H.B. 188 Enrolled

1

HEALTH SYSTEM REFORM - INSURANCE
2 MARKET
3 2009 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: David Clark
6 Senate Sponsor: Gregory S. Bell
7 Cosponsors:
8 Roger E. Barrus
9 Ron Bigelow
10 Bradley M. DawBrad L. Dee
Ben C. Ferry
Kevin S. Garn
Bradley G. LastDavid Litvack
Merlynn T. Newbold
Patrick Painter 11
12 LONG TITLE
13 General Description:
14 This bill amends the Insurance Code and the Governor's Office of Economic
15 Development Code to expand access to the health insurance market, increase market
16 flexibility, and provide greater transparency in the health insurance market.
17 Highlighted Provisions:
18 This bill:
19 . prohibits balanced billing by certain health care providers in certain circumstances;
20 . revises the basic benefit plan used for consumer comparison of health benefit
21 products;
22 . requires the Insurance Department to include in its annual market report a summary
23 of the types of plans sold through the Internet portal, including market penetration
24 of mandate lite products;
25 . allows insurers to offer lower cost health insurance products that do not include
26 certain state mandates in the individual market, the small employer group market,
27 and in the conversion market;
28 . creates the Utah NetCare Plan, a low cost health benefit plan as an alternative to
29 current federal COBRA, state mini-COBRA, and conversion products;
30 . requires health insurance brokers and producers to disclose their commissions and

31 compensation to their customers prior to selling a health benefit plan;
32 . modifies the number and type of products an insurer must offer in the small
33 employer group market and the individual market;
34 . establishes a defined contribution arrangement market available on the Internet
35 portal, which:
36 . beginning January 1, 2010, is available to small employer groups;
37 . offers a range of health benefit plan choices to an employer's eligible
38 employees;
39 . beginning January 1, 2012, is available to eligible large employer groups; and
40 . beginning January 1, 2012, will offer a wider range of choices of health benefit
41 plans to employees;
42 . establishes a board within the Insurance Department that is given the responsibility
43 to develop a risk adjustment mechanism that will apportion risk among the insurers
44 participating in the Internet portal defined contribution market to protect insurers
45 from adverse risk selection;
46 . requires insurers who offer health benefit plans on the Internet portal to provide
47 greater transparency and disclose information about the plan benefits, provider
48 networks, wellness programs, claim payment practices, and solvency ratings;
49 . establishes a process for a consumer to compare health plan features on the Internet
50 portal and to enroll in a health benefit plan from the Internet portal;
51 . requires the Office of Consumer Health Services to convene insurers and health
52 care providers to monitor and report to the Health Reform Task Force and to the
53 Business and Labor Interim Committee regarding progress towards expanding
54 access to the defined contribution market, greater choice in the market, and
55 payment reform demonstration projects;
56 . establishes limited rulemaking authority for the Office of Consumer Health
57 Services to:
58 . assist employers and insurance carriers with interacting with the Internet portal;

59 and
60 . facilitate the receipt and payment of health plan premium payments from
61 multiple sources;
62 . authorizes the Office of Consumer Health Services to establish a fee to cover the
63 transaction cost associated with the Internet portal functions such as sending and
64 processing an application or processing multiple premium payment sources; and
65 . re-authorizes the Health Reform Task Force for one year.
66 Monies Appropriated in this Bill:
67 None
68 Other Special Clauses:
69 This bill provides an immediate effective date.
70 This bill repeals the Health Reform Task Force on December 30, 2009.
71 Utah Code Sections Affected:
72 AMENDS:
73 31A-8-501, as last amended by Laws of Utah 2004, Chapters 90, 229, and 367
74 31A-22-613.5, as last amended by Laws of Utah 2008, Chapters 241 and 345
75 31A-22-617, as last amended by Laws of Utah 2008, Chapter 3
76 31A-22-722, as last amended by Laws of Utah 2006, Chapter 188
77 31A-22-723, as last amended by Laws of Utah 2008, Chapters 241 and 250
78 31A-23a-401, as last amended by Laws of Utah 2007, Chapter 307
79 31A-23a-501, as renumbered and amended by Laws of Utah 2003, Chapter 298
80 31A-30-102, as last amended by Laws of Utah 2008, Chapter 345
81 31A-30-103, as last amended by Laws of Utah 2007, Chapter 307
82 31A-30-104, as last amended by Laws of Utah 2004, Chapter 108
83 31A-30-107, as last amended by Laws of Utah 2004, Chapter 329
84 31A-30-109, as last amended by Laws of Utah 1997, Chapter 265
85 31A-30-112, as last amended by Laws of Utah 2008, Chapter 345
86 63M-1-2504, as enacted by Laws of Utah 2008, Chapter 383

87 ENACTS:
88 31A-22-618.5, Utah Code Annotated 1953
89 31A-22-724, Utah Code Annotated 1953
90 31A-30-201, Utah Code Annotated 1953
91 31A-30-202, Utah Code Annotated 1953
92 31A-30-203, Utah Code Annotated 1953
93 31A-30-204, Utah Code Annotated 1953
94 31A-30-205, Utah Code Annotated 1953
95 31A-30-206, Utah Code Annotated 1953
96 31A-30-207, Utah Code Annotated 1953
97 31A-30-208, Utah Code Annotated 1953
98 31A-42-101, Utah Code Annotated 1953
99 31A-42-102, Utah Code Annotated 1953
100 31A-42-103, Utah Code Annotated 1953
101 31A-42-201, Utah Code Annotated 1953
102 31A-42-202, Utah Code Annotated 1953
103 31A-42-203, Utah Code Annotated 1953
104 31A-42-204, Utah Code Annotated 1953
105 63M-1-2506, Utah Code Annotated 1953
106 Uncodified Material Affected:
107 ENACTS UNCODIFIED MATERIAL
108
109 Be it enacted by the Legislature of the state of Utah:
110 Section 1. Section 31A-8-501 is amended to read:
111 31A-8-501. Access to health care providers.
112 (1) As used in this section:
113 (a) "Class of health care provider" means a health care provider or a health care
114 facility regulated by the state within the same professional, trade, occupational, or certification

115 category established under Title 58, Occupations and Professions, or within the same facility
116 licensure category established under Title 26, Chapter 21, Health Care Facility Licensing and
117 Inspection Act.
118 (b) "Covered health care services" or "covered services" means health care services for
119 which an enrollee is entitled to receive under the terms of a health maintenance organization
120 contract.
121 (c) "Credentialed staff member" means a health care provider with active staff
122 privileges at an independent hospital or federally qualified health center.
123 (d) "Federally qualified health center" means as defined in the Social Security Act, 42
124 U.S.C. Sec. 1395x.
125 (e) "Independent hospital" means a general acute hospital or a critical access hospital
126 that:
127 (i) is either:
128 (A) located 20 miles or more from any other general acute hospital or critical access
129 hospital; or
130 (B) licensed as of January 1, 2004;
131 (ii) is licensed pursuant to Title 26, Chapter 21, Health Care Facility Licensing and
132 Inspection Act; and
133 (iii) is controlled by a board of directors of which 51% or more reside in the county
134 where the hospital is located and:
135 (A) the board of directors is ultimately responsible for the policy and financial
136 decisions of the hospital; or
137 (B) the hospital is licensed for 60 or fewer beds and is not owned, in whole or in part,
138 by an entity that owns or controls a health maintenance organization if the hospital is a
139 contracting facility of the organization.
140 (f) "Noncontracting provider" means an independent hospital, federally qualified
141 health center, or credentialed staff member who has not contracted with a health maintenance
142 organization to provide health care services to enrollees of the organization.

143 (2) Except for a health maintenance organization which is under the common
144 ownership or control of an entity with a hospital located within ten paved road miles of an
145 independent hospital, a health maintenance organization shall pay for covered health care
146 services rendered to an enrollee by an independent hospital, a credentialed staff member at an
147 independent hospital, or a credentialed staff member at his local practice location if:
148 (a) the enrollee:
149 (i) lives or resides within 30 paved road miles of the independent hospital; or
150 (ii) if Subsection (2)(a)(i) does not apply, lives or resides in closer proximity to the
151 independent hospital than a contracting hospital;
152 (b) the independent hospital is located prior to December 31, 2000 in a county with a
153 population density of less than 100 people per square mile, or the independent hospital is
154 located in a county with a population density of less than 30 people per square mile; and
155 (c) the enrollee has complied with the prior authorization and utilization review
156 requirements otherwise required by the health maintenance organization contract.
157 (3) A health maintenance organization shall pay for covered health care services
158 rendered to an enrollee at a federally qualified health center if:
159 (a) the enrollee:
160 (i) lives or resides within 30 paved road miles of the federally qualified health center;
161 or
162 (ii) if Subsection (3)(a)(i) does not apply, lives or resides in closer proximity to the
163 federally qualified health center than a contracting provider;
164 (b) the federally qualified health center is located in a county with a population density
165 of less than 30 people per square mile; and
166 (c) the enrollee has complied with the prior authorization and utilization review
167 requirements otherwise required by the health maintenance organization contract.
168 (4) (a) A health maintenance organization shall reimburse a noncontracting provider
169 or the enrollee for covered services rendered pursuant to Subsection (2) a like dollar amount as
170 it pays to contracting providers under a noncapitated arrangement for comparable services.

171 (b) A health maintenance organization shall reimburse a federally qualified health
172 center or the enrollee for covered services rendered pursuant to Subsection (3) a like amount as
173 paid by the health maintenance organization under a noncapitated arrangement for comparable
174 services to a contracting provider in the same class of health care providers as the provider
175 who rendered the service.
176 (5) (a) A noncontracting independent hospital may not balance bill a patient when the
177 health maintenance organization reimburses a noncontracting independent hospital or an
178 enrollee in accordance with Subsection (4)(a).
179 (b) A noncontracting federally qualified health center may not balance bill a patient
180 when the federally qualified health center or the enrollee receives reimbursement in
181 accordance with Subsection (4)(b).
182 [(5)] (6) A noncontracting provider may only refer an enrollee to another
183 noncontracting provider so as to obligate the enrollee's health maintenance organization to pay
184 for the resulting services if:
185 (a) the noncontracting provider making the referral or the enrollee has received prior
186 authorization from the organization for the referral; or
187 (b) the practice location of the noncontracting provider to whom the referral is made:
188 (i) is located in a county with a population density of less than 25 people per square
189 mile; and
190 (ii) is within 30 paved road miles of:
191 (A) the place where the enrollee lives or resides; or
192 (B) the independent hospital or federally qualified health center at which the enrollee
193 may receive covered services pursuant to Subsection (2) or (3).
194 [(6)] (7) Notwithstanding this section, a health maintenance organization may contract
195 directly with an independent hospital, federally qualified health center, or credentialed staff
196 member.
197 [(7)] (8) (a) A health maintenance organization that violates any provision of this
198 section is subject to sanctions as determined by the commissioner in accordance with Section

