S.B. 60 Enrolled

OPEN ENROLLMENT AMENDMENTS
1997 GENERAL SESSION
STATE OF UTAH
Sponsor: George Mantes
AN ACT RELATING TO INSURANCE; MODIFYING ELIGIBILITY REQUIREMENTS AND
PREMIUM RATES FOR COMPREHENSIVE HEALTH INSURANCE POOL;
AUTHORIZING THE ISSUANCE OF CERTIFICATES TO INDIVIDUALS WHOSE
HEALTH CONDITION DOES NOT MEET INSURANCE POOL CRITERIA;
REQUIRING INDIVIDUAL CARRIERS TO COVER INDIVIDUALS WHO PRESENT
A CERTIFICATE FROM INSURANCE POOL; AMENDING LAW TO REFLECT
FEDERAL CHANGES; AMENDING OPEN ENROLLMENT PROVISIONS;
ALLOWING INSURERS TO IMPOSE A 25% SURCHARGE IF A SMALL GROUP
CHANGES CARRIERS; AMENDING DEFINITIONS; MAKING TECHNICAL
CHANGES AND CONFORMING AMENDMENTS; PROVIDING AN EFFECTIVE
DATE; AND PROVIDING A COORDINATION CLAUSE.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
31A-2-212, as enacted by Chapter 242, Laws of Utah 1985
31A-29-111, as last amended by Chapter 321, Laws of Utah 1995
31A-29-112, as enacted by Chapter 232, Laws of Utah 1990
31A-29-117, as enacted by Chapter 232, Laws of Utah 1990
31A-29-120, as last amended by Chapter 20, Laws of Utah 1995
31A-30-102, as last amended by Chapter 321, Laws of Utah 1995
31A-30-103, as last amended by Chapter 243, Laws of Utah 1996
31A-30-104, as last amended by Chapter 321, Laws of Utah 1995
31A-30-106, as last amended by Chapter 321, Laws of Utah 1995
31A-30-107, as last amended by Chapter 321, Laws of Utah 1995
31A-30-108, as enacted by Chapter 321, Laws of Utah 1995
31A-30-109, as enacted by Chapter 321, Laws of Utah 1995

31A-30-110, as enacted by Chapter 321, Laws of Utah 1995
ENACTS:
31A-30-106.6, Utah Code Annotated 1953
31A-30-106.7, Utah Code Annotated 1953
REPEALS AND REENACTS:
31A-29-115, as enacted by Chapter 232, Laws of Utah 1990
REPEALS:
31A-30-113, as enacted by Chapter 321, Laws of Utah 1995
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 31A-2-212 is amended to read:
31A-2-212. Miscellaneous duties.
(1) Upon issuance of any order limiting, suspending, or revoking an insurer's authority to
do business in Utah, and on institution of any proceedings against the insurer under Chapter 27, the
commissioner shall notify by mail all agents of the insurer of whom the commissioner has record.
The commissioner may also publish notice of the order in any manner he considers necessary to
protect the rights of the public.
(2) When required for evidence in any legal proceeding, the commissioner shall furnish a
certificate of the authority of any licensee to transact insurance business in Utah on any particular
date. The court or other officer shall receive the certificate in lieu of the commissioner's testimony.
(3) The commissioner shall obtain and publish tables showing the average expectancy of life,
the values of annuities, and of life and term estates. These tables shall be for the use of courts and
appraisers in Utah.
(4) On the request of any insurer authorized to do a surety business, the commissioner shall
mail a certified copy of the insurer's certificate of authority to any designated public officer in this
state who requires that certificate before accepting a bond. That public officer shall file the
certificate. After a certified copy of a certificate of authority has been furnished to a public officer,
it is not necessary, while the certificate remains effective, to attach a copy of it to any instrument of
suretyship filed with that public officer. Whenever the commissioner revokes the certificate of

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authority or starts proceedings under Chapter 27 against any insurer authorized to do a surety
business, the commissioner shall immediately give notice of that action to each officer who was sent
a certified copy under this subsection.
(5) When an authorized insurer doing a surety business has filed a petition for receivership,
is in receivership, or the commissioner has reason to believe the company is in financial difficulty,
or has unreasonably failed to carry out any of its contracts, the commissioner shall immediately
notify every judge and clerk of all courts of record in the state. Upon the receipt of the notice it is
the duty of the judges and clerks to notify and require every person that has filed with the court a
bond on which the company is surety, to immediately file a new bond with a new surety.
(6) The commissioner shall require an insurer that issues, sells, renews, or offers health
insurance coverage in this state to comply with the Health Insurance Portability and Accountability
Act, P.L. 104-191, pursuant to 110 Stat. 1968, Sec. 2722.
Section 2. Section 31A-29-111 is amended to read:
31A-29-111. Eligibility -- Limitations.
(1) Any person who has resided in this state for at least 12 consecutive months immediately
preceding the date of application or who is a dependent child [24] 25 years of age or less of such a
person is eligible for pool coverage if[: (a)] the person pays the established premium [and provides
evidence of: (i) a rejection or refusal by an insurer to issue health insurance coverage similar to the
pool's coverage for reasons relating to health; or], unless:
[(ii) a refusal by an insurer to issue the insurance except at a rate exceeding the pool rate for
reasons relating to health; and]
[(b) after May 1, 1997, the person is not able to obtain coverage under the open enrollment
provisions of Chapter 30 because the carriers in the state subject to Chapter 30 have reached the HIP
count maximum as provided in Section 31A-30-110.]
[(c) The eligibility requirements in Subsection (b) apply to new enrollees and shall not be
used to disqualify persons enrolled in the pool prior to May 1, 1997. Persons participating in the
pool prior to May 1, 1997, may either remain in the pool or obtain coverage under Chapter 30.]
[(2) (a) The board shall promulgate a list of medical or health conditions for which a person

