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H0500...........................................................by BUSINESS
SELF-FUNDED HEALTH CARE PLANS - Amends and adds to existing law relating to
self-funded health care plans to revise the declaration of purpose; to
provide for nonapplicability to multiple employer welfare arrangements; to
revise definitions; to revise application of registration requirements to
single employer self-funded health plans; to revise qualifications for
registration; to revise provisions applicable to applications for
registration; to clarify trust fund liability; to revise prohibited
investments of trust fund moneys; to revise provisions applicable to the
delivery of annual statements; to clarify who may be a trustee or
administrator; to revise provisions applicable to termination of
registration; to provide that the adoption of rules shall be in accordance
with the Idaho Administrative Procedure Act; to provide for application to
single employer self-funded health plans; to revise penalties; to revise
provisions applicable to coverage for birth and complications of pregnancy;
to provide for application to single employer self-funded health plans for
purposes of mammography; and to set forth provisions applicable to the
crediting of preexisting condition waiting periods.
01/30 House intro - 1st rdg - to printing
01/31 Rpt prt - to Bus
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 500
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO SELF-FUNDED HEALTH CARE PLANS; AMENDING SECTION 41-4001, IDAHO
3 CODE, TO REVISE THE DECLARATION OF PURPOSE; AMENDING CHAPTER 40, TITLE 41,
4 IDAHO CODE, BY THE ADDITION OF A NEW SECTION 41-4001A, IDAHO CODE, TO PRO-
5 VIDE FOR NONAPPLICABILITY TO MULTIPLE EMPLOYER WELFARE ARRANGEMENTS;
6 AMENDING SECTION 41-4002, IDAHO CODE, TO DEFINE "MULTIPLE EMPLOYER WELFARE
7 ARRANGEMENT" AND "SINGLE EMPLOYER," TO REVISE DEFINITIONS AND TO MAKE
8 TECHNICAL CORRECTIONS; AMENDING SECTION 41-4003, IDAHO CODE, TO REVISE
9 APPLICATION OF REGISTRATION REQUIREMENTS TO SINGLE EMPLOYER SELF-FUNDED
10 HEALTH PLANS AND TO MAKE A TECHNICAL CORRECTION; AMENDING SECTION 41-4004,
11 IDAHO CODE, TO REVISE QUALIFICATIONS FOR REGISTRATION AND TO MAKE TECHNI-
12 CAL CORRECTIONS; AMENDING SECTION 41-4005, IDAHO CODE, TO REVISE PROVI-
13 SIONS APPLICABLE TO APPLICATIONS FOR REGISTRATION AND TO MAKE A TECHNICAL
14 CORRECTION; AMENDING SECTION 41-4007, IDAHO CODE, TO MAKE GRAMMATICAL
15 CHANGES AND TO MAKE A TECHNICAL CORRECTION; AMENDING SECTION 41-4008,
16 IDAHO CODE, TO CLARIFY TRUST FUND LIABILITY; AMENDING SECTION 41-4009,
17 IDAHO CODE, TO REVISE PROHIBITED INVESTMENTS OF TRUST FUND MONEYS AND TO
18 MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 41-4010, IDAHO CODE, TO MAKE
19 TECHNICAL CORRECTIONS; AMENDING SECTION 41-4011, IDAHO CODE, TO REVISE
20 PROVISIONS APPLICABLE TO THE DELIVERY OF ANNUAL STATEMENTS AND TO MAKE
21 TECHNICAL CORRECTIONS; AMENDING SECTION 41-4014, IDAHO CODE, TO CLARIFY
22 WHO MAY BE A TRUSTEE OR ADMINISTRATOR AND TO MAKE A TECHNICAL CORRECTION;
23 AMENDING SECTION 41-4017, IDAHO CODE, TO MAKE A GRAMMATICAL CHANGE; AMEND-
24 ING SECTION 41-4018, IDAHO CODE, TO REVISE PROVISIONS APPLICABLE TO TERMI-
25 NATION OF REGISTRATION AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION
26 41-4020, IDAHO CODE, TO REVISE THE CATCHLINE, TO PROVIDE THAT THE ADOPTION
27 OF RULES SHALL BE IN ACCORDANCE WITH THE IDAHO ADMINISTRATIVE PROCEDURE
28 ACT AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 41-4021, IDAHO
29 CODE, TO PROVIDE A STATUTORY REFERENCE, TO PROVIDE FOR APPLICATION TO SIN-
30 GLE EMPLOYER SELF-FUNDED HEALTH PLANS AND TO MAKE TECHNICAL CORRECTIONS;
31 AMENDING SECTION 41-4022, IDAHO CODE, TO REVISE PENALTIES AND TO MAKE
32 TECHNICAL CORRECTIONS; AMENDING SECTION 41-4023, IDAHO CODE, TO REVISE
33 PROVISIONS APPLICABLE TO COVERAGE FOR BIRTH AND COMPLICATIONS OF PREGNANCY
34 AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 41-4025, IDAHO CODE,
35 TO PROVIDE FOR APPLICATION TO SINGLE EMPLOYER SELF-FUNDED HEALTH PLANS FOR
36 PURPOSES OF MAMMOGRAPHY COVERAGE; AND AMENDING CHAPTER 40, TITLE 41, IDAHO
37 CODE, BY THE ADDITION OF A NEW SECTION 41-4026, IDAHO CODE, TO SET FORTH
38 PROVISIONS APPLICABLE TO THE CREDITING OF PREEXISTING CONDITION WAITING
39 PERIODS.
40 Be It Enacted by the Legislature of the State of Idaho:
41 SECTION 1. That Section 41-4001, Idaho Code, be, and the same is hereby
42 amended to read as follows:
43 41-4001. DECLARATION OF PURPOSE. It is the purpose of this act chapter to
2
1 recognize and provide reasonable public supervision of single employer self-
2 funded or partially self-funded plans for provision of health care service
