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S.B. 190

             1     

INSURANCE LAW AMENDMENTS

             2     
2000 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: L. Steven Poulton

             5      AN ACT RELATING TO INSURANCE; GRANTING RULEMAKING AUTHORITY;
             6      S [ ESTABLISHING A PROCESS FOR REQUIRING CERTAIN COVERAGE OR BENEFITS BY
             7      RULE;
] s
CLARIFYING LANGUAGE ADDRESSING PENALTIES FOR CERTAIN IMPROPER
             8      TRANSACTIONS OR PENALTIES; ADDRESSING INCORPORATION BY REFERENCE;
             9      ADDRESSING RESCINDING POLICIES; INCLUDING APPLICATIONS UNDER CERTAIN
             10      FORM REQUIREMENTS; AMENDING GRACE PERIOD REQUIREMENTS; ADDRESSING
             11      LIFE INSURANCE BENEFITS IN THE CASE OF SUICIDE; ADDRESSING MATERNITY
             12      BENEFITS; ADDRESSING REQUIRED DISCLOSURES OF DISABILITY INSURERS;
             13      ADDRESSING MASTECTOMY COVERAGE; ADDRESSING MENTAL HEALTH PARITY;
             14      ADDRESSING SIGNATURE REQUIREMENT FOR FORMS LISTING AGENTS; AMENDING
             15      PROVISIONS RELATED TO THE COMPREHENSIVE HEALTH INSURANCE POOL ACT;
             16      ADDRESSING SETTING RATES FOR THE POOL; ADDRESSING PREEXISTING
             17      CONDITIONS; S [ AND ] s MAKING TECHNICAL CORRECTIONS S ; AND PROVIDING A
             17a      COORDINATION CLAUSE s .
             18      This act affects sections of Utah Code Annotated 1953 as follows:
             19      AMENDS:
             20          31A-4-115, as enacted by Chapter 329, Laws of Utah 1998
             21          31A-16-111, as last amended by Chapter 131, Laws of Utah 1999
             22          31A-18-106, as last amended by Chapter 131, Laws of Utah 1999
             23          31A-21-105, as last amended by Chapter 204, Laws of Utah 1986
             24          31A-21-106, as last amended by Chapter 153, Laws of Utah 1996
             25          31A-21-201, as last amended by Chapter 230, Laws of Utah 1992
             26          31A-22-402, as enacted by Chapter 242, Laws of Utah 1985
             27          31A-22-404, as enacted by Chapter 242, Laws of Utah 1985


             28          31A-22-513, as enacted by Chapter 242, Laws of Utah 1985
             29          31A-22-613.5, as last amended by Chapter 13, Laws of Utah 1998
             30          31A-23-219, as last amended by Chapter 293, Laws of Utah 1998
             31          31A-25-205, as enacted by Chapter 242, Laws of Utah 1985
             32          31A-29-111, as last amended by Chapter 329, Laws of Utah 1998
             33          31A-29-117, as last amended by Chapter 265, Laws of Utah 1997
             34          31A-30-107, as last amended by Chapter 329, Laws of Utah 1998
             35      ENACTS:
             36          31A-2-201.1, Utah Code Annotated 1953
             37      S [     31A-2-217, Utah Code Annotated 1953 ] s
             38          31A-22-610.2, Utah Code Annotated 1953
             39          31A-22-625, Utah Code Annotated 1953
             40          31A-22-719, Utah Code Annotated 1953
             41          31A-22-720, Utah Code Annotated 1953
             42      Be it enacted by the Legislature of the state of Utah:
             43          Section 1. Section 31A-2-201.1 is enacted to read:
             44          31A-2-201.1. General filing requirements.
             45          Except as otherwise provided in this title, the commissioner may set by rule made in
             46      accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, specific
             47      requirements for filing any of the following required by this title:
             48          (1) a form;
             49          (2) a rate; or
             50          (3) a report.
             51           S [ Section 2. Section 31A-2-217 is enacted to read:
             52          31A-2-217. Disability insurance coverage and benefits required by rule.
             53          (1) The commissioner may by rule require that all admitted disability insurers develop and
             54      offer a specific disability insurance coverage or benefit in Utah if:
             55          (a) the commissioner determines that the coverage or benefit is not available in the market
             56      in Utah; and
             57          (b) consumer demand and need for the coverage or benefit exists on such a scale that is
             58      reasonable to offer it in Utah.
] s
S [


             59          (2) In making the determination under Subsection (1), the commissioner shall consider:
             60          (a) consumer demand in the market for the coverage or benefit;
             61          (b) the extent to which the coverage or benefit is currently offered in the market;
             62          (c) whether or not the pricing for the coverage or benefit will foster its availability
             63      generally in the market;
             64          (d) the public interest in having the coverage or benefit available;
             65          (e) consumer need for the coverage or benefit to be adequate and readily accessible;
             66          (f) any alternative methods for providing the coverage or benefit;
             67          (g) any inherent limitations in providing the coverage or benefit;
             68          (h) the reasonableness of underwriting the coverage or benefit;
             69          (i) the impact the coverage or benefit has on competition in the market; and
             70          (j) the extent to which consumer's choice of coverages and benefits in the market will be
             71      maintained.
             72          (3) If the commissioner determines under this section that a disability coverage or benefit
             73      is to be offered in the market, all admitted disability insurers shall offer the coverage or benefit in
             74      Utah.
             75          (4) (a) If a consumer is unable to obtain a disability coverage or benefit because it is not
             76      available in the market in Utah, the consumer may file a written request with the commissioner
             77      that:
             78          (i) identifies the coverage or benefit that is not available; and
             79          (ii) requests that the commissioner make a determination under this section.
             80          (b) On receipt of a written request under Subsection (4)(a), the commissioner shall begin
             81      the process of making a determination in accordance with Subsection (2).
             82          (5) The commissioner may issue rules related to:
             83          (a) a disability coverage or benefit required under Subsection (1); and
             84          (b) the process for making a determination under this section.
             85          (6) The commissioner may require any interested party to a determination under this
             86      section to provide information or data related to:
             87          (a) a request made under Subsection (4); or
             88          (b) a determination made under this section.
] s

