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H0750.....................................................by WAYS AND MEANS
INDIVIDUAL HIGH RISK INSURANCE POOL - Repeals, amends and adds to existing
law to establish the Idaho individual high risk reinsurance pool for
individual health insurance carriers; and to provide for diversion of
premium tax funds to the pool.
03/14 House intro - 1st rdg - to printing
03/15 Rpt prt - to Bus
03/16 Rpt out - rec d/p - to 2nd rdg
03/17 2nd rdg - to 3rd rdg
03/20 3rd rdg - PASSED - 66-3-1
AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Black, Boe,
Bruneel, Callister, Campbell, Chase, Cheirrett, Clark, Crow, Deal,
Denney, Ellsworth, Field(13), Field(20), Gagner, Geddes, Hadley,
Hammond, Hansen(23), Hansen(29), Henbest, Hornbeck, Jaquet, Jones,
Judd, Kellogg, Kempton, Kendell, Kunz, Lake, Linford, Loertscher,
Mader, Marley, McKague, Meyer, Montgomery, Mortensen, Moss, Moyle,
Pearce, Pischner, Pomeroy, Reynolds, Ringo, Robison, Sali, Schaefer,
Sellman, Shepherd, Smith, Smylie, Stevenson, Stone, Taylor, Tilman,
Trail, Wheeler, Wood, Zimmermann, Mr Speaker
NAYS -- Cuddy, Gould, Stoicheff
Absent and excused -- Ridinger
Floor Sponsor - Black, Deal, Kunz, Henbest
Title apvd - to Senate
03/21 Senate intro - 1st rdg - to Com/HuRes
03/24 Rpt out - rec d/p - to 2nd rdg
03/27 2nd rdg - to 3rd rdg
04/04 3rd rdg - PASSED - 34-0-1
AYES--Andreason, Boatright, Bunderson, Burtenshaw, Cameron, Crow,
Danielson, Darrington, Deide, Dunklin, Frasure, Geddes, Hawkins,
Ingram, Ipsen, Keough, King-Barrutia, Lee, McLaughlin, Noh, Parry,
Richardson, Riggs, Risch, Sandy, Schroeder, Sorensen, Stegner,
Stennett, Thorne, Walton, Wheeler, Whitworth, Williams
NAYS--None
Absent and excused--Davis
Floor Sponsor - Cameron
Title apvd - to House
To enrol - rpt enrol - Sp signed
04/05 Pres signed - to Governor
04/17 Governor signed
Session Law Chapter 472
Effective: 07/01/00 with certain benefit plans
in Section 2 not available until
01/01/01
H0750
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature Second Regular Session - 2000
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 750
BY WAYS AND MEANS COMMITTEE
1 AN ACT
2 RELATING TO HEALTH INSURANCE; AMENDING SECTION 41-4702, IDAHO CODE, TO DELETE
3 OBSOLETE LANGUAGE; AMENDING SECTION 41-4703, IDAHO CODE, TO REVISE DEFINI-
4 TIONS AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 41-4706, IDAHO
5 CODE, TO EXPAND THE RATE BANDS FOR SMALL EMPLOYER CARRIERS AND TO PROVIDE
6 A DATE AFTER WHICH THE RATE BANDS WILL TERMINATE WITH RESPECT TO SMALL
7 EMPLOYER HEALTH BENEFIT PLANS OTHER THAN THE SMALL EMPLOYER BASIC, STAN-
8 DARD AND CATASTROPHIC HEALTH BENEFIT PLANS, TO PROVIDE A CODE REFERENCE,
9 TO DELETE OBSOLETE LANGUAGE AND TO MAKE A TECHNICAL CORRECTION; AMENDING
10 SECTION 41-4707, IDAHO CODE, TO PROVIDE A CORRECT CODE REFERENCE; AMENDING
11 SECTION 41-4708, IDAHO CODE, TO PROVIDE THAT A SMALL EMPLOYER CARRIER
12 SHALL OFFER ALL BENEFIT PLANS TO SMALL EMPLOYERS, INCLUDING THE SMALL
13 EMPLOYER BASIC, STANDARD AND CATASTROPHIC HEALTH BENEFIT PLANS, TO DELETE
14 OBSOLETE AND REDUNDANT LANGUAGE AND TO MAKE TECHNICAL CORRECTIONS; AMEND-
15 ING SECTION 41-4711, IDAHO CODE, TO PROVIDE THAT THE BOARD ADMINISTERING
16 THE SMALL EMPLOYER CARRIER REINSURANCE PROGRAM SHALL BE THE SAME BOARD
17 ADMINISTERING THE INDIVIDUAL HIGH RISK REINSURANCE POOL, TO DELETE OBSO-
18 LETE LANGUAGE, TO PROVIDE FOR APPLICATION OF THE SECTION TO SMALL EMPLOYER
19 HEALTH BENEFIT PLANS ONLY, TO CORRECT TERMINOLOGY, TO PROVIDE FOR IMMUNITY
20 OF THE BOARD AND ITS EMPLOYEES FOR ACTS OR OMISSIONS RELATED TO THE PER-
21 FORMANCE OF THEIR POWERS AND DUTIES AND FOR INDEMNIFICATION OF AND LEGAL
22 REPRESENTATION FOR BOARD MEMBERS AND EMPLOYEES AND TO MAKE TECHNICAL COR-
23 RECTIONS; AMENDING SECTION 41-4712, IDAHO CODE, TO PROVIDE THAT THE BOARD
24 SHALL DEVELOP AND DETERMINE NECESSARY CHANGES TO THE SMALL EMPLOYER BASIC,
25 STANDARD AND CATASTROPHIC HEALTH BENEFIT PLANS AND MAY APPOINT AN ADVISORY
26 COMMITTEE TO ASSIST THE BOARD THEREWITH AND TO MAKE TECHNICAL CORRECTIONS;
27 AMENDING SECTION 41-4716, IDAHO CODE, TO PROVIDE FOR ACTIVE MARKETING BY
28 SMALL EMPLOYER CARRIERS OF SMALL EMPLOYER BASIC, STANDARD AND CATASTROPHIC
29 HEALTH BENEFIT PLANS, TO DELETE OBSOLETE LANGUAGE, TO PROVIDE CORRECT TER-
30 MINOLOGY AND TO MAKE TECHNICAL CORRECTIONS; REPEALING SECTIONS 41-4714,
31 41-4718 AND 41-5213, IDAHO CODE; AMENDING SECTION 41-5202, IDAHO CODE, TO
32 DELETE OBSOLETE LANGUAGE; AMENDING SECTION 41-5203, IDAHO CODE, TO REVISE
33 DEFINITIONS AND TO MAKE A TECHNICAL CORRECTION; AMENDING SECTION 41-5204,
34 IDAHO CODE, TO EXEMPT APPLICATION OF THE CHAPTER TO INDIVIDUAL HEALTH BEN-
35 EFIT PLANS COVERED IN CHAPTER 55, TITLE 41, IDAHO CODE, AND TO CORRECT
36 TERMINOLOGY; AMENDING SECTION 41-5206, IDAHO CODE, TO EXPAND THE RATE
37 BANDS APPLICABLE TO INDIVIDUAL HEALTH BENEFIT PLANS, TO PROVIDE THE DATE
38 AFTER WHICH THE RATE BANDS SHALL TERMINATE WITH RESPECT TO INDIVIDUAL
39 HEALTH BENEFIT PLANS OTHER THAN THE INDIVIDUAL BASIC, STANDARD, CATA-
40 STROPHIC A AND CATASTROPHIC B PLANS, TO DELETE OBSOLETE LANGUAGE, TO PRO-
41 VIDE A CODE REFERENCE AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION
42 41-5207, IDAHO CODE, TO PROVIDE A CORRECT CODE REFERENCE; AMENDING SECTION
43 41-5208, IDAHO CODE, TO PROVIDE THAT INDIVIDUAL CARRIERS SHALL ACTIVELY
44 OFFER HEALTH BENEFIT PLANS INCLUDING THE INDIVIDUAL BASIC, STANDARD, CATA-
45 STROPHIC A AND CATASTROPHIC B HEALTH BENEFIT PLANS, TO DELETE OBSOLETE
46 LANGUAGE AND TO PROVIDE CORRECT TERMINOLOGY; AMENDING SECTION 41-5212,
2
1 IDAHO CODE, TO PROVIDE CORRECT TERMINOLOGY; AMENDING TITLE 41, IDAHO CODE,
2 BY THE ADDITION OF A NEW CHAPTER 55, TITLE 41, IDAHO CODE, TO PROVIDE DEF-
3 INITIONS, TO PROVIDE FOR CREATION OF THE INDIVIDUAL HIGH RISK REINSURANCE
4 POOL AND THE BOARD, TO PROVIDE FOR THE PLAN OF OPERATION OF THE POOL, TO
5 PROVIDE THE POWERS AND AUTHORITY OF THE POOL, TO PROVIDE FOR REINSURANCE
6 OF INDIVIDUAL CARRIERS ISSUING INDIVIDUAL BASIC, STANDARD, CATASTROPHIC A
7 OR CATASTROPHIC B HEALTH BENEFIT PLANS, TO PROVIDE FOR REINSURANCE PREMIUM
8 RATES, TO PROVIDE FOR PREMIUM RATES FOR PLAN COVERAGE, TO PROVIDE FOR
9 ASSESSMENTS OF CARRIERS, TO PROVIDE STANDARDS FOR AGENTS, TO PROVIDE FOR
10 ELIGIBILITY OF AN INDIVIDUAL FOR COVERAGE UNDER AN INDIVIDUAL BASIC, STAN-
11 DARD, CATASTROPHIC A OR CATASTROPHIC B HEALTH BENEFIT PLAN AND TO PROVIDE
12 FOR THE DESIGN AND BENEFIT LEVELS OF THE INDIVIDUAL BASIC, STANDARD, CATA-
13 STROPHIC A AND CATASTROPHIC B HEALTH BENEFIT PLANS; AMENDING SECTION
14 41-406, IDAHO CODE, TO PROVIDE FOR DIVERSION OF A PORTION OF THE PREMIUM
15 TAX TO THE INDIVIDUAL HIGH RISK REINSURANCE POOL AND TO MAKE TECHNICAL
16 CORRECTIONS; PROVIDING AN EFFECTIVE DATE AND PROVIDING WHEN THE INDIVIDUAL
17 POOL PLANS SHALL BE AVAILABLE; PROVIDING FOR APPOINTMENT OF A JOINT LEGIS-
18 LATIVE OVERSIGHT COMMITTEE TO MONITOR THE EFFECTS OF THE ACT; AND PROVID-
19 ING THAT THE HEALTH INSURANCE PREMIUMS TASK FORCE SHALL DETERMINE A METHOD
20 OF LIMITING ASSESSMENTS FOR THE INDIVIDUAL HIGH RISK POOL ON CARRIERS PRO-
21 VIDING REINSURANCE BY WAY OF EXCESS OR STOP LOSS COVERAGE AND ON INDIVID-
22 UAL CARRIERS PRIOR TO THE 2001 ASSESSMENT AND SHALL REVIEW OPTIONS FOR
23 INITIALLY LIMITING ENROLLMENT IN THE POOL.
24 Be It Enacted by the Legislature of the State of Idaho:
25 SECTION 1. That Section 41-4702, Idaho Code, be, and the same is hereby
26 amended to read as follows:
27 41-4702. PURPOSE. The purpose and intent of this chapter is to promote
28 the availability of health insurance coverage to small employers regardless of
29 their health status or claims experience, to prevent abusive rating practices,
30 to require disclosure of rating practices to purchasers, to establish rules
31 regarding renewability of coverage, to establish limitations on the use of
32 preexisting condition exclusions, to provide for the development of "basic"
33 and "standard" health benefit plans to be offered to all small employers, to
34 provide for establishment of a reinsurance program, and to improve the overall
35 fairness and efficiency of the small group health insurance market.
36 This chapter is not intended to provide a comprehensive solution to the
37 problem of affordability of health care or health insurance.
38 SECTION 2. That Section 41-4703, Idaho Code, be, and the same is hereby
39 amended to read as follows:
40 41-4703. DEFINITIONS. As used in this chapter:
41 (1) "Actuarial certification" means a written statement by a member of
42 the American academy of actuaries or other individual acceptable to the direc-
43 tor that a small employer carrier is in compliance with the provisions of sec-
44 tion 41-4706, Idaho Code, based upon the person's examination and including a
45 review of the appropriate records and the actuarial assumptions and methods
46 used by the small employer carrier in establishing premium rates for applica-
47 ble health benefit plans.
48 (2) "Affiliate" or "affiliated" means any entity or person who directly
49 or indirectly through one (1) or more intermediaries, controls or is con-
50 trolled by, or is under common control with, a specified entity or person.
3
1 (3) "Agent" means an agent as defined in section 41-1021, Idaho Code, or
2 a broker as defined in section 41-1024, Idaho Code.
3 (4) "Base premium rate" means, for each class of business as to a rating
4 period, the lowest premium rate charged or that could have been charged under
5 a rating system for that class of business by the small employer carrier to
6 small employers with similar case characteristics for health benefit plans
7 with the same or similar coverage.
8 (5) "Basic health benefit plan" means a lower cost health benefit plan
9 developed pursuant to section 41-4712, Idaho Code.
10 (6) "Board" means the board of directors of the small employer reinsur-
11 ance program established pursuant to and the individual high risk reinsurance
12 pool as provided for in section 41-47115502, Idaho Code.
13 (76) "Carrier" means any entity that provides health insurance in this
14 state. For the purposes of this chapter, carrier includes an insurance com-
15 pany, a hospital or professional service corporation, a fraternal benefit
16 society, a health maintenance organization, any entity providing health
17 insurance coverage or benefits to residents of this state as certificate hold-
18 ers under a group policy issued or delivered outside of this state, and any
19 other entity providing a plan of health insurance or health benefits subject
20 to state insurance regulation.
21 (87) "Case characteristics" means demographic or other objective charac-
22 teristics of a small employer that are considered by the small employer car-
23 rier in the determination of premium rates for the small employer, provided
24 that claim experience, health status and duration of coverage shall not be
25 case characteristics for the purposes of this chapter.
26 (98) "Catastrophic health benefit plan" means a higher limit health bene-
27 fit plan developed pursuant to section 41-4712, Idaho Code.
28 (109) "Class of business" means all or a separate grouping of small
29 employers established pursuant to section 41-4705, Idaho Code.
