S1572aa,aa.................................................by STATE AFFAIRS MANAGED CARE ORGANIZATIONS - Amends existing law to provide that managed care organizations are members of the life and health insurance guaranty association; to revise the purpose of the act to include members of managed care organizations as members of the association; to provide coverage for managed care contracts of disability insurers; to exclude coverage of contractual obligations owed to nonresidents under a managed care plan; and to provide that a managed care organization shall not be subject to a class B or class C assessment for any domestic, foreign or alien insurer that is declared insolvent by any court prior to July 1, 2000. 03/15 Senate intro - 1st rdg - to printing 03/16 Rpt prt - to Com/HuRes 03/17 Rpt out - to 14th Ord Rpt out amen - to engros 03/20 Rpt engros - 1st rdg - to 2nd rdg as amen To 14th Ord 03/21 Rpt out amen - to engros 03/22 Rpt engros - to 1st rdg as amen 03/23 2nd rdg - to 3rd rdg as amen 03/24 3rd rdg as amen - PASSED - 30-1-4 AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron, Crow, Danielson, Davis, Deide, Dunklin, Frasure, Geddes, Hawkins, Keough, King-Barrutia, Lee, McLaughlin, Parry, Richardson, Risch, Sandy, Schroeder, Sorensen, Stegner, Stennett, Thorne, Wheeler, Whitworth, Williams NAYS--Riggs Absent and excused--Darrington, Ingram, Ipsen, Noh Floor Sponsor - Crow Title apvd - to House 03/27 House intro - 1st rdg as amen - to Bus 03/30 Rpt out - rec d/p - to 2nd rdg as amen 03/31 2nd rdg - to 3rd rdg as amen 04/04 3rd rdg as amen - PASSED - 62-2-6 AYES -- Alltus, Barraclough(Barraclough), Barrett, Bell, Bieter, Black, Boe, Bruneel, Callister, Campbell, Chase, Cheirrett, Crow, Cuddy, Deal, Denney, Ellsworth, Field(13), Field(20), Gagner, Geddes, Hadley, Hammond, Hansen(23), Henbest, Hornbeck, Jaquet, Jones, Judd, Kempton, Kendell, Kunz, Lake, Loertscher(Loertscher), Marley, McKague, Meyer, Montgomery, Mortensen, Moss, Moyle, Pearce, Pischner, Pomeroy, Reynolds, Ridinger, Ringo, Robison, Sali, Schaefer, Sellman, Shepherd, Smith, Smylie, Stevenson, Stoicheff, Stone, Taylor, Tilman, Trail, Wood, Zimmermann NAYS -- Gould, Kellogg Absent and excused -- Clark, Hansen(29), Linford, Mader, Wheeler, Mr Speaker Floor Sponsor - Alltus Title apvd - to Senate To enrol - rpt enrol - Pres signed 04/05 Sp signed 04/06 To Governor 04/14 Governor signed Session Law Chapter 371 Effective: 07/01/00
|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fifth Legislature Second Regular Session - 2000 IN THE SENATE SENATE BILL NO. 1572, As Amended, As Amended BY STATE AFFAIRS COMMITTEE 1 AN ACT 2 RELATING TO THE IDAHO LIFE AND HEALTH GUARANTY ASSOCIATION; PROVIDING LEGISLA- 3 TIVE INTENT; AMENDING SECTION 41-3931, IDAHO CODE, TO PROVIDE THAT MAN- 4 AGED CARE ORGANIZATIONS ARE MEMBERS OF THE ASSOCIATION; AMENDING SECTION 5 41-4302, IDAHO CODE, TO REVISE THE PURPOSE OF THE ACT AND TO MAKE TECHNI- 6 CAL CORRECTIONS; AMENDING SECTION 41-4303, IDAHO CODE, TO PROVIDE COVERAGE 7 FOR MANAGED CARE CONTRACTS OF DISABILITY INSURERS; AMENDING SECTION 8 41-4308, IDAHO CODE, TO EXCLUDE COVERAGE OF CONTRACTUAL OBLIGATIONS OWED 9 TO NONRESIDENTS UNDER A MANAGED CARE PLAN AND TO MAKE TECHNICAL CORREC- 10 TIONS; AMENDING SECTION 41-4309, IDAHO CODE, TO PROVIDE THAT A MANAGED 11 CARE ORGANIZATION SHALL NOT BE SUBJECT TO A CLASS B OR CLASS C ASSESSMENT 12 FOR ANY DOMESTIC, FOREIGN OR ALIEN INSURER THAT IS DECLARED INSOLVENT BY 13 ANY COURT PRIOR TO JULY 1, 2000 AND TO MAKE A TECHNICAL CORRECTION. 14 Be It Enacted by the Legislature of the State of Idaho: 15 SECTION 1. LEGISLATIVE INTENT. It is the intent of the Legislature that 16 at least one member of the board of directors of the Idaho Life and Health 17 Guaranty Association be a managed care organization on and after July 1, 2000. 18 19 SECTION 2. That Section 41-3931, Idaho Code, be, and the same is hereby 20 amended to read as follows: 21 41-3931. PARTICIPATION IN IDAHO LIFE AND HEALTH INSURANCE GUARANTY ASSO- 22 CIATION. BY THE YEAR 2000.(1) By the conclusion of the year 2000, eEach orga- 23 nization offering a managed care plan for which a certificate of authority is 24 required under this chapter shall, as a condition of its authority to continue25 tooffer managed care plans in this state, be comea member of ainsurer of the 26 Idaho life and health insurance guaranty association having as its purpose the27 protection of all members of the managed care organization in this state28 against failure by the organization in the performance of its obligations due29 to impairment or insolvencyestablished under chapter 43, title 41, Idaho 30 Code. 31 (2) The director may take such actions and promulgate such rules as may 32 be necessary to effectuate the provisions of this section. 