Print Friendly SENATE BILL NO. 1506 – Small employer hlth reinsrnc/newbrn
SENATE BILL NO. 1506
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S1506......................................................by STATE AFFAIRS
SMALL EMPLOYER HEALTH REINSURANCE - Amends existing law relating to the
small employer health reinsurance program to clarify that newborn
dependents are not eligible for reinsurance unless a parent is already
03/05 Senate intro - 1st rdg - to printing
03/06 Rpt prt - to Com/HuRes
03/08 Rpt out - rec d/p - to 2nd rdg
03/11 2nd rdg - to 3rd rdg
Rls susp - PASSED - 30-0-5
AYES -- Andreason, Brandt, Bunderson, Burtenshaw, Cameron,
Darrington, Davis, Deide, Frasure, Geddes, Goedde, Hawkins, Hill,
Keough, King-Barrutia, Little, Lodge, Marley, Noh, Richardson, Risch,
Sandy, Schroeder, Sims, Sorensen, Stegner, Stennett, Thorne, Wheeler,
NAYS -- None
Absent and excused -- Boatright, Branch(Bartlett), Dunklin, Ingram,
Floor Sponsor - Cameron
Title apvd - to House
03/12 House intro - 1st rdg - to Bus
03/14 Rpt out - rec d/p - to 2nd rdg
03/15 2nd rdg - to 3rd rdg
Rls susp - PASSED - 69-0-1
AYES -- Barraclough, Barrett, Bedke, Bell, Bieter, Black, Block, Boe,
Bolz, Bradford, Bruneel, Callister, Campbell, Clark, Collins, Crow,
Cuddy, Deal, Denney, Ellis, Ellsworth, Eskridge, Field(13),
Field(20), Gagner, Gould, Hadley, Hammond, Harwood, Henbest, Higgins,
Hornbeck, Jaquet, Jones, Kellogg, Kendell, Kunz, Lake, Langford,
Loertscher, Mader, Martinez, McKague, Meyer, Montgomery, Mortensen,
Moyle, Pearce, Pischner, Pomeroy, Raybould, Ridinger, Roberts,
Robison, Sali, Schaefer, Sellman, Shepherd, Smith(33), Smith(23),
Smylie, Stevenson, Stone, Tilman, Trail, Wheeler, Wood, Young, Mr.
NAYS -- None
Absent and excused -- Aikele
Floor Sponsor - Deal
Title apvd - to Senate
03/15 To enrol
03/18 Rpt enrol - Pres signed - Sp signed
03/18 To Governor
03/21 Governor signed
Session Law Chapter 197
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature Second Regular Session - 2002
IN THE SENATE
SENATE BILL NO. 1506
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO THE SMALL EMPLOYER HEALTH REINSURANCE PROGRAM; AMENDING SECTION
3 41-4711, IDAHO CODE, TO CLARIFY THAT NEWBORN DEPENDENTS ARE NOT ELIGIBLE
4 FOR REINSURANCE UNLESS A PARENT IS ALREADY REINSURED; DECLARING AN EMER-
5 GENCY AND PROVIDING RETROACTIVE APPLICATION.
6 Be It Enacted by the Legislature of the State of Idaho:
7 SECTION 1. That Section 41-4711, Idaho Code, be, and the same is hereby
8 amended to read as follows:
9 41-4711. SMALL EMPLOYER CARRIER REINSURANCE PROGRAM. (1) A reinsuring
10 carrier shall be subject to the provisions of this section.
11 (2) There is hereby created an independent public body corporate and pol-
12 itic to be known as the Idaho small employer health reinsurance program. The
13 program will perform an essential governmental function in the exercise of
14 powers conferred upon it in this act and any assessments imposed or collected
15 pursuant to the operation of the program shall at all times be free from taxa-
16 tion of every kind.
17 (3) The program shall operate subject to the supervision and control of
18 the board established in section 41-5502, Idaho Code.
19 (4) Each small employer carrier shall make a filing with the director
20 containing the carrier's earned health insurance premium derived from health
21 benefit plans delivered or issued for delivery to small employers in this
22 state in the previous calendar year.
