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S1105.......................................by COMMERCE AND HUMAN RESOURCES
INSURANCE - Amends existing law relating to dependents for purposes of
insurance to increase the applicable age of dependent coverage.
02/09 Senate intro - 1st rdg - to printing
02/12 Rpt prt - to Com/HuRes
02/16 Rpt out - rec d/p - to 2nd rdg
02/19 2nd rdg - to 3rd rdg
02/23 3rd rdg - PASSED - 32-0-3
AYES -- Bair, Bastian, Bilyeu, Broadsword, Burkett, Cameron, Coiner,
Corder, Darrington, Davis, Fulcher, Gannon, Geddes, Goedde, Hammond,
Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst, Little, Lodge,
Malepeai, McGee, McKague, Richardson, Schroeder, Siddoway, Stegner,
Stennett, Werk
NAYS -- None
Absent and excused -- Andreason, McKenzie, Pearce
Floor Sponsor - Cameron
Title apvd - to House
02/26 House intro - 1st rdg - to Bus
03/06 Rpt out - rec d/p - to 2nd rdg
03/07 2nd rdg - to 3rd rdg
03/12 3rd rdg - PASSED - 69-0-1
AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
Block, Bock, Boe, Bolz, Brackett, Bradford, Chadderdon, Chavez, Chew,
Collins, Crane, Durst, Edmunson, Eskridge, Hagedorn, Hart, Harwood,
Henbest, Henderson, Jaquet, Killen, King, Kren, Labrador, Lake,
LeFavour, Loertscher, Luker, Marriott, Mathews, McGeachin, Mortimer,
Moyle, Nielsen, Nonini, Pasley-Stuart, Patrick, Pence, Raybould,
Ring, Ringo, Roberts, Ruchti, Rusche, Sayler, Schaefer, Shepherd(2),
Shepherd(8), Shirley, Shively, Smith(30), Smith(24), Snodgrass,
Stevenson, Thayn, Trail, Vander Woude, Wills, Wood(27), Wood(35), Mr.
Speaker
NAYS -- None
Absent and excused -- Clark
Floor Sponsor - Rusche
Title apvd - to Senate
03/13 To enrol
03/14 Rpt enrol - Pres signed - Sp signed
03/15 To Governor
03/21 Governor signed
Session Law Chapter 148
Effective: 07/01/07
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature First Regular Session - 2007
IN THE SENATE
SENATE BILL NO. 1105
BY COMMERCE AND HUMAN RESOURCES COMMITTEE
1 AN ACT
2 RELATING TO DEPENDENTS; AMENDING SECTION 41-2103, IDAHO CODE, TO REVISE
3 REQUIREMENTS FOR POLICIES OF DISABILITY INSURANCE AND TO DEFINE
4 "DEPENDENT"; AMENDING SECTION 41-4703, IDAHO CODE, TO REVISE THE DEFINI-
5 TION FOR "DEPENDENT" AND TO PROVIDE A CORRECT CODE REFERENCE; AMENDING
6 SECTION 41-4706, IDAHO CODE, TO REVISE APPLICABLE AGE OF DEPENDENTS;
7 AMENDING SECTION 41-5203, IDAHO CODE, TO REVISE THE DEFINITION FOR
8 "DEPENDENT"; AMENDING SECTION 41-5206, IDAHO CODE, TO REVISE APPLICABLE
9 AGE OF DEPENDENTS; AMENDING SECTION 41-5501, IDAHO CODE, TO REVISE THE
10 DEFINITION FOR "DEPENDENT"; AND AMENDING SECTION 63-3022K, IDAHO CODE, TO
11 REVISE APPLICABLE AGE OF DEPENDENTS.
12 Be It Enacted by the Legislature of the State of Idaho:
13 SECTION 1. That Section 41-2103, Idaho Code, be, and the same is hereby
14 amended to read as follows:
15 41-2103. SCOPE AND FORMAT OF POLICY. No policy of disability insurance
16 shall be delivered or issued for delivery to any person in this state unless
17 it otherwise complies with this code, and complies with the following:
18 (1) The entire money and other considerations therefor shall be expressed
19 therein;
20 (2) The time when the insurance takes effect and terminates shall be
21 expressed therein;
22 (3) It shall purport to insure only one (1) person, except that a policy
23 may insure, originally or by subsequent amendment, upon the application of an
24 adult member of a family, who shall be deemed the policy holder, any two (2)
25 or more eligible members of that family, including husband, wife, and any
26 other dependent children or any children under a specified or dependents. As
27 used in this subsection (3), "dependent" includes an unmarried child under the
28 age which shall not exceed nineteen of twenty-one (219) years, and any other
29 person dependent upon the policy holder an unmarried child who is a full-time
30 student under the age of twenty-five (25) years and who is financially depend-
31 ent upon the parent, and an unmarried child of any age who is medically certi-
32 fied as disabled and dependent upon the parent;
33 (4) The style, arrangement and overall appearance of the policy shall
34 give no undue prominence to any portion of the text, and every printed portion
35 of the text of the policy and of any endorsements or attached papers shall be
36 plainly printed in light-faced type of a style in general use, the size of
37 which shall be uniform and not less than ten (10) point with a lower case
38 unspaced alphabet length not less than one hundred and twenty (120) point (the
39 "text" shall include all printed matter except the name and address of the
40 insurer, name or title of the policy, the brief description, if any, and cap-
41 tions and subcaptions);
42 (5) The exceptions and reductions of indemnity shall be set forth in the
43 policy and, other than those contained in sections 41-2105 to 41-2127, inclu-
2
1 sive, of this chapter, shall be printed, at the insurer's option, either
2 included with the benefit provisions to which they apply, or under an appro-
3 priate caption such as "exceptions," or "exceptions and reductions," except
4 that if an exception or reduction specifically applies only to a particular
5 benefit of the policy, a statement of such exception or reduction shall be
6 included with the benefit provision to which it applies;
7 (6) Each such form, including riders and endorsements, shall be identi-
8 fied by a form number in the lower left-hand corner of the first page thereof;
9 (7) The policy shall contain no provision purporting to make any portion
10 of the charter, rules, constitution or by-laws of the insurer a part of the
11 policy unless such portion is set forth in full in the policy, except in the
12 case of the incorporation of, or reference to, a statement of rates or classi-
13 fication of risks, or short-rate table filed with the director;
14 (8) When the policy provides payment for medical or surgical expense to
15 the insured, on a reimbursement basis, or otherwise, the insured shall be
16 entitled to a free choice of medical doctor to perform said services, or the
17 free choice of a podiatrist if the latter is authorized by law to perform the
18 particular medical or surgical services covered under the terms of said pol-
19 icy;
20 (9) When the policy provides for payment for the expense of services that
21 are within the lawful scope of practice of a duly licensed optometrist, on a
22 reimbursement basis or otherwise, the insured shall be entitled to a free
23 choice of medical doctor or optometrist to perform such services.