30 (11) "Committee" means the health benefit plan committee created pursuant
31 to section 41-4712, Idaho Code.
32 (120) "Control" shall be defined in the same manner as in section
33 41-3801(2), Idaho Code.
34 (131) "Dependent" means a spouse, and unmarried child under the age of
35 nineteen (19) years, and unmarried child who is a full-time student under the
36 age of twenty-three (23) years and who is financially dependent upon the par-
37 ent, and an unmarried child of any age who is medically certified as disabled
38 and dependent upon the parent.
39 (142) "Director" means the director of the department of insurance of the
40 state of Idaho.
41 (153) "Eligible employee" means an employee who works on a full-time basis
42 and has a normal work week of thirty (30) or more hours or, by agreement
43 between the employer and the carrier, an employee who works between twenty
44 (20) and thirty (30) hours per week. The term includes a sole proprietor, a
45 partner of a partnership, and an independent contractor, if the sole propri-
46 etor, partner or independent contractor is included as an employee under a
47 health benefit plan of a small employer, but does not include an employee who
48 works on a part-time, temporary, seasonal or substitute basis. The term eligi-
49 ble employee may include public officers and public employees without regard
50 to the number of hours worked when designated by a small employer.
51 (164) "Established geographic service area" means a geographic area, as
52 approved by the director and based on the carrier's certificate of authority
53 to transact insurance in this state, within which the carrier is authorized to
54 provide coverage.
55 (175) "Health benefit plan" means any hospital or medical policy or cer-
4
1 tificate, any subscriber contract provided by a hospital or professional ser-
2 vice corporation, or health maintenance managed care organization subscriber
3 contract. Health benefit plan does not include policies or certificates of
4 insurance for specific disease, hospital confinement indemnity, accident-only,
5 credit, dental, vision, medicare supplement, long-term care, or disability
6 income insurance, student health benefits only coverage issued as a supplement
7 to liability insurance, worker's compensation or similar insurance, automobile
8 medical payment insurance or nonrenewable short-term coverage issues for a
9 period of twelve (12) months or less.
10 (186) "Index rate" means, for each class of business as to a rating period
11 for small employers with similar case characteristics, the arithmetic average
12 of the applicable base premium rate and the corresponding highest premium
13 rate.
14 (197) "Late enrollee" means an eligible employee or dependent who requests
15 enrollment in a health benefit plan of a small employer following the initial
16 enrollment period during which the individual is entitled to enroll under the
17 terms of the health benefit plan, provided that the initial enrollment period
18 is a period of at least thirty (30) days. However, an eligible employee or
19 dependent shall not be considered a late enrollee if:
20 (a) The individual meets each of the following:
21 (i) The individual was covered under qualifying previous coverage
22 at the time of the initial enrollment;
23 (ii) The individual lost coverage under qualifying previous coverage
24 as a result of termination of employment or eligibility, or the
25 involuntary termination of the qualifying previous coverage; and
26 (iii) The individual requests enrollment within thirty (30) days
27 after termination of the qualifying previous coverage.
28 (b) The individual is employed by an employer which offers multiple
29 health benefit plans and the individual elects a different plan during an
30 open enrollment period.
31 (c) A court has ordered coverage be provided for a spouse or minor or
32 dependent child under a covered employee's health benefit plan and request
33 for enrollment is made within thirty (30) days after issuance of the court
34 order.
35 (d) The individual first becomes eligible.
36 (e) If an individual seeks to enroll a dependent during the first sixty
37 (60) days of eligibility, the coverage of the dependent shall become
38 effective:
39 (i) In the case of marriage, not later than the first day of the
40 first month beginning after the date the completed request for
41 enrollment is received;
42 (ii) In the case of a dependent's birth, as of the date of such
43 birth; or
44 (iii) In the case of a dependent's adoption or placement for adop-
45 tion, the date of such adoption or placement for adoption.
46 (2018) "New business premium rate" means, for each class of business as to
47 a rating period, the lowest premium rate charged or offered or which could
48 have been charged or offered by the small employer carrier to small employers
49 with similar case characteristics for newly issued health benefit plans with
50 the same or similar coverage.
51 (2119) "Plan of operation" means the plan of operation of the program
52 established pursuant to section 41-4711, Idaho Code.
53 (220) "Plan year" means the year that is designated as the plan year in
54 the plan document of a group health benefit plan, except that if the plan doc-
55 ument does not designate a plan year or if there is no plan document, the year
5
1 plan is:
2 (a) The deductible/limit year used under the plan;
3 (b) If the plan does not impose deductibles or limits on a yearly basis,
4 then the plan year is the policy year;
5 (c) If the plan does not impose deductibles or limits on a yearly basis
6 or the insurance policy is not renewed on an annual basis, then the plan
7 year is the employer's taxable year; or
8 (d) In any other case, the plan year is the calendar year.
9 (231) "Premium" means all moneys paid by a small employer and eligible
10 employees as a condition of receiving coverage from a small employer carrier,
11 including any fees or other contributions associated with the health benefit
12 plan.
13 (242) "Program" means the Idaho small employer reinsurance program created
14 in section 41-4711, Idaho Code.
15 (253) "Qualifying previous coverage" and "qualifying existing coverage"
16 means benefits or coverage provided under:
17 (a) Medicare or medicaid, civilian health and medical program for
18 uniformed services (CHAMPUS), the Indian health service program, a state
19 health benefit risk pool or any other similar publicly sponsored program;
20 or
21 (b) Any other group or individual health insurance policy or health bene-
22 fit arrangement whether or not subject to the state insurance laws,
23 including coverage provided by a health maintenance organization, hospital
24 or professional service corporation, or a fraternal benefit society, that
25 provides benefits similar to or exceeding benefits provided under the
26 basic health benefit plan.
27 (264) "Rating period" means the calendar period for which premium rates
28 established by a small employer carrier are assumed to be in effect.
29 (275) "Reinsuring carrier" means a small employer carrier participating in
30 the reinsurance program pursuant to section 41-4711, Idaho Code.
31 (286) "Restricted network provision" means any provision of a health bene-
32 fit plan that conditions the payment of benefits, in whole or in part, on the
33 use of health care providers that have entered into a contractual arrangement
34 with the carrier to provide health care services to covered individuals.
35 (297) "Risk-assuming carrier" means a small employer carrier whose appli-
36 cation is approved by the director pursuant to section 41-4710, Idaho Code.
37 (3028) "Small employer" means any person, firm, corporation, partnership
38 or association that is actively engaged in business that, employed an average
39 of at least two (2) but no more than fifty (50) eligible employees on business
40 days during the preceding calendar year and that employs at least two (2) but
41 no more than fifty (50) eligible employees on the first day of the plan year,
42 the majority of whom were and are employed within this state. In determining
43 the number of eligible employees, companies that are affiliated companies, or
44 that are eligible to file a combined tax return for purposes of state taxa-
45 tion, shall be considered one (1) employer.
46 (29) "Small employer basic health benefit plan" means a lower cost health
47 benefit plan developed pursuant to section 41-4712, Idaho Code.
48 (310) "Small employer carrier" means a carrier that offers health benefit
49 plans covering eligible employees of one (1) or more small employers in this
50 state.
51 (31) "Small employer catastrophic health benefit plan" means a higher
52 limit health benefit plan developed pursuant to section 41-4712, Idaho Code.
53 (32) "Small employer sStandard health benefit plan" means a health benefit
54 plan developed pursuant to section 41-4712, Idaho Code.
6
1 SECTION 3. That Section 41-4706, Idaho Code, be, and the same is hereby
2 amended to read as follows:
3 41-4706. RESTRICTIONS RELATING TO PREMIUM RATES. (1) Premium rates for
4 health benefit plans subject to the provisions of this chapter shall be sub-
5 ject to the provisions of the following provisions:
6 (a) The index rate for a rating period for any class of business shall
7 not exceed the index rate for any other class of business by more than
8 twenty percent (20%).
9 (b) For a class of business, the premium rates charged during a rating
10 period to small employers with similar case characteristics for the same
11 or similar coverage, or the rates that could be charged to such employers
12 under the rating system for that class of business, shall not vary from
13 the index rate by more than twenty-five fifty percent (250%) of the index
14 rate. The provisions of this subsection (1)(b) shall apply until July 1,
15 2002, with respect to all health benefit plans offered to small employers
16 other than the small employer basic, standard and catastrophic plans.
17 (c) The percentage increase in the premium rate charged to a small
18 employer for a new rating period may not exceed the sum of the following:
19 (i) The percentage change in the new business premium rate measured
20 from the first day of the prior rating period to the first day of the
21 new rating period. In the case of a health benefit plan into which
22 the small employer carrier is no longer enrolling new small employ-
23 ers, the small employer carrier shall use the percentage change in
24 the base premium rate, provided that such change does not exceed, on
25 a percentage basis, the change in the new business premium rate for
26 the most similar health benefit plan into which the small employer
27 carrier is actively enrolling new small employers;
28 (ii) Any adjustment, not to exceed fifteen percent (15%) annually
29 and adjusted pro rata for rating periods of less than one (1) year,
30 due to the claim experience, health status or duration of coverage of
31 the employees or dependents of the small employer as determined from
32 the small employer carrier's rate manual for the class of business;
33 and
34 (iii) Any adjustment due to change in coverage or change in the case
35 characteristics of the small employer as determined from the small
36 employer carrier's rate manual for the class of business.
37 (d) Adjustments in rates for claim experience, health status and duration
38 of coverage shall not be charged to individual employees or dependents.
39 Any such adjustment shall be applied uniformly to the rates charged for
40 all employees and dependents of the small employer.
41 (e) Premium rates for health benefit plans shall comply with the require-
42 ments of this section notwithstanding any assessments paid or payable by
43 small employer carriers pursuant to section 41-4711, Idaho Code, or chap-
44 ter 55, title 41, Idaho Code.
45 (f) In the case of health benefit plans delivered or issued for delivery
46 prior to the effective date of this chapter, a premium rate for a rating
47 period may exceed the ranges set forth in subsections (1)(a) and (b) of
48 this section for a period of three (3) years following the effective date
49 of this chapter. In such case, the percentage increase in the premium rate
50 charged to a small employer for a new rating period shall not exceed the
51 sum of the following:
52 (i) The percentage change in the new business premium rate measured
53 from the first day of the prior rating period to the first day of the
54 new rating period. In the case of a health benefit plan into which
7
1 the small employer carrier is no longer enrolling new small employ-
2 ers, the small employer carrier shall use the percentage change in
3 the base premium rate, provided that such change does not exceed, on
4 a percentage basis, the change in the new business premium rate for
5 the most similar health benefit plan into which the small employer
6 carrier is actively enrolling new small employers; and
7 (ii) Any adjustment due to change in coverage or change in the case
8 characteristics of the small employer as determined from the
9 carrier's rate manual for the class of business.
10 (g) (i) Small employer carriers shall apply rating factors, including
11 case characteristics, consistently with respect to all small employ-
12 ers in a class of business. Rating factors shall produce premiums for
13 identical groups which differ only by the amounts attributable to
14 plan design and do not reflect differences due to the nature of the
15 groups assumed to select particular health benefit plans; and
16 (ii) A small employer carrier shall treat all health benefit plans
17 issued or renewed in the same calendar month as having the same rat-
18 ing period.
19 (hg) For the purposes of this subsection, a health benefit plan that uti-
20 lizes a restricted provider network shall not be considered similar cover-
21 age to a health benefit plan that does not utilize such a network, pro-
22 vided that utilization of the restricted provider network results in sub-
23 stantial differences in claims costs.
24 (ih) The small employer carrier shall not use case characteristics, other
25 than age, individual tobacco use, geography, as defined by rule of the
26 director, or gender, without prior approval of the director.
27 (ji) A small employer carrier may utilize age as a case characteristic in
28 establishing premium rates, provided that the same rating factor shall be
29 applied to all dependents under the age of twenty-three (23) years of age,
30 and the same rating factor shall be applied on a quinquennial basis as to
31 individuals or nondependents twenty (20) years of age or older.
32 (kj) The director may establish rules to implement the provisions of this
33 section and to assure that rating practices used by small employer carri-
34 ers are consistent with the purposes of this chapter, including rules
35 that:
36 (i) Assure that differences in rates charged for health benefit
37 plans by small employer carriers are reasonable and reflect objective
38 differences in plan design, not including differences due to the
39 nature of the groups assumed to select particular health benefit
40 plans;
41 (ii) Prescribe the manner in which case characteristics may be used
42 by small employer carriers; and
43 (iii) Prescribe the manner in which a small employer carrier is to
44 demonstrate compliance with the provisions of this section, including
45 requirements that a small employer carrier provide the director with
46 actuarial certification as to such compliance.
47 (2) A small employer carrier shall not transfer a small employer involun-
48 tarily into or out of a class of business. A small employer carrier shall not
49 offer to transfer a small employer into or out of a class of business unless
50 such offer is made to transfer all small employers in the class of business
51 without regard to case characteristics, claim experience, health status or
52 duration of coverage since issue.
53 (3) The director may suspend for a specified period the application of
54 subsection (1)(a) of this section as to the premium rates applicable to one
55 (1) or more small employers included within a class of business of a small
8
1 employer carrier for one (1) or more rating periods upon a filing by the small
2 employer carrier and a finding by the director either that the suspension is
3 reasonable in light of the financial condition of the small employer carrier
4 or that the suspension would enhance the efficiency and fairness of the
5 marketplace for small employer health insurance.
6 (4) In connection with the offering for sale of any health benefit plan
7 to a small employer, a small employer carrier shall make a reasonable disclo-
8 sure, as part of its solicitation and sales materials, of all of the follow-
9 ing:
10 (a) The extent to which premium rates for a specified small employer are
11 established or adjusted based upon the actual or expected variation in
12 claims costs or actual or expected variation in health status of the
13 employees of the small employer and their dependents;
14 (b) The provisions of the health benefit plan concerning the small
15 employer carrier's right to change premium rates and the factors, other
16 than claim experience, that affect changes in premium rates;
17 (c) The provisions relating to renewability of policies and contracts;
18 and
19 (d) The provisions relating to any preexisting condition provision.
20 (5) (a) Each small employer carrier shall maintain at its principal place
21 of business a complete and detailed description of its rating practices
22 and renewal underwriting practices, including information and documenta-
23 tion that demonstrate that its rating methods and practices are based upon
24 commonly accepted actuarial assumptions and are in accordance with sound
25 actuarial principles.