23 (5) The board shall submit to the director a plan of operation and there-
24 after any amendments thereto necessary or suitable to assure the fair, reason-
25 able and equitable administration of the program. The director may, after
26 notice and hearing, approve the plan of operation if the director determines
27 it to be suitable to assure the fair, reasonable and equitable administration
28 of the program, and to provide for the sharing of program gains or losses on
29 an equitable and proportionate basis in accordance with the provisions of this
30 section. The plan of operation shall become effective upon written approval by
31 the director.
32 (6) If the board fails to submit a suitable plan of operation, the direc-
33 tor shall, after notice and hearing, adopt and promulgate a temporary plan of
34 operation. The director shall approve the plan of operation submitted by the
35 board, or adopt a temporary plan of operation if the board fails to submit a
36 suitable plan. The director shall amend or rescind any plan adopted under the
37 provisions of this subsection at the time a plan of operation is submitted by
38 the board and approved by the director.
39 (7) The plan of operation shall:
40 (a) Establish procedures for handling and accounting of program assets
41 and moneys and for an annual fiscal reporting to the director;
42 (b) Establish procedures for selecting an administrator, which shall be
43 properly licensed in this state, and setting forth the powers and duties
1 of the administrator;
2 (c) Establish procedures for reinsuring risks in accordance with the pro-
3 visions of this section;
4 (d) Establish procedures for collecting assessments from reinsuring car-
5 riers to fund claims and administrative expenses incurred or estimated to
6 be incurred by the program; and
7 (e) Provide for any additional matters necessary for the implementation
8 and administration of the program.
9 (8) The program shall have the general powers and authority granted under
10 the laws of this state to insurance companies and health maintenance organiza-
11 tions licensed to transact business, except the power to issue health benefit
12 plans directly to either groups or individuals. In addition thereto, the pro-
13 gram shall have the specific authority to:
14 (a) Enter into contracts as are necessary or proper to carry out the pro-
15 visions and purposes of this chapter, including the authority, with the
16 approval of the director, to enter into contracts with similar programs of
17 other states for the joint performance of common functions or with persons
18 or other organizations for the performance of administrative functions;
19 (b) Sue or be sued, including taking any legal actions necessary or
20 proper to recover any assessments and penalties for, on behalf of, or
21 against the program or any reinsuring carriers;
22 (c) Take any legal action necessary to avoid the payment of improper
23 claims against the program;
24 (d) Define the health benefit plans, which plans shall allow coordination
25 of benefits, for which reinsurance will be provided, and to issue reinsur-
26 ance policies, in accordance with the requirements of this chapter;
27 (e) Establish rules, conditions and procedures for reinsuring risks under
28 the program, including board discretion to operate separate small employer
29 and individual reinsurance pools;
30 (f) Establish actuarial functions as appropriate for the operation of the
32 (g) Assess carriers in accordance with the provisions of subsection (12)
33 of this section, and to make advance interim assessments of carriers as
34 may be reasonable and necessary for organizational and interim operating
35 expenses. Any interim assessments shall be credited as offsets against any
36 regular assessments due following the close of the fiscal year;
37 (h) Appoint appropriate legal, actuarial and other committees as neces-
38 sary to provide technical assistance in the operation of the program, pol-
39 icy and other contract design, and any other function within the authority
40 of the program;
41 (i) Borrow money to effect the purposes of the program. Any notes or
42 other evidence of indebtedness of the program not in default shall be
43 legal investments for carriers and may be carried as admitted assets.
44 (9) A reinsuring carrier may reinsure with the program as provided for in
45 this subsection:
46 (a) With respect to a small employer basic, standard or catastrophic
47 health benefit plan, the program shall reinsure the level of coverage pro-
48 vided and, with respect to other plans, the program shall reinsure up to
49 the level of coverage provided in a small employer basic, standard or cat-
50 astrophic health benefit plan.
51 (b) A small employer carrier may reinsure an entire employer group within
52 sixty (60) days of the commencement of the group's coverage under a health
53 benefit plan.
