2000 Legislation
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HOUSE BILL NO. 750 – Individual high risk insurance pool

HOUSE BILL NO. 750

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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

Bill Text


 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 / Fiscal Impact


     
     
                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