24 SECTION 2. That Section 41-4703, Idaho Code, be, and the same is hereby
25 amended to read as follows:
26 41-4703. DEFINITIONS. As used in this chapter:
27 (1) "Actuarial certification" means a written statement by a member of
28 the American academy of actuaries or other individual acceptable to the direc-
29 tor that a small employer carrier is in compliance with the provisions of sec-
30 tion 41-4706, Idaho Code, based upon the person's examination and including a
31 review of the appropriate records and the actuarial assumptions and methods
32 used by the small employer carrier in establishing premium rates for applica-
33 ble health benefit plans.
34 (2) "Affiliate" or "affiliated" means any entity or person who directly
35 or indirectly through one (1) or more intermediaries, controls or is con-
36 trolled by, or is under common control with, a specified entity or person.
37 (3) "Agent" means a producer as defined in section 41-1003(98), Idaho
38 Code.
39 (4) "Base premium rate" means, for each class of business as to a rating
40 period, the lowest premium rate charged or that could have been charged under
41 a rating system for that class of business by the small employer carrier to
42 small employers with similar case characteristics for health benefit plans
43 with the same or similar coverage.
44 (5) "Board" means the board of directors of the small employer reinsur-
45 ance program and the individual high risk reinsurance pool as provided for in
46 section 41-5502, Idaho Code.
47 (6) "Carrier" means any entity that provides, or is authorized to pro-
48 vide, health insurance in this state. For the purposes of this chapter, car-
49 rier includes an insurance company, a hospital or professional service corpo-
50 ration, a fraternal benefit society, a health maintenance organization, any
51 entity providing health insurance coverage or benefits to residents of this
52 state as certificate holders under a group policy issued or delivered outside
53 of this state, and any other entity providing a plan of health insurance or
3
1 health benefits subject to state insurance regulation.
2 (7) "Case characteristics" means demographic or other objective charac-
3 teristics of a small employer that are considered by the small employer car-
4 rier in the determination of premium rates for the small employer, provided
5 that claim experience, health status and duration of coverage shall not be
6 case characteristics for the purposes of this chapter.
7 (8) "Catastrophic health benefit plan" means a higher limit health bene-
8 fit plan developed pursuant to section 41-4712, Idaho Code.
9 (9) "Class of business" means all or a separate grouping of small employ-
10 ers established pursuant to section 41-4705, Idaho Code.
11 (10) "Control" shall be defined in the same manner as in section
12 41-3801(2), Idaho Code.
13 (11) "Dependent" means a spouse, an unmarried child under the age of nine-
14 teen twenty-one (219) years, an unmarried child who is a full-time student
15 under the age of twenty-threefive (235) years and who is financially dependent
16 upon the parent, and an unmarried child of any age who is medically certified
17 as disabled and dependent upon the parent.
18 (12) "Director" means the director of the department of insurance of the
19 state of Idaho.
20 (13) "Eligible employee" means an employee who works on a full-time basis
21 and has a normal work week of thirty (30) or more hours or, by agreement
22 between the employer and the carrier, an employee who works between twenty
23 (20) and thirty (30) hours per week. The term includes a sole proprietor, a
24 partner of a partnership, and an independent contractor, if the sole propri-
25 etor, partner or independent contractor is included as an employee under a
26 health benefit plan of a small employer, but does not include an employee who
27 works on a part-time, temporary, seasonal or substitute basis. The term eligi-
28 ble employee may include public officers and public employees without regard
29 to the number of hours worked when designated by a small employer.
30 (14) "Established geographic service area" means a geographic area, as
31 approved by the director and based on the carrier's certificate of authority
32 to transact insurance in this state, within which the carrier is authorized to
33 provide coverage.
34 (15) "Health benefit plan" means any hospital or medical policy or certif-
35 icate, any subscriber contract provided by a hospital or professional service
36 corporation, or managed care organization subscriber contract. Health benefit
37 plan does not include policies or certificates of insurance for specific dis-
38 ease, hospital confinement indemnity, accident-only, credit, dental, vision,
39 medicare supplement, long-term care, or disability income insurance, student
40 health benefits only coverage issued as a supplement to liability insurance,
41 worker's compensation or similar insurance, automobile medical payment insur-
42 ance or nonrenewable short-term coverage issues for a period of twelve (12)
43 months or less.
44 (16) "Index rate" means, for each class of business as to a rating period
45 for small employers with similar case characteristics, the arithmetic average
46 of the applicable base premium rate and the corresponding highest premium
47 rate.
48 (17) "Late enrollee" means an eligible employee or dependent who requests
49 enrollment in a health benefit plan of a small employer following the initial
50 enrollment period during which the individual is entitled to enroll under the
51 terms of the health benefit plan, provided that the initial enrollment period
52 is a period of at least thirty (30) days. However, an eligible employee or
53 dependent shall not be considered a late enrollee if:
54 (a) The individual meets each of the following:
55 (i) The individual was covered under qualifying previous coverage
4
1 at the time of the initial enrollment;
2 (ii) The individual lost coverage under qualifying previous coverage
3 as a result of termination of employment or eligibility, or the
4 involuntary termination of the qualifying previous coverage; and
5 (iii) The individual requests enrollment within thirty (30) days
6 after termination of the qualifying previous coverage.
7 (b) The individual is employed by an employer which offers multiple
8 health benefit plans and the individual elects a different plan during an
9 open enrollment period.
10 (c) A court has ordered coverage be provided for a spouse or minor or
11 dependent child under a covered employee's health benefit plan and request
12 for enrollment is made within thirty (30) days after issuance of the court
13 order.
14 (d) The individual first becomes eligible.
