute liabil- 43 ities. 44 41-4111. RECORDS AND ACCOUNTS -- ANNUAL STATEMENT. (1) The board of a 45 joint public agency self-funded plan shall cause full and accurate records and 46 accounts to be entered and maintained covering all financial transactions and 47 affairs of the trust fund. 48 (2) Within ninety (90) days after the close of a fiscal year of the plan, 49 the board shall make an annual statement in writing summarizing the financial 50 transactions of the trust fund for such fiscal year and its financial condi- 51 tion at the end of such year in accordance with this chapter and generally 52 accepted and applicable accounting principles. The statement shall be in the 53 form as prescribed by the director and the financial information therein shall 6 1 be certified by an independent public accountant by whom such information was 2 prepared. The board shall keep a copy thereof on file in the business office 3 of the plan where it shall be available at all reasonable times for a period 4 of not less than three (3) years for review by any beneficiary and shall 5 deliver a copy of a financial summary to each participating employer. 6 (3) On or before expiration of such ninety (90) day period the board 7 shall cause an original of the annual statement to be filed with the director. 8 The joint public agency self-funded plan shall not be subject to any filing 9 fees provided for by rule. The director may grant a thirty (30) day extension 10 of the time for filing the annual statement. 11 (4) The board shall also file quarterly supplemental financial reports in 12 a form and at the times prescribed by the director. 13 (5) The annual and quarterly reports required under this section shall be 14 public records. 15 41-4112. TAXES -- EXEMPTION. Any plan established under this chapter is 16 not subject to any state tax, including a premium or maintenance tax. 17 41-4113. EXAMINATION OF BOOKS, RECORDS AND ACCOUNTS. (1) The books, 18 records, accounts and affairs of a joint public agency self-funded plan shall 19 be subject to examination by the director, by competent examiners duly autho- 20 rized by him in writing, at such times or intervals as the director deems 21 advisable. The purposes of the examination shall be to determine compliance of 22 the plan with applicable laws, financial condition and actuarial adequacy of 23 its trust fund, treatment accorded beneficiaries, and as to other factors 24 materially related to the plan's management and operation. 25 (2) The board shall promptly make the books, records and accounts of the 26 plan and trust fund available in Idaho to the examiner and otherwise facili- 27 tate the examination. 28 (3) The examiner shall conduct the examination expeditiously, make his 29 report of the examination in writing, and deliver a copy thereof to the board 30 and to the director. The board shall have four (4) weeks after receipt of the 31 report within which to recommend to the director such corrections or changes 32 therein as the board may deem appropriate. After making such corrections or 33 changes, if any, as he deems proper, the director shall file the report in his 34 office as a document open to public inspection, and deliver to the board a 35 copy of the report as so corrected or changed. 36 (4) Since a joint public agency self-funded plan is funded by local tax 37 moneys, the costs of the examination shall not be borne by the plan or trust 38 fund of the plan. 39 41-4114. BOARD OF TRUSTEES -- ADMINISTRATORS. (1) The trust shall be gov- 40 erned and managed by a board of trustees. This board shall consist of members 41 elected by the governing boards of the member public agencies. The composition 42 and membership of the board shall be established in the joint powers agreement 43 between the members. The process and procedure for conducting the election and 44 determining the members shall be set forth in the joint powers agreement 45 establishing the plan, except that the election must be conducted, completed 46 and results certified by December 31 of each year in which an election for 47 members is conducted. Boards of joint public agency self-funded plans existing 48 as of July 1, 2006, shall be deemed to be in compliance with the establishment 49 requirements of this chapter but shall conduct future elections in accordance 50 with the requirements of this chapter. 51 (2) An individual, firm or corporation may be an administrator of a plan. 52 (3) The board shall cause all individuals handling receipts and disburse- 7 1 ments for the trust fund to be covered under a dishonesty insurance policy or 2 surety bond in an amount not less than ten percent (10%) of the annual contri- 3 butions to the plan or as the director may deem reasonably advisable, issued 4 by an insurer authorized to transact such insurance in this state. This policy 5 shall only be canceled upon giving no less than thirty (30) days' notice to 6 the board and to the director. The cost of the insurance shall be borne by the 7 trust fund. The amount of any policy or bond required under this section shall 8 be not less than twenty-five thousand dollars ($25,000) or more than five hun- 9 dred thousand dollars ($500,000). 