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is eligible for plan coverage without applying for health insurance coverage under Subsection (1).
A person who demonstrates the existence or history of any medical or health condition on the list
promulgated by the board is eligible to apply directly to the pool for coverage.]
[(b) The provisions of Subsection (a) shall not apply after May 1, 1997.]
[(3) A person is not eligible for coverage under this chapter if:]
(a) at the time of pool application, the person is eligible for health care benefits under
Medicaid or Medicare, except as provided in Section 31A-29-112;
(b) the person has terminated coverage in the pool, unless:
(i) 12 months have elapsed since the termination date; or
(ii) the person demonstrates that continuous other coverage has been involuntarily
terminated for any reason other than nonpayment of premium;
(c) the pool has paid the maximum lifetime benefit to or on behalf of the person;
(d) the person is an inmate of a public institution; [or]
(e) the person is eligible for other public programs for which medical care is provided[.];
(f) the person's health condition does not meet the criteria established under Subsection (4);
or
[(4) In addition to other reasons for termination, if a person with pool coverage establishes
residency outside Utah for three consecutive months, the person's coverage terminates.]
(g) the person is an eligible employee or a member of an employer group that offers health
insurance or a self-insurance arrangement to all its eligible employees or members.
[(5)] (2) (a) [Any] If otherwise eligible under Subsections (1)(a) through (1)(g), a person
whose health insurance coverage from a state health risk pool with similar coverage is terminated
because of nonresidency in another state may apply for coverage under the pool.
(b) If the coverage is applied for under Subsection (2)(a) within 31 days after the termination
and if premiums are paid for the entire coverage period under the pool, the effective date of the
pool's coverage shall be the date of termination of previous coverage.
(c) The waiting period of a person with a preexisting condition applying for coverage under
this chapter shall be waived if the waiting period was satisfied under a similar plan from another

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state and that state's benefit limitation was not reached.
[(6) Although the pool is open to application from individual members of an employee
group, the pool may not accept a person from a group that is capable of offering health insurance or
a self-insurance arrangement to all of its employees or members and that has unreasonably excluded
that person from eligibility in the group's plan. The board shall establish policies and guidelines to
assist the pool administrator in evaluating applications from persons who are employees or members
of a group that offers health insurance or a self-insurance arrangement to employees or members of
the group.]
[(7) (a) The board may determine the total number of persons that shall be enrolled for
coverage by the pool at any time for the purpose of controlling expenditures so they do not exceed
available revenues and shall permit and prohibit enrollment in order to maintain the number
authorized.]
[(b) Nothing in this subsection authorizes the board to prohibit enrollment for any reason
other than to control the number of persons in the pool.]
(3) If an eligible person applies for pool coverage within 30 days of being denied coverage
by an individual carrier, the effective date for pool coverage shall be set at the first day of the month
following the submission of the completed insurance application to the carrier.
(4) (a) The board shall establish and adjust, as necessary, underwriting criteria based on:
(i) health condition; and
(ii) expected claims so that such claims are anticipated to remain within available funding.
(b) The commissioner may contract with one or more providers under Title 63, Chapter 56,
Utah Procurement Code, to develop underwriting criteria under Subsection (4)(a).
(c) If a person is denied coverage under the criteria established in Subsection (4)(a), the pool
shall issue a certificate to the applicant for coverage under Subsection 31A-30-108(3).
Section 3. Section 31A-29-112 is amended to read:
31A-29-112. Medicaid recipients.
(1) If authorized by federal statutes or rules, a person receiving Medicaid benefits may
continue to receive those benefits while satisfying the preexisting condition requirements established

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by Section 31A-29-113 and the terms of the policy issued under this chapter.
(2) If allowed by federal statute, federal regulation, state statute, or rule, the Department of
Health shall allocate premiums paid to the pool by a person receiving Medicaid benefits to that
person's spenddown for purposes of the Medicaid no-grant program.
(3) (a) If a person continues to receive Medicaid benefits after the requirements for a
preexisting condition are satisfied, the pool administrator may not issue an insurance policy or allow
that person to receive any benefit from the pool.
(b) If a person continues to receive Medicaid benefits when the requirements for a
preexisting condition are satisfied, the pool administrator shall give any premiums collected by it
during the preexisting conditions period to the Medicaid program.
(4) (a) If any person is covered by a pool policy and becomes eligible to receive Medicaid
benefits, that person's coverage by the pool terminates as of the effective date of the receipt of
Medicaid benefits.
(b) The pool administrator shall:
(i) include a provision in the insurance policy requiring a person covered by a pool policy
to provide written notice to the pool administration if he becomes covered by Medicaid; and
(ii) terminate a person's coverage by the pool as of the effective date of the person's receipt
of Medicaid benefits when the pool administrator becomes aware that the person is covered by
Medicaid.
(5) If a person terminates coverage under Medicaid and applies for coverage under a pool
policy within 45 days after terminating the coverage, the person may begin coverage under a pool
policy as of the date that Medicaid coverage terminated, if a person meets the other eligibility
requirements of the chapter and pays the required premium.
(6) If a person's eligibility for Medicaid requires a spenddown, as defined in rule, that
exceeds the premium for a pool policy, that person shall be eligible for coverage by the pool if the
remaining requirements of Section 31A-29-111 are met.
Section 4. Section 31A-29-115 is repealed and reenacted to read:
31A-29-115. Cancellation --Notice.