3 benefits to employees in connection with or as an alternative to insurance and
4 other prepayment plans, to provide standards for financial soundness of such
5 plans and to protect the interests of employees covered thereby. The legisla-
6 ture of the state of Idaho declares that the existence and operation of such
7 single employer self-funded plans are matters of legislative concern, vitally
8 affecting the rights and interests of the citizens of this state.
9 SECTION 2. That Chapter 40, Title 41, Idaho Code, be, and the same is
10 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
11 ignated as Section 41-4001A, Idaho Code, and to read as follows:
12 41-4001A. NONAPPLICABILITY TO MULTIPLE EMPLOYER WELFARE ARRANGEMENTS. (1)
13 The provisions of this chapter shall not apply to multiple employer welfare
14 arrangements as that term is defined in section 41-4002(5), Idaho Code, and
15 shall only apply to single employer self-funded health plans that are not pre-
16 empted from state insurance regulation under the employee retirement income
17 security act of 1974. Multiple employer welfare arrangements that offer self-
18 funded or partially self-funded health plans shall be deemed to be transacting
19 insurance and subject to all other provisions under title 41, Idaho Code, per-
20 taining to disability insurance companies authorized to transact insurance in
21 this state and shall not be subject to the registration requirements of this
22 chapter.
23 (2) Any multiple employer welfare arrangement registered with the depart-
24 ment of insurance under chapter 40, title 41, Idaho Code, prior to July 1,
25 2006, or currently operating but not subject to registration prior to July 1,
26 2006, shall have a period of one (1) year from and after July 1, 2006, within
27 which to obtain a certificate of authority from the director and to comply
28 with all other code provisions pertaining to insurance companies authorized to
29 transact disability insurance in this state.
30 SECTION 3. That Section 41-4002, Idaho Code, be, and the same is hereby
31 amended to read as follows:
32 41-4002. DEFINITIONS. For the purposes of this act chapter unless context
33 otherwise requires:
34 (1) "Administrator" is a person, if other than the trustee, employed by
35 the trustee to administer a single employer self-funded plan.
36 (2) "Beneficiary" is any individual entitled, under the self-funded plan,
37 to payment by the trust fund of any part of all of the cost of any health care
38 service rendered him.
39 (3) "Contribution" is the amount paid or payable by the employer or
40 employee into the trust fund.
41 (4) "Director" is the director of the department of insurance of this
42 state.
43 (45) "Contribution" is the amount paid or payable by the employer or
44 employee into the trust fund "Multiple employer welfare arrangement" is any
45 entity other than a duly authorized insurer or single employer that estab-
46 lishes a self-funded or partially self-funded employee health benefit plan for
47 the purpose of offering or providing health, medical, sickness or disability
48 benefits to the employees of two (2) or more employers, including self-
49 employed individuals and their dependents, as defined in section 3 of the
50 employee retirement income security act of 1974, public law 93-406, 29 U.S.C.
51 1002. The term "multiple employer welfare arrangement" also includes any self-
3
1 funded or partially self-funded health benefit plan that is an arrangement,
2 plan, program, interlocal or joint powers agreement of or between political
3 subdivisions of this state, including counties, cities, school districts and
4 public universities, or any self-funding arrangement or association involving
5 multiple employers that is not a single employer plan.
6 (56) "Person" is any individual, corporation, association, firm, syndi-
7 cate, organization, or other entity.
8 (67) "Self-funded plan" or "plan" is any plan under which payment for any
9 disability income benefits not otherwise provided for under title 72, Idaho
10 Code, (workmen's worker's compensation and related laws--industrial commis-
11 sion), medical, surgical, hospital, and other services for prevention, diagno-
12 sis, or treatment of any disease, injury, or bodily condition of an employee
13 is, or is to be, regularly provided for or promised from funds created or
14 maintained in whole or in part by contributions or payments thereto by the
15 employer, or by the employer and the employees, and not otherwise covered by
16 insurance or contract with a health care service corporation, health mainte-
17 nance organization, or similar other third party prepayment plan.
