2005 Legislation
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SENATE BILL NO. 1219 – Insurance, administered by county


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Bill Status

S1219................................................by JUDICIARY AND RULES
INSURANCE - Amends existing law relating to insurance to remove exemption
language referencing plans administered by counties; and to provide for
petitions for exemptions.
03/17    Senate intro - 1st rdg - to printing
03/18    Rpt prt - to Com/HuRes

Bill Text

  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-eighth Legislature                   First Regular Session - 2005
                                       IN THE SENATE
                                    SENATE BILL NO. 1219
                              BY JUDICIARY AND RULES COMMITTEE
  1                                        AN ACT
  6    Be It Enacted by the Legislature of the State of Idaho:
  7        SECTION 1.  That Section 41-4003, Idaho Code, be, and the same  is  hereby
  8    amended to read as follows:
 10    CODE. (1) No self-funded plan shall operate in this state except while  regis-
 11    tered  with the director as hereinafter provided. Self-funded plans already in
 12    operation at the effective date  of this act shall so register  within  ninety
 13    (90) days after such effective date.
 14        (2)  No registration shall be required of:
 15        (a)  Any  self-funded plan established for the sole purpose of funding the
 16        dollar amount of a deductible clause contained in  the  provisions  of  an
 17        insurance  contract  issued by an insurer duly authorized to transact dis-
 18        ability insurance in this state if  the  deductible  does  not  exceed  an
 19        amount applicable to each beneficiary of two thousand dollars ($2,000) per
 20        annum  and the total of all obligations to all beneficiaries insured under
 21        the plan arising out of the application of  such  a  deductible  does  not
 22        exceed  the aggregate amount of two hundred thousand dollars ($200,000) in
 23        any one (1) year.
 24        (b)  Any plan established and maintained for the purpose of complying with
 25        any worker's compensation  law  or  unemployment  compensation  disability
 26        insurance law.
 27        (c)  Any  plan  administered  by  or  for the federal government or agency
 28        thereof. or any county of this state.
 29        (d)  Any plan which is primarily for the purpose of  providing  first  aid
 30        care and treatment, at a dispensary of an employer, for injury or sickness
 31        of employees while engaged in their employment.
 32        (e)  Any  employer's  self-insured  health plan or service established and
 33        maintained solely for its members and their immediate families, or to  any
 34        self-insured  health  plan or service established, maintained, and insured
 35        jointly by any employer and any labor  organization  or  organizations  if
 36        such  health  plan or service has been in existence and operation for fif-
 37        teen (15) years immediately preceding the effective date of this act.
 38        (3)  Plans while so registered shall not be deemed to be  engaged  in  the
 39    business  of  insurance  and  shall  not be subject to provisions of the Idaho
 40    insurance code except as expressly provided in this act.
 41        SECTION 2.  That Section 41-4009, Idaho Code, be, and the same  is  hereby
 42    amended to read as follows:
  1        41-4009.  INVESTMENT  OF  TRUST  FUND. (1) The trustee may invest reserves
  2    and other funds available for the purpose in the trust fund of  a  self-funded
  3    plan in the following kinds of investments only:
  4        (a)  General obligations of the United States government, or of any state,
  5    district,  commonwealth,  or territory of the United States, or of any munici-
  6    pality, county, or other political subdivision or agency thereof.
  7        (b)  Obligations the payment of principal and interest of which is guaran-
  8    teed by any such government or agency.
  9        (c)  Corporate bonds and  similar  obligations  meeting  the  requirements
 10    specified  for  investment  of  funds  of insurers under section 41-711, Idaho
 11    Code.
 12        (d)  Collateral loans payment of principal and interest of which  is  ade-
 13    quately  secured  by  securities in which the trust fund could lawfully invest
 14    direct.
 15        (e)  Deposits, savings accounts, and share accounts in  established  banks
 16    and  savings  and loan associations located in the United States. Such invest-
 17    ment as to any one (1) such institution shall not be in excess of  the  amount
 18    covered by applicable deposit, savings, and share account insurance.
 19        (2)  In  addition  to investments excluded under subsection (1) above, the
 20    trustee is expressly prohibited from investing trust fund moneys in:
 21        (a)  Any loan to or security of any employer participating in the plan, or
 22    to or of any officer, director, subsidiary or affiliate of any such employer.
 23        (b)  The security of any person in which the  trustee,  administrator,  or
 24    any  consultant of the plan has a direct or indirect material pecuniary inter-
 25    est.
 26        (c)  Real estate or loans thereon.
 27        (d)  Any personal loan, other than a collateral loan referred to  in  sub-
 28    section  (1)(d) above, but subject to subdivisions (a) and (b) of this subsec-
 29    tion (2).
 30        (3)  All such investments shall be made and held in the name of the  trust
 31    fund,  and  the  interest  and yield thereon shall inure to the account of the
 32    trust fund.
 33        (4)  No investment shall be made  unless  authorized  in  writing  by  the
 34    trustee and so shown in the records of the trust fund.
 35        (5)  Any  person  who  authorizes  any  investment of trust fund moneys in
 36    violation of this section shall, in addition to  other  penalty  therefor,  be
 37    liable for all loss suffered by the trust fund on account of the investment.
 38        (6)  No  investment  made in violation of this section shall constitute an
 39    "asset" in any determination of the financial condition of the trust fund.
 40        (7)  A trustee of a self-funded plan  offered  by  a  single  governmental
 41    entity,  but  not  including a group of entities or a joint powers entity, may
 42    petition the director for an exemption from this section. The  director  shall
 43    grant such petition if the director finds that the proposed investment plan is
 44    consistent  with the fiduciary obligations of the trustee as set forth in this
 45    chapter. A failure by the trustee to adhere to an investment plan approved  by
 46    the director shall be a violation of this section.
 47        SECTION  3.  This act shall be in full force and effect on and after Janu-
 48    ary 1, 2006.

Statement of Purpose / Fiscal Impact

                  STATEMENT OF PURPOSE

                	RS 15149

The purpose of this legislation is to eliminate the 
exemption from the requirement for registration of any self-
funded health care plans administered by or for any county of 
this State and thereby provide better protections for consumers 
and health care providers.  Individual counties will have the 
opportunity to petition the Department of Insurance for an 
exemption from the investment requirements in this chapter. The 
legislation would also eliminate the need to pursue litigation 
to clarify the intent of current law with regard to such plans 
and would provide a level playing field by subjecting self-
funded plans of counties to the same regulations and consumer 
protections as self-funded plans of other employers. 

                     FISCAL IMPACT

There would be a positive impact on the General Fund equal 
to any tax that would be paid to the General Fund as a result of 
this legislation.  Greater regulation would also reduce the 
possibility of insolvency which might have to be borne by 
government if unregulated plans lack sufficient reserves or 
underwrite inadequately.  There could be a slight impact on some 
county governments that would have to pay a tax to the General 
Fund to the extent that they are not paying such a tax at the 
present time.  The amount of such tax is too speculative to 
quantify because the rate to be applied is unknowable at this 


Name:  Senator Dean Cameron
Phone: 334-4735

STATEMENT OF PURPOSE/FISCAL NOTE                       S 1219