             89          Section S [ 3 ] 2 s . Section 31A-4-115 is amended to read:


             90           31A-4-115. Plan of orderly withdrawal.
             91          (1) When an insurer intends to withdraw from writing a line of insurance in this state or
             92      to reduce its total annual premium volume by 75% or more, it shall file with the commissioner a
             93      plan of orderly withdrawal.
             94          (2) An insurer's plan of orderly withdrawal shall:
             95          (a) indicate the date the insurer intends to begin and complete its withdrawal plan; and
             96          (b) include provisions for:
             97          (i) meeting the insurer's contractual obligations;
             98          (ii) providing services to its Utah policyholders and claimants; and
             99          (iii) meeting any applicable statutory obligations.
             100          (3) The commissioner shall approve a plan of orderly withdrawal if it adequately
             101      demonstrates that the insurer will:
             102          (a) protect the interests of the people of the state;
             103          (b) meet its contractual obligations;
             104          (c) provide service to its Utah policyholders and claimants; and
             105          (d) meet any applicable statutory obligations.
             106          (4) [The provisions of] Section 31A-2-302 [govern] governs the commissioner's approval
             107      or disapproval of a plan for orderly withdrawal.
             108          (5) The commissioner may require an insurer to increase the deposit maintained in
             109      accordance with Section 31A-4-105 or Section 31A-4-105.5 and place the deposit in trust in the
             110      name of the commissioner upon finding, after an adjudicative proceeding that:
             111          (a) there is reasonable cause to conclude that the interests of the people of the state are best
             112      served by such action; and
             113          (b) the insurer:
             114          (i) has filed a plan of orderly withdrawal; or
             115          (ii) intends to:
             116          (A) withdraw from writing a line of insurance in this state; or [to]
             117          (B) reduce its total annual premium volume by 75% or more.
             118          (6) An insurer that withdraws from writing insurance in this state or that reduces its total
             119      annual premium volume by 75% or more in any year without having submitted a plan or receiving
             120      the commissioner's approval is subject to the civil penalties under Section 31A-2-308 .


             121          (7) An insurer that withdraws from writing all lines of insurance in this state may not
             122      resume writing insurance in this state for five years without:
             123          (a) the approval of the commissioner; and
             124          (b) complying with Subsection [ 31A-30-109 ] 31A-30-108 (5), if applicable.
             125          (8) The commissioner shall adopt rules necessary to implement the provisions of this
             126      section.
             127          Section 4. Section 31A-16-111 is amended to read:
             128           31A-16-111. Required sale of improperly acquired stock -- Penalties.
             129          (1) If the commissioner finds that the acquiring person has not substantially complied with
             130      the requirements of this chapter in acquiring control of a domestic insurer, the commissioner may
             131      require the acquiring person to sell the acquiring person's stock of the domestic insurer in the
             132      manner specified in Subsection (2).
             133          (2) (a) The commissioner shall effect the sale required by Subsection (1) in the manner
             134      which, under the particular circumstances, appears most likely to result in the payment of the full
             135      market value for the stock by persons who have the collective competence, experience, financial
             136      resources, and integrity to obtain approval under Subsection 31A-16-103 (8).
             137          (b) Sales made under this section are subject to approval by the Third Judicial District
             138      Court for Salt Lake County, which court has the authority to effect the terms of the sale.
             139          (3) The proceeds from sales made under this section shall be distributed first to the person
             140      required by this section to sell the stock, but only up to the amount originally paid by the person
             141      for the securities. Additional sale proceeds shall be paid to the General Fund.
             142          (4) The person required to sell and persons related to or affiliated with the seller may not
             143      purchase the stock at the sale conducted under this section.
             144          (5) (a) [Every] A director or officer of an insurance holding company system [who]
             145      violates this chapter if the director or officer knowingly [violates,]:
             146          (i) participates in[,] or assents to[, or who knowingly permits any of the officers or agents
             147      of the insurer to engage in transactions] a transaction or [make investments] investment that
             148      [have]:
             149          (A) has not been properly reported or submitted pursuant to:
             150          (I) Subsections 31A-16-105 (1) and (2)[,]; or
             151          (II) Subsection 31A-16-106 (1)(b)[,]; or [which]


             152          (B) otherwise [violate] violates this chapter[,]; or
             153          (ii) permits any of the officers or agents of the insurer to engage in a transaction or
             154      investment described in Subsection (5)(a)(i).
             155          (b) A director or officer in violation of Subsection (5)(a) shall pay, in [their] the director's
             156      or officer's individual capacity, a civil penalty of not more than $20,000 per violation[,]:
             157          (i) upon a finding by the commissioner of a violation[,]; and
             158          (ii) after notice and hearing before the commissioner.
             159          [(b)] (c) In determining the amount of the civil penalty under Subsection (5)[(a)](b), the
             160      commissioner shall take into account:
             161          (i) the appropriateness of the penalty with respect to the gravity of the violation;
             162          (ii) the history of previous violations; and
             163          (iii) any other matters that justice requires.
             164          (6) (a) When it appears to the commissioner that any insurer or any director, officer,
             165      employee, or agent of the insurer, has committed a willful violation of this chapter, the
             166      commissioner may cause criminal proceedings to be instituted:
             167          (i) (A) in the district court for the county in this state in which the principal office of the
             168      insurer is located[,]; or
             169          (B) if the insurer has no principal office in this state, [then] in the Third District Court for
             170      Salt Lake County; and
             171          (ii) against the insurer or the responsible director, officer, employee, or agent of the
             172      insurer.
             173          (b) (i) An insurer that willfully violates this chapter may be fined not more than $20,000.
             174          (ii) Any individual who willfully violates this chapter is guilty of a third degree felony, and
             175      upon conviction may be:
             176          [(i)] (A) fined in that person's individual capacity not more than $5,000;
             177          [(ii)] (B) imprisoned; or
             178          [(iii)] (C) both fined and imprisoned.
             179          (7) This section does not limit the other sanctions applicable to violations of this title under
             180      Section 31A-2-308 .
             181          Section 5. Section 31A-18-106 is amended to read:
             182           31A-18-106. Investment limitations generally applicable.