10 41-4115. PROHIBITED PECUNIARY INTERESTS IN PLAN MANAGEMENT. No board mem- 11 ber, administrator or other person having responsibility for the management of 12 a joint public agency self-funded plan or the investment or other handling of 13 plan funds shall: 14 (1) Receive directly or indirectly or be pecuniarily interested in any 15 fee, commission, compensation, or emolument, other than salary or other com- 16 pensation regularly fixed and allowed for services regularly rendered to the 17 plan, arising out of any transaction to which the trust fund is or is to be a 18 party; 19 (2) Receive compensation as a consultant to the plan while also acting as 20 a board member or administrator, or as an employee of either; or 21 (3) Have any direct or indirect material pecuniary interest in any loan 22 or investment of the trust fund. 23 41-4116. POLITICAL CONTRIBUTIONS PROHIBITED. No board shall make or know- 24 ingly permit the making, directly or indirectly, of any political contribution 25 by or from any joint public agency self-funded plan trust fund. 26 41-4117. RECOVERY OF DEPLETED FUNDS. If after notice and hearing the 27 director finds that any joint public agency self-funded plan trust fund has 28 been depleted by reason of any wrongful or grossly negligent act or omission 29 of a board member or any other person, he shall transmit a copy of his find- 30 ings to the attorney general of this state, who may bring an action in the 31 name of the people of this state, or intervene in any action brought by or on 32 behalf of an employer or beneficiary, for the recovery of the amount of such 33 depletion, for the benefit of the trust fund. 34 41-4118. TERMINATION OF REGISTRATION. (1) The director may terminate the 35 registration of a joint public agency self-funded plan upon written request of 36 the board, or if he finds, after an examination, that the trust fund is insol- 37 vent. 38 (2) The director may terminate the registration of a plan for violation 39 of this chapter, or failure of the board to file the annual statement with the 40 director within the time required under section 41-4111, Idaho Code, or if he 41 finds, after an examination of the trust fund or the plan: 42 (a) That the plan no longer meets the qualifications required by sections 43 41-4101 and 41-4110, Idaho Code, and that the deficiency will not or can- 44 not be remedied within a reasonable time; 45 (b) That as a matter of frequent practice the benefits promised by the 46 plan are not being fairly and promptly paid; 47 (c) That the cost of administering the plan is excessive in relation to 48 the character and volume of service being rendered in the administration; 49 or 50 (d) That the trust fund has been subject to fraudulent or dishonest prac- 51 tices on the part of the board, administrator, consultant, any participat- 8 1 ing employer, or beneficiaries. 2 (3) The director shall so terminate the registration by his written order 3 given to the board and to each employer last of record a participant in the 4 plan. The order shall state the grounds upon which it is made and its effec- 5 tive date. The order shall be subject to judicial review in the same manner as 6 applies to official orders of the director in general. 7 41-4119. LIQUIDATION OF TRUST FUND. (1) Upon termination of registration 8 the trust fund of a joint public agency self-funded plan shall be liquidated. 9 (2) Liquidation of a solvent joint public agency self-funded plan shall 10 be conducted by its trustee under a plan of liquidation in writing filed with 11 the director, found by the director to be fair and equitable to all persons 12 having a pecuniary interest in the trust fund, and approved by him. Any bal- 13 ance remaining after payment or adequate provision for all claims and charges 14 against the trust fund shall be disposed of in such manner as is provided for 15 in the plan of liquidation. Unless under the plan of liquidation liability for 16 all unpaid claims and obligations of the trust fund has been assumed by other 17 financially responsible person or persons, the existence of surplus funds for 18 such disposition shall not be determined prior to expiration of two (2) years 19 after termination of the registration. 20 (3) The liquidation of an insolvent joint public agency self-funded plan 21 shall be carried out by the director in accordance with chapter 33, title 41, 22 Idaho Code (supervision, rehabilitation and liquidation), and for this purpose 23 the joint public agency self-funded plan shall be deemed to be an insolvent 24 domestic insurer. 25 41-4120. RULES. (1) The director may make reasonable rules necessary for 26 or as an aid to effectuation of any provision of this chapter. No such rule 27 shall extend, modify, or conflict with any provision of this chapter and the 28 reasonable implications thereof nor any of the administrative, statutory or 29 constitutional rights and responsibilities of a public agency. 30 (2) Such rules, or any amendment thereof, shall be made by the director 31 in accordance with chapter 52, title 67, Idaho Code. 32 41-4121. OTHER PROVISIONS APPLICABLE. Chapter 2, title 41, Idaho Code 33 (the director of the department of insurance), chapter 13, title 41, Idaho 34 Code (trade practices and frauds), and sections 41-2141(1) and 41-2216(1), 35 Idaho Code (coordination of benefits, except to the extent the rules pertain 36 to medicare coverage), to the extent applicable and not in conflict with the 37 express provisions of this chapter, shall also apply with respect to joint 38 public agency self-funded plans, and for the purpose such plans shall be 39 deemed to be "insurers." 40 41-4122. PENALTIES. (1) Any person who violates or causes or induces 41 violation of any provision of this chapter or any lawful rule of the director 42 issued hereunder, shall be subject to an administrative penalty for each 43 violation of not more than one thousand dollars ($1,000) for an individual and 44 not more than five thousand dollars ($5,000) for any entity. 