18 (8) "Single employer" is any individual, sole proprietorship, business,
19 partnership, corporation, limited liability company, firm or any other form of
20 legally recognized entity or a group of two (2) or more employers under common
21 ownership control as defined under sections 414 and 1563 of the Internal Reve-
22 nue Code, and 26 CFR section 1.414(c)-2 that employs employees and retains
23 primary supervision, control, management and oversight of said employees
24 including, without limitation, hiring and discharge decisions, training, eval-
25 uations, discipline, compensation and personnel issues, job duties and perfor-
26 mance, project assignments, establishment of work schedules and worksite loca-
27 tion, management of day to day operations, and any other traditional employer
28 functions as are necessary to conduct the business of the single employer. The
29 term "single employer" does not include any type of employee leasing organiza-
30 tion, professional employer organization, temporary staffing or personnel
31 placement service, labor organization, an association or conglomeration of
32 multiple employers, a parent company that has less than an eighty percent
33 (80%) ownership interest in a subsidiary company, a contractually created
34 employer-employee or co-employer relationship, shared or allocated employment
35 arrangements, or a multiple employer welfare arrangement.
36 (79) "Trust fund" is a trust fund established by an employer under a
37 self-funded plan for receipt of contributions of the employer and its employ-
38 ees and payment of or with respect to health care service costs of beneficia-
39 ries.
40 (810) "Trustee" is the trustee, whether a single or multiple trustee, of
41 the trust fund.
42 SECTION 4. That Section 41-4003, Idaho Code, be, and the same is hereby
43 amended to read as follows:
44 41-4003. REGISTRATION REQUIRED -- EXEMPTIONS -- NOT SUBJECT TO INSURANCE
45 CODE. (1) No single employer self-funded health plan shall operate in this
46 state except while registered with the director as hereinafter provided. Sin-
47 gle employer sSelf-funded health plans that are not currently registered and
48 are already in operation at the effective date of this act as of July 1,
49 2006, shall so register within ninety (90) days after such effective date.
50 (2) No registration shall be required of:
51 (a) Any self-funded plan established for the sole purpose of funding the
52 dollar amount of a deductible clause contained in the provisions of an
53 insurance contract issued by an insurer duly authorized to transact dis-
4
1 ability insurance in this state if the deductible does not exceed an
2 amount applicable to each beneficiary of two thousand dollars ($2,000) per
3 annum and the total of all obligations to all beneficiaries insured under
4 the plan arising out of the application of such a deductible does not
5 exceed the aggregate amount of two hundred thousand dollars ($200,000) in
6 any one (1) year.
7 (b) Any plan established and maintained for the purpose of complying with
8 any worker's compensation law or unemployment compensation disability
9 insurance law.
10 (c) Any single employer self-funded health plan administered by or for
11 the federal government or any agency thereof or any individual county of
12 this state.
13 (d) Any plan which is primarily for the purpose of providing first aid
14 care and treatment, at a dispensary of an employer, for injury or sickness
15 of employees while engaged in their employment.
16 (e) Any employer's self-insured health plan or service established and
17 maintained solely for its members and their immediate families, or to any
18 self-insured health plan or service established, maintained, and insured
19 jointly by any employer and any labor organization or organizations if
20 such health plan or service has been in existence and operation for fif-
21 teen (15) years immediately preceding the effective date of this act.
22 (3) Single employer self-funded health pPlans while so registered shall
23 not be deemed to be engaged in the business of insurance and shall not be sub-
24 ject to provisions of the Idaho insurance code except as expressly provided in
25 this act chapter.
26 SECTION 5. That Section 41-4004, Idaho Code, be, and the same is hereby
27 amended to read as follows:
28 41-4004. QUALIFICATIONS FOR REGISTRATION. No single employer self-funded
29 health plan shall register, and the director shall not register a self-funded
30 health plan, which is not qualified therefor as follows:
31 (1) The plan mMust require all employer and employee contributions to be
32 paid in advance and to be deposited in and disbursed from a trust fund duly
33 created and existing under an adequate written irrevocable trust agreement
34 between the employer or employers and the trustee.
35 (2) The plan mMust have, or provide for, a trustworthy and responsible
36 trustee, and for competent administration of the trust fund and plan.
37 (3) The plan mMust require that all such the employers must contribute
38 to the trust fund, and that all contributions, if any, by employees shall be
39 by regular periodic payroll deductions, except as to contributions made by an
40 employee during his absence from such employment for such period as the plan
41 may reasonably provide.
42 (4) The plan mMust provide that the administrator or trustee on behalf of
43 the trust fund, as the case may be, shall furnish to each employee-beneficiary
44 of the plan a written statement or schedule adequately and clearly stating all
45 benefits currently allowable under the plan, together with all applicable
46 restrictions, limitations, and exclusions, and the procedure for filing a
47 claim for benefits.