             183          (1) The investment limitations listed in Subsections (1)(a) through (l) apply to each insurer.
             184          (a) (i) Except as provided in Subsection (1)(a)(ii), for investments authorized under
             185      Subsection 31A-18-105 (1) that are not amortizable under applicable valuation rules, the limitation
             186      is 5% of assets.
             187          (ii) The limitation of Subsection (1)(a)(i) and the limitation of Subsection (2) do not apply
             188      to demand deposits and certificates of deposit in solvent banks and savings and loan institutions
             189      to the extent they are insured by a federal deposit insurance agency.
             190          (b) For investments authorized under Subsection 31A-18-105 (2), the limitation is 10% of
             191      assets.
             192          (c) For investments authorized under Subsection 31A-18-105 (3), the limitation is 50% of
             193      assets.
             194          (d) For investments authorized under Subsection 31A-18-105 (4), that are considered to
             195      be investments in kinds of securities or evidences of debt pledged, those investments are subject
             196      to the class limitations applicable to the pledged securities or evidences of debt.
             197          (e) For investments authorized under Subsection 31A-18-105 (5), the limitation is 35% of
             198      assets.
             199          (f) For investments authorized under Subsection 31A-18-105 (6), the limitation is:
             200          (i) 20% of assets for life insurers; and
             201          (ii) 50% of assets for nonlife insurers.
             202          (g) For investments authorized under Subsection 31A-18-105 (7), the limitation is 5% of
             203      assets, except as to insurers organized and operating under Chapter 7, in which case the limitation
             204      is 25% of assets.
             205          (h) For investments authorized under Subsection 31A-18-105 (8), the limitation is 20% of
             206      assets inclusive of home office and branch office properties, except as to insurers organized and
             207      operating under Chapter 7, in which case the limitation is 35% of assets, inclusive of home office
             208      and branch office properties.
             209          (i) For investments authorized under Subsection 31A-18-105 (10), the limitation is 1% of
             210      assets.
             211          (j) For investments authorized under Subsection 31A-18-105 (11), the limitation is the
             212      greater of that permitted or required for compliance with Section 31A-18-103 .
             213          (k) Except as provided in Subsection (1)(l), an insurer's investments in subsidiaries is


             214      limited to 50% of the insurer's total adjusted [capitol] capital. Investments by an insurer in its
             215      subsidiaries includes:
             216          (i) the insurer's loans, advances, and contributions to its subsidiaries; and
             217          (ii) the insurer's holding of bonds, notes, and stocks of its subsidiaries are included.
             218          (l) Under a plan of merger approved by the commissioner, the commissioner may allow
             219      an insurer any portion of its assets invested in an insurance subsidiary. The approved plan of
             220      merger shall require the acquiring insurer to conform its accounting for investments in subsidiaries
             221      to Subsection (1)(k) within a specified period that may not exceed five years.
             222          (2) The limits on investments listed in Subsections (2)(a) through (e) apply to each insurer.
             223          (a) For all investments in a single entity, its affiliates, and subsidiaries, the limitation is
             224      10% of assets, except that the limit imposed by this Subsection (2)(a) does not apply to:
             225          (i) investments in the government of the United States or its agencies;
             226          (ii) investments guaranteed by the government of the United States; or
             227          (iii) investments in the insurer's insurance subsidiaries.
             228          (b) Investments authorized by Subsection 31A-18-105 (3) shall comply with the
             229      requirements listed in this Subsection (2)(b).
             230          (i) (A) Except as provided in Subsection (2)(b)(i), the amount of any loan secured by a
             231      mortgage or deed of trust may not exceed 80% of the value of the real estate interest mortgaged,
             232      unless the excess over 80%:
             233          (I) is insured or guaranteed by the United States, any state of the United States, any
             234      instrumentality, agency, or political subdivision of the United States, any of its states, or a
             235      combination of any of these; or
             236          (II) insured by an insurer approved by the commissioner and qualified to insure that type
             237      of risk in this state.
             238          (B) Mortgage loans representing purchase money mortgages acquired from the sale of real
             239      estate are not subject to the limitation of Subsection (2)(b)(i)(A).
             240          (ii) Subject to Subsection (2)(b)(v), loans or evidences of debt secured by real estate may
             241      only be secured by unencumbered real property, or an unencumbered interest in real property that
             242      is located in the United States.
             243          (iii) Evidence of debt secured by first mortgages or deeds of trust upon leasehold estates
             244      shall require that:


             245          (A) the leasehold estate exceed the maturity of the loan by not less than 10% of the lease
             246      term;
             247          (B) the real estate not be otherwise encumbered; and
             248          (C) the mortgagee is entitled to be subrogated to all rights under the leasehold.
             249          (iv) Subject to Subsection (2)(b)(v):
             250          (A) participation in any mortgage loan must:
             251          (I) be senior to other participants; and
             252          (II) give the holder substantially the rights of a first mortgagee; or
             253          (B) the interest of the insurer in the evidence of indebtedness must be of equal priority, to
             254      the extent of the interest, with other interests in the real property.
             255          (v) A fee simple or leasehold real estate or any interest in either of them is not considered
             256      to be encumbered within the meaning of this chapter by reason of any prior mortgage or trust deed
             257      held or assumed by the insurer as a lien on the property, if:
             258          (A) the total of the mortgages or trust deeds held does not exceed 70% of the value of the
             259      property; and
             260          (B) the security created by the prior mortgage or trust deed is a first lien.
             261          (c) Loans permitted under Subsection 31A-18-105 (4) may not exceed 75% of the market
             262      value of the collateral pledged, except that loans upon the pledge of United States government
             263      bonds may be equal to the market values of the pledge.
             264          (d) For an equity interest in a single real estate property authorized under Subsection
             265      31A-18-105 (8), the limitation is 5% of assets.
             266          (e) Investments authorized under Subsection 31A-18-105 (10) shall be in connection with
             267      potential changes in the value of specifically identified:
             268          (i) assets which the insurer owns; or
             269          (ii) liabilities which the insurer has incurred.
             270          (3) The restrictions on investments listed in Subsections (3)(a) and (b) apply to each
             271      insurer.
             272          (a) Except for financial futures contracts and real property acquired and occupied by the
             273      insurer for home and branch office purposes, a security or other investment is not eligible for
             274      purchase or acquisition under this chapter unless it is:
             275          (i) interest bearing or income paying; and


             276          (ii) not then in default.
             277          (b) A security is not eligible for purchase at a price above its market value.
             278          (4) Computation of percentage limitations under this section:
             279          (a) is based only upon the insurer's total qualified invested assets described in Section
             280      31A-18-105 and this section, as these assets are valued under Section 31A-17-401 ; and
             281          (b) excludes investments permitted under Section 31A-18-108 and Subsections
             282      31A-17-203 (2) and (3).
             283          (5) An insurer may not make an investment that, because the investment does not conform
             284      to Section 31A-18-105 and this section, has the result of rendering the insurer, under Chapter 17,
             285      Part VI, Risk-Based Capital, subject to proceedings under Chapter 27.
             286          (6) A pattern of persistent deviation from the investment diversification standards set forth
             287      in Section 31A-18-105 and this section may be grounds for a finding that the person or persons
             288      with authority to make the insurer's investment decisions are "incompetent" as used in Subsection
             289      31A-5-410 (3).
             290          (7) Section 77r-1 of the Secondary Mortgage Market Enhancement Act of 1984 does not
             291      apply to the purchase, holding, investment, or valuation limitations of assets of insurance
             292      companies subject to this chapter.
             293          Section 6. Section 31A-21-105 is amended to read:
             294           31A-21-105. Representations, warranties, and conditions.
             295          (1) (a) No statement, representation, or warranty made by any person representing the
             296      insurer in the negotiation for an individual or franchise insurance contract affects the insurer's
             297      obligations under the policy unless it is stated in the policy or in a written application signed by
             298      the applicant. No person, except the applicant or another by his written consent, may alter the
             299      application, except for administrative purposes in a way which is clearly not ascribable to the
             300      applicant.
             301          (b) No statement, representation, or warranty made by or on behalf of a particular
             302      certificate holder under a group policy affects the insurer's obligations under the certificate unless
             303      it is stated in the certificate or in a written document signed by the certificate holder, and a copy
             304      of it is supplied to the certificate holder.
             305          (c) The policyholder, his assignee, the loss payee or mortgagee or lienholder under
             306      property insurance, and any person whose life or health is insured under a policy may request, in


             307      writing, from the company a copy of the application, if he did not receive the policy or a copy of
             308      it, or if the policy has been reinstated or renewed without the attachment of a copy of the original
             309      application. If the insurer does not deliver or mail a copy as requested within 30 days after receipt
             310      of the request by the insurer or its agent, or in the case of a group policy certificate holder, does
             311      not inform that person within the same period how he may inspect the policy or a copy of it and
             312      application or enrollment card or a copy of it during normal business hours at a place reasonably
             313      convenient to the certificate holder, nothing in the application or enrollment card affects the
             314      insurer's obligations under the policy to the person making the request. Each person whose life
             315      or health is insured under a group policy has the same right to request a copy of any document
             316      under Subsection (1) (b).
             317          (2) Except as provided in Subsection (5), no misrepresentation or breach of an affirmative
             318      warranty affects the insurer's obligations under the policy unless:
             319          (a) the insurer relies on it and it is either material or is made with intent to deceive; or
             320          (b) the fact misrepresented or falsely warranted contributes to the loss.
             321          (3) No failure of a condition prior to the loss and no breach of a promissory warranty
             322      affects the insurer's obligations under the policy unless it exists at the time of the loss and either
             323      increases the risk at the time of the loss or contributes to the loss. This Subsection (3) does not
             324      apply to failure to tender payment of premium.
             325          (4) Nondisclosure of information not requested by the insurer is not a defense to an action
             326      against the insurer. Failure to correct within a reasonable time any representation that becomes
             327      incorrect because of changes in circumstances is misrepresentation, not nondisclosure.
             328          (5) If after issuance of a policy the insurer acquires knowledge of sufficient facts to
             329      constitute a general defense to all claims under the policy, the defense is only available if the
             330      insurer notifies the insured within 60 days after acquiring the knowledge of its intention to defend
             331      against a claim if one should arise, or within 120 days if the insurer considers it necessary to secure
             332      additional medical information and is actively seeking the information at the end of the 60 days.
             333      The insurer and insured may mutually agree to a policy rider in order to continue the policy in
             334      force with exceptions or modifications. For purposes of this Subsection (5), an insurer has
             335      acquired knowledge only if the information alleged to give rise to the knowledge was disclosed
             336      to the insurer or its agent in connection with communications or investigations associated with the
             337      insurance policy under which the subject claim arises.