26 (b) Each small employer carrier shall file with the director annually on
27 or before March 15, an actuarial certification certifying that the carrier
28 is in compliance with the provisions of this chapter and that the rating
29 methods of the small employer carrier are actuarially sound. Such certifi-
30 cation shall be in a form and manner, and shall contain such information,
31 as specified by the director. A copy of the certification shall be
32 retained by the small employer carrier at its principal place of business.
33 (c) A small employer carrier shall make the information and documentation
34 described in subsection (4)(a) of this section available to the director
35 upon request. Except in cases of violations of the provisions of this
36 chapter, the information shall be considered proprietary and trade secret
37 information and shall not be subject to disclosure by the director to per-
38 sons outside of the department except as agreed to by the small employer
39 carrier or as ordered by a court of competent jurisdiction.
40 SECTION 4. That Section 41-4707, Idaho Code, be, and the same is hereby
41 amended to read as follows:
42 41-4707. RENEWABILITY OF COVERAGE. (1) A health benefit plan subject to
43 the provisions of this chapter shall be renewable with respect to all eligible
44 employees or dependents, at the option of the small employer, except in any of
45 the following cases:
46 (a) Nonpayment of the required premiums;
47 (b) Fraud or intentional misrepresentation of material fact by the small
48 employer;
49 (c) Noncompliance with the carrier's minimum participation requirements;
50 (d) Noncompliance with the carrier's employer contribution requirements;
51 (e) In the case of health benefit plans that are made available in the
52 small employer market only through one (1) or more associations as defined
53 in section 41-2202, Idaho Code, the membership of an employer in the asso-
9
1 ciation, on the basis of which the coverage is provided ceases, but only
2 if the coverage is terminated under this paragraph uniformly without
3 regard to any health status-related factor relating to any covered indi-
4 vidual;
5 (f) The small employer no longer meets the requirements of section
6 41-4703(3028), Idaho Code;
7 (g) The small employer carrier elects to nonrenew all of its health bene-
8 fit plans delivered or issued for delivery to small employers in this
9 state. In such a case the carrier shall:
10 (i) Provide advance notice of its decision under this paragraph to
11 the director in each state in which it is licensed; and
12 (ii) Provide notice of the decision not to renew coverage to all
13 affected small employers and to the director at least one hundred
14 eighty (180) days prior to the nonrenewal of any health benefit plans
15 by the carrier. Notice to the director under the provisions of this
16 paragraph shall be provided at least three (3) working days prior to
17 the notice to the affected small employers; or
18 (h) The director finds that the continuation of the coverage would:
19 (i) Not be in the best interests of the policyholders or certifi-
20 cate holders; or
21 (ii) Impair the carrier's ability to meet its contractual obliga-
22 tions.
23 In such instance the director shall assist affected small employers in
24 finding replacement coverage.
25 (2) A small employer carrier that elects not to renew a health benefit
26 plan under the provisions of subsection (1)(g) of this section shall be pro-
27 hibited from writing new business in the small employer market in this state
28 for a period of five (5) years from the date of notice to the director.
29 (3) In the case of a small employer carrier doing business in one (1)
30 established geographic service area of the state, the rules set forth in this
31 subsection shall apply only to the carrier's operations in that service area.
32 SECTION 5. That Section 41-4708, Idaho Code, be, and the same is hereby
33 amended to read as follows:
34 41-4708. AVAILABILITY OF COVERAGE -- PREEXISTING CONDITIONS -- PORTABIL-
35 ITY. (1) (a) Every small employer carrier shall, as a condition of offering
36 health benefit plans in this state to small employers, actively offer to small
37 employers at least three (3) health all benefit plans,. One (1) health benefit
38 plan offered by each small employer carrier shall be a including the small
39 employer basic health benefit plan, one (1) plan shall be a the small employer
40 standard health benefit plan, and one (1) plan shall be a the small employer
41 catastrophic health benefit plan.
42 (b) (i) A small employer carrier shall issue a basic, standard or cata-
43 strophic health benefit plan to any eligible small employer that
44 applies for either such plan and agrees to make the required premium
45 payments and to satisfy the other reasonable provisions of the health
46 benefit plan not inconsistent with the provisions of this chapter.
47 (ii) In the case of a small employer carrier that establishes more
48 than one (1) class of business pursuant to the provisions of section
49 41-4705, Idaho Code, the small employer carrier shall maintain and
50 issue to eligible small employers at least one (1) basic health bene-
51 fit plan, at least one (1) standard health benefit plan and at least
52 one (1) catastrophic benefit plan in each class of business so estab-
53 lished. A small employer carrier may apply reasonable criteria in
10
1 determining whether to accept a small employer into a class of busi-
2 ness, provided that:
3 (A) The criteria are not intended to discourage or prevent
4 acceptance of small employers applying for a basic, standard or
5 catastrophic health benefit plan;
6 (B) The criteria are not related to the health status or claim
7 experience of the small employer;
8 (C) The criteria are applied consistently to all small employ-
9 ers applying for coverage in the class of business; and
10 (D) The small employer carrier provides for the acceptance of
11 all eligible small employers into one (1) or more classes of
12 business.
13 The provisions of this paragraph shall not apply to a class of busi-
14 ness into which the small employer carrier is no longer enrolling new
15 small businesses.
16 (c) A small employer is eligible under the provisions of paragraph (b) of
17 this section if it satisfies the definition of "small employer" set forth
18 in section 41-4703(30), Idaho Code.
19 (2) (a) A small employer carrier shall file with the director, in a
20 format and manner prescribed by the director, the small employer basic,
21 standard and catastrophic health benefit plans to be used by the carrier.
22 A health benefit plan filed pursuant to the provisions of this paragraph
23 may be used by a small employer carrier beginning thirty (30) days after
24 it is filed unless the director disapproves its use.
25 (b) The director at any time may, after providing notice and an opportu-
26 nity for a hearing to the small employer carrier, disapprove the continued
27 use by a small employer carrier of a basic, standard or catastrophic
28 health benefit plan on the grounds that the plan does not meet the
29 requirements of this chapter.
30 (3) Health benefit plans covering small employers shall comply with the
31 following provisions:
32 (a) A health benefit plan shall not deny, exclude or limit benefits for a
33 covered individual for covered expenses incurred more than twelve (12)
34 months following the effective date of the individual's coverage due to a
35 preexisting condition. A health benefit plan shall not define a preexist-
36 ing condition more restrictively than a condition, whether physical or
37 mental, regardless of the cause of the condition, for which medical
38 advice, diagnosis, care or treatment was recommended or received during
39 the six (6) months immediately preceding the effective date of coverage.
40 (b) Genetic information shall not be considered as a condition described
41 in subsection (3)(a) of this subsection in the absence of a diagnosis of
42 the condition related to such information.
43 (c) A health benefit plan shall waive any time period applicable to a
44 preexisting condition exclusion or limitation period with respect to par-
45 ticular services for the period of time an individual was previously cov-
46 ered by qualifying previous coverage that provided benefits with respect
47 to such services, provided that the qualifying previous coverage was con-
48 tinuous to a date not more than sixty-three (63) days prior to the effec-
49 tive date of the new coverage. The period of continuous coverage shall not
50 include any waiting period for the effective date of the new coverage
51 applied by the employer or the carrier. This paragraph does not preclude
52 application of any waiting period applicable to all new enrollees under
53 the health benefit plan.
54 (d) A health benefit plan may exclude coverage for late enrollees for the
55 greater of twelve (12) months or for a twelve (12) month preexisting con-
11
1 dition exclusion; provided that if both a period of exclusion from cover-
2 age and a preexisting condition exclusion are applicable to a late
3 enrollee, the combined period shall not exceed twelve (12) months from the
4 date the individual enrolls for coverage under the health benefit plan.
5 (e) (i) Except as provided in subsection (3) paragraph (e)(iv) of this
6 subsection, requirements used by a small employer carrier in deter-
7 mining whether to provide coverage to a small employer, including
8 requirements for minimum participation of eligible employees and min-
9 imum employer contributions, shall be applied uniformly among all
10 small employers with the same number of eligible employees applying
11 for coverage or receiving coverage from the small employer carrier.
12 (ii) A small employer carrier may vary application of minimum par-
13 ticipation requirements and minimum employer contribution require-
14 ments only by the size of the small employer group.
15 (iii) In applying minimum participation requirements with respect to
16 a small employer, a small employer carrier shall not consider employ-
17 ees or dependents who have qualifying existing coverage in determin-
18 ing whether the applicable percentage of participation is met.
19 (iv) A small employer carrier shall not increase any requirement for
20 minimum employee participation or any requirement for minimum
21 employer contribution applicable to a small employer at any time
22 after the small employer has been accepted for coverage.
23 (f) (i) If a small employer carrier offers coverage to a small employer,
24 the small employer carrier shall offer coverage to all of the eligi-
25 ble employees of a small employer and their dependents. A small
26 employer carrier shall not offer coverage to only certain individuals
27 in a small employer group or to only part of the group, except in the
28 case of late enrollees as provided in paragraph (d) of this subsec-
29 tion.
30 (ii) A small employer carrier shall not modify a basic, standard or
31 catastrophic health benefit plan with respect to a small employer or
32 any eligible employee or dependent through riders, endorsements or
33 otherwise, to restrict or exclude coverage for certain diseases or
34 medical conditions otherwise covered by the health benefit plan.
35 (4) (a) A small employer carrier shall not be required to offer coverage
36 or accept applications pursuant to the provisions of subsection (1) of
37 this section in the case of the following:
38 (i) To a small employer, where the small employer is not physically
39 located in the carrier's established geographic service area;
40 (ii) To an employee, when the employee does not work or reside
41 within the carrier's established geographic service area; or
42 (iii) Within an area where the small employer carrier reasonably
43 anticipates, and demonstrates to the satisfaction of the director,
44 that it will not have the capacity within its established geographic
45 service area to deliver service adequately to the members of such
46 groups because of its obligations to existing group policyholders and
47 enrollees.
48 (b) A small employer carrier that cannot offer coverage pursuant to the
49 provisions of subsection (4)(a)(iii) of this section may not offer cover-
50 age in the applicable area to new cases of employer groups with more than
51 fifty (50) eligible employees or to any small employer groups until the
52 later of one hundred eighty (180) days following each such refusal or the
53 date on which the carrier notifies the director that it has regained
54 capacity to deliver services to small employer groups.
55 (5) A small employer carrier shall not be required to provide coverage to
12
1 small employers pursuant to the provisions of subsection (1) of this section
2 for any period of time for which the director determines that requiring the
3 acceptance of small employers in accordance with the provisions of subsection
4 (1) of this section would place the small employer carrier in a financially
5 impaired condition.
6 (6) A small employer carrier shall not be required to comply with the
7 provisions of this section until the director has approved or adopted the
8 revised plan of operation as provided in section 41-4711, Idaho Code.
9 SECTION 6. That Section 41-4711, Idaho Code, be, and the same is hereby
10 amended to read as follows:
11 41-4711. SMALL EMPLOYER AND INDIVIDUAL CARRIER REINSURANCE PROGRAM. (1) A
12 reinsuring carrier shall be subject to the provisions of this section.
13 (2) There is hereby created an independent public body corporate and pol-
14 itic to be known as the Idaho small employer and individual health reinsurance
15 program. The program will perform an essential governmental function in the
16 exercise of powers conferred upon it in this act and any assessments imposed
17 or collected pursuant to the operation of the program shall at all times be
18 free from taxation of every kind.
19 (3) (a) The program shall operate subject to the supervision and control
20 of the board established in section 41-5502, Idaho Code. Subject to the
21 provisions of subsection (3)(b) of this section, the board shall consist
22 of eight (8) members appointed by the director and serving at the pleasure
23 of the director, plus the director or his designated representative, who
24 shall serve as an ex officio member of the board.
25 (b) (i) In selecting the members of the board, the director shall
26 include representatives of small employers and small employer carri-
27 ers, individual carriers and such other individuals determined to be
28 qualified by the director. At least five (5) of the members of the
29 board shall be representatives of reinsuring carriers and shall be
30 selected from individuals nominated by small employer and individual
31 carriers in this state pursuant to procedures and guidelines devel-
32 oped by the director.
33 (ii) In the event that the program becomes eligible for additional
34 financing pursuant to the provisions of subsection (12)(c) of this
35 section, the board shall be expanded to include two (2) additional
36 members who shall be appointed by the director. In selecting the
37 additional members of the board, the director shall choose individu-
38 als who represent carriers subject to assessment for additional
39 financing identified in subsection (12)(c) of this section. The
40 expansion of the board under the provisions of this subsection shall
41 continue for the period that the program continues to be eligible for
42 additional financing under the provisions of subsection (12)(c) of
43 this section.
44 (c) The initial board members shall be appointed as follows: two (2) of
45 the members to serve a term of two (2) years; three (3) of the members to
46 serve a term of four (4) years; and three (3) of the members to serve a
47 term of six (6) years. Subsequent board members shall serve for a term of
48 three (3) years.
49 (d) A vacancy in the board shall be filled by the director. A board mem-
50 ber may be removed by the director for cause.
51 (4) Each small employer and individual carrier shall make a filing with
52 the director containing the carrier's earned health insurance premium derived
53 from health benefit plans delivered or issued for delivery to small employers
13
1 and individuals in this state in the previous calendar year.
2 (5) The board shall submit to the director a plan of operation and there-
3 after any amendments thereto necessary or suitable to assure the fair, reason-
4 able and equitable administration of the program. The director may, after
5 notice and hearing, approve the plan of operation if the director determines
6 it to be suitable to assure the fair, reasonable and equitable administration
7 of the program, and to provide for the sharing of program gains or losses on
8 an equitable and proportionate basis in accordance with the provisions of this
9 section. The plan of operation shall become effective upon written approval by
10 the director.
11 (6) If the board fails to submit a suitable plan of operation, the direc-
12 tor shall, after notice and hearing, adopt and promulgate a temporary plan of
13 operation. The director shall approve the plan of operation submitted by the
14 board, or adopt a temporary plan of operation if the board fails to submit a
15 suitable plan. The director shall amend or rescind any plan adopted under the
16 provisions of this subsection at the time a plan of operation is submitted by
17 the board and approved by the director.