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(1) (a) On the date of renewal, the pool may cancel a person's policy if:
(i) the person's health condition does not meet the criteria established in Subsection
31A-29-111(4);
(ii) the pool has provided written notice to the person's last-known address no less than 60
days before cancellation; and
(iii) at least one individual carrier has not reached the individual enrollment cap established
in Section 31A-30-110.
(b) The pool shall issue a certificate to a person whose policy is cancelled under Subsection
(1)(a) for coverage under Subsection 31A-30-108(3) if the requirements of Subsection
31A-29-111(4) are met.
(2) The pool may cancel a person's policy at any time if:
(a) the person establishes a residency outside of Utah for three consecutive months; and
(b) the pool has provided written notice to the person's last-known address no less than 15
days before cancellation.
Section 5. Section 31A-29-117 is amended to read:
31A-29-117. Premium rates.
(1) Premium charges for coverage under the pool may not be unreasonable in relation to the
benefits provided, the risk experience, and the reasonable expenses provided in the coverage.
Separate schedules of premium rates based on age and other appropriate demographic characteristics
may apply for individual risks.
[(2) (a) The administrator shall determine the standard risk rate by calculating the average
individual standard rate charged for each type of plan offered by the five insurers and health care
plans with the largest premium volume for coverages in the state similar to the pool coverage to
which an adjustment factor is applied to reflect reasonable substandard risk rates for an insurable
population.]
[(b) In the event five insurers do not offer similar coverage, the standard risk rate for each
type of plan offered shall be established using reasonable actuarial techniques and shall reflect
experience and anticipated expenses for such coverage based on reasonable substandard risk rates

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for an insurable population.]
[(c) Initial minimum rates of the pool may be not less than 125% of the standard risk rate.]
[(d) Maximum rates for pool coverage may not exceed 200% of the standard risk rates.]
[(e) Standard risk rates shall be calculated annually.]
(2) A small employer carrier shall annually inform the commissioner by April 1 of the
carrier's small employer index premium rates as of March 1 of the current and preceding year.
[(f) All rates and rate schedules shall be submitted by the administrator to the board and the
commissioner for approval.]
[(3) Nothing in this section shall prevent the board from establishing different rates for pool
coverage which reflect experience and anticipated expense for coverage provided under the
alternative benefit plans offered by the pool.]
(3) Premium rates in effect as of January 1, 1997, shall be adjusted on July 1, 1997, and each
following July 1 based on the average increase in small employer index rates for the five largest
small employer carriers submitted under Subsection (2).
(4) The board may establish a premium scale based on income. The highest rate may not
exceed the expected claims and expenses for the individual.
(5) If a person is an eligible individual as defined in the Health Insurance Portability and
Accountability Act, P.L. 104-191, 110 Stat. 1979, Sec. 2741(b), the maximum premium rate for that
person may not exceed the amount permitted under P.L. 104-191, 110 Stat. 1986, Sec.
2744(c)(2)(B).
(6) All rates and rate schedules shall be submitted by the board to the commissioner for
approval.
Section 6. Section 31A-29-120 is amended to read:
31A-29-120. Enterprise fund.
(1) There is created an enterprise fund known as the Comprehensive Health Insurance Pool
Enterprise Fund.
(2) The following funds shall be credited to the Pool Fund:
(a) [$75,000] $5,000,000 appropriated from the General Fund for Fiscal Year 1997-98;

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(b) pool policy premium payments; and
(c) all interest and dividends earned on the fund's assets.
(3) All money received by the Pool Fund shall be deposited in compliance with Section
51-4-1 and shall be held by the state treasurer and invested in accordance with Title 51, Chapter 7,
State Money Management Act.
(4) The Pool Fund shall comply with the accounting policies, procedures, and reporting
requirements established by the Division of Finance.
(5) The Pool Fund shall comply with Title 63A, Utah Administrative Services Code.
Section 7. Section 31A-30-102 is amended to read:
31A-30-102. Purpose statement.
The purpose of this chapter is to:
(1) prevent abusive rating practices[, to];
(2) require disclosure of rating practices to purchasers[, to];
(3) establish rules regarding renewability of coverage[, to];
(4) improve the overall fairness and efficiency of the individual and small group insurance
market; and [to]
(5) provide [a limited open enrollment period] increased access for [individual] individuals
and small [employer] employers to health insurance.
Section 8. Section 31A-30-103 is amended to read:
31A-30-103. Definitions.
As used in this part:
(1) "Actuarial certification" means a written statement by a member of the American
Academy of Actuaries or other individual approved by the commissioner that a covered carrier is
in compliance with the provisions of Section 31A-30-106, based upon the examination of the
covered carrier, including review of the appropriate records and of the actuarial assumptions and
methods utilized by the covered carrier in establishing premium rates for applicable health benefit
plans.
(2) "Affiliate" or "affiliated" means any entity or person who directly or indirectly through

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one or more intermediaries, controls or is controlled by, or is under common control with, a specified
entity or person.
(3) "Base premium rate" means, for each class of business as to a rating period, the lowest
premium rate charged or that could have been charged under a rating system for that class of
business by the covered carrier to covered insureds with similar case characteristics for health benefit
plans with the same or similar coverage.
(4) "Basic coverage" means the coverage provided in the Basic Health Care Plan established
by the Health Benefit Plan Committee under Subsection 31A-22-613.5(8).
(5) "Carrier" means any person or entity that provides health insurance in this state including
an insurance company, a prepaid hospital or medical care plan, a health maintenance organization,
a multiple employer welfare arrangement, and any other person or entity providing a health
insurance plan under this title.
(6) "Case characteristics" means demographic or other objective characteristics of a covered
insured that are considered by the carrier in determining premium rates for the covered insured.
However, duration of coverage since the policy was issued, claim experience, and health status, are
not case characteristics for the purposes of this chapter.
(7) "Class of business" means all or a separate grouping of covered insureds established
under Section 31A-30-105.
(8) "Conversion policy" means a policy providing coverage under the conversion provisions
required in Title 31A, Chapter 22, Part VII, Group Disability Insurance.
(9) "Covered carrier" means any individual carrier or small employer carrier subject to this
act.
(10) "Covered individual" means any individual who is covered under a health benefit plan
subject to this act.
(11) "Covered insureds" means small employers and individuals who are issued a health
benefit plan that is subject to this act.
(12) "Dependent" means individuals to the extent they are defined to be a dependent by:
(a) the health benefit plan covering the covered individual; and