33 SECTION 3. That Section 41-4302, Idaho Code, be, and the same is hereby 34 amended to read as follows: 35 41-4302. PURPOSE. The purpose of this act is to protect policyowners, 36 insureds, members, beneficiaries, annuitants, payees, and assignees of life 37 insurance policies, health insurance policies, managed care plans, annuity 38 contracts, and supplemental contracts, subject to certain limitations, against 39 failure in the performance of contractual obligations due to the impairment of 40 insolvency of the insurer issuing such policies or contracts. To provide this 41 protection ,: (1) an association of insurers is created to enable the guaranty 2 1 of payment of benefits and of continuation of coverages, to residents ,; 2 (2) members of the association are subject to assessment to provide funds to 3 carry out the purpose of this act ,; and (3) the association is authorized to 4 assist the director in the prescribed manner, in the detection and prevention 5 of insurer impairments or insolvencies. 6 SECTION 4. That Section 41-4303, Idaho Code, be, and the same is hereby 7 amended to read as follows: 8 41-4303. APPLICATION OF ACT. (1) This act shall apply to direct life 9 insurance policies, contractual obligations of managed care plans to members 10 of such plans only, disability insurance policies, annuity contracts, and con- 11 tracts supplemental to life and disability insurance policies, annuity con- 12 tracts, and contracts supplemental to life and disability insurance policies 13 and annuity contracts issued by persons licensed to transact insurance in this 14 state at any time. 15 (2) This act shall not apply to: 16 (a) That portion or part of a variable life insurance or variable annuity 17 contract not guaranteed by an insurer; 18 (b) That portion or part of any policy or contract under which the risk 19 is borne by the policyholder; 20 (c) Any policy or contract or part thereof assumed by the impaired or 21 insolvent insurer under a contract of reinsurance, other than reinsurance 22 for which assumption certificates have been issued; 23 (d) Any such policy or contract issued by a reciprocal insurer, mutual 24 benefit association, fraternal benefit society, hospital and medical ser- 25 vice corporation, health maintenance organization,limited managed care 26 plan, or self-funded health care plan; or 27 (e) Any unallocated annuity contract. 28 SECTION 5. That Section 41-4308, Idaho Code, be, and the same is hereby 29 amended to read as follows: 30 41-4308. POWERS AND DUTIES OF THE ASSOCIATION. In addition to the powers 31 and duties enumerated in other sections of this act: 32 (1) If a domestic insurer is an impaired insurer, the association may, 33 subject to any conditions imposed by the association, other than those which 34 impair the contractual obligations of the impaired insurer, and approved by 35 the impaired insurer and the director: 36 (a) Guarantee or reinsure, or cause to be guaranteed, assumed, or rein- 37 sured, any or all of the covered policies of residents of the impaired 38 insurers; 39 (b) Provide such moniesmoneys, pledges, notes, guarantees, or other 40 means as are proper to effectuate and assure payment of the contractual 41 obligations to residents of the impaired insurer pending action under sub-42 sectionparagraph (a) aboveof this subsection; 43 (c) Loan money to the impaired insurer. 44 (d) This chapter shall provide coverage for the policies and contracts 45 specified in subsection (1) of this section, for persons who are not resi- 46 dents, but only under the following conditions: 47 (i) The insurers which issued such policies or contracts are domi- 48 ciled in this state; and49 (ii) The director has determined that by statute, similar protection 50 is not available for such nonresidents as that provided in this chap- 51 ter for residents of this state; and 3 1 (iii) The policy or contract establishing or creating the obligation 2 is not a managed care plan. 3 (2) If a domestic insurer is an insolvent insurer, the association shall, 4 subject to the approval of the director: 5 (a) Guarantee, assume, or reinsure, or cause to be guaranteed, assumed, 6 or reinsured the covered policies of residents of the insolvent insurer; 7 (b) Assume payment of the contractual obligations to residents of the 8 insolvent insurer; and 9 (c) Provide such moniesmoneys, pledges, notes, guarantees, or other 10 means as are reasonably necessary to discharge such duties. 