18 (7) The plan of operation shall:
19 (a) Establish procedures for handling and accounting of program assets
20 and moneys and for an annual fiscal reporting to the director;
21 (b) Establish procedures for selecting an administering carrier adminis-
22 trator, which carrier shall be a properly licensed or authorized carrier
23 in this state, and setting forth the powers and duties of the administer-
24 ing carrier administrator;
25 (c) Establish procedures for reinsuring risks in accordance with the pro-
26 visions of this section;
27 (d) Establish procedures for collecting assessments from reinsuring car-
28 riers to fund claims and administrative expenses incurred or estimated to
29 be incurred by the program; and
30 (e) Provide for any additional matters necessary for the implementation
31 and administration of the program.
32 (8) The program shall have the general powers and authority granted under
33 the laws of this state to insurance companies and health maintenance organiza-
34 tions licensed to transact business, except the power to issue health benefit
35 plans directly to either groups or individuals. In addition thereto, the pro-
36 gram shall have the specific authority to:
37 (a) Enter into contracts as are necessary or proper to carry out the pro-
38 visions and purposes of this chapter, including the authority, with the
39 approval of the director, to enter into contracts with similar programs of
40 other states for the joint performance of common functions or with persons
41 or other organizations for the performance of administrative functions;
42 (b) Sue or be sued, including taking any legal actions necessary or
43 proper to recover any assessments and penalties for, on behalf of, or
44 against the program or any reinsuring carriers;
45 (c) Take any legal action necessary to avoid the payment of improper
46 claims against the program;
47 (d) Define the health benefit plans, which plans shall allow coordination
48 of benefits, for which reinsurance will be provided, and to issue reinsur-
49 ance policies, in accordance with the requirements of this chapter;
50 (e) Establish rules, conditions and procedures for reinsuring risks under
51 the program, including board discretion to operate separate small employer
52 and individual reinsurance pools;
53 (f) Establish actuarial functions as appropriate for the operation of the
54 program;
55 (g) Assess carriers in accordance with the provisions of subsection (12)
14
1 of this section, and to make advance interim assessments of carriers as
2 may be reasonable and necessary for organizational and interim operating
3 expenses. Any interim assessments shall be credited as offsets against any
4 regular assessments due following the close of the fiscal year;
5 (h) Appoint appropriate legal, actuarial and other committees as neces-
6 sary to provide technical assistance in the operation of the program, pol-
7 icy and other contract design, and any other function within the authority
8 of the program;
9 (i) Borrow money to effect the purposes of the program. Any notes or
10 other evidence of indebtedness of the program not in default shall be
11 legal investments for carriers and may be carried as admitted assets.
12 (9) A reinsuring carrier may reinsure with the program as provided for in
13 this subsection:
14 (a) With respect to a small employer basic, standard or catastrophic
15 health benefit plan, the program shall reinsure the level of coverage pro-
16 vided and, with respect to other plans, the program shall reinsure up to
17 the level of coverage provided in a small employer basic, standard or cat-
18 astrophic health benefit plan.
19 (b) A small employer carrier may reinsure an entire employer group within
20 sixty (60) days of the commencement of the group's coverage under a health
21 benefit plan.
22 (c) A reinsuring small employer carrier may reinsure an eligible employee
23 or dependent within a period of sixty (60) days following the commencement
24 of the coverage with the small employer. A newly eligible employee or
25 dependent of the reinsured small employer may be reinsured within sixty
26 (60) days of the commencement of his coverage.
27 (d) A reinsuring individual carrier may reinsure any eligible individual
28 or dependent within a period of sixty (60) days following commencement of
29 the coverage with the individual. Newborn dependents of insureds are not
30 eligible for individual reinsurance unless a parent is already reinsured.
31 (e) (i) The program shall not reimburse a reinsuring carrier with
32 respect to the claims of a reinsured individual, employee or depend-
33 ent until the carrier has incurred an initial level of claims for
34 such individual, employee or dependent of five thousand dollars
35 ($5,000) in a calendar year for benefits covered by the program. In
36 addition, the reinsuring carrier shall be responsible for ten percent
37 (10%) of the next fifty thousand dollars ($50,000) of benefit pay-
38 ments during a calendar year and the program shall reinsure the
39 remainder.
40 (ii) The board annually may adjust the initial level of claims and
41 the maximum limit to be retained by the carrier to reflect increases
42 in costs and utilization within the standard market for health bene-
43 fit plans within the state. The adjustment shall not be less than the
44 annual change in the medical component of the "Consumer Price Index
45 for All Urban Consumers" of the department of labor, bureau of labor
46 statistics, unless the board proposes and the director approves a
47 lower adjustment factor.
48 (fe) A reinsuring carrier may terminate reinsurance with the program for
49 one (1) or more of the reinsured individuals, employees or dependents on
50 any anniversary of the health benefit plan.
51 (gf) A reinsuring carrier shall apply all managed care and claims handl-
52 ing techniques, including utilization review, individual case management,
53 preferred provider provisions, and other managed care provisions or meth-
54 ods of operation consistently with respect to reinsured and nonreinsured
55 business.
15
1 (10) (a) The board, as part of the plan of operation, shall establish a
2 methodology for determining premium rates to be charged by the program for
3 reinsuring small employers and individuals pursuant to this section. The
4 methodology shall include a system for classification of small employers
5 and individuals that reflects the types of case characteristics commonly
6 used by small employer and individual carriers in the state. The methodol-
7 ogy shall provide for the development of base reinsurance premium rates,
8 which shall be multiplied by the factors set forth in subsection (10)(b)
9 of this section to determine the premium rates for the program. The base
10 reinsurance premium rates shall be established by the board, subject to
11 the approval of the director, and shall be set at levels which reasonably
12 approximate gross premiums charged to small employers or individuals by
13 small employer or individual carriers for health benefit plans with bene-
14 fits similar to the standard health benefit plan, adjusted to reflect
15 retention levels required under the provisions of this chapter.
16 (b) Premiums for the program shall be as established by the board.
17 (c) The board periodically shall review the methodology established under
18 the provisions of paragraph (10)(a) of this section, including the system
19 of classification and any rating factors, to assure that it reasonably
20 reflects the claims experience of the program. The board may propose
21 changes to the methodology which shall be subject to the approval of the
22 director.
23 (d) The board may consider adjustments to the premium rates charged by
24 the program to reflect the use of effective cost containment and managed
25 care arrangements.
26 (11) If a health benefit plan for a small employer is entirely or par-
27 tially reinsured with the program, the premium charged to the small employer
28 for any rating period for the coverage issued shall meet the requirements
29 relating to premium rates set forth in section 41-4706, Idaho Code.
30 (12) (a) Prior to March 1 of each year, the board shall determine and
31 report to the director the program net loss for the previous calendar
32 year, including administrative expenses and incurred losses for the year,
33 taking into account investment income and other appropriate gains and
34 losses.
35 (b) Any net loss for the year shall be recouped by assessments of carri-
36 ers.
37 (c) (i) For the assessment of March 1, 1995, and prior to March 1 of
38 each succeeding year, the board shall determine and file with the
39 director an estimate of the assessments needed to fund the losses
40 incurred by the program in the previous calendar year.
41 (ii) The individual assessments shall be determined by multiplying
42 net losses, if net earnings are negative, as defined by subsection
43 (12)(a) of this section, by a fraction, the numerator of which shall
44 be the carrier's total premiums earned in the preceding calendar year
45 from all health benefit plans and policies or certificates of insur-
46 ance for specific disease, and hospital confinement indemnity in this
47 state as reported in the carrier's annual report pursuant to subsec-
48 tion (16) of this section, and the denominator of which shall be the
49 total premiums earned in the preceding calendar year from all health
50 benefit plans and policies or certificates of insurance for specific
51 disease and hospital confinement indemnity in this state.
52 (d) If assessments exceed net losses of the program, the excess shall be
53 held at interest and used by the board to offset future losses or to
54 reduce program premiums. As used in this paragraph, "future losses"
55 includes reserves for incurred but not reported claims.
16
1 (e) Each reinsuring carrier's proportion of the assessment shall be
2 determined annually by the board based on annual statements and other
3 reports deemed necessary by the board and filed by the reinsuring carriers
4 with the board.
5 (f) The plan of operation shall provide for the imposition of an interest
6 penalty for late payment of assessments.
7 (g) A reinsuring carrier may seek from the director a deferment from all
8 or part of an assessment imposed by the board. The director may defer all
9 or part of the assessment of a reinsuring carrier if the director deter-
10 mines that the payment of the assessment would place the reinsuring car-
11 rier in a financially impaired condition. If all or part of an assessment
12 against a reinsuring carrier is deferred the amount deferred shall be
13 assessed against the other participating carriers in a manner consistent
14 with the basis for assessment set forth in this subsection. The reinsuring
15 carrier receiving the deferment shall remain liable to the program for the
16 amount deferred and shall be prohibited from reinsuring any individuals or
17 groups with the program until such time as it pays the assessments.
18 (13) (a) Neither the participation in the program as reinsuring carriers,
19 the establishment of rates, forms or procedures, nor any other joint or
20 collective action required under the provisions of this chapter shall be
21 the basis of any legal action, criminal or civil liability, or penalty
22 against the program or any of its reinsuring carriers either jointly or
23 separately.
24 (b) Neither the board nor its employees shall be liable for any obliga-
25 tions of the program. No member or employee of the board shall be liable,
26 and no cause of action of any nature may arise against them, for any act
27 or omission related to the performance of their powers and duties under
28 this chapter, unless such act or omission constitutes willful or wanton
29 misconduct. The board may provide for indemnification of, and legal repre-
30 sentation for, its members and employees.
31 (14) The board, as part of the plan of operation, shall develop standards
32 setting forth the manner and levels of compensation to be paid to agents for
33 the sale of small employer basic, standard and catastrophic health benefit
34 plans. In establishing such standards, the board shall take into consideration
35 the need to assure the broad availability of coverages, the objectives of the
36 program, the time and effort expended in placing the coverage, the need to
37 provide ongoing service to the small employer and individual, the levels of
38 compensation currently used in the industry and the overall costs of coverage
39 to small employers and individuals selecting these plans.
40 (15) The program shall be exempt from any and all taxes.
41 (16) Each carrier shall file with the director, in a form and manner to be
42 prescribed by the director, an annual report. The report shall state the num-
43 ber of resident persons insured under the carrier's health benefit plan.
44 (17) If a reinsuring small employer carrier attempts to reinsure or
45 reinsures an entire employer group, an employee, or a dependent of such
46 employee that, immediately prior to the commencement of such coverage, it cov-
47 ered under a health benefit plan, the board shall assess all costs and losses
48 incurred by the program for claims and administrative expenses relating to
49 such group, employee or dependent of such employee only to the said reinsuring
50 small employer carrier.
51 (18) Subsection (17) of this section shall apply to assessments made for
52 the 1994 calendar year and each year thereafter.
53 SECTION 7. That Section 41-4712, Idaho Code, be, and the same is hereby
54 amended to read as follows:
17
1 41-4712. SMALL EMPLOYER HEALTH BENEFIT PLANS. COMMITTEE. (1) The director
2 shall appoint a health benefit plan committee consisting of nine (9) members,
3 five (5) of whom shall represent consumer interests and four (4) of whom shall
4 be members of the board created in section 41-4711, Idaho Code. Members of the
5 committee serve at the pleasure of the director.
6 (2) The committee shall recommend to tThe board, in addition to its other
7 powers and duties, shall establish the form and level of coverages, including
8 benefit levels, cost-sharing levels, exclusions and limitations for the small
9 employer basic, standard and catastrophic health benefit plans to be made
10 available by small employer and individual carriers pursuant to sections
11 41-4708, and 41-5208, Idaho Code, with an emphasis on making coverage avail-
12 able for preventive care. The plan designs for the small employer market shall
13 not necessarily be the same as the plan designs for the individual market.
14 (32) The committee shall recommend to the board benefit levels, cost
15 sharing levels, exclusions and limitations for the basic, standard and cata-
16 strophic health benefit plans. The committee board shall also design a small
17 employer basic, standard and catastrophic health benefit plan which each con-
18 tain benefit and cost-sharing levels that are consistent with the basic method
19 of operation and the benefit plans of health maintenance managed care organi-
20 zations, including any restrictions imposed by federal law.
21 (a) The plans or changes recommended established by the committee board
22 may include cost containment features such as:
23 (ia) Utilization review of health care services, including review of
24 medical necessity of hospital and physician services;
25 (iib) Case management;
26 (iiic) Selective contracting with hospitals, physicians and other health
27 care providers;
28 (ivd) Reasonable benefit differentials applicable to providers that par-
29 ticipate or do not participate in arrangements using restricted network
30 provisions; and
31 (ve) Other managed care provisions.
32 (b) The committee shall submit the health benefit plans or changes
33 described in paragraph (3)(a) of this section to the board for approval by
34 not later than March 1 of each year.
35 (3) The board shall thereafter submit those the plans or changes approved
36 by the board to the director for approval not later than March 1 of each year.
37 The director shall promulgate the approved plans pursuant to the provisions of
38 section 41-4715, Idaho Code.
39 (c4) Small employer carriers desiring to issue a small employer basic,
40 standard or catastrophic health benefit plan differing from the form and level
41 of coverage developed by the committee and approved by the board and the
42 director shall submit such plan to the committee board for review to insure
43 that such proposed plan is commensurate with the benefit levels, cost-sharing
44 levels, exclusions, and limitations for the plan developed and approved pursu-
45 ant to the provisions of this section. The committee shall forward the pro-
46 posed plan to the board and the director with a recommendation for approval or
47 rejection.
48 (5) The board may appoint an advisory committee to assist in the develop-
49 ment of and any changes to the small employer basic, standard and catastrophic
50 health benefit plans.
51 SECTION 8. That Section 41-4716, Idaho Code, be, and the same is hereby
52 amended to read as follows:
53 41-4716. STANDARDS TO ASSURE FAIR MARKETING. (1) Each small employer car-
18
1 rier shall actively market health benefit plan coverage, including the small
2 employer basic, standard and catastrophic health benefit plans, to eligible
3 small employers in the state. If a small employer carrier denies coverage to a
4 small employer on the basis of the health status or claims experience of the
5 small employer or its employees or dependents, the small employer carrier
6 shall offer the small employer the opportunity to purchase a basic, health
7 benefit plan, a standard health benefit plan and a catastrophic health benefit
8 plan.