45 (2) Any person who makes a false statement or representation of a mate- 46 rial fact, knowing it to be false, or who knowingly fails to disclose a mate- 47 rial fact in any application, examination, or statement required under this 48 chapter or by lawful rule of the director hereunder, shall be subject to pen- 49 alty as provided in subsection (4) of this section. 50 (3) Any person who makes a false entry in any book, record, statement, or 51 report required by this chapter or lawful rule of the director thereunder to 9 1 be kept by him for any joint public agency self-funded plan, with intent to 2 injure or defraud the fund or any beneficiary thereunder, or to deceive any 3 person authorized or entitled to examine the affairs of the plan, shall be 4 subject to penalty as provided in subsection (4) of this section. 5 (4) For each such violation, act or omission referred to in subsections 6 (2) and (3) of this section, unless greater penalty is provided therefor under 7 any other applicable law, the offender shall upon conviction thereof be sub- 8 ject to a fine of not more than fifteen thousand dollars ($15,000) and to 9 imprisonment for not more than fifteen (15) years, or to both such fine and 10 imprisonment. 11 41-4123. COVERAGE FROM MOMENT OF BIRTH -- COMPLICATIONS OF PREGNANCY. (1) 12 Every joint public agency self-funded plan issued in this state or providing 13 coverage to any covered family residing within this state, shall contain a 14 provision granting immediate accident and sickness coverage, from and after 15 the moment of birth, to each newborn child or infant of any covered family, 16 including a newborn child placed with the adoptive covered family within sixty 17 (60) days of the adopted child's date of birth. Coverage under the joint pub- 18 lic agency self-funded plan for an adopted newborn child placed with the adop- 19 tive covered family more than sixty (60) days after the birth of the adopted 20 child shall be from and after the date the child is so placed. Coverage pro- 21 vided in accordance with this section shall include, but not be limited to, 22 coverage for congenital anomalies. For the purposes of this section, "child" 23 means an individual who has not reached eighteen (18) years of age as of the 24 date of the adoption or placement for adoption. For the purposes of this sec- 25 tion, "placed" shall mean physical placement in the care of the adoptive cov- 26 ered family, or in those circumstances in which such physical placement is 27 prevented due to the medical needs of the child requiring placement in a medi- 28 cal facility, it shall mean when the adoptive covered family signs an agree- 29 ment for adoption of such child and signs an agreement assuming financial 30 responsibility for such child. Prior to legal finalization of adoption, the 31 coverage required under the provisions of this subsection (1) as to a child 32 placed for adoption with a covered family continues in the same manner as it 33 would with respect to a naturally born child of the covered family until the 34 first to occur of the following events: 35 (a) The date the child is removed permanently from that placement and the 36 legal obligation terminates; or 37 (b) The date the covered family rescinds, in writing, the agreement of 38 adoption or agreement assuming financial responsibility. 39 No such plan may be issued or amended if it contains any disclaimer, 40 waiver, or other limitation of coverage relative to the coverage or insurabil- 41 ity of newborn or adopted children or infants of a covered family covered from 42 and after the moment of birth that is inconsistent with the provisions of this 43 section. 44 (2) An insurer shall not restrict coverage under a joint public agency 45 self-funded plan of any dependent child adopted by a participant or benefi- 46 ciary, or placed with a participant or beneficiary for adoption, solely on the 47 basis of a preexisting condition of the child at the time the child would 48 otherwise become eligible for coverage under the plan, if the adoption or 49 placement for adoption occurs while the participant or beneficiary is eligible 50 for coverage under the plan. 51 (3) No joint public agency self-funded plan which provides maternity ben- 52 efits for a person covered continuously from conception shall be issued, 53 amended, delivered, or renewed in this state if it contains any exclusion, 54 reduction, or other limitations as to coverage, deductibles, or coinsurance 10 1 provisions as to involuntary complications of pregnancy, unless such provi- 2 sions apply generally to all benefits paid under the plan. If a fixed amount 3 is specified in such plan for surgery, the fixed amounts for surgical proce- 4 dures involving involuntary complications of pregnancy shall be commensurate 5 with other fixed amounts payable for procedures of comparable difficulty and 6 severity. In a case where a fixed amount is payable for maternity benefits, 7 involuntary complications of pregnancy shall be deemed an illness and entitled 8 to benefits otherwise provided by the plan. Where the plan contains a mater- 9 nity deductible, the maternity deductible shall apply only to expenses result- 10 ing from normal delivery and cesarean section delivery; however, expenses for 11 cesarean section delivery in excess of the deductible shall be treated as 12 expenses for any other illness under the plan. 13 For purposes of this subsection (3), involuntary complications of preg- 14 nancy shall include, but not be limited to, puerperal infection, eclampsia, 15 cesarean section delivery, ectopic pregnancy, and toxemia. 