             338          (6) (a) An insurer that offers coverage to a small employer group as required by P.L.
             339      104-91, 110 Stat. 1979, Sec. 2711(a), may not rescind a policy or individual certificate holder
             340      based on application misrepresentation unless the insurer would not have been required to issue
             341      the coverage in the absence of the misrepresentation.
             342          (b) Subsection (6)(a) does not prevent an insurer from correcting rates if:
             343          (i) in the absence of misrepresentation a different rate would have been required; and
             344          (ii) the corrected rates are in compliance with Section 31A-30-106 .
             345          [(6)] (7) No trivial or transitory breach of or noncompliance with any provision of this
             346      chapter is a basis for avoiding an insurance contract.
             347          Section 7. Section 31A-21-106 is amended to read:
             348           31A-21-106. Incorporation by reference.
             349          (1) (a) Except as provided in Subsection (1)(b), an insurance policy may not contain any
             350      agreement or incorporate any provision not fully set forth in the policy or in an application or other
             351      document attached to and made a part of the policy at the time of its delivery, unless the policy,
             352      application, or agreement accurately reflects the terms of the incorporated agreement, provision,
             353      or attached document.
             354          (b) (i) A policy may by reference incorporate rate schedules and classifications of risks and
             355      short-rate tables filed with the commissioner.
             356          (ii) By rule or order, the commissioner may authorize incorporation by reference of
             357      provisions for administrative arrangements, premium schedules, and payment procedures for
             358      complex contracts.
             359          (c) (i) A policy of title insurance insuring the mortgage or deed of trust of an institutional
             360      lender may, if requested by an institutional lender, incorporate by reference generally applicable
             361      policy terms that are contained in a specifically identified policy that has been filed with the
             362      commissioner.
             363          (ii) As used in Subsection (1)(c)(i), "institutional lender" means a person that regularly
             364      engages in the business of making loans secured by real estate.
             365          (d) A policy may incorporate by reference the following by citing in the policy:
             366          (i) a federal law or regulation;
             367          (ii) a state law or rule; or
             368          (iii) a public directive of a federal or state agency.


             369          (2) Except as provided in Subsection (3) or (4), or as otherwise mandated by law, no
             370      purported modification of a contract during the term of the policy affects the obligations of a party
             371      to the contract unless the modification is in writing and agreed to by the party against whose
             372      interest the modification operates.
             373          (3) Subsection (2) does not prevent a change in coverage under group contracts resulting
             374      from:
             375          (a) provisions of an employer eligibility rule;
             376          (b) the terms of a collective bargaining agreement; or
             377          (c) provisions in federal Employee Retirement Income Security Act plan documents.
             378          (4) Subsection (2) does not prevent a premium increase at any renewal date that is
             379      applicable uniformly to all comparable persons.
             380          Section 8. Section 31A-21-201 is amended to read:
             381           31A-21-201. Filing and approval of forms.
             382          (1) [No] (a) A form subject to Subsection 31A-21-101 (1), except as exempted under
             383      Subsections 31A-21-101 (2) through [ 31A-21-101 ] (6), may not be used, sold, or offered for sale
             384      unless it has been filed with the commissioner.
             385          (b) A form is considered filed with the commissioner when [it has been received by] the
             386      commissioner [with] receives:
             387          (i) the form;
             388          (ii) the applicable filing fee as prescribed under Section 31A-3-103 [together with]; and
             389          (iii) the applicable transmittal forms as required by the commissioner.
             390          (2) In filing a form for use in this state the insurer is responsible for assuring that the form
             391      is in compliance with this title and rules adopted by the commissioner.
             392          (3) (a) The commissioner may disapprove a form at any time upon a finding that:
             393          (i) it is:
             394          (A) inequitable[,];
             395          (B) unfairly discriminatory[,];
             396          (C) misleading[,];
             397          (D) deceptive[,];
             398          (E) obscure[,];
             399          (F) unfair[,];


             400          (G) encourages misrepresentation[,]; or [is]
             401          (H) not in the public interest;
             402          (ii) it provides benefits or contains other provisions that endanger the solidity of the
             403      insurer;
             404          (iii) in the case of the basic policy and the application for a basic policy, [though not
             405      applicable to riders and endorsements,] it fails to provide the exact name of the insurer and its state
             406      of domicile; [or]
             407          (iv) it violates a statute or a rule adopted by the commissioner[,]; or
             408          (v) it is otherwise contrary to law.
             409          (b) Subsection (3)(a)(iii) does not apply to riders and endorsements to a basic policy.
             410          [(b)] (c) (i) Whenever the commissioner disapproves a form under Subsection (3)(a), the
             411      commissioner may order that, on or before a date not less than 15 days after the order, the use of
             412      the form be discontinued.
             413          (ii) Once a form has been disapproved, it may not be used unless appropriate changes are
             414      filed with and approved by the commissioner. [The]
             415          (iii) Whenever the commissioner disapproves a form under Subsection (3)(a), the
             416      commissioner may [also] require the insurer to disclose contract deficiencies to existing
             417      policyholders.
             418          [(c)] (d) The commissioner's disapproval under this Subsection (3) shall be in writing and
             419      constitutes an order. The order shall state the reasons for disapproval.
             420          (4) (a) If, after a hearing, the commissioner determines that it is in the public interest, [he]
             421      the commissioner may require by rule or order that certain forms be subject to the commissioner's
             422      approval prior to their use.
             423          (b) The rule or order described in Subsection (4)(a) shall prescribe the filing procedures
             424      for [such] the forms if different than stated in this section.
             425          (c) The types of forms [which] that may be addressed under Subsection (4)(a) include:
             426          (i) forms for a particular class of insurance[,];
             427          (ii) forms for a specific line of insurance[,];
             428          (iii) a specific type of form[,]; or
             429          (iv) forms for a specific market segment.
             430          Section 9. Section 31A-22-402 is amended to read:


             431           31A-22-402. Grace period.
             432          (1) (a) Every life insurance policy other than a group policy shall contain a provision
             433      entitling the policyholder to a grace period within which the payment of any premium may be
             434      made after the first [may be made] payment of any premium.
             435          (b) During the grace period described in Subsection (1)(a), the policy continues in full
             436      force.
             437          (2) The grace period required by Subsection (1) may not be less than [30]:
             438          (a) 31 days[,]; or [less than]
             439          (b) four weeks for policies whose premiums are payable more frequently than monthly.
             440          (3) The insurer may impose an interest charge during the grace period not in excess of the
             441      interest rate:
             442          (a) set by the policy for policy loans[,]; or
             443          (b) in the absence of [that] a provision described in Subsection (3)(a), a rate set by the
             444      commissioner by rule. [The]
             445          (4) If a claim arises under the policy during the grace period, an insurer may deduct from
             446      the policy proceeds:
             447          (a) the amount of any premium due or overdue[, together with];
             448          (b) interest at the rate provided in this section[,]; and
             449          (c) any deferred installment of the annual premium[, may be deducted from the policy
             450      proceeds if a claim arises under the policy during the grace period].
             451          Section 10. Section 31A-22-404 is amended to read:
             452           31A-22-404. Suicide.
             453          (1) (a) Suicide is not a defense to a claim under a life insurance policy that has been in
             454      force as to a policyholder or certificate holder for two years from the date the coverage is effective,
             455      whether:
             456          (i) the suicide was voluntary or involuntary [and whether]; or
             457          (ii) the insured was sane or insane. [However, if]
             458          (b) If a suicide occurs within the two-year period described in Subsection (1)(a), the
             459      insurer shall pay to the beneficiary an amount not less than the premium paid for the life insurance
             460      policy.
             461          (2) (a) If after a life insurance policy is in effect the policy allows the insured[, after the


             462      policy's issuance and for an additional premium,] to obtain a death benefit [which] that is larger
             463      than when the policy was originally [issued, then] effective for an additional premium, the payment
             464      of the additional increment of benefit may be [denied on the ground of suicide, if the policy so
             465      provides, until two years after the incremental increase of benefits is in effect] limited in the event
             466      of a suicide within a two-year period beginning on the date the increment increase takes effect.
             467          (b) If a suicide occurs within the two-year period described in Subsection (2)(a), the
             468      insurer shall pay to the beneficiary an amount not less than the additional premium paid for the
             469      additional increment of benefit.
             470          (3) This section does not apply to:
             471          (a) policies insuring against death by accident only[, nor to]; or
             472          (b) the accident or double indemnity provisions of an insurance policy.
             473          Section 11. Section 31A-22-513 is amended to read:
             474           31A-22-513. Grace period.
             475          (1) (a) Every group life insurance policy shall contain a provision that the policyholder is
             476      entitled to a grace period of not less than [30] 31 days for the payment of any premium due except
             477      the first payment of premium.
             478          (b) During the grace period described in Subsection (1)(a) the death benefit coverage
             479      continues in force, unless the policyholder gives the insurer written notice of discontinuance:
             480          (i) in advance of the date of discontinuance; and
             481          (ii) in accordance with the policy terms.
             482          (2) The policy may require the policyholder to pay the pro rata premium for the time the
             483      policy is in force during the grace period.
             484          Section 12. Section 31A-22-610.2 is enacted to read:
             485          31A-22-610.2. Maternity stay minimum limits.
             486          (1) (a) If an insured has coverage for maternity benefits, the policy may not be limited to
             487      a less than a 48-hour benefit for both mother and newborn with a normal vaginal delivery.
             488          (b) If an insured has coverage for maternity benefits, the policy may not be limited to a less
             489      than 96-hour benefit for both mother and newborn with a caesarean section delivery.
             490          (2) Subsection (1) applies to a disability insurer who offers maternity coverage.
             491           S [ (3) (a) This section does not prevent a disability insurer from imposing cost-sharing
             492      measures for health benefits relating to hospital stays in connection with a delivery if the
] s


             493      S [ cost-sharing measures are not greater than those imposed on a hospital stay relating to childbirth
             494      prior to the actual delivery.
             495          (b) For purposes of Subsection (3)(a), cost-sharing measures include imposing a deductible
             496      or coinsurance requirement.
] s

             497          Section 13. Section 31A-22-613.5 is amended to read:
             498           31A-22-613.5. Price and value comparisons of health insurance.
             499          (1) This section applies generally to all health insurance policies and health maintenance
             500      organization contracts.
             501          (2) (a) Immediately after the effective date of this section, the commissioner shall appoint
             502      a Health Benefit Plan Committee.
             503          (b) The committee shall be composed of representatives of carriers, employers, employees,
             504      health care providers, consumers, and producers[,].
             505          (c) A member of the committee shall be appointed to a four-year [terms] term.
             506          [(c)] (d) Notwithstanding the requirements of Subsection (2)[(b)](c), the commissioner
             507      shall, at the time of appointment or reappointment, adjust the length of terms to ensure that the
             508      terms of committee members are staggered so that approximately half of the committee is
             509      appointed every two years.
             510          (3) When a vacancy occurs in the membership for any reason, the replacement shall be
             511      appointed for the unexpired term.
             512          (4) (a) Members shall receive no compensation or benefits for their services, but may
             513      receive per diem and expenses incurred in the performance of the member's official duties at the
             514      rates established by the Division of Finance under Sections 63A-3-106 and 63A-3-107 .
             515          (b) Members may decline to receive per diem and expenses for their service.
             516          (5) (a) The committee shall:
             517          (i) serve as an advisory committee to the commissioner; and [shall]
             518          (ii) recommend [services to be covered, copays, deductibles, levels of coinsurance, annual
             519      out-of-pocket maximums, exclusions, and limitations] for two or more designated health care plans
             520      to be marketed in the state[.]:
             521          (A) services to be covered;
             522          (B) copays;
             523          (C) deductibles;