9 (2) (a) Except as provided in subsection (2)(b) of this section, no small
10 employer carrier or agent shall, directly or indirectly, engage in the
11 following activities:
12 (i) Encouraging or directing small employers to refrain from filing
13 an application for coverage with the small employer carrier because
14 of the health status, claims experience, industry, occupation or geo-
15 graphic location of the small employer;
16 (ii) Encouraging or directing small employers to seek coverage from
17 another carrier because of the health status, claims experience,
18 industry, occupation or geographic location of the small employer.
19 (b) The provisions of subsection (2)(a) of this section shall not apply
20 with respect to information provided by a small employer carrier or agent
21 to a small employer regarding the established geographic service area or a
22 restricted network provision of a small employer carrier.
23 (3) (a) Except as provided in subsection (2)(b) of this section, no small
24 employer carrier shall, directly or indirectly, enter into any contract,
25 agreement or arrangement with an agent that provides for or results in the
26 compensation paid to an agent for the sale of a health benefit plan to be
27 varied because of the health status, claims experience, industry, occupa-
28 tion or geographic location of the small employer.
29 (b) The provisions of subsection (a) of this section shall not apply with
30 respect to a compensation arrangement that provides compensation to an
31 agent on the basis of percentage of premium, provided that the percentage
32 shall not vary because of the health status, claims experience, industry,
33 occupation or geographic area of the small employer.
34 (4) A small employer carrier shall provide reasonable compensation, as
35 provided under the plan of operation of the program, to an agent, if any, for
36 the sale of a small employer basic, standard or catastrophic health benefit
37 plan.
38 (5) No small employer carrier may terminate, fail to renew or limit its
39 contract or agreement of representation with an agent for any reason related
40 to the health status, claims experience, occupation or geographic location of
41 the small employers placed by the agent with the small employer carrier.
42 (6) No small employer carrier or agent may induce or otherwise encourage
43 a small employer to separate or otherwise exclude an employee from health cov-
44 erage or benefits provided in connection with the employee's employment.
45 (7) Denial by a small employer carrier of an application for coverage
46 from a small employer shall be in writing and shall state the reason or rea-
47 sons for the denial.
48 (8) The director may establish regulations rules setting forth additional
49 standards to provide for the fair marketing and broad availability of health
50 benefit plans to small employers in this state.
51 (9) (a) A violation of the provisions of this section by a small employer
52 carrier or an agent shall be an unfair trade practice pursuant to the pro-
53 visions of section 41-1302, Idaho Code.
54 (b) If a small employer carrier enters into a contract, agreement or
55 other arrangement with a third-party administrator to provide administra-
19
1 tive, marketing or other services related to the offering of health bene-
2 fit plans to small employers in this state, the third-party administrator
3 shall be subject to the provisions of this section as if it were a small
4 employer carrier.
5 SECTION 9. That Sections 41-4714, 41-4718 and 41-5213, Idaho Code, be,
6 and the same are hereby repealed.
7 SECTION 10. That Section 41-5202, Idaho Code, be, and the same is hereby
8 amended to read as follows:
9 41-5202. PURPOSE. The purpose and intent of this chapter is to promote
10 the availability of health insurance coverage to persons not covered by
11 employment based insurance regardless of their health status or claims experi-
12 ence, to prevent abusive rating practices, to require disclosure of rating
13 practices to purchasers, to establish rules regarding renewability of cover-
14 age, to establish limitations on the use of preexisting condition exclusions,
15 to provide for the adoption of "basic," "standard" and "catastrophic" health
16 benefit plans to be offered to all individuals, to provide for the establish-
17 ment of a reinsurance program, and to improve the overall fairness and effi-
18 ciency of the individual health insurance market.
19 This chapter is not intended to provide a comprehensive solution to the
20 problem of affordability of health care or health insurance.
21 SECTION 11. That Section 41-5203, Idaho Code, be, and the same is hereby
22 amended to read as follows:
23 41-5203. DEFINITIONS. As used in this chapter:
24 (1) "Actuarial certification" means a written statement by a member of
25 the American academy of actuaries or other individual acceptable to the direc-
26 tor that an individual carrier is in compliance with the provisions of section
27 41-5206, Idaho Code, based upon the person's examination and including a
28 review of the appropriate records and the actuarial assumptions and methods
29 used by the individual carrier in establishing premium rates for applicable
30 health benefit plans.
31 (2) "Affiliate" or "affiliated" means any entity or person who directly
32 or indirectly through one (1) or more intermediaries, controls or is con-
33 trolled by, or is under common control with, a specified entity or person.
34 (3) "Agent" means an agent as defined in section 41-1021, Idaho Code, or
35 a broker as defined in section 41-1024, Idaho Code.
36 (4) "Base premium rate" means, as to a rating period, the lowest premium
37 rate charged or that could have been charged under a rating system by the
38 individual carrier to individuals with similar case characteristics for health
39 benefit plans with the same or similar coverage.
40 (5) "Basic health benefit plan" means a lower cost health benefit plan
41 developed pursuant to section 41-4712, Idaho Code.
42 (6) "Board" means the board of directors of the program established pur-
43 suant to section 4-4711, Idaho Code.
44 (7) "Carrier" means any entity that provides health insurance in this
45 state. For purposes of this chapter, carrier includes an insurance company, a
46 hospital or professional service corporation, a fraternal benefit society, a
47 health maintenance organization, any entity providing health insurance cover-
48 age or benefits to residents of this state as certificate holders under a
49 group policy issued or delivered outside of this state, and any other entity
50 providing a plan of health insurance or health benefits subject to state
20
1 insurance regulation.
2 (86) "Case characteristics" means demographic or other objective charac-
3 teristics of an individual that are considered by the individual carrier in
4 the determination of premium rates for the individual, provided that claim
5 experience, health status and duration of coverage shall not be case charac-
6 teristics for the purposes of this chapter.
7 (9) "Catastrophic health benefit plan" means a higher limit health bene-
8 fit plan developed pursuant to section 41-4712, Idaho Code.
9 (10) "Committee" means the health benefit plan committee created pursuant
10 to section 41-4712, Idaho Code.
11 (117) "Control" shall be defined in the same manner as in section
12 41-3801(2), Idaho Code.
13 (128) "Dependent" means a spouse, an unmarried child under the age of
14 nineteen (19) years, an unmarried child who is a fulltime full-time student
15 under the age of twenty-three (23) years and who is financially dependent upon
16 the parent, and an unmarried child of any age who is medically certified as
17 disabled and dependent upon the parent.
18 (139) "Director" means the director of the department of insurance of the
19 state of Idaho.
20 (140) "Eligible individual" means an Idaho resident individual or depend-
21 ent of an Idaho resident who is under the age of sixty-five (65) years, is not
22 eligible for coverage under a group health plan, part A or part B of title
23 XVIII of the social security act (medicare), or a state plan under title XIX
24 (medicaid) or any successor program, and who does not have other health insur-
25 ance coverage. An "eligible individual" can be the dependent of an eligible
26 employee, which eligible employee is receiving health insurance benefits sub-
27 ject to the regulation of title 41, Idaho Code, provided that no insurer shall
28 be required to issue a basic, standard or catastrophic health benefit plan to
29 any individual who is covered under other health insurance coverage.
30 (151) "Established geographic service area" means a geographic area, as
31 approved by the director and based on the carrier's certificate of authority
32 to transact insurance in this state, within which the carrier is authorized to
33 provide coverage.
34 (162) "Health benefit plan" means any hospital or medical policy or cer-
35 tificate, any subscriber contract provided by a hospital or professional ser-
36 vice corporation, or health maintenance organization subscriber contract.
37 Health benefit plan does not include policies or certificates of insurance for
38 specific disease, hospital confinement indemnity, accident-only, credit, den-
39 tal, vision, medicare supplement, long-term care, or disability income insur-
40 ance, student health benefits only, coverage issued as a supplement to liabil-
41 ity insurance, worker's compensation or similar insurance, automobile medical
42 payment insurance, or nonrenewable short-term coverage issued for a period of
43 twelve (12) months or less.
44 (173) "Index rate" means, as to a rating period for individuals with simi-
45 lar case characteristics, the arithmetic average of the applicable base pre-
46 mium rate and the corresponding highest premium rate.
47 (14) "Individual basic health benefit plan" means a lower cost health ben-
48 efit plan developed pursuant to chapter 55, title 41, Idaho Code.
49 (15) "Individual catastrophic A health benefit plan" means a higher limit
50 health benefit plan developed pursuant to chapter 55, title 41, Idaho Code.
51 (16) "Individual catastrophic B health benefit plan means a health benefit
52 plan with limits higher than an individual catastrophic A health benefit plan
53 developed pursuant to chapter 55, title 41, Idaho Code.
54 (17) "Individual standard health benefit plan" means a health benefit plan
55 developed pursuant to chapter 55, title 41, Idaho Code.
21
1 (18) "New business premium rate" means, as to a rating period, the lowest
2 premium rate charged or offered or which could have been charged or offered by
3 the individual carrier to individuals with similar case characteristics for
4 newly issued health benefit plans with the same or similar coverage.
5 (19) "Plan of operation" means the plan of operation of the program estab-
6 lished pursuant to section 41-4711, Idaho Code.
7 (20) "Premium" means all moneys paid by an individual and eligible depend-
8 ents as a condition of receiving coverage from a carrier, including any fees
9 or other contributions associated with the health benefit plan.
10 (21) "Program" means the Idaho reinsurance program created in section
11 41-4711, Idaho Code.
12 (220) "Qualifying previous coverage" and "qualifying existing coverage"
13 means benefits or coverage provided under:
14 (a) Medicare or medicaid, civilian health and medical program for
15 uniformed services (CHAMPUS), the Indian health service program, a state
16 health benefit risk pool, or any other similar publicly sponsored program;
17 or
18 (b) Any group or individual health insurance policy or health benefit
19 arrangement whether or not subject to the state insurance laws, including
20 coverage provided by a health maintenance managed care organization, hos-
21 pital or professional service corporation, or a fraternal benefit society,
22 that provides benefits similar to or exceeding benefits provided under the
23 basic health benefit plan.
24 (231) "Rating period" means the calendar period for which premium rates
25 established by a carrier are assumed to be in effect.
26 (242) "Reinsuring carrier" means a carrier participating in the Idaho
27 individual high risk reinsurance program pursuant to section 41-4711 pool
28 established in chapter 55, title 41, Idaho Code.
29 (253) "Restricted network provision" means any provision of a health bene-
30 fit plan that conditions the payment of benefits, in whole or in part, on the
31 use of health care providers that have entered into a contractual arrangement
32 with the carrier to provide health care services to covered individuals.
33 (264) "Risk-assuming carrier" means a carrier whose application is
34 approved by the director pursuant to section 41-5210, Idaho Code.
35 (275) "Individual carrier" means a carrier that offers health benefit
36 plans covering eligible individuals and their dependents.
37 (28) "Standard health benefit plan" means a health benefit plan developed
38 pursuant to section 41-4712, Idaho Code.
39 SECTION 12. That Section 41-5204, Idaho Code, be, and the same is hereby
40 amended to read as follows:
41 41-5204. APPLICABILITY AND SCOPE. To the extent permitted by federal law,
42 the provisions of this chapter shall apply to any health benefit plan deliv-
43 ered or issued for delivery in the state of Idaho that provides coverage to
44 eligible individuals or their dependents if not otherwise subject to the pro-
45 visions of chapter 22, 40, or 47, or 55, title 41, Idaho Code.
46 (1) Except as provided in subsection (2) of this section, for the pur-
47 poses of this chapter, carriers that are affiliated companies or that are eli-
48 gible to file a consolidated tax return shall be treated as one (1) carrier
49 and any restrictions or limitations imposed in this chapter shall apply as if
50 all health benefit plans delivered or issued for delivery to individuals in
51 this state by such affiliated carriers were insured by one (1) carrier.
52 (2) An affiliated carrier that is a health maintenance managed care orga-
53 nization having a certificate of authority pursuant to the provisions of chap-
22
1 ter 39, title 41, Idaho Code, may be considered to be a separate carrier for
2 the purposes of this chapter.
3 (3) Unless otherwise authorized by the director, an individual carrier
4 shall not enter into one (1) or more ceding arrangements with respect to
5 health benefit plans delivered or issued for delivery to individuals in this
6 state if such arrangements would result in less than fifty percent (50%) of
7 the insurance obligation or risk for such health benefit plans being retained
8 by the ceding carrier. The provisions of sections 41-510, 41-511 and 41-514,
9 Idaho Code, shall apply if an individual carrier cedes or assumes all of the
10 insurance obligation or risk with respect to one (1) or more health benefit
11 plans delivered or issued for delivery to individuals in this state.
12 SECTION 13. That Section 41-5206, Idaho Code, be, and the same is hereby
13 amended to read as follows:
14 41-5206. RESTRICTIONS RELATING TO PREMIUM RATES. (1) Premium rates for
15 health benefit plans subject to the provisions of this chapter shall be sub-
16 ject to the following provisions:
17 (a) The premium rates charged during a rating period to individuals with
18 similar case characteristics for the same or similar coverage, or the
19 rates that could be charged to such individuals under the rating system,
20 shall not vary from the index rate by more than twenty-five fifty percent
21 (250%) of the index rate. The provisions of this subsection (1)(a) shall
22 apply until July 1, 2002, with respect to all health benefit plans offered
23 to individuals other than the individual basic, standard, catastrophic A
24 and catastrophic B plans.
25 (b) The percentage increase in the premium rate charged to an individual
26 for a new rating period may not exceed the sum of the following:
27 (i) The percentage change in the new business premium rate measured
28 from the first day of the prior rating period to the first day of the
29 new rating period. In the case of a health benefit plan into which
30 the individual carrier is no longer enrolling new individuals, the
31 individual carrier shall use the percentage change in the base pre-
32 mium rate, provided that such change does not exceed, on a percentage
33 basis, the change in the new business premium rate for the most simi-
34 lar health benefit plan into which the individual carrier is actively
35 enrolling new individuals.
36 (ii) Any adjustment, not to exceed fifteen percent (15%) annually
37 and adjusted pro rata for rating periods of less than one (1) year,
38 due to the claim experience, health status or duration of coverage of
39 the individual or dependents as determined from the individual
40 carrier's rate manual; and
41 (iii) Any adjustment due to change in coverage or change in the case
42 characteristics of the individual as determined from the individual
43 carrier's rate manual.