199 31A-2-308 .
200 (b) Violations of this section include:
201 (i) failing to provide the notice required by Subsection [(7)] (8)(d) by placing the
202 notice in any health maintenance organization's provider list that is supplied to enrollees,
203 including any website maintained by the health maintenance organization;
204 (ii) failing to provide notice of an enrolles's rights under this section when:
205 (A) an enrollee makes personal contact with the health maintenance organization by
206 telephone, electronic transaction, or in person; and
207 (B) the enrollee inquires about his rights to access an independent hospital or federally
208 qualified health center; and
209 (iii) refusing to reprocess or reconsider a claim, initially denied by the health
210 maintenance organization, when the provisions of this section apply to the claim.
211 (c) The commissioner shall, pursuant to Chapter 2, Part 2, Duties and Powers of
212 Commissioner:
213 (i) adopt rules as necessary to implement this section;
214 (ii) identify in rule:
215 (A) the counties with a population density of less than 100 people per square mile;
216 (B) independent hospitals as defined in Subsection (1)(e); and
217 (C) federally qualified health centers as defined in Subsection (1)(d).
218 (d) (i) A health maintenance organization shall:
219 (A) use the information developed by the commissioner under Subsection [(7)] (8)(c)
220 to identify the rural counties, independent hospitals, and federally qualified health centers that
221 are located in the health maintenance organization's service area; and
222 (B) include the providers identified under Subsection [(7)] (8)(d)(i)(A) in the notice
223 required in Subsection [(7)] (8)(d)(ii).
224 (ii) The health maintenance organization shall provide the following notice, in bold
225 type, to enrollees as specified under Subsection [(7)] (8)(b)(i), and shall keep the notice
226 current:

227 "You may be entitled to coverage for health care services from the following non-HMO
228 contracted providers if you live or reside within 30 paved road miles of the listed providers, or
229 if you live or reside in closer proximity to the listed providers than to your HMO contracted
230 providers:
231 This list may change periodically, please check on our website or call for verification.
232 Please be advised that if you choose a noncontracted provider you will be responsible for any
233 charges not covered by your health insurance plan.
234 If you have questions concerning your rights to see a provider on this list you may
235 contact your health maintenance organization at ________. If the HMO does not resolve your
236 problem, you may contact the Office of Consumer Health Assistance in the Insurance
237 Department, toll free."
238 (e) A person whose interests are affected by an alleged violation of this section may
239 contact the Office of Consumer Health Assistance and request assistance, or file a complaint
240 as provided in Section 31A-2-216 .
241 Section 2. Section 31A-22-613.5 is amended to read:
242 31A-22-613.5. Price and value comparisons of health insurance -- Basic Health
243 Care Plan.
244 (1) (a) Except as provided in Subsection (1)(b), this section applies to all health
245 insurance policies and health maintenance organization contracts.
246 (b) Subsection [(3)] (2) applies to:
247 (i) all health insurance policies and health maintenance organization contracts; and
248 (ii) coverage offered to state employees under Subsection 49-20-202 (1)(a).
249 [(2) The commissioner shall adopt a Basic Health Care Plan consistent with this
250 section to be offered under the open enrollment provisions of Chapter 30, Individual, Small
251 Employer, and Group Health Insurance Act.]
252 [(3)] (2) (a) The commissioner shall promote informed consumer behavior and
253 responsible health insurance and health plans by requiring an insurer issuing health insurance
254 policies or health maintenance organization contracts to provide to all enrollees, prior to

255 enrollment in the health benefit plan or health insurance policy, written disclosure of:
256 (i) restrictions or limitations on prescription drugs and biologics including the use of a
257 formulary and generic substitution;
258 (ii) coverage limits under the plan; and
259 (iii) any limitation or exclusion of coverage including:
260 (A) a limitation or exclusion for a secondary medical condition related to a limitation
261 or exclusion from coverage; and
262 (B) beginning July 1, 2009, easily understood examples of a limitation or exclusion of
263 coverage for a secondary medical condition.
264 (b) In addition to the requirements of Subsections [(3)] (2)(a), (d), and (e) an insurer
265 described in Subsection [(3)] (2)(a) shall file the written disclosure required by this Subsection
266 [(3)] (2) to the commissioner:
267 (i) upon commencement of operations in the state; and
268 (ii) anytime the insurer amends any of the following described in Subsection [(3)(a)]
269 (2):
270 (A) treatment policies;
271 (B) practice standards;
272 (C) restrictions;
273 (D) coverage limits of the insurer's health benefit plan or health insurance policy; or
274 (E) limitations or exclusions of coverage including a limitation or exclusion for a
275 secondary medical condition related to a limitation or exclusion of the insurer's health
276 insurance plan.
277 (c) The commissioner may adopt rules to implement the disclosure requirements of
278 this Subsection [(3)] (2), taking into account:
279 (i) business confidentiality of the insurer;
280 (ii) definitions of terms;
281 (iii) the method of disclosure to enrollees; and
282 (iv) limitations and exclusions.

283 (d) If under Subsection [(3)] (2)(a)(i) a formulary is used, the insurer shall make
284 available to prospective enrollees and maintain evidence of the fact of the disclosure of:
285 (i) the drugs included;
286 (ii) the patented drugs not included;
287 (iii) any conditions that exist as a precedent to coverage; and
288 (iv) any exclusion from coverage for secondary medical conditions that may result
289 from the use of an excluded drug.
290 [(e) Before December 1, 2008, insurers subject to this Subsection (3) shall report to
291 the Legislature's Health and Human Services Interim Committee and Business and Labor
292 Interim Committee, either collectively or independently regarding insurer efforts to inform
293 enrollees of any limitation of coverage or exclusion for a secondary medical condition when an
294 enrollee, or someone on the enrollee's behalf, contacts the insurer for pre-authorization of a
295 procedure or use of a drug that is excluded or limited from coverage.]
296 [(f)] (e) (i) The department shall develop examples of limitations or exclusions of a
297 secondary medical condition that an insurer may use under Subsection [(3)] (2)(a)(iii).
298 (ii) Examples of a limitation or exclusion of coverage provided under Subsection [(3)]
299 (2)(a)(iii) or otherwise are for illustrative purposes only, and the failure of a particular fact
300 situation to fall within the description of an example does not, by itself, support a finding of
301 coverage.
302 (3) An insurer who offers a health care plan under Chapter 30, Individual, Small
303 Employer, and Group Health Insurance Act, shall:
304 (a) until January 1, 2010, offer the basic health care plan described in Subsection (4)
305 subject to the open enrollment provisions of Chapter 30, Individual, Small Employer, and
306 Group Health Insurance Act; and
307 (b) beginning January 1, 2010, offer a basic health care plan subject to the open
308 enrollment provisions of Chapter 30, Individual, Small Employer, and Group Health Insurance
309 Act, that:
310 (i) is a federally qualified high deductible health plan;

311 (ii) has the lowest deductible that qualifies under a federally qualified high deductible
312 health plan, as adjusted by federal law; and
313 (iii) does not exceed an annual out of pocket maximum equal to three times the
314 amount of the annual deductible.
315 (4) [The] Until January 1, 2010, the Basic Health Care Plan [adopted by the
316 commissioner] under this section shall provide for:
317 (a) a lifetime maximum benefit per person not [to exceed] less than $1,000,000;
318 (b) an annual maximum benefit per person not less than $250,000;
319 (c) an out-of-pocket maximum of cost-sharing features:
320 (i) including:
321 (A) a deductible;
322 (B) a copayment; and
323 (C) coinsurance;
324 (ii) not to exceed $5,000 per person; and
325 (iii) for family coverage, not to exceed three times the per person out-of-pocket
326 maximum provided in Subsection (4)(c)(ii);
327 (d) in relation to its cost-sharing features:
328 (i) a deductible of:
329 (A) not less than [$1,500] $1,000 per person for major medical expenses; and
330 (B) for family coverage, not to exceed three times the per person deductible for major
331 medical expenses under Subsection (4)(d)(i)(A); and
332 (ii) (A) a copayment of not less than:
333 (I) $25 per visit for office services; and
334 (II) $150 per visit to an emergency room; or
335 (B) coinsurance of not less than:
336 (I) 20% per visit for office services; and
337 (II) 20% per visit for an emergency room; and
338 (e) in relation to cost-sharing features for prescription drugs:

339 (i) (A) a deductible not to exceed $1,000 per person; and
340 (B) for family coverage, not to exceed three times the per person deductible provided
341 in Subsection (4)(e)(i)(A); and
342 (ii) (A) a copayment of not less than:
343 (I) the lesser of the cost of the prescription drug or $15 for the lowest level of cost for
344 prescription drugs;
345 (II) the lesser of the cost of the prescription drug or $25 for the second level of cost for
346 prescription drugs; and
347 (III) the lesser of the cost of the prescription drug or $35 for the highest level of cost
348 for prescription drugs; or
349 (B) coinsurance of not less than:
350 (I) the lesser of the cost of the prescription drug or 25% for the lowest level of cost for
351 prescription drugs;
352 (II) the lesser of the cost of the prescription drug or 40% for the second level of cost
353 for prescription drugs; and
354 (III) the lesser of the cost of the prescription drug or 60% for the highest level of cost
355 for prescription drugs.
356 (5) The department shall include in its yearly insurance market report information
357 about:
358 (a) the types of health benefit plans sold on the Internet portal created in Section
359 63M-1-2504 ;
360 (b) the number of insurers participating in the defined contribution market on the
361 Internet portal;
362 (c) the number of employers and covered lives in the defined contribution market; and
363 (d) the number of lives covered by health benefit plans that do not include state
364 mandates as permitted by Subsection 31A-30-109 (2).
365 (6) The commissioner may request information from an insurer to verify the
366 information submitted by the insurer to the Internet portal under Subsection 63M-1-2506 (4).