             524          (D) levels of coinsurance;
             525          (E) annual out-of-pocket maximums;
             526          (F) exclusions; and
             527          (G) limitations.
             528          [(a)] (b) The plans recommended by the committee may include reasonable benefit
             529      differentials applicable to participating and nonparticipating providers.
             530          [(b)] (c) The plans recommended by the committee [shall] may not prohibit the use of the
             531      following cost management techniques by an insurer:
             532          (i) preauthorization of health care services;
             533          (ii) concurrent review of health care services;
             534          (iii) case management of health care services;
             535          (iv) retrospective review of medical appropriateness;
             536          (v) selective contracting with hospitals, physicians, and other health care providers to the
             537      extent permitted by law; and
             538          (vi) other reasonable techniques intended to manage health care costs.
             539          [(c)] (d) The committee shall submit the plans to the commissioner within 180 days after
             540      the appointment of the committee in accordance with this section.
             541          [(d)] (e) The commissioner shall adopt two or more health benefit plans within 60 days
             542      after the committee submits recommendations.
             543          [(e)] (f) (i) If the committee fails to submit recommendations to the commissioner within
             544      180 days after appointment, the commissioner shall, within 90 days, develop two or more
             545      designated health benefit plans.
             546          (ii) The commissioner shall, after notice and hearing, adopt two or more designated health
             547      benefit plans.
             548          (iii) The commissioner shall provide incentives for personal management of health care
             549      expenses by adopting:
             550          (A) one plan that applies deductibles in the amount of $1,500; and
             551          (B) another plan that applies deductibles in the amount of $2,500. [These]
             552          (iv) The plans described in Subsection (5)(f)(iii) may include:
             553          (A) illustrations and explanations showing the premium savings generated by the high
             554      deductibles being applied to a medical savings account for the insured [which] that can be used


             555      to pay:
             556          (I) medical expenses up to the plan deductible [and/or];
             557          (II) any other medical expenses not covered by the insurance[,]; or
             558          (III) both the medical expenses described in Subsection (5)(f)(iv)(A)(I) and (II); and
             559          (B) an explanation that any funds in the savings account belong to the insured.
             560          [(f)] (g) The commissioner may reconvene a Health Benefit Plan Committee in accordance
             561      with Subsections (2) and (5) to recommend revisions to the designated benefit plans adopted by
             562      the commissioner.
             563          (6) (a) Within 180 days after the adoption of the designated benefit plans by the
             564      commissioner, or any changes in the designated plans, an insurer offering health insurance policies
             565      for sale in this state shall, at the request of a potential buyer, offer the current designated plans at
             566      a premium based on factors such as that buyer's previous claims experience, group size,
             567      demographic characteristics, and health status.
             568          (b) This section does not prohibit an insurer from refusing to insure, under any plan, a
             569      person or group. However, if the insurer offers any policy or contract to that person or group, the
             570      insurer [must] shall offer the designated plans.
             571          (7) The designated benefit plans, described in Subsection (5) are intended to facilitate price
             572      and value comparisons by consumers. The designated benefit plans are not minimum standards
             573      for health insurance policies. An insurer offering the designated benefit plans may offer policies
             574      that provide more or less coverage than the designated benefit plans.
             575          (8) (a) The commissioner shall convene or reconvene a Health Benefit Plan Committee
             576      for the purpose of developing a Basic Health Care Plan to be offered under the open enrollment
             577      provisions of Chapter 30.
             578          (b) The commissioner shall adopt a Basic Health Care Plan within 60 days after the
             579      committee submits recommendations, or if the committee fails to submit recommendations to the
             580      commissioner within 180 days after appointment, the commissioner shall, within 90 days, adopt
             581      a Basic Health Care Plan.
             582          (c) (i) Before adoption of a plan under Subsection (8)(b), the commissioner shall submit
             583      the proposed Basic Health Care Plan to the Health and Human Services Interim Committee for
             584      review and recommendations.
             585          (ii) After the commissioner adopts the Basic Health Care Plan, the Health and Human


             586      Services Interim Committee:
             587          (A) shall provide legislative oversight of the Basic Health Care Plan; and
             588          (B) may recommend legislation to modify the Basic Health Care Plan adopted by the
             589      commissioner.
             590          (d) The committee's recommendations for the Basic Health Care Plan shall be advisory
             591      to the commissioner.
             592          (9) (a) The commissioner shall promote informed consumer behavior and responsible
             593      health insurance and health plans by requiring an insurer issuing health insurance policies or health
             594      maintenance organization contracts to provide to all enrollees, prior to enrollment in the health
             595      benefit plan or health insurance policy, written disclosure of:
             596          (i) restrictions or limitations on prescription drugs and biologics including the use of a
             597      formulary and generic substitution[. If a formulary is used, the drugs included and the patented
             598      drugs not included, and any conditions which exist as a precedent to coverage shall be made
             599      readily available to prospective enrollees and evidence of the fact of that disclosure shall be
             600      maintained by the insurer]; and
             601          (ii) coverage limits under the plan.
             602          (b) [An] In addition to the requirements of Subsections (9)(a) and (d), an insurer described
             603      in Subsection (9)(a) shall [also] submit the written disclosure required by this Subsection (9) to
             604      the commissioner:
             605          (i) annually[,]; and
             606          (ii) anytime [thereafter when] the insurer amends any of the following described in
             607      Subsection (9)(a):
             608          (A) treatment policies[,];
             609          (B) practice standards[, or];
             610          (C) restrictions [described in Subsection (8)(a)]; or
             611          (D) coverage limits of the insurer's health benefit plan or health insurance policy.
             612          (c) The commissioner may adopt rules to implement the disclosure requirements of this
             613      Subsection (9), taking into account:
             614          (i) business confidentiality of the insurer[,];
             615          (ii) definitions of terms[,]; and
             616          (iii) the method of disclosure to enrollees.