48 (5) The trust fund must be actuarially sound; that is, assets and income
49 of the trust fund must be adequate under reasonable estimates for payment of
50 all benefits promised to beneficiaries by the plan. In determining actuarial
51 soundness the director shall also give due consideration to:
52 (a) Applicable stop-loss insurance provided or to be provided to the plan
53 by an insurer duly authorized to transact disability insurance in this
5
1 state;
2 (b) Contracts with health care service corporations or health maintenance
3 managed care organizations authorized to conduct such operations in this
4 state, and covering certain of the promised benefits;
5 (c) Other applicable insurance or guarantys guaranties; and
6 (d) Plan factors or provisions for prevention or reduction of adverse
7 selection against the plan by those otherwise eligible to become benefi-
8 ciaries.
9 (6) The plan mMust otherwise be in compliance with this act chapter.
10 SECTION 6. That Section 41-4005, Idaho Code, be, and the same is hereby
11 amended to read as follows:
12 41-4005. APPLICATION FOR REGISTRATION -- FEE. (1) Application for regis-
13 tration of a self-funded plan shall be made to the director, on forms fur-
14 nished and designed by him for the purpose of eliciting information as to
15 whether the plan is qualified for registration. The application shall be
16 signed and verified by at least one (1) of the employers and at least one (1)
17 of the trustees. If the employer or trustee is a corporation, the verification
18 shall be by a duly authorized corporate officer.
19 (2) The application shall be accompanied by:
20 (a) A copy of the trust agreement under which the trust fund is to exist
21 and operate;
22 (b) A copy of the proposed written statement of benefits referred to in
23 section 41-4004(54), Idaho Code;
24 (c) A financial statement of the trust fund, if already in existence and
25 operating on the effective date of this act, as of a date not more than
26 forty-five (45) days prior to the date of filing the application. The
27 statement shall be certified by an independent accountant, or by an
28 accountant whose certification is acceptable to the director;
29 (d) A written statement of reasonably projected income and disbursements
30 of the trust fund for the twelve (12) month period commencing with date of
31 application and showing also the amount reserved as of the end of such
32 period for claims incurred and not paid or incurred and not reported;
33 (e) A copy of any study made of the proposed self-funded plan by any con-
34 sultant for the information or guidance of employer or employees; and
35 (f) Such other relevant documentation and information as the director may
36 reasonably require.
37 (3) At the time of filing the application the applicant shall pay to the
38 director a nonrefundable filing fee as provided for by regulation rule.
39 (4) The director shall transmit and account for all fees received by him
40 hereunder as provided in section 41-406, Idaho Code.
41 SECTION 7. That Section 41-4007, Idaho Code, be, and the same is hereby
42 amended to read as follows:
43 41-4007. TRUST FUND -- POWERS. The trust fund of a self-funded plan shall
44 have power:
45 (1) To have and use an appropriate descriptive name;
46 (2) To sue and be sued in its own name;
47 (3) To contract in its own name. All such contracts shall be in writing
48 and shall be signed by the trustee of the fund, and if there is more than one
49 (1) trustee, the contract may be so executed by one (1) trustee if so autho-
50 rized by all trustees;
51 (4) To borrow money and give security therefor; and
6
1 (5) To engage exclusively in transactions authorized or required by this
2 act chapter, or reasonably incidental thereto.
3 SECTION 8. That Section 41-4008, Idaho Code, be, and the same is hereby
4 amended to read as follows:
5 41-4008. TRUST FUND LIABILITY. (1) The trust fund of a self-funded plan
6 shall be legally liable for payment of all applicable benefits stated in the
7 statement or schedule of benefits in effect at the time a claim thereunder
8 arises.
9 (2) Funds in the trust fund are fiduciary funds, and are not liable for
10 any obligation of any the employer, participant in the plan, nor subject to
11 garnishment or levy for the obligation of any beneficiary. This clause shall
12 not be deemed to prohibit levy upon the trust fund by any provider thereof (or
13 its assignee) for health care services rendered a beneficiary if the trust
14 fund has theretofore agreed in writing to pay for the same direct to such pro-
15 vider.
16 SECTION 9. That Section 41-4009, Idaho Code, be, and the same is hereby
17 amended to read as follows:
18 41-4009. INVESTMENT OF TRUST FUND. (1) The trustee may invest reserves
19 and other funds available for the purpose in the trust fund of a self-funded
20 plan in the following kinds of investments only:
21 (a) General obligations of the United States government, or of any state,
22 district, commonwealth, or territory of the United States, or of any
23 municipality, county, or other political subdivision or agency thereof.
24 (b) Obligations the payment of principal and interest of which is guaran-
25 teed by any such government or agency.
26 (c) Corporate bonds and similar obligations meeting the requirements
27 specified for investment of funds of insurers under section 41-711, Idaho
28 Code.
29 (d) Collateral loans payment of principal and interest of which is ade-
30 quately secured by securities in which the trust fund could lawfully
31 invest direct.
32 (e) Deposits, savings accounts, and share accounts in established banks
33 and savings and loan associations located in the United States. Such
34 investment as to any one (1) such institution shall not be in excess of
35 the amount covered by applicable deposit, savings, and share account
36 insurance.
37 (2) In addition to investments excluded under subsection (1) above of
38 this section, the trustee is expressly prohibited from investing trust fund
39 moneys in:
40 (a) Any loan to or security of any the employer, participating in the
41 plan, or to or of any officer, director, subsidiary or affiliate of any
42 such the employer.