367 Section 3. Section 31A-22-617 is amended to read:
368 31A-22-617. Preferred provider contract provisions.
369 Health insurance policies may provide for insureds to receive services or
370 reimbursement under the policies in accordance with preferred health care provider contracts
371 as follows:
372 (1) Subject to restrictions under this section, any insurer or third party administrator
373 may enter into contracts with health care providers as defined in Section 78B-3-403 under
374 which the health care providers agree to supply services, at prices specified in the contracts, to
375 persons insured by an insurer.
376 (a) (i) A health care provider contract may require the health care provider to accept
377 the specified payment as payment in full, relinquishing the right to collect additional amounts
378 from the insured person.
379 (ii) In any dispute involving a provider's claim for reimbursement, the same shall be
380 determined in accordance with applicable law, the provider contract, the subscriber contract,
381 and the insurer's written payment policies in effect at the time services were rendered.
382 (iii) If the parties are unable to resolve their dispute, the matter shall be subject to
383 binding arbitration by a jointly selected arbitrator. Each party is to bear its own expense
384 except the cost of the jointly selected arbitrator shall be equally shared. This Subsection
385 (1)(a)(iii) does not apply to the claim of a general acute hospital to the extent it is inconsistent
386 with the hospital's provider agreement.
387 (iv) An organization may not penalize a provider solely for pursuing a claims dispute
388 or otherwise demanding payment for a sum believed owing.
389 (v) If an insurer permits another entity with which it does not share common
390 ownership or control to use or otherwise lease one or more of the organization's networks of
391 participating providers, the organization shall ensure, at a minimum, that the entity pays
392 participating providers in accordance with the same fee schedule and general payment policies
393 as the organization would for that network.
394 (b) The insurance contract may reward the insured for selection of preferred health

395 care providers by:
396 (i) reducing premium rates;
397 (ii) reducing deductibles;
398 (iii) coinsurance;
399 (iv) other copayments; or
400 (v) any other reasonable manner.
401 (c) If the insurer is a managed care organization, as defined in Subsection
402 31A-27a-403 (1)(f):
403 (i) the insurance contract and the health care provider contract shall provide that in the
404 event the managed care organization becomes insolvent, the rehabilitator or liquidator may:
405 (A) require the health care provider to continue to provide health care services under
406 the contract until the earlier of:
407 (I) 90 days after the date of the filing of a petition for rehabilitation or the petition for
408 liquidation; or
409 (II) the date the term of the contract ends; and
410 (B) subject to Subsection (1)(c)(v), reduce the fees the provider is otherwise entitled to
411 receive from the managed care organization during the time period described in Subsection
412 (1)(c)(i)(A);
413 (ii) the provider is required to:
414 (A) accept the reduced payment under Subsection (1)(c)(i)(B) as payment in full; and
415 (B) relinquish the right to collect additional amounts from the insolvent managed care
416 organization's enrollee, as defined in Subsection 31A-27a-403 (1)(b);
417 (iii) if the contract between the health care provider and the managed care
418 organization has not been reduced to writing, or the contract fails to contain the language
419 required by Subsection (1)(c)(i), the provider may not collect or attempt to collect from the
420 enrollee:
421 (A) sums owed by the insolvent managed care organization; or
422 (B) the amount of the regular fee reduction authorized under Subsection (1)(c)(i)(B);

423 (iv) the following may not bill or maintain any action at law against an enrollee to
424 collect sums owed by the insolvent managed care organization or the amount of the regular fee
425 reduction authorized under Subsection (1)(c)(i)(B):
426 (A) a provider;
427 (B) an agent;
428 (C) a trustee; or
429 (D) an assignee of a person described in Subsections (1)(c)(iv)(A) through (C); and
430 (v) notwithstanding Subsection (1)(c)(i):
431 (A) a rehabilitator or liquidator may not reduce a fee by less than 75% of the
432 provider's regular fee set forth in the contract; and
433 (B) the enrollee shall continue to pay the copayments, deductibles, and other payments
434 for services received from the provider that the enrollee was required to pay before the filing
435 of:
436 (I) a petition for rehabilitation; or
437 (II) a petition for liquidation.
438 (2) (a) Subject to Subsections (2)(b) through (2)(f), an insurer using preferred health
439 care provider contracts shall pay for the services of health care providers not under the
440 contract, unless the illnesses or injuries treated by the health care provider are not within the
441 scope of the insurance contract. As used in this section, "class of health care providers" means
442 all health care providers licensed or licensed and certified by the state within the same
443 professional, trade, occupational, or facility licensure or licensure and certification category
444 established pursuant to Titles 26, Utah Health Code and 58, Occupations and Professions.
445 (b) [When] (i) Until July 1, 2012, when the insured receives services from a health
446 care provider not under contract, the insurer shall reimburse the insured for at least 75% of the
447 average amount paid by the insurer for comparable services of preferred health care providers
448 who are members of the same class of health care providers.
449 (ii) Notwithstanding Subsection (2)(b)(i), an insurer may offer a health plan that
450 complies with the provisions of Subsection 31A-22-618.5 (3).

451 (iii) The commissioner may adopt a rule dealing with the determination of what
452 constitutes 75% of the average amount paid by the insurer under Subsection (2)(b)(i) for
453 comparable services of preferred health care providers who are members of the same class of
454 health care providers.
455 (c) When reimbursing for services of health care providers not under contract, the
456 insurer may make direct payment to the insured.
457 (d) Notwithstanding Subsection (2)(b), an insurer using preferred health care provider
458 contracts may impose a deductible on coverage of health care providers not under contract.
459 (e) When selecting health care providers with whom to contract under Subsection (1),
460 an insurer may not unfairly discriminate between classes of health care providers, but may
461 discriminate within a class of health care providers, subject to Subsection (7).
462 (f) For purposes of this section, unfair discrimination between classes of health care
463 providers shall include:
464 (i) refusal to contract with class members in reasonable proportion to the number of
465 insureds covered by the insurer and the expected demand for services from class members; and
466 (ii) refusal to cover procedures for one class of providers that are:
467 (A) commonly utilized by members of the class of health care providers for the
468 treatment of illnesses, injuries, or conditions;
469 (B) otherwise covered by the insurer; and
470 (C) within the scope of practice of the class of health care providers.
471 (3) Before the insured consents to the insurance contract, the insurer shall fully
472 disclose to the insured that it has entered into preferred health care provider contracts. The
473 insurer shall provide sufficient detail on the preferred health care provider contracts to permit
474 the insured to agree to the terms of the insurance contract. The insurer shall provide at least
475 the following information:
476 (a) a list of the health care providers under contract and if requested their business
477 locations and specialties;
478 (b) a description of the insured benefits, including any deductibles, coinsurance, or

479 other copayments;
480 (c) a description of the quality assurance program required under Subsection (4); and
481 (d) a description of the adverse benefit determination procedures required under
482 Subsection (5).
483 (4) (a) An insurer using preferred health care provider contracts shall maintain a
484 quality assurance program for assuring that the care provided by the health care providers
485 under contract meets prevailing standards in the state.
486 (b) The commissioner in consultation with the executive director of the Department of
487 Health may designate qualified persons to perform an audit of the quality assurance program.
488 The auditors shall have full access to all records of the organization and its health care
489 providers, including medical records of individual patients.
490 (c) The information contained in the medical records of individual patients shall
491 remain confidential. All information, interviews, reports, statements, memoranda, or other
492 data furnished for purposes of the audit and any findings or conclusions of the auditors are
493 privileged. The information is not subject to discovery, use, or receipt in evidence in any legal
494 proceeding except hearings before the commissioner concerning alleged violations of this
495 section.
496 (5) An insurer using preferred health care provider contracts shall provide a reasonable
497 procedure for resolving complaints and adverse benefit determinations initiated by the
498 insureds and health care providers.
499 (6) An insurer may not contract with a health care provider for treatment of illness or
500 injury unless the health care provider is licensed to perform that treatment.
501 (7) (a) A health care provider or insurer may not discriminate against a preferred
502 health care provider for agreeing to a contract under Subsection (1).
503 (b) Any health care provider licensed to treat any illness or injury within the scope of
504 the health care provider's practice, who is willing and able to meet the terms and conditions
505 established by the insurer for designation as a preferred health care provider, shall be able to
506 apply for and receive the designation as a preferred health care provider. Contract terms and

507 conditions may include reasonable limitations on the number of designated preferred health
508 care providers based upon substantial objective and economic grounds, or expected use of
509 particular services based upon prior provider-patient profiles.
510 (8) Upon the written request of a provider excluded from a provider contract, the
511 commissioner may hold a hearing to determine if the insurer's exclusion of the provider is
512 based on the criteria set forth in Subsection (7)(b).
513 (9) Insurers are subject to the provisions of Sections 31A-22-613.5 , 31A-22-614.5 ,
514 and 31A-22-618 .
515 (10) Nothing in this section is to be construed as to require an insurer to offer a certain
516 benefit or service as part of a health benefit plan.
517 (11) This section does not apply to catastrophic mental health coverage provided in
518 accordance with Section 31A-22-625 .
519 Section 4. Section 31A-22-618.5 is enacted to read:
520 31A-22-618.5. Health plan offerings.
521 (1) The purpose of this section is to increase the range of health benefit plans available
522 in the small group, small employer group, large group, and individual insurance markets.
523 (2) A health maintenance organization that is subject to Chapter 8, Health
524 Maintenance Organizations and Limited Health Plans:
525 (a) shall offer to potential purchasers at least one health benefit plan that is subject to
526 the requirements of Chapter 8, Health Maintenance Organizations and Limited Health Plans;
527 and
528 (b) may offer to a potential purchaser one or more health benefit plans that:
529 (i) are not subject to one or more of the following:
530 (A) the limitations on insured indemnity benefits in Subsection 31A-8-105 (4);
531 (B) the limitation on point of service products in Subsections 31A-8-408 (3) through
532 (6);
533 (C) except as provided in Subsection (2)(b)(ii), basic health care services as defined in
534 Section 31A-8-101 ; or

535 (D) coverage mandates enacted after January 1, 2009 that are not required by federal
536 law, provided that the insurer offers one plan under Subsection (2)(a) that covers the mandate
537 enacted after January 1, 2009; and
538 (ii) when offering a health plan under this section, provide coverage for an emergency
539 medical condition as required by Section 31A-22-627 as follows:
540 (A) within the organization's service area, covered services shall include health care
541 services from non-affiliated providers when medically necessary to stabilize an emergency
542 medical condition; and
543 (B) outside the organization's service area, covered services shall include medically
544 necessary health care services for the treatment of an emergency medical condition that are
545 immediately required while the enrollee is outside the geographic limits of the organization's
546 service area.
547 (3) An insurer that offers a health benefit plan that is not subject to Chapter 8, Health
548 Maintenance Organizations and Limited Health Plans:
549 (a) notwithstanding Subsection 31A-22-617 (2), may offer a health benefit plan that
550 groups providers into the following reimbursement levels:
551 (i) tier one contracted providers;
552 (ii) tier two contracted providers who the insurer must reimburse at least 75% of tier
553 one providers; and
554 (iii) one or more tiers of non-contracted providers; and
555 (b) may offer a health benefit plan that is not subject to Subsection 31A-22-617 (9) and
556 Section 31A-22-618 ;
557 (c) beginning July 1, 2012, may offer products under Subsection (3)(a) that:
558 (i) are not subject to Subsection 31A-22-617 (2); and
559 (ii) are subject to the reimbursement requirements in Section 31A-8-501 ;
560 (d) when offering a health plan under this Subsection (3), shall provide coverage of
561 emergency care services as required by Section 31A-22-627 by providing coverage at a
562 reimbursement level of at least 75% of tier one providers; and

563 (e) are not subject to coverage mandates enacted after January 1, 2009 that are not
564 required by federal law, provided that an insurer offers one plan that covers a mandate enacted
565 after January 1, 2009.
566 (4) Section 31A-8-106 does not prohibit the offer of a health benefit plan under
567 Subsection (2)(b).
568 (5) (a) Any difference in price between a health benefit plan offered under Subsections
569 (2)(a) and (b) shall be based on actuarially sound data.
570 (b) Any difference in price between a health benefit plan offered under Subsections
571 (3)(a) and (b) shall be based on actuarially sound data.
572 (6) Nothing in this section limits the number of health benefit plans that an insurer
573 may offer.
574 Section 5. Section 31A-22-722 is amended to read:
575 31A-22-722. Utah mini-COBRA benefits for employer group coverage.
576 (1) An insured has the right to extend the employee's coverage under the current
577 employer's group policy for a period of [six] 12 months, except as provided in Subsection (2).
578 The right to extend coverage includes:
579 (a) voluntary termination;
580 (b) involuntary termination;
581 (c) retirement;
582 (d) death;
583 (e) divorce or legal separation;
584 (f) loss of dependent status;
585 (g) sabbatical;
586 (h) any disability;
587 (i) leave of absence; or
588 (j) reduction of hours.
589 (2) (a) Notwithstanding the provisions of Subsection (1), an employee does not have
590 the right to extend coverage under the current employer's group policy if the employee:

591 (i) failed to pay any required individual contribution;
592 (ii) acquires other group coverage covering all preexisting conditions including
593 maternity, if the coverage exists;
594 (iii) performed an act or practice that constitutes fraud in connection with the
595 coverage;
596 (iv) made an intentional misrepresentation of material fact under the terms of the
597 coverage;
598 (v) was terminated for gross misconduct;
599 (vi) has not been continuously covered under the current employer's group policy for a
600 period of [six] three months immediately prior to the termination of the policy due to the
601 events set forth in Subsection (1); [or]
602 (vii) is eligible for any extension of coverage required by federal law[.]; or
603 (viii) elected alternative coverage under Section 31A-22-724 .
604 (b) The right to extend coverage under Subsection (1) applies to any spouse or
605 dependent coverages, including a surviving spouse or dependents whose coverage under the
606 policy terminates by reason of the death of the employee or member.
607 (3) (a) The employer shall provide written notification of the right to extend group
608 coverage and the payment amounts required for extension of coverage, including the manner,
609 place, and time in which the payments shall be made to:
610 (i) the terminated insured;
611 (ii) the ex-spouse; or
612 (iii) if Subsection (2)(b) applies:
613 (A) to a surviving spouse; and
614 (B) the guardian of surviving dependents, if different from a surviving spouse.
615 (b) The notification shall be sent first class mail within 30 days after the termination
616 date of the group coverage to:
617 (i) the terminated insured's home address as shown on the records of the employer;
618 (ii) the address of the surviving spouse, if different from the insured's address and if

619 shown on the records of the employer;
620 (iii) the guardian of any dependents address, if different from the insured's address,
621 and if shown on the records of the employer; and
622 (iv) the address of the ex-spouse, if shown on the records of the employer.
623 (4) The insurer shall provide the employee, spouse, or any eligible dependent the
624 opportunity to extend the group coverage at the payment amount stated in [this] Subsection
625 [(3)] (5) if:
626 (a) the employer policyholder does not provide the terminated insured the written
627 notification required by Subsection (3)(a); and
628 (b) the employee or other individual eligible for extension contacts the insurer within
629 60 days of coverage termination.
630 (5) The premium amount for extended group coverage may not exceed 102% of the
631 group rate in effect for a group member, including an employer's contribution, if any, for a
632 group insurance policy.
633 (6) Except as provided in this Subsection (6), the coverage extends without
634 interruption for [six] 12 months and may not terminate if the terminated insured or, with
635 respect to a minor, the parent or guardian of the terminated insured:
636 (a) elects to extend group coverage within 60 days of losing group coverage; and
637 (b) tenders the amount required to the employer or insurer.
638 (7) The insured's coverage may be terminated prior to [six] 12 months if the
639 terminated insured:
640 (a) establishes residence outside of this state;
641 (b) moves out of the insurer's service area;
642 (c) fails to pay premiums or contributions in accordance with the terms of the policy,
643 including any timeliness requirements;
644 (d) performs an act or practice that constitutes fraud in connection with the coverage;
645 (e) makes an intentional misrepresentation of material fact under the terms of the
646 coverage;

647 (f) becomes eligible for similar coverage under another group policy; or
648 (g) employer's coverage is terminated, except as provided in Subsection (8).
649 (8) If the current employer coverage is terminated and the employer replaces coverage
650 with similar coverage under another group policy, without interruption, the terminated insured,
651 spouse, or the surviving spouse and guardian of dependents if Subsection (2)(b) applies, have
652 the right to obtain extension of coverage under the replacement group policy:
653 (a) for the balance of the period the terminated insured would have extended coverage
654 under the replaced group policy; and
655 (b) if the terminated insured is otherwise eligible for extension of coverage.
656 (9) (a) Within 30 days of the insured's exhaustion of extension of coverage, the
657 employer shall provide the terminated insured and the ex-spouse, or, in the case of the death of
658 the insured, the surviving spouse, or guardian of any dependents, written notification of the
659 right to an individual conversion policy under Section 31A-22-723 .
660 (b) The notification required by Subsection (9)(a):
661 (i) shall be sent first class mail to:
662 (A) the insured's last-known address as shown on the records of the employer;
663 (B) the address of the surviving spouse, if different from the insured's address, and if
664 shown on the records of the employer;
665 (C) the guardian of any dependents last known address as shown on the records of the
666 employer, if different from the address of the surviving spouse; and
667 (D) the address of the ex-spouse as shown on the records of the employer, if
668 applicable; and
669 (ii) shall contain the name, address, and telephone number of the insurer that will
670 provide the conversion coverage.
671 Section 6. Section 31A-22-723 is amended to read:
672 31A-22-723. Group and blanket conversion coverage.
673 (1) Notwithstanding Subsection 31A-1-103 (3)(f), and except as provided in
674 Subsection (3), all policies of accident and health insurance offered on a group basis under

675 this title, or Title 49, Chapter 20, Public Employees' Benefit and Insurance Program Act, shall
676 provide that a person whose insurance under the group policy has been terminated is entitled
677 to choose a converted individual policy [of similar accident and health insurance] in
678 accordance with this section and Section 31A-22-724 .
679 (2) A person who has lost group coverage may elect conversion coverage with the
680 insurer that provided prior group coverage if the person:
681 (a) has been continuously covered for a period of [six] three months by the group
682 policy or the group's preceding policies immediately prior to termination;
683 (b) has exhausted either:
684 (i) Utah mini-COBRA coverage as required in Section 31A-22-722 [or];
685 (ii) federal COBRA coverage; or
686 (iii) alternative coverage under Section 31A-22-724 ;
687 (c) has not acquired or is not covered under any other group coverage that covers all
688 preexisting conditions, including maternity, if the coverage exists; and
689 (d) resides in the insurer's service area.
690 (3) This section does not apply if the person's prior group coverage:
691 (a) is a stand alone policy that only provides one of the following:
692 (i) catastrophic benefits;
693 (ii) aggregate stop loss benefits;
694 (iii) specific stop loss benefits;
695 (iv) benefits for specific diseases;
696 (v) accidental injuries only;
697 (vi) dental; or
698 (vii) vision;
699 (b) is an income replacement policy;
700 (c) was terminated because the insured:
701 (i) failed to pay any required individual contribution;
702 (ii) performed an act or practice that constitutes fraud in connection with the coverage;

703 or
704 (iii) made intentional misrepresentation of material fact under the terms of coverage;
705 or
706 (d) was terminated pursuant to Subsection 31A-8-402.3 (2)(a), 31A-22-721 (2)(a), or
707 31A-30-107 (2)(a).
708 (4) (a) The employer shall provide written notification of the right to an individual
709 conversion policy within 30 days of the insured's termination of coverage to:
710 (i) the terminated insured;
711 (ii) the ex-spouse; or
712 (iii) in the case of the death of the insured:
713 (A) the surviving spouse; and
714 (B) the guardian of any dependents, if different from a surviving spouse.
715 (b) The notification required by Subsection (4)(a) shall:
716 (i) be sent by first class mail;
717 (ii) contain the name, address, and telephone number of the insurer that will provide
718 the conversion coverage; and
719 (iii) be sent to the insured's last-known address as shown on the records of the
720 employer of:
721 (A) the insured;
722 (B) the ex-spouse; and
723 (C) if the policy terminates by reason of the death of the insured to:
724 (I) the surviving spouse; and
725 (II) the guardian of any dependents, if different from a surviving spouse.
726 (5) (a) An insurer is not required to issue a converted policy which provides benefits
727 in excess of those provided under the group policy from which conversion is made.
728 (b) Except as provided in Subsection (5)(c), if the conversion is made from a health
729 benefit plan, the employee or member [must] shall be offered:
730 (i) at least the basic benefit plan as provided in Section 31A-22-613.5 through

731 December 31, 2009; and
732 (ii) beginning January 1, 2010, only the alternative coverage as provided in Subsection
733 31A-22-724 (1)(a).
734 (c) If the benefit levels required under Subsection (5)(b) exceed the benefit levels
735 provided under the group policy, the conversion policy may offer benefits which are
736 substantially similar to those provided under the group policy.
737 (6) Written application for the converted policy shall be made and the first premium
738 paid to the insurer no later than 60 days after termination of the group accident and health
739 insurance.
740 (7) The converted policy shall be issued without evidence of insurability.
741 (8) (a) The initial premium for the converted policy for the first 12 months and
742 subsequent renewal premiums shall be determined in accordance with premium rates
743 applicable to age, class of risk of the person, and the type and amount of insurance provided.
744 (b) The initial premium for the first 12 months may not be raised based on pregnancy
745 of a covered insured.
746 (c) The premium for converted policies shall be payable monthly or quarterly as
747 required by the insurer for the policy form and plan selected, unless another mode or premium
748 payment is mutually agreed upon.
749 (9) The converted policy becomes effective at the time the insurance under the group
750 policy terminates.
751 (10) (a) A newly issued converted policy covers the employee or the member and must
752 also cover all dependents covered by the group policy at the date of termination of the group
753 coverage.
754 (b) The only dependents that may be added after the policy has been issued are
755 children and dependents as required by Section 31A-22-610 and Subsections 31A-22-610.5 (6)
756 and (7).
757 (c) At the option of the insurer, a separate converted policy may be issued to cover any
758 dependent.

759 (11) (a) To the extent the group policy provided maternity benefits, the conversion
760 policy shall provide maternity benefits equal to the lesser of the maternity benefits of the group
761 policy or the conversion policy until termination of a pregnancy that exists on the date of
762 conversion if one of the following is pregnant on the date of the conversion:
763 (i) the insured;
764 (ii) a spouse of the insured; or
765 (iii) a dependent of the insured.
766 (b) The requirements of this Subsection (11) do not apply to a pregnancy that occurs
767 after the date of conversion.
768 (12) Except as provided in this Subsection (12), a converted policy is renewable with
769 respect to all individuals or dependents at the option of the insured. An insured may be
770 terminated from a converted policy for the following reasons:
771 (a) a dependent is no longer eligible under the policy;
772 (b) for a network plan, if the individual no longer lives, resides, or works in:
773 (i) the insured's service area; or
774 (ii) the area for which the covered carrier is authorized to do business;
775 (c) the individual fails to pay premiums or contributions in accordance with the terms
776 of the converted policy, including any timeliness requirements;
777 (d) the individual performs an act or practice that constitutes fraud in connection with
778 the coverage;
779 (e) the individual makes an intentional misrepresentation of material fact under the
780 terms of the coverage; or
781 (f) coverage is terminated uniformly without regard to any health status-related factor
782 relating to any covered individual.
783 (13) Conditions pertaining to health may not be used as a basis for classification under
784 this section.
785 Section 7. Section 31A-22-724 is enacted to read:
786 31A-22-724. Offer of alternative coverage -- Utah NetCare Plan.