11 (d) This chapter shall provide coverage for the policies and contracts 12 specified in subsection (2) of this section, for persons who are not resi- 13 dents, but only under the following conditions: 14 (i) The insurers which issued such policies or contracts are domi- 15 ciled in this state; and16 (ii) The director has determined that by statute, similar protection 17 is not available for such nonresidents as that provided by this chap- 18 ter for residents of this state; and 19 (iii) The policy or contract establishing or creating the obligation 20 is not a managed care plan. 21 (3) If a foreign or alien insurer is an insolvent insurer, the associa- 22 tion shall, subject to the approval of the director: 23 (a) Guarantee, assume, or reinsure, or cause to be guaranteed, assumed, 24 or reinsured the covered policies of residents; 25 (b) Assure payment of the contractual obligations of the insolvent 26 insurer to residents; and 27 (c) Provide such moniesmoneys, pledges, notes, guarantees, or other 28 means as are reasonably necessary to discharge such duties. 29 Provided, however, that this subsection shall not apply where the director has 30 determined that the foreign or alien insurer's domiciliary jurisdiction or 31 state of entry provides, by statute, protection substantially similar to that 32 provided by this act for residents of this state. 33 (4) (a) In carrying out its duties under subsections (2) and (3) of this 34 section, permanent policy liens, or contract liens may be imposed in con- 35 nection with any guarantee, assumption or reinsurance agreement, if the 36 court: 37 (i) Finds that the amounts which can be assessed under this act are 38 less than the amounts needed to assure full and prompt performance of 39 the insolvent insurer's contractual obligations, or that the economic 40 or financial conditions as they affect member insurers are suffi- 41 ciently adverse to render the imposition of policy or contract liens, 42 to be in the public interest; and 43 (ii) Approves the specific policy liens or contract liens to be 44 used. 45 (b) Before being obligated under subsections (2) and (3) of this section 46 the association may request that there be imposed temporary moratoriums or 47 liens on payments of cash values and policy loans in addition to any con- 48 tractual provisions for deferral of cash or policy loan values and such 49 temporary moratoriums and liens may be imposed if they are approved by the 50 court. 51 (5) If the association fails to act within a reasonable period of time as 52 provided in subsections (2) and (3) of this section, the director shall have 53 the powers and duties of the association under this act with respect to insol- 54 vent insurers. 55 (6) The association may render assistance and advice to the director upon 4 1 his request, concerning rehabilitation, payment of claims, continuance of cov- 2 erage, or the performance of other contractual obligations of any impaired or 3 insolvent insurer. 4 (7) The association shall have standing to appear before any court in 5 this state with jurisdiction over an impaired or insolvent insurer concerning 6 which the association is or may become obligated under this act. Such standing 7 shall extend to all matters germane to the powers and duties of the associa- 8 tion, including, but not limited to, proposals for reinsuring or guaranteeing 9 the covered policies of the impaired or insolvent insurer and the determina- 10 tion of the covered policies and contractual obligations. 11 (8) (a) Any person receiving benefits under this act shall be deemed to 12 have assigned the rights under the covered policy to the association to 13 the extent of the benefits received because of this act whether the bene- 14 fits are payments of contractual obligations or continuation of coverage. 15 The association may require an assignment to it of such rights by any 16 payee, policy or contract owner, beneficiary, insured or annuitant as a 17 condition precedent to the receipt of any rights or benefits conferred by 18 this act upon such person. The association shall be subrogated to these 19 rights against the assets of any insolvent insurer. 20 (b) The subrogation rights of the association under this subsection shall 21 have the same priority against the assets of the insolvent insurer as that 22 possessed by the person entitled to receive benefits under this act. 23 (9) The contractual obligations of the insolvent insurer for which the 24 association becomes or may become liable shall be as great as but no greater 25 than the contractual obligations of the insolvent insurer would have been in 26 the absence of an insolvency unless such obligations are reduced as permitted 27 by subsection (4) of this section but the aggregate liability of the associa- 28 tion shall not exceed one hundred thousand dollars ($100,000) in cash values, 29 or three hundred thousand dollars ($300,000) for all benefits, including cash 30 values, with respect to any one life. 31 (10) The