43 (b) The security of any person in which the trustee, administrator, or
44 any consultant of the plan has a direct or indirect material pecuniary
45 interest.
46 (c) Real estate or loans thereon.
47 (d) Any personal loan, other than a collateral loan referred to in sub-
48 section (1)(d) above of this section, but subject to subdivisions para-
49 graphs (a) and (b) of this subsection (2).
50 (3) All such investments shall be made and held in the name of the trust
51 fund, and the interest and yield thereon shall inure to the account of the
7
1 trust fund.
2 (4) No investment shall be made unless authorized in writing by the
3 trustee and so shown in the records of the trust fund.
4 (5) Any person who authorizes any investment of trust fund moneys in
5 violation of this section shall, in addition to other penalty therefor, be
6 liable for all loss suffered by the trust fund on account of the investment.
7 (6) No investment made in violation of this section shall constitute an
8 "asset" in any determination of the financial condition of the trust fund.
9 SECTION 10. That Section 41-4010, Idaho Code, be, and the same is hereby
10 amended to read as follows:
11 41-4010. RESERVES. (1) A self-funded plan shall establish and maintain
12 the following reserves:
13 (a) A reserve in an amount as certified by a member of the American
14 Aacademy of Aactuaries as being necessary for payment of claims against
15 the trust fund for benefits, including both claims reported and not yet
16 paid and claims incurred but not yet reported.
17 (b) If under the plan periodic contributions of either the employer or
18 employees to the trust fund are payable less frequently than monthly,
19 there shall be a reserve for unearned contributions as computed pro-rata
20 pro rata on the basis of the unexpired portion of the period for which the
21 contribution has been paid.
22 (2) In any determination of the financial condition of the trust fund the
23 claims reserve and reserve for unearned contributions shall constitute liabil-
24 ities.
25 SECTION 11. That Section 41-4011, Idaho Code, be, and the same is hereby
26 amended to read as follows:
27 41-4011. RECORDS AND ACCOUNTS -- ANNUAL STATEMENT. (1) The trustees of a
28 self-funded plan shall cause full and accurate records and accounts to be
29 entered and maintained covering all financial transactions and affairs of the
30 trust fund.
31 (2) Within sixty (60) days after close of a fiscal year of the plan, the
32 trustee shall make an annual statement in writing summarizing the financial
33 transactions of the trust fund for such fiscal year and its financial condi-
34 tion at the end of such year in accordance with this act chapter and generally
35 accepted and applicable accounting principles. The statement shall otherwise
36 be in form and require information as prescribed by the director, and the
37 financial information therein shall be certified by the accountant by whom
38 such information was prepared or audited. The trustee shall promptly deliver a
39 copy of the statement to each the employer, participating in the plan, and
40 keep a copy thereof on file in the business office of the plan where it shall
41 be available at all reasonable times for a period of not less than three (3)
42 years to review by any beneficiary.
43 (3) On or before expiration of such sixty (60) day period the trustee
44 shall cause an original of the annual statement to be filed with the director.
45 The trust fund shall pay a filing fee as provided for by regulation rule.
46 (4) The director shall transmit and account for all fees received by him
47 hereunder as provided in section 41-406, Idaho Code.
48 SECTION 12. That Section 41-4014, Idaho Code, be, and the same is hereby
49 amended to read as follows:
8
1 41-4014. TRUSTEES -- ADMINISTRATORS -- BONDING. (1) Either an individual
2 or a corporation may be a trustee of the trust fund. Either an individual,
3 firm, or corporation may be an administrator of a plan.
4 (2) An The employer participant in the plan shall be neither a trustee
5 nor the administrator, but this provision shall not be deemed to prohibit an
6 individual who is otherwise an employee of such an the employer from being
7 trustee or administrator.
8 (3) The trustee shall cause all individuals handling receipts and dis-
9 bursements for the trust fund to be bonded at all times under a fidelity bond
10 issued by a surety insurer authorized to transact such insurance in this
11 state. The bond shall be in favor of the trust fund and for such aggregate
12 penalty amount, not less than twenty-five thousand dollars ($25,000), as the
13 director may deem reasonably advisable in relation to amount of funds to be so
14 handled. The bond shall be noncancellable noncancelable except upon not less
15 than thirty (30) days advance notice in writing to the trustee and the direc-
16 tor. The cost of the bond shall be borne by the trust fund.
17 SECTION 13. That Section 41-4017, Idaho Code, be, and the same is hereby
18 amended to read as follows:
19 41-4017. RECOVERY OF DEPLETED FUNDS. If after notice and hearing the
20 director finds that any self-funded plan trust fund has been depleted by rea-
21 son of any wrongful or negligent act or omission of a trustee or any other
22 person, he shall transmit a copy of his findings to the attorney general of
23 this state, who may bring an action in the name of the people of this state,
24 or intervene in any action brought by or on behalf of an the employer or bene-
25 ficiary, for the recovery of the amount of such depletion, for the benefit of
26 the trust fund.