54 (c) A reinsuring small employer carrier may reinsure an eligible employee
55 or dependent within a period of sixty (60) days following the commencement
1 of the coverage with the small employer. A newly eligible employee or
2 dependent of the reinsured small employer may be reinsured within sixty
3 (60) days of the commencement of his coverage. Newborn dependents of
4 insureds are not eligible for reinsurance unless a parent is already rein-
6 (d) (i) The program shall not reimburse a reinsuring carrier with
7 respect to the claims of a reinsured employee or dependent until the car-
8 rier has incurred an initial level of claims for such employee or depend-
9 ent of five thousand dollars ($5,000) in a calendar year for benefits cov-
10 ered by the program. In addition, the reinsuring carrier shall be respon-
11 sible for ten percent (10%) of the next fifty thousand dollars ($50,000)
12 of benefit payments during a calendar year and the program shall reinsure
13 the remainder.
14 (ii) The board annually may adjust the initial level of claims and
15 the maximum limit to be retained by the carrier to reflect increases
16 in costs and utilization within the standard market for health bene-
17 fit plans within the state. The adjustment shall not be less than the
18 annual change in the medical component of the "Consumer Price Index
19 for All Urban Consumers" of the department of labor, bureau of labor
20 statistics, unless the board proposes and the director approves a
21 lower adjustment factor.
22 (e) A reinsuring carrier may terminate reinsurance with the program for
23 one (1) or more of the reinsured employees or dependents on any anniver-
24 sary of the health benefit plan.
25 (f) A reinsuring carrier shall apply all managed care and claims handling
26 techniques, including utilization review, individual case management, pre-
27 ferred provider provisions, and other managed care provisions or methods
28 of operation consistently with respect to reinsured and nonreinsured busi-
30 (10) (a) The board, as part of the plan of operation, shall establish a
31 methodology for determining premium rates to be charged by the program for
32 reinsuring small employers pursuant to this section. The methodology shall
33 include a system for classification of small employers that reflects the
34 types of case characteristics commonly used by small employer carriers in
35 the state. The methodology shall provide for the development of base rein-
36 surance premium rates, subject to the approval of the director, and shall
37 be set at levels which reasonably approximate gross premiums charged to
38 small employers by small employer carriers for health benefit plans with
39 benefits similar to the standard health benefit plan, adjusted to reflect
40 retention levels required under the provisions of this chapter.
41 (b) Premiums for the program shall be as established by the board.
42 (c) The board periodically shall review the methodology established under
43 the provisions of paragraph (10)(a) of this section, including the system
44 of classification and any rating factors, to assure that it reasonably
45 reflects the claims experience of the program. The board may propose
46 changes to the methodology which shall be subject to the approval of the
48 (d) The board may consider adjustments to the premium rates charged by
49 the program to reflect the use of effective cost containment and managed
50 care arrangements.
51 (11) If a health benefit plan for a small employer is entirely or par-
52 tially reinsured with the program, the premium charged to the small employer
53 for any rating period for the coverage issued shall meet the requirements
54 relating to premium rates set forth in section 41-4706, Idaho Code.
55 (12) (a) Prior to March 1 of each year, the board shall determine and
1 report to the director the program net loss for the previous calendar
2 year, including administrative expenses and incurred losses for the year,
3 taking into account investment income and other appropriate gains and
5 (b) Any net loss for the year shall be recouped by assessments of carri-
7 (c) (i) For the assessment of March 1, 1995, and prior to March 1 of
8 each succeeding year, the board shall determine and file with the
9 director an estimate of the assessments needed to fund the losses
10 incurred by the program in the previous calendar year.
11 (ii) The individual assessments shall be determined by multiplying
12 net losses, if net earnings are negative, as defined by subsection
13 (12)(a) of this section, by a fraction, the numerator of which shall
14 be the carrier's total premiums earned in the preceding calendar year
15 from all health benefit plans and policies or certificates of insur-
16 ance for specific disease, and hospital confinement indemnity in this
17 state as reported in the carrier's annual report pursuant to subsec-
18 tion (16) of this section, and the denominator of which shall be the
19 total premiums earned in the preceding calendar year from all health
20 benefit plans and policies or certificates of insurance for specific
21 disease and hospital confinement indemnity in this state.