association may: 32 (a) Enter into such contracts as are necessary or proper to carry out the 33 provisions and purposes of this act; 34 (b) Sue or be sued, including taking any legal actions necessary or 35 proper for recovery of any unpaid assessments under section 41-4309, Idaho 36 Code; 37 (c) Borrow money to effect the purposes of this act. Any notes or other 38 evidence of indebtedness of the association not in default shall be legal 39 investments for domestic insurers and may be carried as admitted assets; 40 (d) Employ or retain such persons as are necessary to handle the finan- 41 cial transactions of the association and to perform such other functions 42 as become necessary or proper under this act; 43 (e) Negotiate and contract with any liquidator, rehabilitator, conserva- 44 tor, or ancillary receiver to carry out the powers and duties of the asso- 45 ciation; 46 (f) Take such legal action as may be necessary to avoid payment of 47 improper claims; 48 (g) Exercise, for the purposes of this act and to the extent approved by 49 the director, the powers of a domestic life or health insurer, but in no 50 case may the association issue insurance policies or annuity contracts 51 other than those issued to perform the contractual obligations of the 52 impaired or insolvent insurer. 53 SECTION 6. That Section 41-4309, Idaho Code, be, and the same is hereby 54 amended to read as follows: 5 1 41-4309. ASSESSMENTS. (1) For the purpose of providing the funds neces- 2 sary to carry out the powers and duties of the association, the board of 3 directors shall assess the member insurers, separately for each account, at 4 such time and for such amounts as the board finds necessary. Assessments shall 5 be due not less than thirty (30) days after prior written notice to the member 6 insurers and shall accrue interest at eight percent (8%) per annum on and 7 after the due date. 8 (2) There shall be three (3) classes of assessments, as follows: 9 (a) Class A assessments shall be made for the purpose of meeting adminis- 10 trative costs and other general expenses and examinations conducted under 11 the authority of subsection (5) of section 41-4312 and of section 41-4315, 12 Idaho Code. 13 (b) Class B assessments shall be made to the extent necessary to carry 14 out the powers and duties of the association under section 41-4308, Idaho 15 Code, with regard to an impaired or insolvent domestic insurer. 16 (c) Class C assessments shall be made to the extent necessary to carry 17 out the powers and duties of the association under section 41-4308, Idaho 18 Code, with regard to an insolvent foreign or alien insurer. 19 (3) (a) The amount of any class A assessment shall be determined by the 20 board and may be made on a nonproratanon pro rata basis. Such assessment 21 shall be credited against future insolvency assessments. The amount of any 22 class B or C assessment shall be allocated for assessment purposes among 23 the accounts in the proportion that the premiums received by the impaired 24 or insolvent insurer on the policies covered by each account for the last 25 calendar year preceding the assessment in which the impaired or insolvent 26 insurer received premiums bears to the premiums received by such insurer 27 for such calendar year on all covered policies. 28 (b) Class C assessments against member insurers for each account shall be 29 in the proportion that the premiums received on business in this state by 30 each assessed member insurer on policies covered by each account for the 31 calendar year preceding the assessments bears to such premiums received on 32 business in this state for the calendar year preceding the assessment by 33 all assessed member insurers. 34 (c) Class B assessments for each account shall be made separately for 35 each state in which the impaired or insolvent domestic insurer was autho- 36 rized to transact insurance at any time, in the proportion that the pre- 37 miums received on business in such state by the impaired or insolvent 38 insurer on policies covered by such account for the last calendar year 39 preceding the assessment in which the impaired or insolvent insurer 40 received premiums bears to such premiums received in all such states for 41 such calendar year by the impaired or insolvent insurer. The assessments 42 against member insurers shall be in the proportion that the premiums 43 received on business in each such state by each assessed member insurer on 44 policies covered by each account for the calendar year preceding the 45 assessment bears to such premiums received on business in each state for 46 the calendar year preceding assessment by all assessed member insurers. 