27 SECTION 14. That Section 41-4018, Idaho Code, be, and the same is hereby
28 amended to read as follows:
29 41-4018. TERMINATION OF REGISTRATION. (1) The director shall terminate
30 the registration of a self-funded plan upon written request of the trustee, or
31 if he finds, after an examination, that the trust fund is insolvent.
32 (2) The director may terminate the registration of a plan for violation
33 of this act chapter, or failure of the trustee to file the annual statement
34 with the director and pay the tax within the time required under sections
35 41-4011 and 41-4012, Idaho Code, or if he finds, after an examination of the
36 trust fund and the plan:
37 (a) That the plan no longer meets the qualifications required by section
38 41-4004, Idaho Code, and that the deficiency will not or cannot be reme-
39 died within a reasonable time;
40 (b) That as a matter of frequent practice the benefits promised by the
41 plan are not being fairly and promptly paid;
42 (c) That the cost of administering the plan is excessive in relation to
43 the character and volume of service being rendered in the administration;
44 or
45 (d) That the trust fund has been subject to fraudulent or dishonest prac-
46 tices on the part of the trustee, administrator, consultant, any partici-
47 pating employer, or beneficiaries.
48 (3) The director shall so terminate the registration by his written order
49 given to the trustee last of record and to each the employer. last of record a
50 participant in the plan. The order shall state the grounds upon which made and
51 its effective date. The order shall be subject to judicial review in the same
9
1 manner as applies to official orders of the director in general.
2 SECTION 15. That Section 41-4020, Idaho Code, be, and the same is hereby
3 amended to read as follows:
4 41-4020. RULES. AND REGULATIONS. (1) The director may make reasonable
5 rules and regulations necessary for or as an aid to effectuation of any provi-
6 sion of this act chapter. No such rule or regulation shall extend, modify, or
7 conflict with any provision of this act chapter and the reasonable implica-
8 tions thereof.
9 (2) Such rules, and regulations, or any amendment thereof, shall be made
10 by the director only after a public hearing thereon of which the director has
11 given written notice not less than thirty (30) days in advance to the trustee
12 of each plan then registered with him. If reasonably possible the director
13 shall include with the notice a copy of the proposed rules and regulations or
14 amendment, or a condensed summary of material proposed provisions in accor-
15 dance with chapter 52, title 67, Idaho Code.
16 SECTION 16. That Section 41-4021, Idaho Code, be, and the same is hereby
17 amended to read as follows:
18 41-4021. OTHER PROVISIONS APPLICABLE. Chapter 2, title 41, Idaho Code,
19 (the director of the department of insurance), chapter 13, title 41, Idaho
20 Code, (trade practices and frauds) and sections 41-2141 and 41-2216, Idaho
21 Code, (coordination with social security benefits), to the extent applicable
22 and not in conflict with the express provisions of this act chapter, shall
23 also apply with respect to single employer self-funded health plans, and for
24 the that purpose such plans shall be deemed to be "insurers."
25 SECTION 17. That Section 41-4022, Idaho Code, be, and the same is hereby
26 amended to read as follows:
27 41-4022. PENALTIES. (1) Any person who wilfully willfully violates or
28 causes or induces violation of any provision of this act chapter or any lawful
29 rule or regulation of the director issued thereunder, shall be subject to pen-
30 alty as provided in subsection (4) of this section.
31 (2) Any person who makes a false statement or representation of a mate-
32 rial fact, knowing it to be false, or who knowingly fails to disclose a mate-
33 rial fact in any application, examination, or statement required under this
34 act chapter or by lawful rule or regulation of the director thereunder, shall
35 be subject to penalty as provided in subsection (4) of this section.
36 (3) Any person who makes a false entry in any book, record, statement, or
37 report required by this act chapter or lawful rule or regulation of the direc-
38 tor thereunder to be kept by him for any self-funded plan, with intent to
39 injure or defraud the trust fund or any beneficiary thereunder, or to deceive
40 any one anyone authorized or entitled to examine the affairs of the plan,
41 shall be subject to penalty as provided in subsection (4) of this section.
42 (4) For each such violation, act or omission referred to in this section,
43 unless greater penalty is provided therefor under any other applicable law,
44 the offender shall upon conviction thereof be subject to a fine of not more
45 than one thousand dollars ($1,000) and to imprisonment for not more than one
46 (1) year, or to both such fine and imprisonment. In addition, each violation
47 of this chapter may result in the revocation or suspension of registration
48 hereunder or an administrative penalty of not more than five thousand dollars
49 ($5,000), or both.