15 (e) If an individual seeks to enroll a dependent during the first sixty
16 (60) days of eligibility, the coverage of the dependent shall become
17 effective:
18 (i) In the case of marriage, not later than the first day of the
19 first month beginning after the date the completed request for
20 enrollment is received;
21 (ii) In the case of a dependent's birth, as of the date of such
22 birth; or
23 (iii) In the case of a dependent's adoption or placement for adop-
24 tion, the date of such adoption or placement for adoption.
25 (18) "New business premium rate" means, for each class of business as to a
26 rating period, the lowest premium rate charged or offered or which could have
27 been charged or offered by the small employer carrier to small employers with
28 similar case characteristics for newly issued health benefit plans with the
29 same or similar coverage.
30 (19) "Plan of operation" means the plan of operation of the program estab-
31 lished pursuant to section 41-4711, Idaho Code.
32 (20) "Plan year" means the year that is designated as the plan year in the
33 plan document of a group health benefit plan, except that if the plan document
34 does not designate a plan year or if there is no plan document, the year plan
35 is:
36 (a) The deductible/limit year used under the plan;
37 (b) If the plan does not impose deductibles or limits on a yearly basis,
38 then the plan year is the policy year;
39 (c) If the plan does not impose deductibles or limits on a yearly basis
40 or the insurance policy is not renewed on an annual basis, then the plan
41 year is the employer's taxable year; or
42 (d) In any other case, the plan year is the calendar year.
43 (21) "Premium" means all moneys paid by a small employer and eligible
44 employees as a condition of receiving coverage from a small employer carrier,
45 including any fees or other contributions associated with the health benefit
46 plan.
47 (22) "Program" means the Idaho small employer reinsurance program created
48 in section 41-4711, Idaho Code.
49 (23) "Qualifying previous coverage" and "qualifying existing coverage"
50 mean benefits or coverage provided under:
51 (a) Medicare or medicaid, civilian health and medical program for
52 uniformed services (CHAMPUS), the Indian health service program, a state
53 health benefit risk pool or any other similar publicly sponsored program;
54 or
55 (b) Any other group or individual health insurance policy or health bene-
5
1 fit arrangement whether or not subject to the state insurance laws,
2 including coverage provided by a health maintenance organization, hospital
3 or professional service corporation, or a fraternal benefit society, that
4 provides benefits similar to or exceeding benefits provided under the
5 basic health benefit plan.
6 (24) "Rating period" means the calendar period for which premium rates
7 established by a small employer carrier are assumed to be in effect.
8 (25) "Reinsuring carrier" means a small employer carrier participating in
9 the reinsurance program pursuant to section 41-4711, Idaho Code.
10 (26) "Restricted network provision" means any provision of a health bene-
11 fit plan that conditions the payment of benefits, in whole or in part, on the
12 use of health care providers that have entered into a contractual arrangement
13 with the carrier to provide health care services to covered individuals.
14 (27) "Risk-assuming carrier" means a small employer carrier whose applica-
15 tion is approved by the director pursuant to section 41-4710, Idaho Code.
16 (28) "Small employer" means any person, firm, corporation, partnership or
17 association that is actively engaged in business that employed an average of
18 at least two (2) but no more than fifty (50) eligible employees on business
19 days during the preceding calendar year and that employs at least two (2) but
20 no more than fifty (50) eligible employees on the first day of the plan year,
21 the majority of whom were and are employed within this state. In determining
22 the number of eligible employees, companies that are affiliated companies, or
23 that are eligible to file a combined tax return for purposes of state taxa-
24 tion, shall be considered one (1) employer.
25 (29) "Small employer basic health benefit plan" means a lower cost health
26 benefit plan developed pursuant to section 41-4712, Idaho Code.
27 (30) "Small employer carrier" means a carrier that offers health benefit
28 plans covering eligible employees of one (1) or more small employers in this
29 state.
30 (31) "Small employer catastrophic health benefit plan" means a higher
31 limit health benefit plan developed pursuant to section 41-4712, Idaho Code.
32 (32) "Small employer standard health benefit plan" means a health benefit
33 plan developed pursuant to section 41-4712, Idaho Code.
34 SECTION 3. That Section 41-4706, Idaho Code, be, and the same is hereby
35 amended to read as follows:
36 41-4706. RESTRICTIONS RELATING TO PREMIUM RATES. (1) Premium rates for
37 health benefit plans subject to the provisions of this chapter shall be sub-
38 ject to the following provisions:
39 (a) The index rate for a rating period for any class of business shall
40 not exceed the index rate for any other class of business by more than
41 twenty percent (20%).
42 (b) For a class of business, the premium rates charged during a rating
43 period to small employers with similar case characteristics for the same
44 or similar coverage, or the rates that could be charged to such employers
45 under the rating system for that class of business, shall not vary from
46 the index rate by more than fifty percent (50%) of the index rate.
47 (c) The percentage increase in the premium rate charged to a small
48 employer for a new rating period may not exceed the sum of the following:
49 (i) The percentage change in the new business premium rate measured
50 from the first day of the prior rating period to the first day of the
51 new rating period. In the case of a health benefit plan into which
52 the small employer carrier is no longer enrolling new small employ-
53 ers, the small employer carrier shall use the percentage change in
6
1 the base premium rate, provided that such change does not exceed, on
2 a percentage basis, the change in the new business premium rate for
3 the most similar health benefit plan into which the small employer
4 carrier is actively enrolling new small employers;
5 (ii) Any adjustment, not to exceed fifteen percent (15%) annually
6 and adjusted pro rata for rating periods of less than one (1) year,
7 due to the claim experience, health status or duration of coverage of
8 the employees or dependents of the small employer as determined from
9 the small employer carrier's rate manual for the class of business;
10 and
11 (iii) Any adjustment due to change in coverage or change in the case
12 characteristics of the small employer as determined from the small
13 employer carrier's rate manual for the class of business.
14 (d) Adjustments in rates for claim experience, health status and duration
15 of coverage shall not be charged to individual employees or dependents.
16 Any such adjustment shall be applied uniformly to the rates charged for
17 all employees and dependents of the small employer.
18 (e) Premium rates for health benefit plans shall comply with the require-
19 ments of this section notwithstanding any assessments paid or payable by
20 small employer carriers pursuant to section 41-4711, Idaho Code, or chap-
21 ter 55, title 41, Idaho Code.