44 (c) Premium rates for health benefit plans shall comply with the require-
45 ments of this section notwithstanding any assessments paid or payable by
46 carriers pursuant to section 41-4711, Idaho Code, or chapter 55, title 41,
47 Idaho Code.
48 (d) In the case of health benefit plans delivered or issued for delivery
49 prior to the effective date of this chapter, a premium rate for a rating
50 period may exceed the ranges set forth in subsections (1)(a) and (b) of
51 this section for a period of three (3) years following the effective date
52 of this chapter. In such case, the percentage increase in the premium rate
53 charged to an individual for a new rating period shall not exceed the sum
23
1 of the following:
2 (i) The percentage change in the new business premium rate measured
3 from the first day of the prior rating period to the first day of the
4 new rating period. In the case of a health benefit plan into which
5 the individual carrier is no longer enrolling new individuals, the
6 individual carrier shall use the percentage change in the base pre-
7 mium rate, provided that such change does not exceed, on a percentage
8 basis, the change in the new business premium rate for the most simi-
9 lar health benefit plan into which the individual carrier is actively
10 enrolling new individuals; and
11 (ii) Any adjustment due to change in coverage or change in the case
12 characteristics of the individual as determined from the carrier's
13 rate manual.
14 (e) (i) Individual carriers shall apply rating factors, including case
15 characteristics, consistently with respect to all individuals. Rating
16 factors shall produce premiums for identical individuals which differ
17 only by the amounts attributable to plan design and do not reflect
18 differences due to the nature of the individuals assumed to select
19 particular health benefit plans; and
20 (ii) An individual carrier shall treat all health benefit plans
21 issued or renewed in the same calendar month as having the same rat-
22 ing period.
23 (fe) For purposes of this subsection, a health benefit plan that utilizes
24 a restricted provider network shall not be considered similar coverage to
25 a health benefit plan that does not utilize such a network, provided that
26 utilization of the restricted provider network results in substantial dif-
27 ferences in claims costs.
28 (gf) The individual carrier shall not use case characteristics, other
29 than age, individual tobacco use, geography as defined by rule of the
30 director, or gender, without prior approval of the director.
31 (hg) An individual carrier may utilize age as a case characteristic in
32 establishing premium rates, provided that the same rating factor shall be
33 applied to all dependents under the age of twenty-three (23) years of age,
34 and the same rating factor shall be applied on a quinquennial basis as to
35 individuals or nondependents twenty (20) years of age or older.
36 (ih) The director may establish rules to implement the provisions of this
37 section and to assure that rating practices used by individual carriers
38 are consistent with the purposes of this chapter, including rules that:
39 (i) Assure that differences in rates charged for health benefit
40 plans by individual carriers are reasonable and reflect objective
41 differences in plan design, not including differences due to the
42 nature of the individuals assumed to select particular health benefit
43 plans;
44 (ii) Prescribe the manner in which case characteristics may be used
45 by individual carriers; and
46 (iii) Prescribe the manner in which an individual carrier is to
47 demonstrate compliance with the provisions of this section, including
48 requirements that an individual carrier provide the director with
49 actuarial certification as to such compliance.
50 (2) The director may suspend for a specified period the application of
51 subsection (1)(a) of this section as to the premium rates applicable to one
52 (1) or more individuals for one (1) or more rating periods upon a filing by
53 the individual carrier and a finding by the director either that the suspen-
54 sion is reasonable in light of the financial condition of the individual car-
55 rier or that the suspension would enhance the efficiency and fairness of the
24
1 marketplace for individual health insurance.
2 (3) In connection with the offering for sale of any health benefit plan
3 to an individual, an individual carrier shall make a reasonable disclosure, as
4 part of its solicitation and sales materials, of all of the following:
5 (a) The extent to which premium rates for an individual are established
6 or adjusted based upon the actual or expected variation in claims costs or
7 actual or expected variation in health status of the individual and his
8 dependents;
9 (b) The provisions of the health benefit plan concerning the individual
10 carrier's right to change premium rates and the factors, other than claim
11 experience, that affect changes in premium rates;
12 (c) The provisions relating to renewability of policies and contracts;
13 and
14 (d) The provisions relating to any preexisting condition provision.
15 (4) (a) Each individual carrier shall maintain at its principal place of
16 business a complete and detailed description of its rating practices and
17 renewal underwriting practices, including information and documentation
18 that demonstrate that its rating methods and practices are based upon com-
19 monly accepted actuarial assumptions and are in accordance with sound
20 actuarial principles.
21 (b) Each individual carrier shall file with the director annually on or
22 before September 15, an actuarial certification certifying that the car-
23 rier is in compliance with the provisions of this chapter and that the
24 rating methods of the individual carrier are actuarially sound. Such cer-
25 tification shall be in a form and manner, and shall contain such informa-
26 tion, as specified by the director. A copy of the certification shall be
27 retained by the individual carrier at its principal place of business.
28 (c) An individual carrier shall make the information and documentation
29 described in subsection (4)(a) of this section available to the director
30 upon request. Except in cases of violations of the provisions of this
31 chapter, the information shall be considered proprietary and trade secret
32 information and shall not be subject to disclosure by the director to per-
33 sons outside of the department except as agreed to by the individual car-
34 rier or as ordered by a court of competent jurisdiction.
35 SECTION 14. That Section 41-5207, Idaho Code, be, and the same is hereby
36 amended to read as follows:
37 41-5207. RENEWABILITY OF COVERAGE. (1) A health benefit plan subject to
38 the provisions of this chapter shall be renewable with respect to the individ-
39 ual or dependents, at the option of the individual, except in any of the fol-
40 lowing cases:
41 (a) Nonpayment of the required premiums;
42 (b) Fraud or intentional misrepresentation of material fact by the indi-
43 vidual insured or his representatives. An individual whose coverage is
44 terminated for fraud or misrepresentation shall not be deemed to be an
45 "eligible individual" for a period of twelve (12) months from the effec-
46 tive date of the termination of the individual's coverage and shall not be
47 deemed to have "qualifying previous coverage" under chapter 22, 47 or 52,
48 title 41, Idaho Code;
49 (c) The individual ceases to be an eligible individual as defined in sec-
50 tion 41-5203(140), Idaho Code;
51 (d) In the case of health benefit plans that are made available in the
52 individual market only through one (1) or more associations, as defined in
53 section 41-2202, Idaho Code, the membership of an individual in the asso-
25
1 ciation, on the basis of which the coverage is provided ceases, but only
2 if the coverage is terminated under this paragraph uniformly without
3 regard to any health status-related factor relating to any covered indi-
4 vidual;
5 (e) The individual carrier elects to nonrenew all of its health benefit
6 plans delivered or issued for delivery to individuals in this state. In
7 such a case the carrier shall:
8 (i) Provide advance notice of its decision under this paragraph to
9 the director; and
10 (ii) Provide notice of the decision not to renew coverage to all
11 affected individuals and to the director at least one hundred eighty
12 (180) days prior to the nonrenewal of any health benefit plans by the
13 carrier. Notice to the director under the provisions of this para-
14 graph shall be provided at least three (3) working days prior to the
15 notice to the affected individuals; or
16 (f) The director finds that the continuation of the coverage would:
17 (i) Not be in the best interests of the policyholders or certifi-
18 cate holders; or
19 (ii) Impair the carrier's ability to meet its contractual obliga-
20 tions.
21 In such instance, the director shall assist affected individuals in find-
22 ing replacement coverage.
23 (2) An individual carrier that elects not to renew a health benefit plan
24 under the provisions of subsection (1)(e) of this section shall be prohibited
25 from writing new business in the individual market in this state for a period
26 of five (5) years from the date of notice to the director.
27 (3) In the case of an individual carrier doing business in one (1) estab-
28 lished geographic service area of the state, the rules set forth in this sub-
29 section shall apply only to the carrier's operations in that service area.
30 SECTION 15. That Section 41-5208, Idaho Code, be, and the same is hereby
31 amended to read as follows:
32 41-5208. AVAILABILITY OF COVERAGE -- PREEXISTING CONDITIONS -- PORTABIL-
33 ITY.
34 (1) (a) Every individual carrier shall, as a condition of offering health
35 benefit plans in this state to individuals, actively offer health benefit
36 plans to individuals, at least three (3) health benefit plans as provided
37 in this section and provide enrollment to all persons with qualifying pre-
38 vious coverage during all months of the year and to all persons without
39 qualifying previous coverage on an open enrollment basis for a forty-five
40 (45) day period commencing on January 1 and July 1 of each calendar year.
41 One (1) health benefit plan offered by each individual carrier shall be a
42 basic health benefit plan, one (1) plan shall be a standard health benefit
43 plan, and one (1) plan shall be a catastrophic including the individual
44 basic health benefit plan, the individual standard health benefit plan,
45 the individual catastrophic A health benefit plan and the individual cata-
46 strophic B health benefit plan.
47 (b) An individual carrier shall issue an individual basic, standard, or
48 catastrophic A or catastrophic B health benefit plan to any eligible indi-
49 vidual that applies for such plan and agrees to make the required premium
50 payments and to satisfy the other reasonable provisions of the health ben-
51 efit plan not inconsistent with the provisions of this chapter.
52 (2) (a) An individual carrier shall file with the director, in a format
53 and manner prescribed by the director, the basic, standard and cata-
26
1 strophic health benefit plans to be used by the carrier. A health benefit
2 plan filed pursuant to the provisions of this paragraph may be used by an
3 individual carrier beginning thirty (30) days after it is filed unless the
4 director disapproves its use.
5 (b) The director at any time may, after providing notice and an opportu-
6 nity for a hearing to the individual carrier, disapprove the continued use
7 by an individual carrier of a basic, standard, or catastrophic health ben-
8 efit plan on the grounds that the plan does not meet the requirements of
9 this chapter.
10 (3) Health benefit plans covering individuals shall comply with the fol-
11 lowing provisions:
12 (a) A health benefit plan shall not deny, exclude or limit benefits for a
13 covered individual for covered expenses incurred more than twelve (12)
14 months following the effective date of the individual's coverage due to a
15 preexisting condition. A health benefit plan shall not define a preexist-
16 ing condition more restrictively than:
17 (i) A condition that would have caused an ordinarily prudent person
18 to seek medical advice, diagnosis, care or treatment during the six
19 (6) months immediately preceding the effective date of coverage;
20 (ii) A condition for which medical advice, diagnosis, care or treat-
21 ment was recommended or received during the six (6) months immedi-
22 ately preceding the effective date of coverage; or
23 (iii) A pregnancy existing on the effective date of coverage.
24 (b) A health benefit plan shall waive any time period applicable to a
25 preexisting condition exclusion or limitation period with respect to par-
26 ticular services for the period of time an individual was previously cov-
27 ered by qualifying previous coverage to the extent such previous coverage
28 provided benefits with respect to such services, provided that the quali-
29 fying previous coverage was continuous to a date not more than sixty-three
30 (63) days prior to the effective date of the new coverage.
31 (c) An individual carrier shall not modify a basic, standard, or cata-
32 strophic health benefit plan with respect to an individual or any depend-
33 ent through riders, endorsements, or otherwise, to restrict or exclude
34 coverage for certain diseases or medical conditions otherwise covered by
35 the health benefit plan.
36 (4) (a) An individual carrier shall not be required to offer coverage or
37 accept applications pursuant to the provisions of subsection (1) of this
38 section in the case of the following:
39 (i) To an individual, where the individual is not residing in the
40 carrier's established geographic service area;
41 (ii) Within an area where the individual carrier reasonably antici-
42 pates, and demonstrates to the satisfaction of the director, that it
43 will not have the capacity within its established geographic service
44 area to deliver service adequately to individuals because of its
45 obligations to existing groups or individuals.
46 (b) An individual carrier that cannot offer coverage pursuant to the pro-
47 visions of subsection (4)(a)(ii) of this section may not offer coverage in
48 the applicable area to new cases of employer groups with more than fifty
49 (50) eligible employees or to any small employer groups or to any individ-
50 uals until the later of one hundred eighty (180) days following each such
51 refusal or the date on which the carrier notifies the director that it has
52 regained capacity to deliver services to individuals and groups.
53 (5) An individual carrier shall not be required to provide coverage to
54 individuals pursuant to the provisions of subsection (1) of this section for
55 any period of time for which the director determines that requiring the accep-
27
1 tance of individuals in accordance with the provisions of subsection (1) of
2 this section would place the individual carrier in a financially impaired con-
3 dition.
4 (6) An individual carrier shall not be required to comply with the provi-
5 sions of this section until the director has approved or adopted the revised
6 plan of operation as provided in section 41-4711, Idaho Code.
7 SECTION 16. That Section 41-5212, Idaho Code, be, and the same is hereby
8 amended to read as follows:
9 41-5212. STANDARDS TO ASSURE FAIR MARKETING. (1) Each individual carrier
10 shall actively market health benefit plan coverage, including the individual
11 basic, standard, and catastrophic A and catastrophic B health benefit plans,
12 to eligible individuals in the state. If an individual carrier denies coverage
13 to an individual on the basis of the health status or claims experience of the
14 individual or dependents, the individual carrier shall offer the individual
15 the opportunity to purchase an individual basic, standard, catastrophic A or
16 catastrophic B health benefit plan.
17 (2) (a) Except as provided in subsection (2)(b) of this section, no indi-
18 vidual carrier or agent shall, directly or indirectly, engage in the fol-
19 lowing activities:
20 (i) Encouraging or directing individuals to refrain from filing an
21 application for coverage with the individual carrier because of the
22 health status, claims experience, industry, occupation or geographic
23 location of the individual or dependents.
24 (ii) Encouraging or directing individuals to seek coverage from
25 another carrier because of the health status, claims experience,
26 industry, occupation or geographic location of the individual.
27 (b) The provisions of subsection (2)(a) of this section shall not apply
28 with respect to information provided by an individual carrier or agent to
29 an individual regarding the established geographic service area or a
30 restricted network provision of an individual carrier.
31 (3) (a) Except as provided in subsection (2)(b) of this section, no indi-
32 vidual carrier shall, directly or indirectly, enter into any contract,
33 agreement or arrangement with an agent that provides for or results in the
34 compensation paid to an agent for the sale of a health benefit plan to be
35 carried because of the health status, claims experience, industry, occupa-
36 tion or geographic location of the individual.
37 (b) The provisions of paragraph (a) of this subsection shall not apply
38 with respect to a compensation arrangement that provides compensation to
39 an agent on the basis of percentage of premium, provided that the percent-
40 age shall not vary because of the health status, claims experience, indus-
41 try, occupation or geographic area of the individual.