47 (d) Assessments for funds to meet the requirements of the association 48 with respect to an impaired or insolvent insurer shall not be made until 49 necessary to implement the purposes of this act. Classification of assess- 50 ments under subsection (2) of this section and computation of assessments 51 under this subsection shall be made with a reasonable degree of accuracy, 52 recognizing that exact determinations may not always be possible. 53 (e) Notwithstanding any other provision of this section, a managed care 54 organization shall not be subject to a class B or class C assessment for 55 any domestic, foreign or alien insurer that is declared insolvent by any 6 1 court prior to July 1, 2000. 2 (4) The association may abate or defer, in whole or in part, the assess- 3 ment of a member insurer if, in the opinion of the board, payment of the 4 assessment would endanger the ability of the member insurer to fulfill its 5 contractual obligations. In the event an assessment against a member insurer 6 is abated, or deferred in whole or in part, the amount by which such assess- 7 ment is abated or deferred may be assessed against the other member insurers 8 in a manner consistent with the basis for assessments set forth in this sec- 9 tion. 10 (5) The total of all assessments upon a member insurer for each account 11 shall not in any one calendar year exceed two percent (2%) of such insurer's 12 premiums received in this state during the calendar year preceding the assess- 13 ment on the policies covered by the account. If the maximum assessment, 14 together with the other assets of the association in either account, does not 15 provide in any one year in either account an amount sufficient to carry out 16 the responsibilities of the association, the necessary additional funds shall 17 be assessed as soon thereafter as permitted by this act. 18 (6) The board may, by an equitable method as established in the plan of 19 operation, refund to member insurers, in proportion to the contribution of 20 each insurer to that account, the amount by which the assets of the account 21 exceed the amount the board finds is necessary to carry out during the coming 22 year the obligations of the association with regard to that account, including 23 assets accruing from net realized gains and income from investments. A reason- 24 able amount may be retained in any account to provide funds for the continuing 25 expenses of the association and for future losses if refunds are impractical. 26 (7) It shall be proper for any member insurer, in determining its premium 27 rates and policyowner dividends as to any kind of insurance within the scope 28 of this act, to consider the amount reasonably necessary to meet its assess- 29 ment obligations under this act. 30 (8) The association shall issue to each insurer paying an assessment 31 under this act, other than a class A assessment, a certificate of contribu- 32 tion, in a form prescribed by the director, for the amount of the assessment 33 so paid. All outstanding certificates shall be of equal dignity and priority 34 without reference to amounts or dates of issue. A certificate of contribution 35 may be shown by the insurer in its financial statement as an asset in such 36 form and for such amount, if any, and period of time as the director may 37 approve.
|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fifth Legislature Second Regular Session - 2000 Moved by Crow Seconded by Cameron IN THE SENATE SENATE AMENDMENTS TO S.B. NO. 1572 1 AMENDMENT TO SECTION 4 2 On page 2 of the printed bill, in line 10, following "plans" insert: 3 "only". 4 AMENDMENTS TO SECTION 5 5 On page 3, in line 2, delete "of" and insert: "is not"; and in line 20, 6 delete "of" and insert: "is not". Moved by Cameron Seconded by Crow IN THE SENATE SENATE AMENDMENT TO S.B. NO. 1572, As Amended 7 AMENDMENT TO SECTION 4 8 On page 2 of the engrossed bill, in line 25, following " organization," 9 insert: "limited managed care plan,".
STATEMENT OF PURPOSE RS 10297 The purpose of the proposed legislation is to provide that managed care organizations are members of the Idaho Life and Health Insurance Guaranty Association and to provide coverage for managed care contracts of disability insurers. The proposed legislation excludes coverage of contractual obligations owed to non-residents under a managed care plan and states a legislative intent to include a managed care organization on the board of directors of the Association. Managed care organizations shall not be subject to a Class B or Class C assessment for any domestic, foreign or alien insurer declared insolvent by any court prior to July 1, 2000. FISCAL IMPACT There would be no fiscal impact. Contact: Name: Senator Gordon Crow Telephone: (208) 332-1330 STATEMENT OF PURPOSE/FISCAL NOTE S1572