22 (f) (i) Small employer carriers shall apply rating factors, including
23 case characteristics, consistently with respect to all small employ-
24 ers in a class of business. Rating factors shall produce premiums for
25 identical groups which differ only by the amounts attributable to
26 plan design and do not reflect differences due to the nature of the
27 groups assumed to select particular health benefit plans; and
28 (ii) A small employer carrier shall treat all health benefit plans
29 issued or renewed in the same calendar month as having the same rat-
30 ing period.
31 (g) For the purposes of this subsection, a health benefit plan that uti-
32 lizes a restricted provider network shall not be considered similar cover-
33 age to a health benefit plan that does not utilize such a network, pro-
34 vided that utilization of the restricted provider network results in sub-
35 stantial differences in claims costs.
36 (h) The small employer carrier shall not use case characteristics, other
37 than age, individual tobacco use, geography, as defined by rule of the
38 director, or gender, without prior approval of the director.
39 (i) A small employer carrier may utilize age as a case characteristic in
40 establishing premium rates, provided that the same rating factor shall be
41 applied to all dependents under twenty-threefive (235) years of age, and
42 the same rating factor may be applied on an annual basis as to individuals
43 or nondependents twenty (20) years of age or older.
44 (j) The director may establish rules to implement the provisions of this
45 section and to assure that rating practices used by small employer carri-
46 ers are consistent with the purposes of this chapter, including rules
47 that:
48 (i) Assure that differences in rates charged for health benefit
49 plans by small employer carriers are reasonable and reflect objective
50 differences in plan design, not including differences due to the
51 nature of the groups assumed to select particular health benefit
52 plans;
53 (ii) Prescribe the manner in which case characteristics may be used
54 by small employer carriers; and
55 (iii) Prescribe the manner in which a small employer carrier is to
7
1 demonstrate compliance with the provisions of this section, including
2 requirements that a small employer carrier provide the director with
3 actuarial certification as to such compliance.
4 (2) A small employer carrier shall not transfer a small employer involun-
5 tarily into or out of a class of business. A small employer carrier shall not
6 offer to transfer a small employer into or out of a class of business unless
7 such offer is made to transfer all small employers in the class of business
8 without regard to case characteristics, claim experience, health status or
9 duration of coverage since issue.
10 (3) The director may suspend for a specified period the application of
11 subsection (1)(a) of this section as to the premium rates applicable to one
12 (1) or more small employers included within a class of business of a small
13 employer carrier for one (1) or more rating periods upon a filing by the small
14 employer carrier and a finding by the director either that the suspension is
15 reasonable in light of the financial condition of the small employer carrier
16 or that the suspension would enhance the efficiency and fairness of the
17 marketplace for small employer health insurance.
18 (4) In connection with the offering for sale of any health benefit plan
19 to a small employer, a small employer carrier shall make a reasonable disclo-
20 sure, as part of its solicitation and sales materials, of all of the follow-
21 ing:
22 (a) The extent to which premium rates for a specified small employer are
23 established or adjusted based upon the actual or expected variation in
24 claims costs or actual or expected variation in health status of the
25 employees of the small employer and their dependents;
26 (b) The provisions of the health benefit plan concerning the small
27 employer carrier's right to change premium rates and the factors, other
28 than claim experience, that affect changes in premium rates;
29 (c) The provisions relating to renewability of policies and contracts;
30 and
31 (d) The provisions relating to any preexisting condition provision.
32 (5) (a) Each small employer carrier shall maintain at its principal place
33 of business a complete and detailed description of its rating practices
34 and renewal underwriting practices, including information and documenta-
35 tion that demonstrate that its rating methods and practices are based upon
36 commonly accepted actuarial assumptions and are in accordance with sound
37 actuarial principles.
38 (b) Each small employer carrier shall file with the director annually on
39 or before March 15, an actuarial certification certifying that the carrier
40 is in compliance with the provisions of this chapter and that the rating
41 methods of the small employer carrier are actuarially sound. Such certifi-
42 cation shall be in a form and manner, and shall contain such information,
43 as specified by the director. A copy of the certification shall be
44 retained by the small employer carrier at its principal place of business.
45 (c) A small employer carrier shall make the information and documentation
46 described in subsection (4)(a) of this section available to the director
47 upon request. Except in cases of violations of the provisions of this
48 chapter, the information shall be considered proprietary and trade secret
49 information and shall not be subject to disclosure by the director to per-
50 sons outside of the department except as agreed to by the small employer
51 carrier or as ordered by a court of competent jurisdiction.
52 SECTION 4. That Section 41-5203, Idaho Code, be, and the same is hereby
53 amended to read as follows:
8
1 41-5203. DEFINITIONS. As used in this chapter:
2 (1) "Actuarial certification" means a written statement by a member of
3 the American academy of actuaries or other individual acceptable to the direc-
4 tor that an individual carrier is in compliance with the provisions of sec-
5 tion 41-5206, Idaho Code, based upon the person's examination and including a
6 review of the appropriate records and the actuarial assumptions and methods
7 used by the individual carrier in establishing premium rates for applicable
8 health benefit plans.
9 (2) "Affiliate" or "affiliated" means any entity or person who directly
10 or indirectly through one (1) or more intermediaries, controls or is con-
11 trolled by, or is under common control with, a specified entity or person.
12 (3) "Agent" means a producer as defined in section 41-1003(8), Idaho
13 Code.
14 (4) "Base premium rate" means, as to a rating period, the lowest premium
15 rate charged or that could have been charged under a rating system by the
16 individual carrier to individuals with similar case characteristics for health
17 benefit plans with the same or similar coverage.
18 (5) "Carrier" means any entity that provides health insurance in this
19 state. For purposes of this chapter, carrier includes an insurance company, a
20 hospital or professional service corporation, a fraternal benefit society, a
21 health maintenance organization, any entity providing health insurance cover-
22 age or benefits to residents of this state as certificate holders under a
23 group policy issued or delivered outside of this state, and any other entity
24 providing a plan of health insurance or health benefits subject to state
25 insurance regulation.
26 (6) "Case characteristics" means demographic or other objective charac-
27 teristics of an individual that are considered by the individual carrier in
28 the determination of premium rates for the individual, provided that claim
29 experience, health status and duration of coverage shall not be case charac-
30 teristics for the purposes of this chapter.
31 (7) "Control" shall be defined in the same manner as in section
32 41-3801(2), Idaho Code.