42 (4) An individual carrier shall provide reasonable compensation, as pro-
43 vided under the plan of operation of the program individual high risk reinsur-
44 ance pool, to an agent, if any, for the sale of an individual basic, standard,
45 catastrophic A or catastrophic B health benefit plan.
46 (5) No individual carrier may terminate, fail to renew or limit its con-
47 tract or agreement of representation with an agent for any reason related to
48 the health status, claims experience, occupation or geographic location of the
49 individuals placed by the agent with the individual carrier.
50 (6) Denial by an individual carrier of an application for coverage from
51 an individual shall be in writing and shall state the reason or reasons for
52 the denial.
53 (7) The director may establish rules setting forth additional standards
28
1 to provide for the fair marketing and broad availability of health benefit
2 plans to individuals in this state.
3 (8) (a) A violation of the provisions of this section by an individual
4 carrier or an agent shall be an unfair trade practice pursuant to the pro-
5 visions of section 41-1302, Idaho Code.
6 (b) If an individual carrier enters into a contract, agreement or other
7 arrangement with a third party administrator to provide administrative,
8 marketing or other services related to the offering of health benefit
9 plans to individuals in this state, the third party administrator shall be
10 subject to the provisions of this section as if it were an individual car-
11 rier.
12 SECTION 17. That Title 41, Idaho Code, be, and the same is hereby amended
13 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
14 ter 55, Title 41, Idaho Code, and to read as follows:
15 CHAPTER 55
16 IDAHO INDIVIDUAL HIGH RISK REINSURANCE POOL
17 41-5501. DEFINITIONS. As used in this chapter:
18 (1) "Agent" means an agent as defined in section 41-1021, Idaho Code, or
19 a broker as defined in section 41-1024, Idaho Code.
20 (2) "Board" means the board of directors of the Idaho high risk individ-
21 ual reinsurance pool established in this chapter and the Idaho small employer
22 reinsurance program established in section 41-4711, Idaho Code.
23 (3) "Carrier" means any entity that provides health insurance in this
24 state. For purposes of this chapter, carrier includes an insurance company,
25 any other entity providing reinsurance including excess or stop loss coverage,
26 a hospital or professional service corporation, a fraternal benefit society, a
27 managed care organization, any entity providing health insurance coverage or
28 benefits to residents of this state as certificate holders under a group pol-
29 icy issued or delivered outside of this state, and any other entity providing
30 a plan of health insurance or health benefits subject to state insurance regu-
31 lation.
32 (4) "Dependent" means a spouse, an unmarried child under the age of nine-
33 teen (19) years, an unmarried child who is a full-time student under the age
34 of twenty-three (23) years and who is financially dependent upon the parent,
35 and an unmarried child of any age who is medically certified as disabled and
36 dependent upon the parent.
37 (5) "Director" means the director of the department of insurance of the
38 state of Idaho.
39 (6) "Eligible individual" means an Idaho resident individual or dependent
40 of an Idaho resident who is under the age of sixty-five (65) years, is not
41 eligible for coverage under a group health plan, part A or part B of title
42 XVIII of the social security act (medicare), or a state plan under title XIX
43 (medicaid) or any successor program, and who does not have other health insur-
44 ance coverage. Coverage under a basic, standard, catastrophic A or cata-
45 strophic B health benefit plan shall not be available to any individual who is
46 covered under other health insurance coverage. For purposes of this chapter,
47 to be eligible, an individual must also meet the requirements of section
48 41-5510, Idaho Code.
49 (7) "Health benefit plan" means any hospital or medical policy or certif-
50 icate, any subscriber contract provided by a hospital or professional service
51 corporation, or health maintenance organization subscriber contract. Health
52 benefit plan does not include policies or certificates of insurance for spe-
29
1 cific disease, hospital confinement indemnity, accident-only, credit, dental,
2 vision, medicare supplement, long-term care, or disability income insurance,
3 student health benefits only, coverage issued as a supplement to liability
4 insurance, worker's compensation or similar insurance, automobile medical pay-
5 ment insurance, or nonrenewable short-term coverage issued for a period of
6 twelve (12) months or less.
7 (8) "Individual basic health benefit plan" means a lower cost health ben-
8 efit plan developed pursuant to section 41-5511, Idaho Code.
9 (9) "Individual carrier" means a carrier that offers health benefit plans
10 covering eligible individuals and their dependents.
11 (10) "Individual catastrophic A health benefit plan" means a higher limit
12 health benefit plan developed pursuant to section 41-5511, Idaho Code.
13 (11) "Individual catastrophic B health benefit plan" means a health bene-
14 fit plan offering limits higher than a catastrophic A health benefit plan
15 developed pursuant to section 41-5511, Idaho Code.
16 (12) "Individual standard health benefit plan" means a health benefit plan
17 developed pursuant to section 41-5511, Idaho Code.
18 (13) "Plan" or "pool plan" means the individual basic, standard, cata-
19 strophic A or catastrophic B plan established pursuant to section 41-5511,
20 Idaho Code.
21 (14) "Plan of operation" means the plan of operation of the individual
22 high risk reinsurance pool established pursuant to this chapter.
23 (15) "Pool" means the Idaho high risk reinsurance pool.
24 (16) "Premium" means all moneys paid by an individual and eligible depend-
25 ents as a condition of receiving coverage from a carrier, including any fees
26 or other contributions associated with the health benefit plan.
27 (17) "Qualifying previous coverage" and "qualifying existing coverage"
28 means benefits or coverage provided under:
29 (a) Medicare or medicaid, civilian health and medical program for
30 uniformed services (CHAMPUS), the Indian health service program, a state
31 health benefit risk pool, or any other similar publicly sponsored program;
32 or
33 (b) Any group or individual health insurance policy or health benefit
34 arrangement whether or not subject to the state insurance laws, including
35 coverage provided by a managed care organization, hospital or professional
36 service corporation, or a fraternal benefit society, that provides bene-
37 fits similar to or exceeding benefits provided under the basic health ben-
38 efit plan.
39 (18) "Reinsurance premium" means the premium set by the board pursuant to
40 section 41-5506, Idaho Code, to be paid by a reinsuring carrier for plans
41 issued under the pool.
42 (19) "Reinsuring carrier" means a carrier participating in the individual
43 high risk reinsurance pool established by this chapter.
44 (20) "Restricted network provision" means any provision of a health bene-
45 fit plan that conditions the payment of benefits, in whole or in part, on the
46 use of health care providers that have entered into a contractual arrangement
47 with the carrier to provide health care services to covered individuals.
48 41-5502. CREATION OF THE INDIVIDUAL HIGH RISK REINSURANCE POOL -- BOARD.
49 (1) There is hereby created an independent public body corporate and politic
50 to be known as the Idaho individual high risk reinsurance pool. The pool will
51 perform an essential governmental function in the exercise of powers conferred
52 upon it in this chapter. The pool and any assessments imposed or collected
53 pursuant to the operation of the pool shall at all times be free from taxation
54 of every kind.
30
1 (2) The pool created by this chapter and the small employer reinsurance
2 program established in section 41-4711, Idaho Code, shall operate subject to
3 the supervision and control of the board. The board shall consist of ten (10)
4 members. Eight (8) members shall be appointed by the director and serve at
5 the pleasure of the director. The director or his designated representative
6 shall serve as an ex officio member of the board. In selecting the members of
7 the board the director shall appoint four (4) members representing carriers,
8 two (2) disability agents and two (2) members representing consumer interests.
9 One (1) member shall be a member of the senate appointed by the president pro
10 tempore of the senate and one (1) member shall be a member of the house of
11 representatives appointed by the speaker of the house.
12 (3) The initial nonlegislative board members shall be appointed as fol-
13 lows: two (2) of the members to serve a term of two (2) years; three (3) of
14 the members to serve a term of four (4) years; and three (3) of the members to
15 serve a term of six (6) years. Subsequent nonlegislative board members shall
16 serve for a term of three (3) years. Legislative members of the board shall
17 serve for a term of two (2) years. A vacancy in a legislative member's posi-
18 tion on the board shall be filled in the same manner as the original appoint-
19 ment. All other vacancies on the board shall be filled by the director. A
20 nonlegislative board member may be removed by the director for cause.
21 41-5503. PLAN OF OPERATION. (1) The board shall submit to the director a
22 plan of operation and thereafter any amendments thereto necessary or suitable
23 to assure the fair, reasonable and equitable administration of the pool. The
24 director may, after notice and hearing, approve the plan of operation if the
25 director determines it to be suitable to assure the fair, reasonable and equi-
26 table administration of the pool, and to provide for the sharing of pool gains
27 or losses on an equitable and proportionate basis in accordance with the pro-
28 visions of this chapter. The plan of operation shall become effective upon
29 written approval by the director.
30 (2) If the board fails to submit a suitable plan of operation, the direc-
31 tor shall, after notice and hearing, adopt and promulgate a temporary plan of
32 operation. The director shall approve the plan of operation submitted by the
33 board, or adopt a temporary plan of operation if the board fails to submit a
34 suitable plan. The director shall amend or rescind any plan adopted under the
35 provisions of this section at the time a plan of operation is submitted by the
36 board and approved by the director.
37 (3) The plan of operation shall:
38 (a) Establish procedures for handling and accounting of pool assets and
39 moneys and for an annual fiscal reporting to the director;
40 (b) Establish procedures for selecting an administrator, and setting
41 forth the powers and duties of the administrator;
42 (c) Establish procedures for reinsuring risks in accordance with the pro-
43 visions of this chapter;
44 (d) Establish procedures for collecting assessments from carriers to fund
45 claims and administrative expenses incurred or estimated to be incurred by
46 the pool; and
47 (e) Provide for any additional matters necessary for the implementation
48 and administration of the pool.
49 41-5504. POWERS AND AUTHORITY. (1) The pool shall have the general powers
50 and authority granted under the laws of this state to insurance companies and
51 managed care organizations licensed to transact business, except the power to
52 issue health benefit plans directly to individuals. In addition thereto, the
53 pool shall have the specific authority to:
31
1 (a) Enter into contracts as are necessary or proper to carry out the pro-
2 visions and purposes of this chapter, including the authority, with the
3 approval of the director, to enter into contracts with similar programs of
4 other states for the joint performance of common functions or with persons
5 or other organizations for the performance of administrative functions;
6 (b) Sue or be sued, including taking any legal actions necessary or
7 proper to recover any assessments and penalties for, on behalf of, or
8 against the pool or any carrier;
9 (c) Define the health benefit plans, which plans shall allow coordination
10 of benefits, for which reinsurance will be provided, and to issue reinsur-
11 ance policies, in accordance with the requirements of this chapter;
12 (d) Establish rules, conditions and procedures for reinsuring risks under
13 the pool;
14 (e) Establish actuarial functions as appropriate for the operation of the
15 pool;
16 (f) Assess carriers in accordance with the provisions of section 41-5508,
17 Idaho Code, and make advance interim assessments of carriers as may be
18 reasonable and necessary for organizational and interim operating
19 expenses. Any interim assessments shall be credited as offsets against any
20 regular assessments due following the close of the fiscal year;
21 (g) Appoint appropriate legal, actuarial and other committees as neces-
22 sary to provide technical assistance in the operation of the pool, policy
23 and other contract design, and any other function within the authority of
24 the pool;
25 (h) Borrow money to effect the purposes of the pool. Any notes or other
26 evidence of indebtedness of the pool not in default shall be legal invest-
27 ments for carriers and may be carried as admitted assets;
28 (i) Establish rules, policies and procedures as may be necessary or con-
29 venient for the implementation of this chapter and the operation of the
30 pool.
31 (2) Neither the board nor its employees shall be liable for any obliga-
32 tions of the pool. No member or employee of the board shall be liable, and no
33 cause of action of any nature may arise against them, for any act or omission
34 related to the performance of their powers and duties under this chapter,
35 unless such act or omission constitutes willful or wanton misconduct. The
36 board may provide for indemnification of, and legal representation for, its
37 members and employees.
38 (3) No participation of a reinsuring carrier in the pool, no establish-
39 ment of rates, forms or procedures, and no other joint or collective action
40 required under the provisions of this chapter shall be grounds for any legal
41 action, criminal or civil liability, or penalty against the pool or any of its
42 reinsuring carriers either jointly or separately.
43 41-5505. REINSURANCE. (1) Any individual carrier issuing an individual
44 basic, standard, catastrophic A, or catastrophic B health benefit plan as pro-
45 vided in this chapter shall receive reinsurance to the level of coverage pro-
46 vided in the plan.
47 (2) (a) The pool shall not reimburse a reinsuring carrier with respect to
48 the claims of a reinsured individual or dependent until the carrier has
49 incurred an initial level of claims for such individual or dependent of
50 five thousand dollars ($5,000) in a calendar year for benefits covered by
51 the pool. In addition, the reinsuring carrier shall be responsible for ten
52 percent (10%) of the next twenty-five thousand dollars ($25,000) of bene-
53 fit payments during a calendar year and the pool shall reinsure the
54 remainder.
32
1 (b) The board annually may adjust the initial level of claims and the
2 maximum limit to be retained by the carrier to reflect increases in costs
3 and utilization within the standard market for health benefit plans within
4 the state. The adjustment shall not be less than the annual change in the
5 medical component of the "Consumer Price Index for All Urban Consumers" of
6 the department of labor, bureau of labor statistics, unless the board pro-
7 poses and the director approves a lower adjustment factor.
8 (3) A reinsuring carrier shall apply all managed care and claims handling
9 techniques, including utilization review, individual case management, pre-
10 ferred provider provisions, and other managed care provisions or methods of
11 operation consistently with respect to reinsured and nonreinsured business.
12 (4) Each carrier shall make a filing with the director containing the
13 carrier's earned health insurance premium derived from health benefit plans
14 delivered or issued for delivery in this state in the previous calendar year.
15 (5) Each carrier shall file with the director, in a form and manner to be
16 prescribed by the director, an annual report. The report shall state the num-
17 ber of resident persons insured under the carrier's health benefit plan, or
18 through excess or stop loss coverage.
19 41-5506. REINSURANCE PREMIUM RATES. (1) The board, as part of the plan of
20 operation, shall establish a methodology for determining premium rates to be
21 charged reinsuring carriers to reinsure individuals under this chapter. The
22 methodology shall include a system for classification of individuals that
23 reflects the types of case characteristics commonly used by individual carri-
24 ers in the state. The methodology shall provide for the development of base
25 reinsurance premium rates, subject to the approval of the director, which
26 shall be set at levels which reasonably approximate gross premiums charged to
27 individuals by individual carriers for health benefit plans with benefits sim-
28 ilar to the standard health benefit plan, adjusted to reflect retention levels
29 required under the provisions of this chapter. Rate adjustments under the pro-
30 visions of this subsection shall not be subject to the provisions of section
31 41-5206, Idaho Code.