16 All plans subject to this subsection (3) and issued, amended, delivered, 17 or renewed in this state shall be construed to be in compliance with this sec- 18 tion, and any provision in any such plan which is in conflict with this sec- 19 tion shall be of no force or effect. 20 41-4124. SERVICES PROVIDED BY GOVERNMENTAL ENTITIES. (1) From and after 21 July 1, 2006, no joint public agency self-funded plan shall be issued in Idaho 22 which excludes from coverage services rendered the subscriber while a resident 23 in an Idaho state institution, provided the services to the subscriber would 24 be covered by the contract if rendered to him outside an Idaho state institu- 25 tion. 26 (2) From and after July 1, 2006, no joint public agency self-funded plan 27 may contain any provision denying or reducing benefits otherwise provided 28 under the policy for the reason that the person insured is receiving health or 29 mental health care or developmental services provided by the department of 30 health and welfare, whether or not the department of health and welfare bases 31 its charges for such services on the recipient's ability to pay. Provided, 32 nothing in this section shall prevent the issuance of a contract which 33 excludes or reduces benefits where the charge level or amount of the charge 34 levied by a governmental entity for such services would vary or be affected in 35 any way by the existence of coverage under a joint public agency self-funded 36 plan. 37 41-4125. MAMMOGRAPHY COVERAGE. (1) From and after July 1, 2006, all joint 38 public agency self-funded plans which provide coverage for the surgical proce- 39 dure known as a mastectomy which are delivered, issued for delivery, continued 40 or renewed in this state shall provide minimum mammography examination or 41 equivalent examination coverage. Such coverage shall include at least the fol- 42 lowing benefits: 43 (a) One (1) baseline mammogram for any woman who is thirty-five (35) 44 through thirty-nine (39) years of age. 45 (b) A mammogram every two (2) years for any woman who is forty (40) 46 through forty-nine (49) years of age, or more frequently if recommended by 47 the woman's physician. 48 (c) A mammogram every year for any woman who is fifty (50) years of age 49 or older. 50 (d) A mammogram for any woman desiring a mammogram for medical cause. 51 Such coverage shall not exceed the cost of the examination. 52 (2) As used in this section, "mastectomy" means the removal of all or 53 part of the breast for medically necessary reasons as determined by a licensed 11 1 physician. 2 (3) Nothing in this section shall apply to specified accident, specified 3 disease, hospital indemnity, medicare supplement, long-term care or other lim- 4 ited benefit health insurance policies.
STATEMENT OF PURPOSE RS 16175C2 This legislation would create a new chapter of the insurance code to regulate self-funded health plans offered to employees of governmental entities when the self-funding arrangement involves more than one employer. Currently a self-funded health plan offered by a group of governmental entities to their employees would be regulated under Chapter 40 of Title 41, Idaho Code. If the plan includes only counties, there is no regulation of the plan by the Department of Insurance due to an existing exemption in Chapter 40 for self funded plans offered by a county. This legislation would make all self- funded multiple employer plans offered by governmental entities in Idaho, including a plan made up exclusively of counties, subject to regulatory oversight by the Department of Insurance under a special chapter of the code. It would not affect single employer plans. The legislation would require, among other things, that multiple governmental employer plans file annual financial statements that have been prepared by a CPA with the Department of Insurance, that they rely on opinions from a qualified actuary in establishing rates and setting aside appropriate reserves to cover expected losses, that the plans have appropriate stop loss coverage in place to protect against catastrophic losses and that all plan funds be maintained in a trust account. The level of regulation imposed by this legislation is significantly less than the level of regulation applied to insurance companies, but greater than what is applied to multiple employer plans under current law. FISCAL NOTE This bill will create some added costs to the Department of Insurance because it requires that the Department bear all costs associated with examining the public agency plans covered by this chapter. However, because the Department is funded from fee revenue rather than the general fund, the increased costs will impact the general fund only to the extent that there is a reduction in any surplus fee revenue that would otherwise flow to the general fund. Examination costs for a single entity would generally be expected to run between five and ten thousand dollars every three years. This bill also exempts public agency plans from all state taxes. Currently, there is only one existing plan that would fall within this chapter. It is not regulated by the Department of Insurance and does not pay any premium tax or subscriber tax through the Department of Insurance, so the exemption would not create any loss of premium tax or subscriber tax to the general fund. Contact Name: Representative Max Black Representative Bill Deal Phone: (208) 332-1000 STATEMENT OF PURPOSE/FISCAL NOTE H 825