787 (1) For purposes of this section, "alternative coverage" means:
788 (a) the high deductible or low deductible Utah NetCare Plan described in Subsection
789 (2) for conversion policies offered under Section 31A-22-723 ; and
790 (b) the high deductible and low deductible Utah NetCare Plans described in
791 Subsection (2) as an alternative to COBRA and mini-COBRA policies offered under Section
792 31A-22-722 .
793 (2) The Utah NetCare Plans shall include:
794 (a) healthy lifestyle and wellness incentives;
795 (b) the benefits described in this Subsection (2) or at least the actuarial equivalent of
796 the benefits described in this Subsection (2);
797 (c) a lifetime maximum benefit per person of not less than $1,000,000;
798 (d) an annual maximum benefit per person of not less than $250,000;
799 (e) the following deductibles:
800 (i) for the low deductible plans:
801 (A) $2,000 for an individual plan;
802 (B) $4,000 for a two party plan; and
803 (C) $6,000 for a family plan;
804 (ii) for the high deductible plans:
805 (A) $4,000 for an individual plan;
806 (B) $8,000 for a two party plan; and
807 (C) $12,000 for a family plan;
808 (f) the following out-of-pocket maximum costs, including deductibles, copayments,
809 and coinsurance:
810 (i) for the low deductible plans:
811 (A) $5,000 for an individual plan;
812 (B) $10,000 for a two party plan; and
813 (C) $15,000 for a family plan; and
814 (ii) for the high deductible plan:

815 (A) $10,000 for an individual plan;
816 (B) $20,000 for a two party plan; and
817 (C) $30,000 for a family plan;
818 (g) the following benefits before applying any deductible requirements and in
819 accordance with IRC Section 223:
820 (i) all well child exams and immunizations up to age five, with no annual maximum;
821 (ii) preventive care up to a $500 annual maximum;
822 (iii) primary care and specialist and urgent care not covered under Subsection (2)(g)(i)
823 or (ii) up to a $300 annual maximum; and
824 (iv) supplemental accident coverage up to a $500 annual maximum;
825 (h) the following copayments for each exam:
826 (i) $15 for preventive care and well child exams;
827 (ii) $25 for primary care; and
828 (iii) $50 for urgent care and specialist care;
829 (i) a $200 copayment for emergency room visits after applying the deductible;
830 (j) no more than a 30% coinsurance after deductible for covered plan benefits for
831 hospital services, maternity, laboratory work, x-rays, radiology, outpatient surgery services,
832 injectable medications not otherwise covered under a pharmacy benefit, durable medical
833 equipment, ambulance services, in-patient mental health services, and out-patient mental
834 health services; and
835 (k) the following cost-sharing features for prescription drugs:
836 (i) up to a $15 copayment for generic drugs;
837 (ii) up to a 50% coinsurance for name brand drugs; and
838 (iii) may include formularies and preferred drug lists.
839 (3) The Utah NetCare Plans may exclude:
840 (a) the benefit mandates described in Subsections 31A-22-618.5 (2)(b) and (3)(b); and
841 (b) unless required by federal law, mandated coverage required by the following
842 sections and related administrative rules:

843 (i) Section 31A-22-610.1 , Adoption indemnity benefits;
844 (ii) Section 31A-22-623 , Inborn metabolic errors;
845 (iii) Section 31A-22-624 , Primary care physicians;
846 (iv) Section 31A-22-626 , Coverage of diabetes;
847 (v) Section 31A-22-628 , Standing referral to a specialist; and
848 (vi) coverage mandates enacted after January 1, 2009 that are not required by federal
849 law.
850 (4) (a) Beginning January 1, 2010, and except as provided in Subsection (5), a person
851 may elect alternative coverage under this section if the person:
852 (i) is eligible for continuation of employer group coverage under federal COBRA
853 laws;
854 (ii) is eligible for continuation of employer group coverage under state mini-COBRA
855 under Section 31A-22-722 ; or
856 (iii) is eligible for a conversion to an individual plan after the exhaustion of benefits
857 under:
858 (A) alternative coverage elected in place of federal COBRA; or
859 (B) state mini-COBRA under Section 31A-22-722 .
860 (b) The right to extend coverage under Subsection (4)(a) applies to any spouse or
861 dependent coverages, including a surviving spouse or dependent whose coverage under the
862 policy terminates by reason of the death of the employee or member.
863 (5) If a person elects federal COBRA coverage, or state mini-COBRA coverage under
864 Section 31A-22-722 , the person is not eligible to elect alternative coverage under this section
865 until the person is eligible to convert coverage to an individual policy under the provisions of
866 Section 31A-22-723 and Subsection (1)(a).
867 (6) (a) If the alternative coverage is selected as an alternative to COBRA or
868 mini-COBRA under Section 31A-22-722 , the provisions of Section 31A-22-722 apply to the
869 alternative coverage.
870 (b) If the alternative coverage is selected as a conversion policy under Section

871 31A-22-723 , the provisions of Section 31A-22-723 apply.
872 (7) (a) An insurer subject to Sections 31A-22-722 through 31A-22-724 shall, prior to
873 September 1, 2009, file an alternative coverage policy with the department in accordance with
874 Sections 31A-21-201 and 31A-21-201.1 .
875 (b) The department shall, by November 1, 2009, adopt administrative rules in
876 accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, to develop a
877 model letter for employers to use to notify an employee of the employee's options for
878 alternative coverage.
879 Section 8. Section 31A-23a-401 is amended to read:
880 31A-23a-401. Disclosure of conflicting interests.
881 (1) (a) Except as provided under Subsection (1)(b):
882 (i) a licensee under this chapter may not act in the same or any directly related
883 transaction as:
884 (A) a producer for the insured or consultant; and
885 (B) producer for the insurer; and
886 (ii) a producer for the insured or consultant may not recommend or encourage the
887 purchase of insurance from or through an insurer or other producer:
888 (A) of which the producer for the insured or consultant or producer for the insured's or
889 consultant's spouse is an owner, executive, or employee; or
890 (B) to which the producer for the insured or consultant has the type of relation that a
891 material benefit would accrue to the producer for the insured or consultant or spouse as a
892 result of the purchase.
893 (b) Subsection (1)(a) does not apply if the following three conditions are met:
894 (i) Prior to performing the consulting services, the producer for the insured or
895 consultant shall disclose to the client, prominently, in writing:
896 (A) the producer for the insured's or consultant's interest as a producer for the insurer,
897 or the relationship to an insurer or other producer; and
898 (B) that as a result of those interests, the producer for the insured's or the consultant's

899 recommendations should be given appropriate scrutiny.
900 (ii) The producer for the insured's or consultant's fee shall be agreed upon, in writing,
901 after the disclosure required under Subsection (1)(b)(i), but before performing the requested
902 services.
903 (iii) Any report resulting from requested services shall contain a copy of the disclosure
904 made under Subsection (1)(b)(i).
905 (2) A licensee under this chapter may not act as to the same client as both a producer
906 for the insurer and a producer for the insured without the client's prior written consent based
907 on full disclosure.
908 (3) Whenever a person applies for insurance coverage through a producer for the
909 insured, the producer for the insured shall disclose to the applicant, in writing, that the
910 producer for the insured is not the producer for the insurer or the potential insurer. This
911 disclosure shall also inform the applicant that the applicant likely does not have the benefit of
912 an insurer being financially responsible for the conduct of the producer for the insured.
913 (4) If a licensee is subject to both this section and Subsection 31A-23a-501 (4), the
914 licensee shall provide the disclosure required under each statute.
915 Section 9. Section 31A-23a-501 is amended to read:
916 31A-23a-501. Licensee compensation.
917 (1) As used in this section:
918 (a) "Commission compensation" includes funds paid to or credited for the benefit of a
919 licensee from:
920 (i) commission amounts deducted from insurance premiums on insurance sold by or
921 placed through the licensee; or
922 (ii) commission amounts received from an insurer or another licensee as a result of the
923 sale or placement of insurance.
924 (b) (i) "Compensation from an insurer or third party administrator" means
925 commissions, fees, awards, overrides, bonuses, contingent commissions, loans, stock options,
926 gifts, prizes, or any other form of valuable consideration:

927 (A) whether or not payable pursuant to a written agreement; and
928 (B) received from:
929 (I) an insurer; or
930 (II) a third party to the transaction for the sale or placement of insurance.
931 (ii) "Compensation from an insurer or third party administrator" does not mean
932 compensation from a customer that is:
933 (A) a fee or pass-through costs as provided in Subsection (1)(e); or
934 (B) a fee or amount collected by or paid to the producer that does not exceed an
935 amount established by the commissioner by administrative rule.
936 (c) (i) "Customer" means:
937 (A) the person signing the application or submission for insurance; or
938 (B) the authorized representative of the insured actually negotiating the placement of
939 insurance with the producer.
940 (ii) "Customer" does not mean a person who is a participant or beneficiary of:
941 (A) an employee benefit plan; or
942 (B) a group or blanket insurance policy or group annuity contract sold, solicited, or
943 negotiated by the producer or affiliate.
944 [(b)] (d) (i) "Noncommission compensation" includes all funds paid to or credited for
945 the benefit of a licensee other than commission compensation.
946 (ii) "Noncommission compensation" does not include charges for pass-through costs
947 incurred by the licensee in connection with obtaining, placing, or servicing an insurance
948 policy.
949 [(c)] (e) "Pass-through costs" include:
950 (i) costs for copying documents to be submitted to the insurer; and
951 (ii) bank costs for processing cash or credit card payments.
952 (2) A licensee may receive from an insured or from a person purchasing an insurance
953 policy, noncommission compensation if the noncommission compensation is stated on a
954 separate, written disclosure.

955 (a) The disclosure required by this Subsection (2) shall:
956 (i) include the signature of the insured or prospective insured acknowledging the
957 noncommission compensation;
958 (ii) clearly specify the amount or extent of the noncommission compensation; and
959 (iii) be provided to the insured or prospective insured before the performance of the
960 service.
961 (b) Noncommission compensation shall be:
962 (i) limited to actual or reasonable expenses incurred for services; and
963 (ii) uniformly applied to all insureds or prospective insureds in a class or classes of
964 business or for a specific service or services.
965 (c) A copy of the signed disclosure required by this Subsection (2) must be maintained
966 by any licensee who collects or receives the noncommission compensation or any portion
967 [thereof] of the noncommission compensation.
968 (d) All accounting records relating to noncommission compensation shall be
969 maintained by the person described in Subsection (2)(c) in a manner that facilitates an audit.
970 (3) (a) A licensee may receive noncommission compensation when acting as a
971 producer for the insured in connection with the actual sale or placement of insurance if:
972 (i) the producer and the insured have agreed on the producer's noncommission
973 compensation; and
974 (ii) the producer has disclosed to the insured the existence and source of any other
975 compensation that accrues to the producer as a result of the transaction.
976 (b) The disclosure required by this Subsection (3) shall:
977 (i) include the signature of the insured or prospective insured acknowledging the
978 noncommission compensation;
979 (ii) clearly specify the amount or extent of the noncommission compensation and the
980 existence and source of any other compensation; and
981 (iii) be provided to the insured or prospective insured before the performance of the
982 service.