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(b) the provisions of Chapter 22, Part VI, Disability Insurance.
(13) (a) "Eligible employee" means:
[(a)] (i) an employee who works on a full-time basis and has a normal work week of 30 or
more hours[. "Eligible employee"], and includes a sole proprietor, and a partner of a partnership,
if the sole proprietor or partner is included as an employee under a health benefit plan of a small
employer; or
[(b)] (ii) an independent contractor if the independent contractor is included under a health
benefit plan of a small employer.
[(c)] (b) "Eligible employee" does not include:
(i) an employee who works on a part-time, temporary, or substitute basis[.]; or
(ii) the spouse or dependents of the employer.
(14) "Established geographic service area" means a geographical area approved by the
commissioner within which the carrier is authorized to provide coverage.
(15) "Health benefit plan" means any certificate under a group health insurance policy, or
any health insurance policy, except that health benefit plan does not include coverage only for:
(a) accident;
(b) dental;
(c) vision;
(d) Medicare supplement;
(e) long-term care; or
(f) the following when offered and marketed as supplemental health insurance and not as a
substitute for hospital or medical expense insurance or major medical expense insurance:
(i) specified disease;
(ii) hospital confinement indemnity; or
(iii) limited [health] benefit plan.
[(16) "HIP count maximum" means N[.02+((CS+CI)/(TS+TI))] where, for purposes of this
formula:]
[(a) "N" means the number of individuals covered under the Comprehensive Health

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Insurance Pool created in Chapter 29 as of December 31, 1995;]
[(b) "CS" means the carrier's small employer coverage count as of December 31, 1995;]
[(c) "CI" means the carrier's individual coverage count as of December 31, 1995;]
[(d) "TS" means the sum of CS for all carriers; and]
[(e) "TI" means the sum of CI for all carriers.]
[(17)] (16) "Index rate" means, for each class of business as to a rating period for covered
insureds with similar case characteristics, the arithmetic average of the applicable base premium rate
and the corresponding highest premium rate.
[(18)] (17) "Individual carrier" means a carrier that offers health benefit plans covering
insureds in this state under individual [or conversion] policies.
[(19)] (18) "Individual coverage count" means the number of natural persons covered under
a carrier's health benefit plans that are individual [or conversion] policies [not counted in the small
employer coverage count].
(19) "Individual enrollment cap" means the percentage set by the commissioner in
accordance with Section 31A-30-110.
(20) "New business premium rate" means, for each class of business as to a rating period,
the lowest premium rate charged or offered, or that could have been charged or offered, by the carrier
to covered insureds with similar case characteristics for newly issued health benefit plans with the
same or similar coverage.
[(21) "Open enrollment cap" means the percentage set by the commissioner in accordance
with Subsections 31A-30-110(1)(a) and (b).]
[(22)] (21) "Premium" means all monies paid by covered insureds and covered individuals
as a condition of receiving coverage from a covered carrier, including any fees or other contributions
associated with the health benefit plan.
[(23)] (22) "Rating period" means the calendar period for which premium rates established
by a covered carrier are assumed to be in effect, as determined by the carrier. However, a covered
carrier may not have more than one rating period in any calendar month, and no more than 12 rating
periods in any calendar year.

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[(24)] (23) "Resident" means an individual who has resided in this state for at least 12
consecutive months immediately preceding the date of application.
[(25)] (24) "Small employer" means any person, firm, corporation, partnership, or
association actively engaged in business that, on at least 50% of its working days during the
preceding calendar quarter, employed at least [one] two and no more than 50 eligible employees, the
majority of whom were employed within this state. In determining the number of eligible
employees, companies that are affiliated or that are eligible to file a combined tax return for purposes
of state taxation[,] are considered one employer.
[(26)] (25) "Small employer carrier" means a carrier that offers health benefit plans covering
eligible employees of one or more small employers in this state.
[(27) "Small employer coverage count" means the number of natural persons covered under
a carrier's health benefit plans covering eligible employees of one or more small employers in this
state.]
[(28)] (26) "Uninsurable" means [any] an individual [insured by the] who:
(a) is eligible for the Comprehensive Health Insurance Pool [created in Chapter 29, and an
applicant for health insurance coverage who] coverage under the underwriting criteria established
in Subsection 31A-29-111(4); or
(b) (i) is issued a certificate for coverage under Subsection 31A-30-108(3); and
(ii) has a condition of health that does not meet consistently applied underwriting criteria
as established by the commissioner in accordance with Subsections 31A-30-106(k) and (l) for which
coverage the applicant is applying.
[(29) "Uninsurable coverage count" for a given calendar year means the number of natural
persons classified as uninsurable at initial enrollment that were covered by a carrier during that
calendar year.]
[(30)] (27) "Uninsurable percentage" for a given calendar year equals [UC/(CS+CI)] UC/CI
where, for purposes of this formula:
(a) "UC" means the [uninsurable coverage count for that year;] number of uninsurable
individuals who were issued an individual policy on or after July 1, 1997; and

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[(b) "CS" means the carrier's small employer coverage count as of December 31 of the
preceding year; and]
[(c)] (b) "CI" means the carrier's individual coverage count as of December 31 of the
preceding year.
Section 9. Section 31A-30-104 is amended to read:
31A-30-104. Applicability and scope.
(1) This chapter applies to any:
(a) health benefit plan that provides coverage to[:] individuals, small employer groups, or
both; or
(b) conversion policy for purposes of Section 31A-30-106.5.
[(a) the employees of a small employer in this state if any of the following conditions are
met:]
[(i) any part of the premium or benefits of the plan is paid by or on behalf of the small
employer;]
[(ii) the eligible employee or dependent is reimbursed, whether through wage adjustments
or otherwise, by or on behalf of the small employer for any portion of the premium; or]
[(iii) the health benefit plan is treated by the employer or any of the eligible employees or
dependents as part of a plan or program for the purposes of Section 106, 125, or 162 of the Internal
Revenue Code; and]
[(b) individuals in this state under individual or conversion policies not covered under
Subsection (a).]
(2) (a) Except as provided in Subsection (b), for the purposes of this chapter, carriers that
are affiliated companies or that are eligible to file a consolidated tax return shall be treated as one
carrier and any restrictions or limitations imposed by this chapter shall apply as if all health benefit
plans delivered or issued for delivery to covered insureds in this state by such affiliated carriers were
issued by one carrier.
(b) An affiliated carrier that is a health maintenance organization having a certificate of
authority under this title may be considered to be a separate carrier for the purposes of this chapter.