22 (d) If assessments exceed net losses of the program, the excess shall be
23 held at interest and used by the board to offset future losses or to
24 reduce program premiums. As used in this paragraph, "future losses"
25 includes reserves for incurred but not reported claims.
26 (e) Each reinsuring carrier's proportion of the assessment shall be
27 determined annually by the board based on annual statements and other
28 reports deemed necessary by the board and filed by the reinsuring carriers
29 with the board.
30 (f) The plan of operation shall provide for the imposition of an interest
31 penalty for late payment of assessments.
32 (g) A reinsuring carrier may seek from the director a deferment from all
33 or part of an assessment imposed by the board. The director may defer all
34 or part of the assessment of a reinsuring carrier if the director deter-
35 mines that the payment of the assessment would place the reinsuring car-
36 rier in a financially impaired condition. If all or part of an assessment
37 against a reinsuring carrier is deferred the amount deferred shall be
38 assessed against the other participating carriers in a manner consistent
39 with the basis for assessment set forth in this subsection. The reinsuring
40 carrier receiving the deferment shall remain liable to the program for the
41 amount deferred and shall be prohibited from reinsuring any groups with
42 the program until such time as it pays the assessments.
43 (13) (a) Neither the participation in the program as reinsuring carriers,
44 the establishment of rates, forms or procedures, nor any other joint or
45 collective action required under the provisions of this chapter shall be
46 the basis of any legal action, criminal or civil liability, or penalty
47 against the program or any of its reinsuring carriers either jointly or
49 (b) Neither the board nor its employees shall be liable for any obliga-
50 tions of the program. No member or employee of the board shall be liable,
51 and no cause of action of any nature may arise against them, for any act
52 or omission related to the performance of their powers and duties under
53 this chapter, unless such act or omission constitutes willful or wanton
54 misconduct. The board may provide for indemnification of, and legal repre-
55 sentation for, its members and employees.
1 (14) The board, as part of the plan of operation, shall develop standards
2 setting forth the manner and levels of compensation to be paid to agents for
3 the sale of small employer basic, standard and catastrophic health benefit
4 plans. In establishing such standards, the board shall take into consideration
5 the need to assure the broad availability of coverages, the objectives of the
6 program, the time and effort expended in placing the coverage, the need to
7 provide ongoing service to the small employer, the levels of compensation cur-
8 rently used in the industry and the overall costs of coverage to small employ-
9 ers selecting these plans.
10 (15) The program shall be exempt from any and all taxes.
11 (16) Each carrier shall file with the director, in a form and manner to be
12 prescribed by the director, an annual report. The report shall state the num-
13 ber of resident persons insured under the carrier's health benefit plan.
14 (17) If a reinsuring small employer carrier attempts to reinsure or
15 reinsures an entire employer group, an employee, or a dependent of such
16 employee that, immediately prior to the commencement of such coverage, it cov-
17 ered under a health benefit plan, the board shall assess all costs and losses
18 incurred by the program for claims and administrative expenses relating to
19 such group, employee or dependent of such employee only to the said reinsuring
20 small employer carrier.
21 (18) Subsection (17) of this section shall apply to assessments made for
22 the 1994 calendar year and each year thereafter.
23 SECTION 2. An emergency existing therefor, which emergency is hereby
24 declared to exist, this act shall be in full force and effect on and after its
25 passage and approval, and retroactively to July 1, 2000.
STATEMENT OF PURPOSE
The purpose of the bill is to restore wording in the Small
Employer Health Insurance Availability Act that was
inadvertently repealed as a part of the implementation of the
Individual High risk Reinsurance Pool in 2000. The restored
wording provides that newborn dependents of insureds are not
eligible for reinsurance in the Small Employer Health
Reinsurance Program unless a parent is already reinsured.
There is no fiscal impact on the state general fund.
CONTACT: Senator Dean L. Cameron)
Hyatt Erstad, Ch. Small Employer Health Reinsurance
Bart W. Hartwood Small Employer Health Reinsurance
STATEMENT OF PURPOSE/ FISCAL NOTE S 1506