10
1 SECTION 18. That Section 41-4023, Idaho Code, be, and the same is hereby
2 amended to read as follows:
3 41-4023. COVERAGE FROM MOMENT OF BIRTH -- COMPLICATIONS OF PREGNANCY. (1)
4 Every single employer self-funded health plan issued in this state or provid-
5 ing coverage to any covered family residing within this state, shall contain a
6 provision granting immediate accident and sickness coverage, from and after
7 the moment of birth, to each newborn child or infant of any covered family
8 covered, including a newborn child placed with the adoptive covered family
9 within sixty (60) days of the adopted child's date of birth. Coverage under
10 the self-funded plan for an adopted newborn child placed with the adoptive
11 covered family more than sixty (60) days after the birth of the adopted child
12 shall be from and after the date the child is so placed. Coverage provided in
13 accord with this section shall include, but not be limited to, coverage for
14 congenital anomalies. For the purposes of this section, "child" means an
15 individual who has not reached eighteen (18) years of age as of the date of
16 the adoption or placement for adoption. For the purposes of this section,
17 "placed" shall mean physical placement in the care of the adoptive covered
18 family, or in those circumstances in which such physical placement is pre-
19 vented due to the medical needs of the child requiring placement in a medical
20 facility, it shall mean when the adoptive covered family signs an agreement
21 for adoption of such child and signs an agreement assuming financial responsi-
22 bility for such child. Prior to legal finalization of adoption, the coverage
23 required under the provisions of this subsection (1) as to a child placed for
24 adoption with a covered family continues in the same manner as it would with
25 respect to a naturally born child of the covered family until the first to
26 occur of the following events:
27 (a) Date the child is removed permanently from that placement and the
28 legal obligation terminates; or
29 (b) The date the covered family rescinds, in writing, the agreement of
30 adoption or agreement assuming financial responsibility. No such plan may
31 be issued or amended if it contains any disclaimer, waiver, or other limi-
32 tation of coverage relative to the coverage or insurability of newborn or
33 adopted children or infants of a covered family covered from and after the
34 moment of birth that is inconsistent with the provisions of this section.
35 (2) Neither the plan trustee, employer, nor aAn insurer shall not
36 restrict coverage under a single employer self-funded health plan of any
37 dependent child adopted by a participant or beneficiary, or placed with a par-
38 ticipant or beneficiary for adoption, solely on the basis of a preexisting
39 condition of the child at the time the child would otherwise become eligible
40 for coverage under the plan, if the adoption or placement for adoption occurs
41 while the participant or beneficiary is eligible for coverage under the plan.
42 (3) No single employer self-funded health plan which provides maternity
43 benefits for a person covered continuously from conception shall be issued,
44 amended, delivered, or renewed in this state on or after January 1, 1977, if
45 it contains any exclusion, reduction, or other limitations as to coverage,
46 deductibles, or coinsurance provisions as to involuntary complications of
47 pregnancy, unless such provisions apply generally to all benefits paid under
48 the plan. If a fixed amount is specified in such plan for surgery, the fixed
49 amounts for surgical procedures involving involuntary complications of preg-
50 nancy shall be commensurate with other fixed amounts payable for procedures of
51 comparable difficulty and severity. In a case where a fixed amount is payable
52 for maternity benefits, involuntary complications of pregnancy shall be deemed
53 an illness and entitled to benefits otherwise provided by the plan. Where the
54 plan contains a maternity deductible, the maternity deductible shall apply
11
1 only to expenses resulting from normal delivery and cesarean section delivery;
2 however, expenses for cesarean section delivery in excess of the deductible
3 shall be treated as expenses for any other illness under the plan. This subdi-
4 vision shall apply to all self-funded plans except any such plan made subject
5 to an applicable collective-bargaining agreement in effect before January 1,
6 1977. For purposes of this subdivision subsection, involuntary complications
7 of pregnancy shall include, but not be limited to, puerperal infection,
8 eclampsia, cesarean section delivery, ectopic pregnancy, and toxemia.
9 (4) From and after January 1, 1998, no single employer self-funded health
10 plan which provides maternity benefits shall restrict benefits for any hospi-
11 tal length of stay in connection with childbirth for the mother or newborn
12 child in a manner that would be in conflict with the newborns' and mothers'
13 health protection act of 1996.
14 (5) All single employer self-funded health plans subject to this subdivi-
15 sion chapter and issued, amended, delivered, or renewed in this state on or
16 after January 1, 1977, shall be construed to be in compliance with this sec-
17 tion, and any provision in any such plan which is in conflict with this sec-
18 tion shall be of no force or effect.
19 SECTION 19. That Section 41-4025, Idaho Code, be, and the same is hereby
20 amended to read as follows:
21 41-4025. MAMMOGRAPHY COVERAGE. (1) From and after July 1, 1992, all sin-
22 gle employer self-funded health plans which provide coverage for the surgical
23 procedure known as a mastectomy which are delivered, issued for delivery, con-
24 tinued or renewed in this state shall provide minimum mammography examination
25 or equivalent examination coverage. Such coverage shall include at least the
26 following benefits:
27 (a) One (1) baseline mammogram for any woman who is thirty-five (35)
28 through thirty-nine (39) years of age.
29 (b) A mammogram every two (2) years for any woman who is forty (40)
30 through forty-nine (49) years of age, or more frequently if recommended by
31 the woman's physician.
32 (c) A mammogram every year for any woman who is fifty (50) years of age
33 or older.