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(c) Unless otherwise authorized by the commissioner, a covered carrier may not enter into
one or more ceding arrangements with respect to health benefit plans delivered or issued for delivery
to covered insureds in this state if such arrangements would result in less than 50% of the insurance
obligation or risk for such health benefit plans being retained by the ceding carrier. The provisions
of Section 31A-22-1201 apply if a covered carrier cedes or assumes all of the insurance obligation
or risk with respect to one or more health benefit plans delivered or issued for delivery to covered
insureds in this state.
(3) (a) A Taft Hartley trust created in accordance with Section 302(c)(5) of the Federal Labor
Management Relations Act, or a carrier with the written authorization of such a trust, may make a
written request to the commissioner for a waiver from the application of any of the provisions of
Subsection 31A-30-106(1) with respect to a health benefit plan provided to the trust.
(b) The commissioner may grant such a waiver if the commissioner finds that application
with respect to the trust would:
(i) have a substantial adverse effect on the participants and beneficiaries of the trust; and
(ii) require significant modifications to one or more collective bargaining arrangements
under which the trust is established or maintained.
(c) A waiver granted under this subsection may not apply to an individual if the person
participates in such a trust as an associate member of any employee organization.
(4) [All premium rate restrictions or limitations imposed by this chapter shall apply as if all
health benefit plans delivered or issued for delivery to small employers in this state by a carrier
combination as described in Subsection (2) were issued by one carrier and all other health benefit
plans covered under this chapter by that carrier combination were issued by a separate carrier if this
results in lower premium rates for the covered health benefit plans which are not small employer
health benefit plans.] A carrier who offers individual and small employer health benefit plans may
use the small employer index rates to establish the rate limitations for individual policies, even if
some individual policies are rated below the small employer base rate.
Section 10. Section 31A-30-106 is amended to read:
31A-30-106. Premiums -- Rating restrictions -- Disclosure.

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(1) Premium rates for health benefit plans under this chapter are subject to the following
provisions:
(a) The index rate for a rating period for any class of business shall not exceed the index rate
for any other class of business by more than 20%.
(b) For a class of business, the premium rates charged during a rating period to covered
insureds with similar case characteristics for the same or similar coverage, or the rates that could be
charged to such employers under the rating system for that class of business, may not vary from the
index rate by more than [25%] 30% of the index rate.
(c) The percentage increase in the premium rate charged to a covered insured for a new
rating period, adjusted pro rata for rating periods less than a year, may not exceed the sum of the
following:
(i) the percentage change in the new business premium rate measured from the first day of
the prior rating period to the first day of the new rating period. In the case of a health benefit plan
into which the covered carrier is no longer enrolling new covered insureds, the covered carrier shall
use the percentage change in the base premium rate, provided that such change does not exceed, on
a percentage basis, the change in the new business premium rate for the most similar health benefit
plan into which the covered carrier is actively enrolling new covered insureds;
(ii) any adjustment, not to exceed 15% annually and adjusted pro rata for rating periods of
less than one year, due to the claim experience, health status, or duration of coverage of the covered
individuals as determined from the covered carrier's rate manual for the class of business; and
(iii) any adjustment due to change in coverage or change in the case characteristics of the
covered insured as determined from the covered carrier's rate manual for the class of business.
(d) Adjustments in rates for claims experience, health status, and duration from issue may
not be charged to individual employees or dependents. Any such adjustment shall be applied
uniformly to the rates charged for all employees and dependents of the small employer.
(e) A covered carrier may utilize industry as a case characteristic in establishing premium
rates, provided that the highest rate factor associated with any industry classification does not exceed
the lowest rate factor associated with any industry classification by more than 15%.

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(f) In the case of health benefit plans issued prior to July 1, 1994, a premium rate for a rating
period, adjusted pro rata for rating period of less than a year, may exceed the ranges under
Subsections (1)(a) and (b) until July 1, 1996. In that case, the percentage increase in the premium
rate charged to a covered insured for a new rating period may not exceed the sum of the following:
(i) the percentage change in the new business premium rate measured from the first day of
the prior rating period to the first day of the new rating period. In the case where a covered carrier
is not issuing any new policies the covered carrier shall use the percentage change in the base
premium rate, provided that such change does not exceed, on a percentage basis, the change in the
new business premium rate for the most similar health benefit plan into which the covered carrier
is actively enrolling new covered insureds; and
(ii) any adjustment due to change in coverage or change in the case characteristics of the
covered insured as determined from the carrier's rate manual for the class of business.
(g) The commissioner may grant a one-year extension of the July 1, 1996, deadline specified
in Subsection (f) if the commissioner determines that an extension is needed to avoid significant
disruption of the health insurance market subject to this chapter or to insure the financial stability
of carriers in the market.
(h) (i) Covered carriers shall apply rating factors, including case characteristics, consistently
with respect to all covered insureds in a class of business. Rating factors shall produce premiums
for identical groups which differ only by the amounts attributable to plan design and do not reflect
differences due to the nature of the groups assumed to select particular health benefit plans.
(ii) A covered carrier shall treat all health benefit plans issued or renewed in the same
calendar month as having the same rating period.
(i) For the purposes of this subsection, a health benefit plan that utilizes a restricted network
provision shall not be considered similar coverage to a health benefit plan that does not utilize such
a network, provided that utilization of the restricted network provision results in substantial
difference in claims costs.
(j) The covered carrier shall not, without prior approval of the commissioner, use case
characteristics other than age, gender, industry, geographic area, family composition, and group size.