33 (8) "Dependent" means a spouse, an unmarried child under the age of nine-
34 teen twenty-one (219) years, an unmarried child who is a full-time student
35 under the age of twenty-threefive (235) years and who is financially dependent
36 upon the parent, and an unmarried child of any age who is medically certified
37 as disabled and dependent upon the parent.
38 (9) "Director" means the director of the department of insurance of the
39 state of Idaho.
40 (10) "Eligible individual" means an Idaho resident individual or dependent
41 of an Idaho resident:
42 (a) Who is under the age of sixty-five (65) years, is not eligible for
43 coverage under a group health plan, part A or part B of title XVIII of the
44 social security act (medicare), or a state plan under title XIX (medicaid)
45 or any successor program, and who does not have other health insurance
46 coverage; or
47 (b) Who is a federally eligible individual (one who meets the eligibility
48 criteria set forth in the federal health insurance portability and
49 accountability act of 1996 Public Law 104-191, Sec. 2741(b)(HIPAA)).
50 An "eligible individual" can be the dependent of an eligible employee, which
51 eligible employee is receiving health insurance benefits subject to the regu-
52 lation of title 41, Idaho Code.
53 (11) "Established geographic service area" means a geographic area, as
54 approved by the director and based on the carrier's certificate of authority
55 to transact insurance in this state, within which the carrier is authorized to
9
1 provide coverage.
2 (12) "Health benefit plan" means any hospital or medical policy or certif-
3 icate, any subscriber contract provided by a hospital or professional service
4 corporation, or health maintenance organization subscriber contract. Health
5 benefit plan does not include policies or certificates of insurance for spe-
6 cific disease, hospital confinement indemnity, accident-only, credit, dental,
7 vision, medicare supplement, long-term care, or disability income insurance,
8 student health benefits only, coverage issued as a supplement to liability
9 insurance, worker's compensation or similar insurance, automobile medical pay-
10 ment insurance, or nonrenewable short-term coverage issued for a period of
11 twelve (12) months or less.
12 (13) "Index rate" means, as to a rating period for individuals with simi-
13 lar case characteristics, the arithmetic average of the applicable base pre-
14 mium rate and the corresponding highest premium rate.
15 (14) "Individual basic health benefit plan" means a lower cost health ben-
16 efit plan developed pursuant to chapter 55, title 41, Idaho Code.
17 (15) "Individual catastrophic A health benefit plan" means a higher limit
18 health benefit plan developed pursuant to chapter 55, title 41, Idaho Code.
19 (16) "Individual catastrophic B health benefit plan" means a health bene-
20 fit plan with limits higher than an individual catastrophic A health benefit
21 plan developed pursuant to chapter 55, title 41, Idaho Code.
22 (17) "Individual HSA compatible health benefit plan" means a health sav-
23 ings account compatible health benefit plan developed pursuant to section
24 41-5511, Idaho Code.
25 (18) "Individual standard health benefit plan" means a health benefit plan
26 developed pursuant to chapter 55, title 41, Idaho Code.
27 (19) "New business premium rate" means, as to a rating period, the lowest
28 premium rate charged or offered or which could have been charged or offered by
29 the individual carrier to individuals with similar case characteristics for
30 newly issued health benefit plans with the same or similar coverage.
31 (20) "Premium" means all moneys paid by an individual and eligible depend-
32 ents as a condition of receiving coverage from a carrier, including any fees
33 or other contributions associated with the health benefit plan.
34 (21) "Qualifying previous coverage" and "qualifying existing coverage"
35 mean benefits or coverage provided under:
36 (a) Medicare or medicaid, civilian health and medical program for
37 uniformed services (CHAMPUS), the Indian health service program, a state
38 health benefit risk pool, or any other similar publicly sponsored program;
39 or
40 (b) Any group or individual health insurance policy or health benefit
41 arrangement whether or not subject to the state insurance laws, including
42 coverage provided by a managed care organization, hospital or professional
43 service corporation, or a fraternal benefit society, that provides bene-
44 fits similar to or exceeding benefits provided under the basic health ben-
45 efit plan.
46 (22) "Rating period" means the calendar period for which premium rates
47 established by a carrier are assumed to be in effect.
48 (23) "Reinsuring carrier" means a carrier participating in the Idaho indi-
49 vidual high risk reinsurance pool established in chapter 55, title 41, Idaho
50 Code.
51 (24) "Restricted network provision" means any provision of a health bene-
52 fit plan that conditions the payment of benefits, in whole or in part, on the
53 use of health care providers that have entered into a contractual arrangement
54 with the carrier to provide health care services to covered individuals.
55 (25) "Risk-assuming carrier" means a carrier whose application is approved
10
1 by the director pursuant to section 41-5210, Idaho Code.
2 (26) "Individual carrier" means a carrier that offers health benefit plans
3 covering eligible individuals and their dependents.
4 SECTION 5. That Section 41-5206, Idaho Code, be, and the same is hereby
5 amended to read as follows:
6 41-5206. RESTRICTIONS RELATING TO PREMIUM RATES. (1) Premium rates for
7 health benefit plans subject to the provisions of this chapter shall be sub-
8 ject to the following provisions:
9 (a) The premium rates charged during a rating period to individuals with
10 similar case characteristics for the same or similar coverage, or the
11 rates that could be charged to such individuals under the rating system,
12 shall not vary from the index rate by more than fifty percent (50%) of the
13 index rate.
14 (b) The percentage increase in the premium rate charged to an individual
15 for a new rating period may not exceed the sum of the following:
16 (i) The percentage change in the new business premium rate measured
17 from the first day of the prior rating period to the first day of the
18 new rating period. In the case of a health benefit plan into which
19 the individual carrier is no longer enrolling new individuals, the
20 individual carrier shall use the percentage change in the base pre-
21 mium rate, provided that such change does not exceed, on a percentage
22 basis, the change in the new business premium rate for the most simi-
23 lar health benefit plan into which the individual carrier is actively
24 enrolling new individuals.
25 (ii) Any adjustment, not to exceed fifteen percent (15%) annually
26 and adjusted pro rata for rating periods of less than one (1) year,
27 due to the claim experience, health status or duration of coverage of
28 the individual or dependents as determined from the individual
29 carrier's rate manual; and
30 (iii) Any adjustment due to change in coverage or change in the case
31 characteristics of the individual as determined from the individual
32 carrier's rate manual.