34 (d) A mammogram for any woman desiring a mammogram for medical cause.
35 Such coverage shall not exceed the cost of the examination.
36 (2) As used in this section, "mastectomy" means the removal of all or
37 part of the breast for medically necessary reasons as determined by a licensed
38 physician.
39 (3) Nothing in this section shall apply to specified accident, specified
40 disease, hospital indemnity, medicare supplement, long-term care or other lim-
41 ited benefit health insurance policies.
42 SECTION 20. That Chapter 40, Title 41, Idaho Code, be, and the same is
43 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
44 ignated as Section 41-4026, Idaho Code, and to read as follows:
45 41-4026. CREDITING OF PREEXISTING CONDITION WAITING PERIOD. A single
46 employer self-funded or partially self-funded health benefit plan shall comply
47 with the following provisions:
48 (1) A plan shall not deny, exclude or limit benefits for a covered indi-
49 vidual for covered expenses incurred more than twelve (12) months following
50 the effective date of the individual's coverage due to a preexisting condi-
51 tion. A plan shall not define a preexisting condition more restrictively than
12
1 a condition, whether physical or mental, regardless of the cause of the condi-
2 tion, for which medical advice, diagnosis, care or treatment was recommended
3 or received during the six (6) months immediately preceding the effective date
4 of coverage.
5 (2) Genetic information shall not be considered as a condition described
6 in subsection (1) of this section in the absence of a diagnosis of the condi-
7 tion related to such information.
8 (3) A plan shall waive any time period applicable to a preexisting condi-
9 tion exclusion or limitation period with respect to particular services for
10 the period of time an individual was previously covered by qualifying previous
11 coverage that provided benefits with respect to such services, provided that
12 the qualifying previous coverage was continuous to a date not more than sixty-
13 three (63) days prior to the effective date of the new coverage. This subsec-
14 tion (3) does not preclude application of any waiting period applicable to all
15 new enrollees under the plan, with the exception of special enrollment eligi-
16 bility.
17 (4) A plan may exclude coverage for late enrollees for the greater of up
18 to twelve (12) months or the applicable preexisting condition exclusion
19 period, provided that if both a period of exclusion from coverage and a preex-
20 isting condition exclusion period are applicable to a late enrollee, the com-
21 bined period shall not exceed twelve (12) months from the date the individual
22 enrolls for coverage under the plan.
23 (5) A plan shall offer to provide coverage to each eligible employee and
24 each dependent of an eligible employee. The plan shall provide the same bene-
25 fits to such employee and dependent.
26 (6) The plan shall ensure that the special enrollment provisions permit
27 individuals to enroll when a loss of eligibility for other group health bene-
28 fit plans occurs and when employer contributions toward the other coverage
29 cease. If an individual seeks to enroll a dependent during the first sixty
30 (60) days of eligibility, the coverage for the dependent shall become effec-
31 tive:
32 (a) In the case of marriage, not later than the first day of the first
33 month beginning after the date the completed request for enrollment is
34 received;
35 (b) In the case of a dependent's birth, as of the date of such birth; or
36 (c) In the case of a dependent's adoption or placement for adoption, the
37 date of such adoption or placement for adoption.
STATEMENT OF PURPOSE
RS 15355C1
Self-funded employer-sponsored health plans are regulated under
chapter 40 of title 41 of the Idaho Code. Chapter 40 does not
specifically address the handling of self-funded health plans
made up of multiple employers (often referred to as multiple
employer welfare arrangements or MEWAs). This has led to
confusion regarding how and to what extent the requirements of
chapter 40 and other parts of the insurance code apply to
multiple employer self-funded health plans. Multiple employer
plans are much different than single employer plans because they
are often marketed to employers in much the same way as health
insurance, they are able to grow rapidly and they may operate in
multiple states. As a result, multiple employer plans often
involve large amounts of money being handled by third parties
that manage the plans, possibly from outside the state. This
means that multiple employer self-funding arrangements present
much greater financial risks to the public than single employer
plans. For example, according to a 2004 report by the U.S.
General Accounting Office, unlicensed entities offering health
benefit plans left Americans with $252 million in unpaid health
claims between 2000 and 2002. Many of these entities were
multiple employer health plans marketed primarily to small
businesses and claiming to be exempt from state oversight. In
Idaho, the failure of a relatively small multiple employer health
plan based in Coeur d Alene left Idaho residents and health
providers with more than $300,000 in unpaid health claims, and a
total of over $3 million in unpaid claims in all the states in
which it operated.
In recognition of the fact that multiple employer plans are
generally marketed to employers in much the same way as insurance
and pose much the same financial risks to the public as a health
insurer, this proposed legislation will require that self funded
multiple employer health plans be licensed and regulated as
insurers. It also makes some technical corrections to chapter 40
and clarifies single employer self funded health plan obligations
with respect to preexisting conditions.
FISCAL NOTE
None.
CONTACT
Name: Gary Smith
Agency: Insurance, Dept. of
Phone: 334-4250
STATEMENT OF PURPOSE/FISCAL NOTE H 500