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(k) The commissioner may establish regulations in accordance with Title 63, Chapter 46a,
Utah Administrative Rulemaking Act, to implement the provisions of this chapter and to assure that
rating practices used by covered carriers are consistent with the purposes of this chapter, including
regulations that:
(i) assure that differences in rates charged for health benefit plans by covered carriers are
reasonable and reflect objective differences in plan design (not including differences due to the
nature of the groups assumed to select particular health benefit plans);
(ii) prescribe the manner in which case characteristics may be used by covered carriers;
(iii) require insurers, as a condition of transacting business with regard to health insurance
disability policies after January 1, 1995, to reissue a health insurance disability policy to any
policyholder whose insurance disability policy has, after January 1, 1994, been terminated by the
insurer for reasons other than those listed in Subsections 31A-30-107(1)(a) through (1)(e) or not
renewed by the insurer after January 1, 1994. The commissioner may prescribe terms for the reissue
of coverage that the commissioner determines are reasonable and necessary to provide continuity
of coverage to insured individuals;
(iv) implement the individual enrollment cap under Section 31A-30-110, including
specifying the contents for certification, auditing standards, underwriting criteria for uninsurable
classification, and limitations on high risk enrollees under Section 31A-30-111; and
(v) establish [a minimum uninsurable coverage count] the individual enrollment cap under
Subsection 31A-30-110(1).
(l) Before implementing regulations for underwriting criteria for uninsurable classification,
the commissioner shall contract with an independent consulting organization to develop
industry-wide underwriting criteria for uninsurability based on an individual's expected claims under
open enrollment coverage exceeding 200% of that expected for a standard insurable individual with
the same case characteristics.
(m) The commissioner shall revise rules issued for Sections 31A-22-602 and 31A-22-605
regarding individual disability policy rates to allow rating in accordance with [Section 31A-30-106]
this section.

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(2) A covered carrier shall not transfer a covered insured involuntarily into or out of a class
of business. A covered carrier shall not offer to transfer a covered insured into or out of a class of
business unless such offer is made to transfer all covered insureds in the class of business without
regard to case characteristics, claim experience, health status, or duration of coverage since issue.
(3) Upon offering for sale any health benefit plan to a small employer, or individual, the
covered carrier shall, as part of its solicitation and sales materials, disclose or make available all of
the following:
(a) the extent to which premium rates for a specified covered insured are established or
adjusted in part based on the actual or expected variation in claims costs or actual or expected
variation in health status of covered individuals;
(b) provisions concerning the covered carrier's right to change premium rates and the factors
other than claim experience which affect changes in premium rates;
(c) provisions relating to renewability of policies and contracts; and
(d) provisions relating to any preexisting condition provision.
(4) (a) Each covered carrier shall maintain at its principal place of business a complete and
detailed description of its rating practices and renewal underwriting practices, including information
and documentation that demonstrate that its rating methods and practices are based upon commonly
accepted actuarial assumptions and are in accordance with sound actuarial principles.
(b) Each covered carrier shall file with the commissioner, on or before March 15 of each
year, in a form, manner, and containing such information as prescribed by the commissioner, an
actuarial certification certifying that the covered carrier is in compliance with this chapter and that
the rating methods of the covered carrier are actuarially sound. A copy of that certification shall be
retained by the covered carrier at its principal place of business.
(c) A covered carrier shall make the information and documentation described in this
subsection available to the commissioner upon request.
(d) Records submitted to the commissioner under the provisions of this [subsection] section
shall be maintained by the commissioner as protected records under Title 63, Chapter 2, Government
Records Access and Management Act.

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Section 11. Section 31A-30-106.6 is enacted to read:
31A-30-106.6. Individual rates.
Notwithstanding any other provision of this chapter, an individual carrier may, for
individuals provided coverage under Subsection 31A-30-108(3):
(1) use, but not exceed, the rates established by the Comprehensive Health Insurance Pool
under Section 31A-29-117 for basic coverage; and
(2) charge benefit adjusted actuarially equivalent rates for coverage that is in addition to the
basic benefit plan.
Section 12. Section 31A-30-106.7 is enacted to read:
31A-30-106.7. Surcharge for groups changing carriers.
If prior notice is given, a covered carrier may impose upon a small group that changes
coverage to that carrier from another carrier a one-time surcharge of up to 25% of the annualized
premium that the carrier could otherwise charge under Section 31A-30-106, unless the change in
carriers occurs on the annual policy renewal date of the coverage being replaced.
Section 13. Section 31A-30-107 is amended to read:
31A-30-107. Renewal -- Limitations -- Exclusions.
(1) A health benefit plan subject to this chapter is renewable with respect to all covered
individuals at the option of the covered insured except in any of the following cases:
(a) nonpayment of the required premiums;
(b) fraud or misrepresentation of the employer or, with respect to coverage of individual
insureds, the insureds or their representatives;
(c) noncompliance with the covered carrier's minimum participation requirements;
(d) noncompliance with the covered carrier's employer contribution requirements;
(e) repeated misuse of a provider network provision; or
(f) an election by the covered carrier to nonrenew all of its health benefit plans issued to
covered insureds in this state, in which case the covered carrier shall:
(i) provide advanced notice of its decision under this subsection to the commissioner in each
state in which it is licensed; and