33 (c) Premium rates for health benefit plans shall comply with the require-
34 ments of this section notwithstanding any assessments paid or payable by
35 carriers pursuant to section 41-4711, Idaho Code, or chapter 55, title 41,
36 Idaho Code.
37 (d) (i) Individual carriers shall apply rating factors, including case
38 characteristics, consistently with respect to all individuals. Rating
39 factors shall produce premiums for identical individuals which differ
40 only by the amounts attributable to plan design and do not reflect
41 differences due to the nature of the individuals assumed to select
42 particular health benefit plans; and
43 (ii) An individual carrier shall treat all health benefit plans
44 issued or renewed in the same calendar month as having the same rat-
45 ing period.
46 (e) For purposes of this subsection, a health benefit plan that utilizes
47 a restricted provider network shall not be considered similar coverage to
48 a health benefit plan that does not utilize such a network, provided that
49 utilization of the restricted provider network results in substantial dif-
50 ferences in claims costs.
51 (f) The individual carrier shall not use case characteristics, other than
52 age, individual tobacco use, geography as defined by rule of the director,
53 or gender, without prior approval of the director.
11
1 (g) An individual carrier may utilize age as a case characteristic in
2 establishing premium rates, provided that the same rating factor shall be
3 applied to all dependents under twenty-threefive (235) years of age, and
4 the same rating factor may be applied on an annual basis as to individuals
5 or nondependents twenty (20) years of age or older.
6 (h) The director may establish rules to implement the provisions of this
7 section and to assure that rating practices used by individual carriers
8 are consistent with the purposes of this chapter, including rules that:
9 (i) Assure that differences in rates charged for health benefit
10 plans by individual carriers are reasonable and reflect objective
11 differences in plan design, not including differences due to the
12 nature of the individuals assumed to select particular health benefit
13 plans;
14 (ii) Prescribe the manner in which case characteristics may be used
15 by individual carriers; and
16 (iii) Prescribe the manner in which an individual carrier is to
17 demonstrate compliance with the provisions of this section, including
18 requirements that an individual carrier provide the director with
19 actuarial certification as to such compliance.
20 (2) The director may suspend for a specified period the application of
21 subsection (1)(a) of this section as to the premium rates applicable to one
22 (1) or more individuals for one (1) or more rating periods upon a filing by
23 the individual carrier and a finding by the director either that the suspen-
24 sion is reasonable in light of the financial condition of the individual car-
25 rier or that the suspension would enhance the efficiency and fairness of the
26 marketplace for individual health insurance.
27 (3) In connection with the offering for sale of any health benefit plan
28 to an individual, an individual carrier shall make a reasonable disclosure, as
29 part of its solicitation and sales materials, of all of the following:
30 (a) The extent to which premium rates for an individual are established
31 or adjusted based upon the actual or expected variation in claims costs or
32 actual or expected variation in health status of the individual and his
33 dependents;
34 (b) The provisions of the health benefit plan concerning the individual
35 carrier's right to change premium rates and the factors, other than claim
36 experience, that affect changes in premium rates;
37 (c) The provisions relating to renewability of policies and contracts;
38 and
39 (d) The provisions relating to any preexisting condition provision.
40 (4) (a) Each individual carrier shall maintain at its principal place of
41 business a complete and detailed description of its rating practices and
42 renewal underwriting practices, including information and documentation
43 that demonstrate that its rating methods and practices are based upon com-
44 monly accepted actuarial assumptions and are in accordance with sound
45 actuarial principles.
46 (b) Each individual carrier shall file with the director annually on or
47 before September 15, an actuarial certification certifying that the car-
48 rier is in compliance with the provisions of this chapter and that the
49 rating methods of the individual carrier are actuarially sound. Such cer-
50 tification shall be in a form and manner, and shall contain such informa-
51 tion, as specified by the director. A copy of the certification shall be
52 retained by the individual carrier at its principal place of business.
53 (c) An individual carrier shall make the information and documentation
54 described in subsection (4)(a) of this section available to the director
55 upon request. Except in cases of violations of the provisions of this
12
1 chapter, the information shall be considered proprietary and trade secret
2 information and shall not be subject to disclosure by the director to per-
3 sons outside of the department except as agreed to by the individual car-
4 rier or as ordered by a court of competent jurisdiction.
5 SECTION 6. That Section 41-5501, Idaho Code, be, and the same is hereby
6 amended to read as follows:
7 41-5501. DEFINITIONS. As used in this chapter:
8 (1) "Agent" means a producer as defined in section 41-1003(8), Idaho
9 Code.
10 (2) "Board" means the board of directors of the Idaho high risk individ-
11 ual reinsurance pool established in this chapter and the Idaho small employer
12 reinsurance program established in section 41-4711, Idaho Code.
13 (3) "Carrier" means any entity that provides, or is authorized to pro-
14 vide, health insurance in this state. For purposes of this chapter, carrier
15 includes an insurance company, any other entity providing reinsurance includ-
16 ing excess or stop loss coverage, a hospital or professional service corpora-
17 tion, a fraternal benefit society, a managed care organization, any entity
18 providing health insurance coverage or benefits to residents of this state as
19 certificate holders under a group policy issued or delivered outside of this
20 state, and any other entity providing a plan of health insurance or health
21 benefits subject to state insurance regulation.
22 (4) "Dependent" means a spouse, an unmarried child under the age of nine-
23 teen twenty-one (219) years, an unmarried child who is a full-time student
24 under the age of twenty-threefive (235) years and who is financially dependent
25 upon the parent, and an unmarried child of any age who is medically certified
26 as disabled and dependent upon the parent.
27 (5) "Director" means the director of the department of insurance of the
28 state of Idaho.
29 (6) "Eligible individual" means:
30 (a) An Idaho resident individual or dependent of an Idaho resident who is
31 under the age of sixty-five (65) years, is not eligible for coverage under
32 a group health plan, part A or part B of title XVIII of the social secu-
33 rity act (medicare), or a state plan under title XIX (medicaid) or any
34 successor program, and who does not have other health insurance coverage;
35 or
36 (b) An individual who is legally domiciled in Idaho on the date of appli-
37 cation to the pool and is eligible for the credit for health insurance
38 costs under section 35 of the Internal Revenue Code of 1986; or
39 (c) An Idaho resident individual or a dependent of an Idaho resident who
40 is a federally eligible individual (one who meets the eligibility criteria
41 set forth in the federal health insurance portability and accountability
42 act of 1996 Public Law 104-191, Sec. 2741(b) (HIPAA)).