983 (c) The following additional noncommission compensation is authorized:
984 (i) compensation received by a producer of a compensated corporate surety who under
985 procedures approved by a rule or order of the commissioner is paid by surety bond principal
986 debtors for extra services;
987 (ii) compensation received by an insurance producer who is also licensed as a public
988 adjuster under Section 31A-26-203 , for services performed for an insured in connection with a
989 claim adjustment, so long as the producer does not receive or is not promised compensation
990 for aiding in the claim adjustment prior to the occurrence of the claim;
991 (iii) compensation received by a consultant as a consulting fee, provided the
992 consultant complies with the requirements of Section 31A-23a-401 ; or
993 (iv) other compensation arrangements approved by the commissioner after a finding
994 that they do not violate Section 31A-23a-401 and are not harmful to the public.
995 (4) (a) For purposes of this Subsection (4), "producer" includes:
996 (i) a producer;
997 (ii) an affiliate of a producer; or
998 (iii) a consultant.
999 (b) Beginning January 1, 2010, in addition to any other disclosures required by this
1000 section, a producer may not accept or receive any compensation from an insurer or third party
1001 administrator for the placement of a health benefit plan, other than a hospital confinement
1002 indemnity policy, unless prior to the customer's purchase of the health benefit plan the
1003 producer:
1004 (i) except as provided in Subsection (4)(c), discloses in writing to the customer that
1005 the producer will receive compensation from the insurer or third party administrator for the
1006 placement of insurance, including the amount or type of compensation known to the producer
1007 at the time of the disclosure; and
1008 (ii) except as provided in Subsection (4)(c):
1009 (A) obtains the customer's signed acknowledgment that the disclosure under
1010 Subsection (4)(b)(i) was made to the customer; or

1011 (B) certifies to the insurer that the disclosure required by Subsection (4)(b)(i) was
1012 made to the customer.
1013 (c) If the compensation to the producer from an insurer or third party administrator is
1014 for the renewal of health care insurance, once the producer has made an initial disclosure that
1015 complies with Subsection (4)(b), the producer does not have to disclose compensation
1016 received for the subsequent yearly renewals in accordance with Subsection (4)(b) until the
1017 renewal period immediately following 36 months after the initial disclosure.
1018 (d) (i) A copy of the signed acknowledgment required by Subsection (4)(b) must be
1019 maintained by the licensee who collects or receives any part of the compensation from an
1020 insurer or third party administrator in a manner that facilitates an audit.
1021 (ii) The standard application developed in accordance with Section 31A-22-635 shall
1022 include a place for a producer to provide the disclosure required by Subsection (4), and if
1023 completed, shall satisfy the requirement of Subsection (4)(d)(i).
1024 (e) Subsection (4)(b)(ii) does not apply to:
1025 (i) a person licensed as a producer who acts only as an intermediary between an
1026 insurer and the customer's producer, including a managing general agent; or
1027 (ii) the placement of insurance in a secondary or residual market.
1028 [(4)] (5) This section does not alter the right of any licensee to recover from an insured
1029 the amount of any premium due for insurance effected by or through that licensee or to charge
1030 a reasonable rate of interest upon past-due accounts.
1031 [(5)] (6) This section does not apply to bail bond producers or bail enforcement agents
1032 as defined in Section 31A-35-102 .
1033 Section 10. Section 31A-30-102 is amended to read:
1034 Part 1. Individual and Small Employer Group
1035 31A-30-102. Purpose statement.
1036 The purpose of this chapter is to:
1037 (1) prevent abusive rating practices;
1038 (2) require disclosure of rating practices to purchasers;

1039 (3) establish rules regarding:
1040 (a) a universal individual and small group application; and
1041 (b) renewability of coverage;
1042 (4) improve the overall fairness and efficiency of the individual and small group
1043 insurance market; [and]
1044 (5) provide increased access for individuals and small employers to health
1045 insurance[.]; and
1046 (6) provide an employer with the opportunity to establish a defined contribution
1047 arrangement for an employee to purchase a health benefit plan through the Internet portal
1048 created by Section 63M-1-2504 .
1049 Section 11. Section 31A-30-103 is amended to read:
1050 31A-30-103. Definitions.
1051 As used in this chapter:
1052 (1) "Actuarial certification" means a written statement by a member of the American
1053 Academy of Actuaries or other individual approved by the commissioner that a covered carrier
1054 is in compliance with Section 31A-30-106 , based upon the examination of the covered carrier,
1055 including review of the appropriate records and of the actuarial assumptions and methods used
1056 by the covered carrier in establishing premium rates for applicable health benefit plans.
1057 (2) "Affiliate" or "affiliated" means any entity or person who directly or indirectly
1058 through one or more intermediaries, controls or is controlled by, or is under common control
1059 with, a specified entity or person.
1060 (3) "Base premium rate" means, for each class of business as to a rating period, the
1061 lowest premium rate charged or that could have been charged under a rating system for that
1062 class of business by the covered carrier to covered insureds with similar case characteristics
1063 for health benefit plans with the same or similar coverage.
1064 (4) "Basic coverage" means the coverage provided in the Basic Health Care Plan
1065 under [Subsection] Section 31A-22-613.5 [(2)].
1066 (5) "Carrier" means any person or entity that provides health insurance in this state

1067 including:
1068 (a) an insurance company;
1069 (b) a prepaid hospital or medical care plan;
1070 (c) a health maintenance organization;
1071 (d) a multiple employer welfare arrangement; and
1072 (e) any other person or entity providing a health insurance plan under this title.
1073 (6) (a) Except as provided in Subsection (6)(b), "case characteristics" means
1074 demographic or other objective characteristics of a covered insured that are considered by the
1075 carrier in determining premium rates for the covered insured.
1076 (b) "Case characteristics" do not include:
1077 (i) duration of coverage since the policy was issued;
1078 (ii) claim experience; and
1079 (iii) health status.
1080 (7) "Class of business" means all or a separate grouping of covered insureds
1081 established under Section 31A-30-105 .
1082 (8) "Conversion policy" means a policy providing coverage under the conversion
1083 provisions required in Chapter 22, Part 7, Group Accident and Health Insurance.
1084 (9) "Covered carrier" means any individual carrier or small employer carrier subject to
1085 this chapter.
1086 (10) "Covered individual" means any individual who is covered under a health benefit
1087 plan subject to this chapter.
1088 (11) "Covered insureds" means small employers and individuals who are issued a
1089 health benefit plan that is subject to this chapter.
1090 (12) "Dependent" means an individual to the extent that the individual is defined to be
1091 a dependent by:
1092 (a) the health benefit plan covering the covered individual; and
1093 (b) Chapter 22, Part 6, Accident and Health Insurance.
1094 (13) "Established geographic service area" means a geographical area approved by the

1095 commissioner within which the carrier is authorized to provide coverage.
1096 (14) "Index rate" means, for each class of business as to a rating period for covered
1097 insureds with similar case characteristics, the arithmetic average of the applicable base
1098 premium rate and the corresponding highest premium rate.
1099 (15) "Individual carrier" means a carrier that provides coverage on an individual basis
1100 through a health benefit plan regardless of whether:
1101 (a) coverage is offered through:
1102 (i) an association;
1103 (ii) a trust;
1104 (iii) a discretionary group; or
1105 (iv) other similar groups; or
1106 (b) the policy or contract is situated out-of-state.
1107 (16) "Individual conversion policy" means a conversion policy issued to:
1108 (a) an individual; or
1109 (b) an individual with a family.
1110 (17) "Individual coverage count" means the number of natural persons covered under a
1111 carrier's health benefit products that are individual policies.
1112 (18) "Individual enrollment cap" means the percentage set by the commissioner in
1113 accordance with Section 31A-30-110 .
1114 (19) "New business premium rate" means, for each class of business as to a rating
1115 period, the lowest premium rate charged or offered, or that could have been charged or offered,
1116 by the carrier to covered insureds with similar case characteristics for newly issued health
1117 benefit plans with the same or similar coverage.
1118 (20) "Plan year" means the year that is designated as the plan year in the plan
1119 document of a group health plan, except that if the plan document does not designate a plan
1120 year or if there is not a plan document, the plan year is:
1121 (a) the deductible or limit year used under the plan;
1122 (b) if the plan does not impose a deductible or limit on a yearly basis, the policy year;

1123 (c) if the plan does not impose a deductible or limit on a yearly basis and either the
1124 plan is not insured or the insurance policy is not renewed on an annual basis, the employer's
1125 taxable year; or
1126 (d) in any case not described in Subsections (20)(a) through (c), the calendar year.
1127 (21) "Preexisting condition" is as defined in Section 31A-1-301 .
1128 (22) "Premium" means all monies paid by covered insureds and covered individuals as
1129 a condition of receiving coverage from a covered carrier, including any fees or other
1130 contributions associated with the health benefit plan.
1131 (23) (a) "Rating period" means the calendar period for which premium rates
1132 established by a covered carrier are assumed to be in effect, as determined by the carrier.
1133 (b) A covered carrier may not have:
1134 (i) more than one rating period in any calendar month; and
1135 (ii) no more than 12 rating periods in any calendar year.
1136 (24) "Resident" means an individual who has resided in this state for at least 12
1137 consecutive months immediately preceding the date of application.
1138 (25) "Short-term limited duration insurance" means a health benefit product that:
1139 (a) is not renewable; and
1140 (b) has an expiration date specified in the contract that is less than 364 days after the
1141 date the plan became effective.
1142 (26) "Small employer carrier" means a carrier that provides health benefit plans
1143 covering eligible employees of one or more small employers in this state, regardless of
1144 whether:
1145 (a) coverage is offered through:
1146 (i) an association;
1147 (ii) a trust;
1148 (iii) a discretionary group; or
1149 (iv) other similar grouping; or
1150 (b) the policy or contract is situated out-of-state.