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(ii) provide notice of the decision not to renew coverage to all affected covered insureds and
to the commissioner in each state in which an affected insured individual is known to reside at least
180 days prior to the nonrenewal of any health benefit plans by the covered carrier. Notice to the
commissioner under this subsection shall be provided at least three working days prior to the notice
to the affected covered insureds.
(2) A covered carrier that elects not to renew a health benefit plan under Subsection (1)(f)
is prohibited from writing new business subject to this chapter in this state for a period of five years
from the date of notice to the commissioner.
(3) When a covered carrier is doing business subject to this chapter in one service area of
this state, Subsections (1) and (2) apply only to the covered carrier's operations in that service area.
(4) Health benefit plans covering covered insureds shall comply with the following
provisions:
(a) (i) A health benefit plan may not deny, exclude, or limit benefits for a covered individual
for losses incurred more than 12 months, or 18 months in the case of a late enrollee, as defined in
P.L. 104-191, 110 Stat. 1940, Sec. 101, following the effective date of the individual's coverage due
to a preexisting condition.
(ii) A health benefit plan may not define a preexisting condition more restrictively than:
[(i) a condition that would cause an ordinarily prudent person to seek medical advice,
diagnosis, care, or treatment;]
[(ii)] (A) a condition for which medical advice, diagnosis, care, or treatment was
recommended or received during the six months immediately preceding the effective date of
coverage; or
[(iii)] (B) for an individual insurance policy, a pregnancy existing on the effective date of
coverage.
(b) A covered carrier shall waive any time period applicable to a preexisting condition
exclusion or limitation period with respect to particular services in a health benefit plan for the
period of time the individual was previously covered by public or private health insurance or by any
other health benefit arrangement that provided benefits with respect to such services, provided that

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the previous coverage was continuous to a date not more than [90] 62 days prior to the effective date
of the new coverage. The period of continuous coverage shall not include any waiting period for the
effective date of the new coverage applied by the employer [of] or the carrier. This subsection does
not preclude application of any waiting period applicable to all new enrollees under such plan.
Section 14. Section 31A-30-108 is amended to read:
31A-30-108. Eligibility for small employer and individual market.
(1) (a) [Covered] Small employer carriers shall accept residents for [open enrollment] small
group coverage as set forth in [this section, in the order in which they apply for coverage and subject
to the limitations set forth in Sections 31A-30-110 and 31A-30-111] the Health Insurance Portability
and Accountability Act, P.L. 104-191, 110 Stat. 1962, Sec. 2711(a).
(b) Individual carriers shall accept residents for individual coverage pursuant to P.L.
104-191, 110 Stat. 1979, Sec. 2741(a)-(b) and Subsection (3).
(2) (a) Small employer carriers shall offer to accept all eligible employees and their
dependents at the same level of benefits under any health benefit plan provided to a small employer.
(b) Small employer carriers [shall accept uninsured small employers for whom coverage has
not been terminated by the small employer or by a carrier for the cases specified in Subsections
31A-30-107(1)(a) through (e) during the preceding 12-month period.] may:
(i) request a small employer to submit a copy of its quarterly income tax withholdings to
determine whether the employees for whom coverage is provided or requested are bona fide
employees of the small employer; and
(ii) deny or terminate coverage if the small employer refuses to provide documentation
requested under Subsection (2)(b)(i).
(3) [Covered] Except as provided in Subsection (5) and Section 31A-30-110, individual
carriers shall accept for coverage individuals to whom all of the following conditions apply:
(a) the individual is not [applying for] covered or eligible for coverage, as an employee of
an employer, as a member of an association, or as a member of any other group[; and] under:
(i) a health benefit plan; or
(ii) a self-insured arrangement that provides coverage similar to that provided by a health

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benefit plan as defined in Section 31A-30-103;
(b) the individual is not covered and is not eligible for coverage under any public health
benefits arrangement including the Medicare program established under Title XVIII or the Medicaid
program established under Title XIX of the ["]Social Security Act,["] or any other act of congress
or law of this or any other state that provides benefits comparable to the benefits provided under this
part, [but not] including coverage under the Comprehensive Health Insurance Pool created in
Chapter 29;
(c) [(i)] the individual is not covered or eligible for coverage under any [private health
benefit arrangement, including any] Medicare supplement policy, [and is not eligible for coverage
under a Medicare supplement policy, a] conversion option, continuation or extension under COBRA,
or state extension[; (ii) coverage, under Subsection (i), does not include any policy for which] unless
the maximum benefit has been reached; [and]
(d) the individual has not terminated or declined coverage described in Subsection (a), (b),
or (c) within [120] 93 days of application for [open enrollment.] coverage, unless the individual is
eligible for individual coverage under P.L. 104-191, 110 Stat. 1979, Sec. 2741(b), in which case, the
requirement of this Subsection (3)(d) does not apply; and
(e) the individual is certified as ineligible for the Health Insurance Pool if:
(i) the individual applies for coverage with the Comprehensive Health Insurance Pool within
30 days after being rejected or refused coverage by the covered carrier and reapplies for coverage
with that covered carrier within 30 days after the date of issuance of a certificate under Subsection
31A-29-111(4)(b); or
(ii) the individual applies for coverage with any individual carrier within 45 days after:
(A) notice of cancellation of coverage under Subsection 31A-29-115(1); or
(B) the date of issuance of a certificate under Subsection 31A-29-111(4)(b) if the individual
applied first for coverage with the Comprehensive Health Insurance Pool.
(4) (a) If coverage is obtained under Subsection (3)(e)(i) and the required premium is paid,
the effective date of coverage shall be the first day of the month following the individual's
submission of a completed insurance application to that covered carrier.

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(b) If coverage is obtained under Subsection (3)(e)(ii) and the required premium is paid, the
effective date of coverage shall be the day following the:
(i) cancellation of coverage under Subsection 31A-29-115(1); or
(ii) submission of a completed insurance application to the Comprehensive Health Insurance
Pool.
(5) (a) An individual carrier is not required to accept individuals for coverage under
Subsection (3) if the carrier issues no new individual policies in the state after July 1, 1997.
(b) A carrier described in Subsection (5)(a) may not issue new individual policies in the state
for five years from July 1, 1997.
(c) Notwithstanding Subsection (5)(b), a carrier may request permission to issue new
policies after July 1, 1999, which may only be granted if:
(i) the carrier accepts uninsurables as is required of a carrier entering the market under
Subsection 31A-30-110; and
(ii) the commissioner finds that the carrier's issuance of new individual policies:
(A) is in the best interests of the state; and
(B) does not provide an unfair advantage to the carrier.
Section 15. Section 31A-30-109 is amended to read:
31A-30-109. Basic benefit plan.
[Covered carriers must] An individual carrier who offers individual coverage pursuant to
Section 31A-30-108 shall offer a choice of coverage that is at least equal to or greater than basic
coverage [under the open enrollment provisions of this chapter].
Section 16. Section 31A-30-110 is amended to read:
31A-30-110. Individual enrollment cap.
(1) [(a)] The commissioner shall set the [open] individual enrollment cap at .5% on [January
1, 1996] July 1, 1997.
[(b)] (2) The commissioner shall raise the [open] individual enrollment cap by .5% at the
later of the following dates:
[(i) 12] (a) six months from the [effective date of this act or the] last increase in the [open]