43 Coverage under a basic, standard, catastrophic A, catastrophic B, or HSA com-
44 patible health benefit plan shall not be available to any individual who is
45 covered under other health insurance coverage. For purposes of this chapter,
46 to be eligible, an individual must also meet the requirements of section
47 41-5510, Idaho Code.
48 (7) "Health benefit plan" means any hospital or medical policy or certif-
49 icate, any subscriber contract provided by a hospital or professional service
50 corporation, or health maintenance organization subscriber contract. Health
51 benefit plan does not include policies or certificates of insurance for spe-
52 cific disease, hospital confinement indemnity, accident-only, credit, dental,
53 vision, medicare supplement, long-term care, or disability income insurance,
13
1 student health benefits only, coverage issued as a supplement to liability
2 insurance, worker's compensation or similar insurance, automobile medical pay-
3 ment insurance, or nonrenewable short-term coverage issued for a period of
4 twelve (12) months or less.
5 (8) "Individual basic health benefit plan" means a lower cost health ben-
6 efit plan developed pursuant to section 41-5511, Idaho Code.
7 (9) "Individual carrier" means a carrier that offers health benefit plans
8 covering eligible individuals and their dependents.
9 (10) "Individual catastrophic A health benefit plan" means a higher limit
10 health benefit plan developed pursuant to section 41-5511, Idaho Code.
11 (11) "Individual catastrophic B health benefit plan" means a health bene-
12 fit plan offering limits higher than a catastrophic A health benefit plan
13 developed pursuant to section 41-5511, Idaho Code.
14 (12) "Individual HSA compatible health benefit plan" means a health sav-
15 ings account compatible health benefit plan developed pursuant to section
16 41-5511, Idaho Code.
17 (13) "Individual standard health benefit plan" means a health benefit plan
18 developed pursuant to section 41-5511, Idaho Code.
19 (14) "Plan" or "pool plan" means the individual basic, standard, cata-
20 strophic A, catastrophic B, or HSA compatible health benefit plan established
21 pursuant to section 41-5511, Idaho Code.
22 (15) "Plan of operation" means the plan of operation of the individual
23 high risk reinsurance pool established pursuant to this chapter.
24 (16) "Pool" means the Idaho high risk reinsurance pool.
25 (17) "Premium" means all moneys paid by an individual and eligible depend-
26 ents as a condition of receiving coverage from a carrier, including any fees
27 or other contributions associated with the health benefit plan.
28 (18) "Qualifying previous coverage" and "qualifying existing coverage"
29 mean benefits or coverage provided under:
30 (a) Medicare or medicaid, civilian health and medical program for
31 uniformed services (CHAMPUS), the Indian health service program, a state
32 health benefit risk pool, or any other similar publicly sponsored program;
33 or
34 (b) Any group or individual health insurance policy or health benefit
35 arrangement whether or not subject to the state insurance laws, including
36 coverage provided by a managed care organization or a fraternal benefit
37 society.
38 (19) "Reinsurance premium" means the premium set by the board pursuant to
39 section 41-5506, Idaho Code, to be paid by a reinsuring carrier for plans
40 issued under the pool.
41 (20) "Reinsuring carrier" means a carrier participating in the individual
42 high risk reinsurance pool established by this chapter.
43 (21) "Restricted network provision" means any provision of a health bene-
44 fit plan that conditions the payment of benefits, in whole or in part, on the
45 use of health care providers that have entered into a contractual arrangement
46 with the carrier to provide health care services to covered individuals.
47 SECTION 7. That Section 63-3022K, Idaho Code, be, and the same is hereby
48 amended to read as follows:
49 63-3022K. MEDICAL SAVINGS ACCOUNT. (1) For taxable years commencing on
50 and after January 1, 1995, annual contributions to a medical savings account
51 not exceeding two thousand dollars ($2,000) for the account holder and inter-
52 est earned on a medical savings account shall be deducted from taxable income
53 by the account holder, if such amount has not been previously deducted or
14
1 excluded in arriving at taxable income. For married individuals the maximum
2 deduction shall be computed separately for each individual. Contributions to
3 the account shall not exceed the amount deductible under this section.
4 (2) For the purpose of this section, the following terms have the follow-
5 ing meanings unless the context clearly denotes otherwise:
6 (a) "Account holder" means an individual, in the case of married individ-
7 uals each spouse, including a self-employed person, on whose behalf the
8 medical savings account is established.
9 (b) "Dependent" means a person for whom a deduction is permitted under
10 section 151(b) or (c) of the Internal Revenue Code if a deduction for the
11 person is claimed for that person on the account holder's Idaho income tax
12 return.
13 (c) "Dependent child" means a child or grandchild of the account holder
14 who is not a dependent if the account holder actually pays the eligible
15 medical expenses of the child or grandchild and the child or grandchild is
16 any of the following:
17 (i) Under nineteen twenty-one (219) years of age, or enrolled as a
18 full-time student at an accredited college or university.
19 (ii) Legally entitled to the provision of proper or necessary sub-
20 sistence, education, medical care or other care necessary for his or
21 her health, guidance or well-being and not otherwise emancipated,
22 self-supporting, married or a member of the armed forces of the
23 United States.
24 (iii) Mentally or physically incapacitated to the extent that he or
25 she is not self-sufficient.
26 (d) "Depository" means a state or national bank, savings and loan associ-
27 ation, credit union or trust company authorized to act as a fiduciary or
28 an insurance administrator or insurance company authorized to do business
29 in this state, a broker or investment advisor regulated by the department
30 of finance, a broker or insurance agent regulated by the department of
31 insurance or a health maintenance organization, fraternal benefit society,
32 hospital and professional service corporation as defined in section
33 41-3403, Idaho Code, or nonprofit mutual insurer regulated under title 41,
34 Idaho Code.
35 (e) "Eligible medical expense" means an expense paid by the taxpayer for
36 medical care described in section 213(d) of the Internal Revenue Code, and
37 long-term care expenses of the account holder and the spouse, dependents
38 and dependent children of the account holder.