1151 (27) "Uninsurable" means an individual who:
1152 (a) is eligible for the Comprehensive Health Insurance Pool coverage under the
1153 underwriting criteria established in Subsection 31A-29-111 (5); or
1154 (b) (i) is issued a certificate for coverage under Subsection 31A-30-108 (3); and
1155 (ii) has a condition of health that does not meet consistently applied underwriting
1156 criteria as established by the commissioner in accordance with Subsections 31A-30-106 (1)(i)
1157 and (j) for which coverage the applicant is applying.
1158 (28) "Uninsurable percentage" for a given calendar year equals UC/CI where, for
1159 purposes of this formula:
1160 (a) "CI" means the carrier's individual coverage count as of December 31 of the
1161 preceding year; and
1162 (b) "UC" means the number of uninsurable individuals who were issued an individual
1163 policy on or after July 1, 1997.
1164 Section 12. Section 31A-30-104 is amended to read:
1165 31A-30-104. Applicability and scope.
1166 (1) This chapter applies to any:
1167 (a) health benefit plan that provides coverage to:
1168 (i) individuals;
1169 (ii) small employers; or
1170 (iii) both Subsections (1)(a)(i) and (ii); or
1171 (b) individual conversion policy for purposes of Sections 31A-30-106.5 and
1172 31A-30-107.5 .
1173 (2) This chapter applies to a health benefit plan that provides coverage to small
1174 employers or individuals regardless of:
1175 (a) whether the contract is issued to:
1176 (i) an association;
1177 (ii) a trust;
1178 (iii) a discretionary group; or

1179 (iv) other similar grouping; or
1180 (b) the situs of delivery of the policy or contract.
1181 (3) This chapter does not apply to:
1182 (a) a large employer health benefit plan, except as specifically provided in Part 2,
1183 Defined Contribution Arrangements;
1184 (b) short-term limited duration health insurance; or
1185 (c) federally funded or partially funded programs.
1186 (4) (a) Except as provided in Subsection (4)(b), for the purposes of this chapter:
1187 (i) carriers that are affiliated companies or that are eligible to file a consolidated tax
1188 return shall be treated as one carrier; and
1189 (ii) any restrictions or limitations imposed by this chapter shall apply as if all health
1190 benefit plans delivered or issued for delivery to covered insureds in this state by the affiliated
1191 carriers were issued by one carrier.
1192 (b) Upon a finding of the commissioner, an affiliated carrier that is a health
1193 maintenance organization having a certificate of authority under this title may be considered to
1194 be a separate carrier for the purposes of this chapter.
1195 (c) Unless otherwise authorized by the commissioner or by Chapter 42, Defined
1196 Contribution Risk Adjuster Act, a covered carrier may not enter into one or more ceding
1197 arrangements with respect to health benefit plans delivered or issued for delivery to covered
1198 insureds in this state if the ceding arrangements would result in less than 50% of the insurance
1199 obligation or risk for the health benefit plans being retained by the ceding carrier.
1200 (d) Section 31A-22-1201 applies if a covered carrier cedes or assumes all of the
1201 insurance obligation or risk with respect to one or more health benefit plans delivered or
1202 issued for delivery to covered insureds in this state.
1203 (5) (a) A Taft Hartley trust created in accordance with Section 302(c)(5) of the Federal
1204 Labor Management Relations Act, or a carrier with the written authorization of such a trust,
1205 may make a written request to the commissioner for a waiver from the application of any of
1206 the provisions of Subsection 31A-30-106 (1) with respect to a health benefit plan provided to

1207 the trust.
1208 (b) The commissioner may grant a trust or carrier described in Subsection (5)(a) a
1209 waiver if the commissioner finds that application with respect to the trust would:
1210 (i) have a substantial adverse effect on the participants and beneficiaries of the trust;
1211 and
1212 (ii) require significant modifications to one or more collective bargaining
1213 arrangements under which the trust is established or maintained.
1214 (c) A waiver granted under this Subsection (5) may not apply to an individual if the
1215 person participates in a Taft Hartley trust as an associate member of any employee
1216 organization.
1217 (6) Sections 31A-30-106 , 31A-30-106.5 , 31A-30-106.7 , 31A-30-107 , 31A-30-108 ,
1218 and 31A-30-111 apply to:
1219 (a) any insurer engaging in the business of insurance related to the risk of a small
1220 employer for medical, surgical, hospital, or ancillary health care expenses of the small
1221 employer's employees provided as an employee benefit; and
1222 (b) any contract of an insurer, other than a workers' compensation policy, related to the
1223 risk of a small employer for medical, surgical, hospital, or ancillary health care expenses of the
1224 small employer's employees provided as an employee benefit.
1225 (7) The commissioner may make rules requiring that the marketing practices be
1226 consistent with this chapter for:
1227 (a) a small employer carrier;
1228 (b) a small employer carrier's agent;
1229 (c) an insurance producer; and
1230 (d) an insurance consultant.
1231 Section 13. Section 31A-30-107 is amended to read:
1232 31A-30-107. Renewal -- Limitations -- Exclusions -- Discontinuance and
1233 nonrenewal.
1234 (1) Except as otherwise provided in this section, a small employer health benefit plan

1235 is renewable and continues in force:
1236 (a) with respect to all eligible employees and dependents; and
1237 (b) at the option of the plan sponsor.
1238 (2) A small employer health benefit plan may be discontinued or nonrenewed:
1239 (a) for a network plan, if:
1240 (i) there is no longer any enrollee under the group health plan who lives, resides, or
1241 works in:
1242 (A) the service area of the covered carrier; or
1243 (B) the area for which the covered carrier is authorized to do business; and
1244 (ii) in the case of the small employer market, the small employer carrier applies the
1245 same criteria the small employer carrier would apply in denying enrollment in the plan under
1246 Subsection 31A-30-108 (7); or
1247 (b) for coverage made available in the small or large employer market only through an
1248 association, if:
1249 (i) the employer's membership in the association ceases; and
1250 (ii) the coverage is terminated uniformly without regard to any health status-related
1251 factor relating to any covered individual.
1252 (3) A small employer health benefit plan may be discontinued if:
1253 (a) a condition described in Subsection (2) exists;
1254 (b) except as prohibited by Section 31A-30-206 , the plan sponsor fails to pay
1255 premiums or contributions in accordance with the terms of the contract;
1256 (c) the plan sponsor:
1257 (i) performs an act or practice that constitutes fraud; or
1258 (ii) makes an intentional misrepresentation of material fact under the terms of the
1259 coverage;
1260 (d) the covered carrier:
1261 (i) elects to discontinue offering a particular small employer health benefit product
1262 delivered or issued for delivery in this state; and

1263 (ii) (A) provides notice of the discontinuation in writing:
1264 (I) to each plan sponsor, employee, or dependent of a plan sponsor or an employee;
1265 and
1266 (II) at least 90 days before the date the coverage will be discontinued;
1267 (B) provides notice of the discontinuation in writing:
1268 (I) to the commissioner; and
1269 (II) at least three working days prior to the date the notice is sent to the affected plan
1270 sponsors, employees, and dependents of the plan sponsors or employees;
1271 (C) offers to each plan sponsor, on a guaranteed issue basis, the option to purchase all
1272 other small employer health benefit products currently being offered by the small employer
1273 carrier in the market; and
1274 (D) in exercising the option to discontinue that product and in offering the option of
1275 coverage in this section, acts uniformly without regard to:
1276 (I) the claims experience of a plan sponsor;
1277 (II) any health status-related factor relating to any covered participant or beneficiary;
1278 or
1279 (III) any health status-related factor relating to any new participant or beneficiary who
1280 may become eligible for the coverage; or
1281 (e) the covered carrier:
1282 (i) elects to discontinue all of the covered carrier's small employer health benefit plans
1283 in:
1284 (A) the small employer market;
1285 (B) the large employer market; or
1286 (C) both the small employer and large employer markets; and
1287 (ii) (A) provides notice of the discontinuation in writing:
1288 (I) to each plan sponsor, employee, or dependent of a plan sponsor or an employee;
1289 and
1290 (II) at least 180 days before the date the coverage will be discontinued;

1291 (B) provides notice of the discontinuation in writing:
1292 (I) to the commissioner in each state in which an affected insured individual is known
1293 to reside; and
1294 (II) at least 30 working days prior to the date the notice is sent to the affected plan
1295 sponsors, employees, and the dependents of the plan sponsors or employees;
1296 (C) discontinues and nonrenews all plans issued or delivered for issuance in the
1297 market; and
1298 (D) provides a plan of orderly withdrawal as required by Section 31A-4-115 .
1299 (4) A small employer health benefit plan may be discontinued or nonrenewed:
1300 (a) if a condition described in Subsection (2) exists; or
1301 (b) except as prohibited by Section 31A-30-206 , for noncompliance with the insurer's
1302 employer contribution requirements.
1303 (5) A small employer health benefit plan may be nonrenewed:
1304 (a) if a condition described in Subsection (2) exists; or
1305 (b) except as prohibited by Section 31A-30-206 , for noncompliance with the insurer's
1306 minimum participation requirements.
1307 (6) (a) Except as provided in Subsection (6)(d), an eligible employee may be
1308 discontinued if after issuance of coverage the eligible employee:
1309 (i) engages in an act or practice that constitutes fraud in connection with the coverage;
1310 or
1311 (ii) makes an intentional misrepresentation of material fact in connection with the
1312 coverage.
1313 (b) An eligible employee that is discontinued under Subsection (6)(a) may reenroll:
1314 (i) 12 months after the date of discontinuance; and
1315 (ii) if the plan sponsor's coverage is in effect at the time the eligible employee applies
1316 to reenroll.
1317 (c) At the time the eligible employee's coverage is discontinued under Subsection
1318 (6)(a), the covered carrier shall notify the eligible employee of the right to reenroll when

1319 coverage is discontinued.
1320 (d) An eligible employee may not be discontinued under this Subsection (6) because
1321 of a fraud or misrepresentation that relates to health status.
1322 (7) For purposes of this section, a reference to "plan sponsor" includes a reference to
1323 the employer:
1324 (a) with respect to coverage provided to an employer member of the association; and
1325 (b) if the small employer health benefit plan is made available by a covered carrier in
1326 the employer market only through:
1327 (i) an association;
1328 (ii) a trust; or
1329 (iii) a discretionary group.
1330 (8) A covered carrier may modify a small employer health benefit plan only:
1331 (a) at the time of coverage renewal; and
1332 (b) if the modification is effective uniformly among all plans with that product.
1333 Section 14. Section 31A-30-109 is amended to read:
1334 31A-30-109. Health benefit plan choices.
1335 (1) An individual carrier who offers individual coverage pursuant to Section
1336 31A-30-108 :
1337 (a) shall offer in the individual market under this chapter:
1338 (i) a choice of coverage that is at least equal to or greater than basic coverage[.]; and
1339 (ii) beginning January 1, 2010, the Utah NetCare Plan described in Subsection
1340 31A-22-724 (2); and
1341 (b) may offer a choice of coverage that:
1342 (i) costs less than or equal to the plan described in Subsection (1)(a)(ii); and
1343 (ii) excludes some or all of the mandates described in Subsection 31A-22-724 (3).
1344 (2) Beginning January 1, 2010, a small employer group carrier who offers small
1345 employer group coverage pursuant to Section 31A-30-108 :
1346 (a) shall offer in the small employer group market under this part:

1347 (i) a choice of coverage that is at least equal to or greater than basic coverage; and
1348 (ii) coverage under the Utah NetCare Plan described in Section 31A-22-724 ; and
1349 (b) may offer in the small employer group market under this part, a choice of coverage
1350 that:
1351 (i) costs less than or equal to the coverage in Subsection (2)(a); and
1352 (ii) excludes some or all of the mandates described in Subsection 31A-22-724 (3).
1353 (3) Nothing in this section limits the number of health benefit plans an insurer may
1354 offer.
1355 Section 15. Section 31A-30-112 is amended to read:
1356 31A-30-112. Employee participation levels.
1357 (1) (a) Except as provided in Subsection (2) and Section 31A-30-206 , a requirement
1358 used by a covered carrier in determining whether to provide coverage to a small employer,
1359 including a requirement for minimum participation of eligible employees and minimum
1360 employer contributions, shall be applied uniformly among all small employers with the same
1361 number of eligible employees applying for coverage or receiving coverage from the covered
1362 carrier.
1363 (b) In addition to applying Subsection 31A-1-301 (121), a covered carrier may require
1364 that a small employer have a minimum of two eligible employees to meet participation
1365 requirements.
1366 (2) A covered carrier may not increase a requirement for minimum employee
1367 participation or a requirement for minimum employer contribution applicable to a small
1368 employer at any time after the small employer is accepted for coverage.
1369 Section 16. Section 31A-30-201 is enacted to read:
1370 Part 2. Defined Contribution Arrangements
1371 31A-30-201. Title.
1372 This part is known as "Defined Contribution Arrangements."
1373 Section 17. Section 31A-30-202 is enacted to read:
1374 31A-30-202. Definitions.