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individual enrollment cap; or
[(ii)] (b) the date when [[(CCI+CCS)/(TS+TI)]] CCI/TI is greater than .90, where:
[(A)] (i) "CCI" is the total individual coverage count for all carriers certifying that their
uninsurable percentage has reached the [open] individual enrollment cap; and
[(B) "CCS" is the total small employer coverage count for all carriers certifying that their
uninsurable percentage has reached the open enrollment cap;]
[(C)] (ii) "TI" is the total individual coverage count for all carriers[; and].
[(D) "TS" is the total small employer coverage count for all carriers.]
[(c) Eligible employees hired after a covered carrier has met its open enrollment cap are
eligible for open enrollment in accordance with Section 31A-30-108 until the covered carrier
certifies that its uninsurable percentage equals or exceeds the open enrollment cap plus .5%.]
[(d) Open enrollment applicants who participated in the Comprehensive Health Insurance
Pool prior to December 31, 1995, are eligible for open enrollment in accordance with Section
31A-30-108 until the covered carrier certifies that the number of individuals it has insured under this
subsection equals the HIP count maximum as defined in Subsection 31A-30-103(16).]
[(e) Uninsurable open enrollment applicants to whom Subsection (c) or (d) do not apply, are
eligible for open enrollment in accordance with Section 31A-30-108 until the covered carrier has
certified that its uninsurable percentage equals or exceeds the open enrollment cap.]
[(f) Notwithstanding the provisions of Subsections (c) through (e), the]
(3) The commissioner may establish a minimum number of uninsurable [coverage count]
individuals that [carriers] a carrier entering the market who [are] is subject to this chapter must
accept under the [open] individual enrollment provisions of this chapter.
[(g) (i) From May] (4) Beginning July 1, 1997 [until April 30, 1998 covered carriers], an
individual carrier may decline to accept individuals applying for [open] individual enrollment [as]
under Subsection 31A-30-108(3), other than individuals [if UCI/(CS+CI)] applying for coverage as
set forth in P.L. 104-191, 110 Stat. 1979, Sec. 2741 (a)-(b), if:
(a) the uninsurable percentage for that carrier equals or exceeds [.25%.] the cap established
in Subsection (1); and

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[(ii) For purposes of this subsection:]
[(A) "CS" and "CI" have the same meaning as defined in Subsection 31A-30-103(30); and]
[(B) "UCI" means an individual classified as uninsurable at enrollment who was issued an
individual policy and covered on or after May 1, 1997.]
[(h) When] (b) the covered carrier has certified on forms provided by the commissioner that
its uninsurable percentage equals or exceeds the [open] individual enrollment cap[, the carrier may
decline to accept individuals from the Comprehensive Health Insurance Pool and under the open
enrollment provisions of Subsection 31A-30-108(3)].
[(2) An officer of the carrier shall certify to the commissioner when it has met the open
enrollment cap or the HIP count maximum. The commissioner shall by rule establish the contents
of the certification.]
[(3)] (5) The department may audit a carrier's records to verify whether the carrier's
uninsurable classification meets industry standards for underwriting criteria as established by the
commissioner in accordance with Subsection 31A-30-106(1)(k).
[(4)] (6) (a) On or before July 1, 1997, and each July 1 thereafter, the commissioner:
(i) shall report to the Utah Health Policy Commission on the distribution of risks assumed
by various carriers in the state under the [open] individual enrollment provision of this part; and
(ii) may make recommendations to the Utah Health Policy Commission and the Legislature
regarding the adjustment of the .5% cap on [open] individual enrollment or some other risk
adjustment to maintain equitable distribution of risk among carriers.
(b) [For the first 36 months after the effective date, as described in Section 31A-30-114, of
each open enrollment provision of this act, if] If the commissioner determines that [open] individual
enrollment is causing a substantial adverse effect on premiums, enrollment, or experience, the
commissioner may suspend, limit, or delay further [open] individual enrollment for up to 12 months.
(c) The commissioner shall adopt rules to establish a uniform methodology for calculating
and reporting loss ratios for individual policies for determining whether the individual enrollment
provisions of Section 31A-30-108 should be waived for an individual carrier experiencing significant
and adverse financial impact as a result of complying with those provisions.

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[(5)] (7) (a) On or before November 30, 1995, the commissioner shall report to the Health
Policy Commission and the Legislature on:
(i) the impact of the Small Employer Health Insurance Act on availability of small employer
insurance in the market;
(ii) the number of carriers who have withdrawn from the market or ceased to issue new
policies since the implementation of the Small Employer Health Insurance Act;
(iii) the expected impact of the [open] individual enrollment provisions on the factors
described in Subsections (7)(i) and (ii); and
(iv) the claims experience, costs, premiums, participation, and viability of the
Comprehensive Health Insurance Pool created in Chapter 29.
(b) The report to the Legislature shall be submitted in writing to each legislator.
Section 17. Repealer.
This act repeals:
Section 31A-30-113, Effective dates.
Section 18. Effective date.
If approved by two-thirds of all the members elected to each house, this act takes effect on
May 1, 1997.
Section 19. Coordination clause.
If this bill and H.B. 228 both pass, it is the intent of the Legislature that the amendments to
Section 31A-30-110 in this bill supersede the amendments to Section 31A-30-110 in H.B. 228.

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