32 (2) The board periodically shall review the methodology established under
33 the provisions of subsection (1) of this section, including the system of
34 classification and any rating factors, to assure that it reasonably reflects
35 the claims experience of the pool. The board may propose changes to the meth-
36 odology which shall be subject to the approval of the director.
37 (3) The board may consider adjustments to the premium rates charged by
38 the pool to reflect the use of effective cost containment and managed care
39 arrangements.
40 41-5507. PREMIUM RATES FOR PLAN COVERAGE. (1) The board shall establish
41 premium rates for coverage under the individual basic, standard, catastrophic
42 A and catastrophic B health benefit plans.
43 (2) Separate schedules of premium rates based on age, individual tobacco
44 use, geography as defined by rule of the director, gender and benefit plan
45 design shall apply for individual risks.
46 (3) The board, with the assistance of the director and in accordance with
47 appropriate actuarial principles, shall determine a standard risk rate by
48 using the average rates that individual standard risks in this state are
49 charged by at least five (5) of the largest health insurance carriers provid-
50 ing individual health insurance coverage to residents of Idaho that is sub-
51 stantially similar to the coverage offered by each pool plan. In determining
52 the average rate or charges of those health insurance carriers, the rates
53 charged by those carriers shall be actuarially adjusted to determine the rate
33
1 that would have been charged for benefits similar to those provided by each
2 plan. The standard risk rates shall be established using reasonable actuarial
3 techniques and shall reflect anticipated claims experience, expenses, and
4 other appropriate risk factors for such coverage.
5 (4) Rates for plan coverage shall not be less than one hundred twenty-
6 five percent (125%) nor more than one hundred fifty percent (150%) of rates
7 established as applicable for individual standard risks pursuant to subsection
8 (3) of this section.
9 41-5508. ASSESSMENTS. (1) Prior to March 1 of each year, the board shall
10 determine and report to the director the pool's net loss for the previous cal-
11 endar year, including administrative expenses and incurred losses for the
12 year, taking into account investment income and other appropriate gains and
13 losses, and any premium tax funds appropriated to the pool pursuant to section
14 41-406, Idaho Code.
15 (2) Any net loss for the year shall be recouped by assessments of carri-
16 ers.
17 (3) (a) For the assessment of March 1, 2001, and prior to March 1 of each
18 succeeding year, the board shall determine and file with the director an
19 estimate of the assessments needed to fund the losses incurred by the pool
20 in the previous calendar year.
21 (b) The individual assessments shall be determined by multiplying net
22 losses, if net earnings are negative, as defined by subsection (1) of this
23 section, by a fraction, the numerator of which shall be the carrier's
24 total premiums earned in the preceding calendar year from all health bene-
25 fit plans and policies or certificates of insurance for specific disease,
26 and hospital confinement indemnity in this state as reported in the
27 carrier's reports filed pursuant to section 41-5505(4) and (5), Idaho
28 Code, including reinsurance by way of excess or stop loss coverage, and
29 the denominator of which shall be the total premiums earned in the preced-
30 ing calendar year from all health benefit plans and policies or certifi-
31 cates of insurance for specific disease and hospital confinement indemnity
32 in this state, including reinsurance by way of excess or stop loss cover-
33 age.
34 (4) If assessments exceed net losses of the pool, the excess shall be
35 held at interest and used by the board to offset future losses or to reduce
36 pool premiums. As used in this paragraph, "future losses" includes reserves
37 for incurred but not reported claims.
38 (5) Each carrier's proportion of the assessment shall be determined annu-
39 ally by the board based on annual statements and other reports deemed neces-
40 sary by the board and filed by the carriers with the director.
41 (6) The plan of operation shall provide for the imposition of an interest
42 penalty for late payment of assessments.
43 (7) A carrier may seek from the director a deferment from all or part of
44 an assessment imposed by the board. The director may defer all or part of the
45 assessment if the director determines that the payment of the assessment would
46 place the carrier in a financially impaired condition. If all or part of an
47 assessment against a carrier is deferred the amount deferred shall be assessed
48 against the other carriers in a manner consistent with the basis for assess-
49 ment set forth in this section. The carrier receiving the deferment shall
50 remain liable to the pool for the amount deferred and shall be prohibited from
51 reinsuring any individuals with the pool until such time as it pays the
52 assessments.
53 41-5509. STANDARDS FOR AGENTS. The board, as part of the plan of opera-
34
1 tion, shall develop standards setting forth the manner and levels of compen-
2 sation to be paid to agents for the sale of individual basic, standard, cata-
3 strophic A and catastrophic B health benefit plans. In establishing such stan-
4 dards, the board shall take into consideration the need to assure broad avail-
5 ability of coverages, the objectives of the pool, the time and effort expended
6 in placing the coverage, the need to provide ongoing service to the individ-
7 ual, the levels of compensation currently used in the industry and the overall
8 costs of coverage to individuals selecting these plans.
9 41-5510. ELIGIBILITY. (1) Any individual eligible person, who is and con-
10 tinues to be a resident shall be eligible for coverage under an individual
11 basic, standard, catastrophic A or catastrophic B health benefit plan if evi-
12 dence is provided that:
13 (a) Such person has been rejected by one (1) individual carrier on the
14 basis of health status or claims experience; or
15 (b) An individual carrier refuses to issue a health benefit plan provid-
16 ing coverage substantially similar to coverage offered under an equivalent
17 pool plan except at a rate exceeding the rate for the pool plan.
18 (2) A rejection or refusal by a carrier offering only stop loss, excess
19 of loss or reinsurance coverage with respect to an applicant under subsection
20 (1) of this section shall not constitute sufficient evidence for purposes of
21 subsection (1) of this section.
22 (3) Each resident dependent of a person who is eligible for coverage
23 under the pool shall also be eligible for coverage under the pool.
24 (4) A person shall not be eligible for coverage under a pool plan if:
25 (a) The person has or obtains health insurance coverage substantially
26 similar to or more comprehensive than a pool plan, or would be eligible to
27 have coverage if the person elected to obtain it;
28 (b) The person is determined to be eligible for health care benefits
29 under medicaid;
30 (c) The person has previously terminated pool plan coverage unless twelve
31 (12) months have lapsed since such termination; provided however, that
32 this provision shall not apply with respect to an applicant who is a fed-
33 erally defined eligible individual;
34 (d) The person is an inmate or resident of a state or other public insti-
35 tution, or a state, local or private correctional facility; provided how-
36 ever, that this provision shall not apply with respect to an applicant who
37 is a federally defined eligible individual.
38 (5) Coverage shall cease:
39 (a) On the first day of the month following the date a person is no
40 longer a resident of this state;
41 (b) On the first day of the month following the date a person requests
42 coverage to end;
43 (c) Upon the death of the covered person;
44 (d) At the option of the board, thirty (30) days after the plan makes any
45 inquiry concerning the person's eligibility or place of residence to which
46 the person does not reply.
47 (6) A person who ceases to meet the eligibility requirements of this sec-
48 tion may be terminated on the first day of the month following the date when
49 the individual becomes ineligible.
50 41-5511. DESIGN OF PRODUCTS. (1) The board shall design the individual
51 basic, standard, catastrophic A and catastrophic B health benefit plans, with
52 an emphasis on making coverage available for preventive care, and subject to
53 the deductibles and maximum benefits provided in subsection (2) of this sec-
35
1 tion.
2 (2) (a) The basic health benefit plan shall provide a deductible of five
3 hundred dollars ($500), with a lifetime maximum benefit of five hundred
4 thousand dollars ($500,000) per carrier;
5 (b) The standard health benefit plan shall provide a deductible of one
6 thousand dollars ($1,000), with a lifetime maximum benefit of one million
7 dollars ($1,000,000) per carrier;
8 (c) The catastrophic A health benefit plan shall offer a deductible of
9 two thousand dollars ($2,000) and a lifetime maximum benefit of one mil-
10 lion dollars ($1,000,000) per carrier; and
11 (d) The catastrophic B health benefit plan shall offer a deductible of
12 five thousand dollars ($5,000) and a lifetime maximum benefit of one mil-
13 lion dollars ($1,000,000) per carrier.
14 (3) The board shall establish all other benefit levels, as well as cost
15 sharing arrangements, exclusions and limitations for each health benefit plan.
16 The plan designs for the small employer market shall not necessarily be the
17 same as the plan designs for the individual market.
18 (4) The board shall also design an individual basic, standard, cata-
19 strophic A and catastrophic B health benefit plan which each contain benefit
20 and cost-sharing arrangements that are consistent with the basic method of
21 operation and the benefit plans of managed care organizations, including any
22 restrictions imposed by federal law, which may include cost containment fea-
23 tures such as the following:
24 (a) Utilization review of health care services, including review of medi-
25 cal necessity of hospital and physician services;
26 (b) Case management;
27 (c) Selective contracting with hospitals, physicians and other health
28 care providers;
29 (d) Reasonable benefit differentials applicable to providers that partic-
30 ipate or do not participate in arrangements using restricted network pro-
31 visions; and
32 (e) Other managed care provisions.
33 (5) The board shall submit the health benefit plans or changes described
34 in this section to the director for approval. The director shall promulgate
35 the approved plans in accordance with the provisions of chapter 52, title 67,
36 Idaho Code.
37 (6) The board may appoint an advisory committee to assist it in develop-
38 ing the health benefit plans prescribed by this section.
39 SECTION 18. That Section 41-406, Idaho Code, be, and the same is hereby
40 amended to read as follows:
41 41-406. DEPOSIT AND REPORT OF FEES, LICENSES AND TAXES. (1) The director
42 shall transmit all taxes, fines and penalties collected by him to the state
43 treasurer as provided under section 59-1014, Idaho Code. The director shall
44 file with the state controller a statement of each deposit thus made. All such
45 funds received shall be deposited into the department of insurance suspense
46 account.
47 Such funds shall be distributed as follows:
48 (a) Ten percent (10%) shall be deposited in the insurance refund account
49 which is hereby created for the purpose of repaying overpayments of any
50 taxes, fines, and penalties or other erroneous receipts. There is hereby
51 appropriated out of the insurance refund account so much thereof as shall
52 be necessary for the payment of refunds. Any unencumbered balance remain-
53 ing in the insurance refund account on June 30 of each and every year in
36
1 excess of forty thousand dollars ($40,000) shall be transferred to the
2 general account fund and the state controller is hereby authorized and
3 directed on such dates to make such transfers unless the board of examin-
4 ers, which is hereby authorized to do so, changes the date of transfer or
5 sum to be transferred.
6 (b) That portion of the premium tax, payable to the public employee
7 retirement account fund as provided in section 59-1394, Idaho Code, shall
8 be distributed to that account fund.
9 (c) That portion of the premium tax necessary to cover administrative
10 costs incurred by the department in placing insurance companies or any
11 other insurance entities into receivership or under administrative super-
12 vision, and such costs cannot be satisfied from the assets of these compa-
13 nies or entities, shall be distributed to the insurance insolvency admin-
14 istrative account fund which is hereby created. There is hereby appropri-
15 ated out of the insurance insolvency administrative account fund so much
16 thereof as shall be necessary, but not to exceed two hundred thousand dol-
17 lars ($200,000) in any one (1) fiscal year, for the payment of the
18 department's administrative expenses incurred in carrying out such receiv-
19 erships or supervisions. A balance of one hundred thousand dollars
20 ($100,000) shall be maintained in this account fund on June 30 of each
21 year.
22 (d) After all other deductions authorized in this section have been made,
23 if the premium tax remaining exceeds forty-five million dollars
24 ($45,000,000), one-fourth (1/4) of such excess is hereby appropriated and
25 shall be paid to the Idaho high risk individual reinsurance pool estab-
26 lished in chapter 55, title 41, Idaho Code.
27 (e) The balance of the premium tax, fines and penalties shall be distrib-
28 uted to the general account fund of the state of Idaho.
29 (ef) All moneys received for fees, licenses and miscellaneous charges
30 collected shall be distributed to the insurance administrative account.
31 (2) The director shall make and file with the state controller an item-
32 ized statement of the fees, licenses, taxes, fines and penalties collected by
33 him during the preceding month, and shall deliver a certified copy of the
34 statement to the state treasurer.
35 SECTION 19. This act shall be in full force and effect on and after July
36 1, 2000; provided however, that the basic, standard, catastrophic A and cata-
37 strophic B health benefit plans provided for in Section 2 of this act shall
38 not be available until January 1, 2001.
39 SECTION 20. The President Pro Tempore of the Senate shall appoint five
40 senators, and the Speaker of the House of Representatives shall appoint five
41 representatives to act as a joint legislative oversight committee to monitor
42 the effects of this act. The committee shall report its findings and recommen-
43 dations to the Second Regular Session of the Fifty-sixth Idaho Legislature in
44 2002.
45 SECTION 21. Prior to the initial assessment for the Idaho Individual High
46 Risk Reinsurance Pool of March 1, 2001, as provided for in Section 41-5508,
47 Idaho Code, the Health Insurance Premiums Task Force shall determine a method
48 of limiting the assessments which may be imposed on carriers providing rein-
49 surance by way of excess or stop loss coverage and on carriers selling insur-
50 ance in the individual market. The Health Insurance Premiums Task Force shall
51 also review options regarding initially limiting enrollment in the Individual
52 High Risk Reinsurance Pool in order to preserve the financial integrity of the
37
1 pool.
STATEMENT OF PURPOSE
RS 10287C2
The purpose of this legislation is to establish an Individual High Risk Reinsurance
Pool which will provide health insurance coverage to high risk individuals
regardless of health status or claims experience. The pool will also receive funds
from a diversion of 25% of net premium tax funds received above $45,000,000.
The legislation continues the current small employer reinsurance mechanism.
FISCAL IMPACT
The legislation provides for a diversion of 25% of the net proceeds from the
premium tax above $45,000,000 to the individual High Risk Reinsurance Pool.
Contact
Name: Rep. Bill Deal
Rep. Max Black
Sen. Dean Cameron
Phone: 208-332-1000
STATEMENT OF PURPOSE/FISCAL NOTE H 750