1375 For purposes of this part:
1376 (1) "Defined contribution arrangement" means a defined contribution arrangement
1377 employer group health benefit plan that:
1378 (a) complies with this part; and
1379 (b) is sold through the Internet portal in accordance with Title 63M, Chapter 1, Part
1380 25, Health System Reform Act.
1381 (2) "Health reimbursement arrangement" means an employer provided health
1382 reimbursement arrangement in which reimbursements for medical care expenses are excluded
1383 from an employee's gross income under the Internal Revenue Code.
1384 (3) "Producer" is as defined in Subsection 31A-23a-501 (4)(a).
1385 (4) "Section 125 Cafeteria plan" means a flexible spending arrangement that qualifies
1386 under Section 125, Internal Revenue Code, which permits an employee to contribute pre-tax
1387 dollars to a health benefit plan.
1388 (5) "Small employer" is defined in Section 31A-1-301 .
1389 Section 18. Section 31A-30-203 is enacted to read:
1390 31A-30-203. Eligibility for defined contribution arrangement market --
1391 Enrollment.
1392 (1) (a) Beginning January 1, 2010, and during the open enrollment period described in
1393 Section 31A-30-208 , an eligible small employer may choose to participate in a defined
1394 contribution arrangement.
1395 (b) Beginning January 1, 2012, and during the open enrollment period described in
1396 Section 31A-30-208 , an eligible large employer may choose to participate in a defined
1397 contribution arrangement.
1398 (c) Defined contribution arrangement health benefit plans are employer group health
1399 plans individually selected by an employee of an employer.
1400 (2) (a) Participating insurers:
1401 (i) shall offer to accept all eligible employees of an employer described in Subsection
1402 (1), and their dependents, at the same level of benefits as anyone else who has the same health

1403 benefit plan in the defined contribution arrangement market; and
1404 (ii) may not impose a premium surcharge under Section 31A-30-106.7 in the defined
1405 contribution market.
1406 (b) A participating insurer may:
1407 (i) request an employer to submit a copy of the employer's quarterly wage list to
1408 determine whether the employees for whom coverage is provided or requested are bona fide
1409 employees of the employer; and
1410 (ii) deny or terminate coverage if the employer refuses to provide documentation
1411 requested under Subsection (2)(b)(i).
1412 Section 19. Section 31A-30-204 is enacted to read:
1413 31A-30-204. Employer responsibilities -- Defined contribution arrangements.
1414 (1) (a) (i) An employer described in Subsection 31A-30-203 (1) that chooses to
1415 participate in a defined contribution arrangement may not offer a major medical health benefit
1416 plan that is not a part of the defined contribution arrangement to an employee.
1417 (ii) Subsection (1)(a)(i) does not prohibit the offer of supplemental or limited benefit
1418 policies such as dental or vision coverage, or other types of federally qualified savings
1419 accounts for health care expenses.
1420 (b) (i) To the extent permitted by the risk adjustment plan adopted under Section
1421 31A-42-202 , the employer reserves the right to determine:
1422 (A) the criteria for employee eligibility, enrollment, and participation in the employer's
1423 health benefit plan; and
1424 (B) the amount of the employer's contribution to that plan.
1425 (ii) The determinations made under Subsection (1)(b) may only be changed during
1426 periods of open enrollment.
1427 (2) An employer that chooses to establish a defined contribution arrangement to
1428 provide a health benefit plan for its employees shall:
1429 (a) establish a mechanism for its employees to use pre-tax dollars to purchase a health
1430 benefit plan from the defined contribution arrangement market on the Internet portal created in

1431 Section 63M-1-2504 , which may include:
1432 (i) a health reimbursement arrangement;
1433 (ii) a Section 125 Cafeteria plan; or
1434 (iii) another plan or arrangement similar to Subsection (2)(a)(i) or (ii) which is
1435 excluded or deducted from gross income under the Internal Revenue Code;
1436 (b) by November 10 of the open enrollment period:
1437 (i) inform each employee of the health benefit plan the employer has selected as the
1438 default health benefit plan for the employer group;
1439 (ii) offer each employee a choice of any of the health benefit plans available through
1440 the defined contribution arrangement market on the Internet portal; and
1441 (iii) notify the employee that the employee will be enrolled in the default health benefit
1442 plan selected by the employer and payroll deductions initiated for premium payments, unless
1443 the employee, prior to November 25 of the open enrollment period:
1444 (A) notifies the employer that the employee has selected a different health benefit plan
1445 available through the defined contribution arrangement in the Internet portal;
1446 (B) provides proof of coverage from another health benefit plan; or
1447 (C) specifically declines coverage in a health benefit plan.
1448 (3) An employer shall enroll an employee in the default health benefit plan selected by
1449 the employer if the employee does not make one of the choices described in Subsection
1450 (2)(b)(ii) prior to November 25 of the open enrollment period.
1451 (4) The employer's notice to the employee under Subsection (2)(b)(iii) shall inform the
1452 employee that the failure to act under Subsections (2)(b)(iii)(A) through (C) is considered an
1453 affirmative election under pre-tax payroll deductions for the employer to begin payroll
1454 deductions for health benefit plan premiums.
1455 Section 20. Section 31A-30-205 is enacted to read:
1456 31A-30-205. Health benefit plans offered in the defined contribution market.
1457 (1) An insurer who chooses to offer a health benefit plan in the defined contribution
1458 market must offer the following:

1459 (a) one health benefit plan that:
1460 (i) is a federally qualified high deductible health plan;
1461 (ii) has the lowest deductible permitted for a federally qualified high deductible health
1462 plan as adjusted by federal law; and
1463 (iii) does not exceed annual out-of-pocket maximum equal to three times the amount
1464 of the annual deductible; and
1465 (b) one health benefit plan with benefits that have an actuarial value at least 15%
1466 greater that the plan described in Subsection (1)(a).
1467 (2) The provisions of Subsection (1) do not limit the number of health benefit plans an
1468 insurer may offer in the defined contribution market. An insurer who offers the health benefit
1469 plans required by Subsection (1) may also offer any other health benefit plan in the defined
1470 contribution market if the health benefit plan provides benefits that are actuarially richer than
1471 the benefits required in Subsection (1)(a).
1472 Section 21. Section 31A-30-206 is enacted to read:
1473 31A-30-206. Minimum participation and contribution levels -- Premium
1474 payments.
1475 An insurer who offers a health benefit plan for which an employer has established a
1476 defined contribution arrangement under the provisions of this part:
1477 (1) shall not:
1478 (a) establish an employer minimum contribution level for the health benefit plan
1479 premium under Section 31A-30-112 , or any other law; or
1480 (b) discontinue or non-renew a policy under Subsection 31A-30-107 (4) for failure to
1481 maintain a minimum employer contribution level;
1482 (2) shall accept premium payments for an enrollee from multiple sources through the
1483 Internet portal, including:
1484 (a) government assistance programs;
1485 (b) contributions from a Section 125 Cafeteria plan, a health reimbursement
1486 arrangement, or other qualified mechanism for pre-tax payments established by any employer

1487 of the enrollee;
1488 (c) contributions from a Section 125 Cafeteria plan, a health reimbursement
1489 arrangement, or other qualified mechanism for pre-tax payments established by an employer of
1490 a spouse or dependent of the enrollee; and
1491 (d) contributions from private sources of premium assistance; and
1492 (3) may require, as a condition of coverage, a minimum participation level for eligible
1493 employees of an employer, which for purposes of the defined contribution arrangement market
1494 may not exceed 75% participation.
1495 Section 22. Section 31A-30-207 is enacted to read:
1496 31A-30-207. Rating and underwriting restrictions for defined contribution
1497 market.
1498 (1) The rating and underwriting restrictions for the defined contribution market shall
1499 be established in accordance with the plan adopted under Chapter 42, Defined Contribution
1500 Risk Adjuster Act, and shall apply to employers who participate in the defined contribution
1501 arrangement market.
1502 (2) All insurers who participate in the defined contribution market must participate in
1503 the risk adjuster mechanism developed under Chapter 42, Defined Contribution Risk Adjuster
1504 Act.
1505 Section 23. Section 31A-30-208 is enacted to read:
1506 31A-30-208. Enrollment periods for the defined contribution market.
1507 (1) From November 1 to November 30 of each year, an insurer offering a product in
1508 the defined contribution market shall administer an open enrollment period for plans effective
1509 January 1 following the November open enrollment period, during which an eligible employee
1510 may enroll in a health benefit plan offered through the defined contribution market and may
1511 not be declined coverage.
1512 (2) (a) Except as provided in Subsection (4), the period of open enrollment is the time
1513 in which an insurer may:
1514 (i) enter or exit the defined contribution market;

1515 (ii) offer new or modify existing products in the defined contribution market; or
1516 (iii) withdraw products from the defined contribution market.
1517 (b) Ninety days prior to an open enrollment period under Subsection (1), an insurer
1518 shall notify the Internet portal and the risk adjuster board created in Chapter 42, Defined
1519 Contribution Risk Adjuster Act, regarding any of the events described in Subsection (2)(a).
1520 (3) An eligible employee may enroll in a health benefit plan offered in the defined
1521 contribution market and may not be declined coverage, at a time other than the annual open
1522 enrollment period for any of the circumstances recognized as permissible under federal tax
1523 law, provided the individual does so within 63 days of the permissible circumstance.
1524 (4) When an insurer elects to participate in the defined contribution market, the
1525 insurer shall participate in the defined contribution market for no less than two years.
1526 Section 24. Section 31A-42-101 is enacted to read:
1527 CHAPTER 42. DEFINED CONTRIBUTION RISK ADJUSTER ACT
1528 Part 1. General Provisions
1529 31A-42-101. Title.
1530 This chapter is known as the "Defined Contribution Risk Adjuster Act."
1531 Section 25. Section 31A-42-102 is enacted to read:
1532 31A-42-102. Definitions.
1533 As used in this chapter:
1534 (1) "Board" means the board of directors of the Utah Defined Contribution Risk
1535 Adjuster created in Section 31A-42-201 .
1536 (2) "Risk adjuster" means the defined contribution risk adjustment mechanism created
1537 in Section 31A-42-201 .
1538 Section 26. Section 31A-42-103 is enacted to read:
1539 31A-42-103. Applicability and scope.
1540 This chapter applies to a carrier as defined in Section 31A-30-103 who offers a health
1541 benefit plan in a defined contribution arrangement under Chapter 30, Part 2, Defined
1542 Contribution Arrangements.

1543 Section 27. Section 31A-42-201