39 (f) "Long-term care expenses" means expenses incurred in providing custo-
40 dial care in a nursing facility as defined in section 39-1301, Idaho Code,
41 and for insurance premiums relating to long-term care insurance under
42 chapter 46, title 41, Idaho Code.
43 (g) "Medical savings account" means an account established with a deposi-
44 tory to pay the eligible medical expenses of the account holder and the
45 dependents and dependent children of the account holder. Medical savings
46 accounts shall carry the name of the account holder, a designated benefi-
47 ciary or beneficiaries of the account holder and shall be designated by
48 the depository as a "medical savings account."
49 (3) Upon agreement between an employer and employee, an employer may
50 establish and contribute to the employee's medical savings account or con-
51 tribute to an employee's existing medical savings account. The total combined
52 annual contributions by an employer and the account holder shall not exceed
53 two thousand dollars ($2,000) for the account holder. Employer contributions
54 to an employee's medical savings account shall be owned by the employee.
55 (4) Funds held in a medical savings account may be withdrawn by the
15
1 account holder at any time. Withdrawals for the purpose of paying eligible
2 medical expenses shall not be subject to the tax imposed in this chapter. The
3 burden of proving that a withdrawal from a medical savings account was made
4 for an eligible medical expense is upon the account holder and not upon the
5 depository or the employer of the account holder. Other withdrawals shall be
6 subject to the following restrictions and penalties:
7 (a) There shall be a distribution penalty for withdrawal of funds by the
8 account holder for purposes other than the payment of eligible medical
9 expenses. The penalty shall be ten percent (10%) of the amount of with-
10 drawal from the account and, in addition, the amount withdrawn shall be
11 subject to the tax imposed in this chapter. The direct transfer of funds
12 from a medical savings account to a medical savings account at a different
13 depository shall not be considered a withdrawal for purposes of this sec-
14 tion. Charges relating to the administration and maintenance of the
15 account by the depository are not withdrawals for purposes of this sec-
16 tion.
17 (b) After an account holder reaches fifty-nine and one-half (59 1/2)
18 years of age, withdrawals may be made for eligible medical expenses or for
19 any other reason without penalty, but subject to the tax imposed by this
20 section.
21 (c) Upon the death of an account holder, the account principal, as well
22 as any interest accumulated thereon, shall be distributed without penalty
23 to the designated beneficiary or beneficiaries.
24 (d) Funds withdrawn which are later reimbursed shall be taxable unless
25 redeposited into the account within sixty (60) days of the reimbursement.
26 Deposits of reimbursed eligible medical expenses shall not be included in
27 calculating the amount deductible.
28 (e) Funds deposited in a medical savings account which are deposited in
29 error or unintentionally and which are withdrawn within thirty (30) days
30 of being deposited shall be treated as if the amounts had not been depos-
31 ited in the medical savings account. Funds withdrawn from a medical sav-
32 ings account which are withdrawn in error or unintentionally and which are
33 redeposited within thirty (30) days of being withdrawn shall be treated as
34 if the amounts had not been withdrawn from the medical savings account.
35 (f) Funds withdrawn which are, not later than the sixtieth day after the
36 day of the withdrawal, deposited into another medical savings account for
37 the benefit of the same account holder are not a withdrawal for purposes
38 of this section and shall not be included in calculating the amount
39 deductible.
40 (5) Reporting. Depositories, in the case of medical savings accounts,
41 shall provide to the state tax commission, in the routine fashion used for all
42 interest-bearing accounts, the same information that is provided for any
43 interest-bearing bank account. So as to minimize the burden of reporting, the
44 information shall be provided in the format in which information is provided
45 for any interest-bearing bank account to the state tax commission. There shall
46 be no other reporting requirements. Account holders shall provide on any state
47 income tax form in which they take a deduction for a medical savings account
48 the account number of their medical savings account and the depository at
49 which the account is held.
50 (6) Any medical care savings account established pursuant to chapter 53,
51 title 41, Idaho Code, as enacted by chapter 186, laws of 1994, may be contin-
52 ued pursuant to the provisions of this section and all duties, privileges and
53 liabilities imposed in this section upon account holders of medical care sav-
54 ings accounts and the beneficiaries of those accounts shall apply to account
55 holders of medical care savings accounts and their beneficiaries established
16
1 pursuant to chapter 53, title 41, Idaho Code, as enacted by chapter 186, laws
2 of 1994, as if the medical care savings account were a medical savings account
3 established pursuant to this section.
4 (7) (a) If the account holder's surviving spouse acquires the account
5 holder's interest in a medical savings account by reason of being the des-
6 ignated beneficiary of such account at the death of the account holder,
7 the medical savings account shall be treated as if the spouse were the
8 account holder.
9 (b) If, by reason of the death of the account holder, any person acquires
10 the account holder's interest in a medical savings account in a case to
11 which subparagraph (7)(a) of this section does not apply:
12 (i) Such account shall cease to be a medical savings account as of
13 the date of death; and
14 (ii) An amount equal to the fair market value of the assets in such
15 account on such date shall be includable, if such person is not the
16 estate of such holder, in such person's Idaho taxable income for the
17 taxable year which includes such date, or if such person is the
18 estate of such holder, in such holder's Idaho taxable income for the
19 last taxable year of such holder.
20 (c) The amount includable in Idaho taxable income under subparagraph (b)
21 of this subsection (7) by any person, other than the estate, shall be
22 reduced by the amount of qualified medical expenses which were incurred by
23 the decedent before the date of the decedent's death and paid by such per-
24 son within one (1) year after such date.
REPRINT REPRINT REPRINT REPRINT REPRINT REPRINT
STATEMENT OF PURPOSE
RS 16777
The purpose of this bill is to raise the age for which a
dependent can remain on the parent's health insurance policy.
Current law allows an unmarried dependent to stay on the parent's
health insurance until age 19 if not a full-time student and to age
23 if a full-time student. This bill would raise the age to 21 if
not a full-time student and to age 25 if the dependent is a full-
time student.
The indirect benefits of this legislation should be to:
a) reduce the number of uninsured; b) reduce the educational cost
of going to college; and c) improve the actuarial demographics of
individual and group policies, as they retain coverage on an age
group which is typically healthy and inexpensive.
FISCAL NOTE
None.
Contact
Name: Senator Dean Cameron
Phone: 334-4735
STATEMENT OF PURPOSE/FISCAL NOTE S 1105