             617          (d) If under Subsection (9)(a)(i) a formulary is used, the insurer shall make available to
             618      prospective enrollees and maintain evidence of the fact of the disclosure of:
             619          (i) the drugs included;
             620          (ii) the patented drugs not included; and
             621          (iii) any conditions that exist as a precedent to coverage.
             622          (10) (a) The commissioner shall annually publish a table comparing the rates charged by
             623      insurers for the designated health plans and other health insurance plans in this state.
             624          (b) The comparison required by Subsection (10)(a) shall list:
             625          (i) the top 20 insurers writing the greatest volume by premium dollar per calendar year;
             626      and
             627          (ii) others requesting inclusion in the comparison.
             628          (c) In conjunction with the rate comparison described in this Subsection (10), the
             629      commissioner shall publish for each of the listed health insurers a table comparing the complaints
             630      filed and the combined loss and expense ratio as described in Subsections 31A-2-208.5 (2) and (3).
             631          Section 14. Section 31A-22-625 is enacted to read:
             632          31A-22-625. Mastectomy coverage.
             633          (1) If an insured has coverage that provides medical and surgical benefits with respect to
             634      a mastectomy, it shall provide coverage, with consultation of the attending physician and the
             635      patient, for:
             636          (a) reconstruction of the breast on which the mastectomy has been performed;
             637          (b) surgery and reconstruction of the breast on which the mastectomy was not performed
             638      to produce symmetrical appearance; and
             639          (c) prostheses and physical complications with regards to all stages of mastectomy,
             640      including lymphedemas.
             641          (2) (a) This section does not prevent a disability insurer from imposing cost-sharing
             642      measures for health benefits relating to this coverage, if cost-sharing measures are not greater than
             643      those imposed on any other medical condition.
             644          (b) For purposes of this Subsection (2), cost-sharing measures include imposing a
             645      deductible or coinsurance requirement.
             646          (3) Written notice of the availability of the coverage described in Subsection (1) shall be
             647      delivered to the participant:


             648          (a) upon enrollment; and
             649          (b) annually after the enrollment.
             650          Section 15. Section 31A-22-719 is enacted to read:
             651          31A-22-719. Mastectomy coverage.
             652          (1) A group policy subject to Section 31A-22-625 may not deny a person's eligibility or
             653      continued eligibility to enroll or renew coverage under the terms of the group policy plan solely
             654      for the purpose of avoiding the requirements of this section or Section 31A-22-625 .
             655          (2) A group policy subject to Section 31A-22-625 may not do any of the following to
             656      induce a provider to provide care to an insured in a manner inconsistent with this section or
             657      Section 31A-22-625 :
             658          (a) penalize or otherwise reduce or limit the reimbursement of an attending provider; or
             659          (b) provide incentives to an attending provider whether or not the incentives are monetary.
             660          Section 16. Section 31A-22-720 is enacted to read:
             661          31A-22-720. Mental health parity.
             662          (1) (a) A group disability plan offered by an insurer shall comply with Subsection (1)(b)
             663      if the group disability plan:
             664          (i) applies an aggregate lifetime limit to plan payments for medical or surgical services
             665      covered by the group disability plan; and
             666          (ii) provides a mental health benefit.
             667          (b) A group disability plan described in Subsection (1)(a) shall:
             668          (i) include in the aggregate lifetime limit for medical or surgical services covered by the
             669      group disability plan the payments made under the plan for mental health services; or
             670          (ii) establish a separate aggregate lifetime limit to plan payments for mental health services
             671      covered by the group disability plan, but only if the dollar amount of the aggregate lifetime limit
             672      for mental health services covered by that plan is equal to or greater than the dollar amount of the
             673      aggregate lifetime limit for medical or surgical services covered by that plan.
             674          (2) (a) A group disability plan offered by an insurer shall comply with Subsection (2)(b)
             675      if the group disability plan:
             676          (i) applies an annual limit to plan payments for medical or surgical services covered by the
             677      group disability plan; and
             678          (ii) provides a mental health benefit.


             679          (b) A group disability plan described in Subsection (2)(a) shall:
             680          (i) include in the annual limit for medical or surgical services covered by the group
             681      disability plan the payments made under the plan for mental health services; or
             682          (ii) establish a separate annual limit to plan payments for mental health services covered
             683      by the group disability plan, but only if the dollar amount of the annual limit for mental health
             684      services covered by that plan is equal to or greater than the dollar amount of the annual limit for
             685      medical or surgical services covered by that plan.
             686          (3) This section does not prohibit a group disability plan offered by an insurer from:
             687          (a) using other forms of cost containment not prohibited under Subsection (1); or
             688          (b) applying requirements that make distinctions between acute care and chronic care.
             689          (4) This section does not apply to:
             690          (a) benefits for:
             691          (i) substance abuse; or
             692          (ii) chemical dependency; or
             693          (b) disability benefits or plans paid under Title XVII or XIX of the Social Security Act.
             694          (5) (a) This section does not apply to plans maintained by employers that employ less than
             695      50 employees.
             696          (b) For purposes of determining whether an employer is exempt under Subsection (5)(a):
             697          (i) if the employer was not in existence throughout the preceding calendar year, the number
             698      of employees of the employer is determined based on the average number of employees that the
             699      employer is reasonably expected to employ on business days in the calendar year for which the
             700      determination is made; and
             701          (ii) as used in this Subsection (5), "employer" includes a predecessor of the employer.
             702          Section 17. Section 31A-23-219 is amended to read:
             703           31A-23-219. Appointment and listing of insurance agents.
             704          (1) As used in this section, "insurer" includes a bail bond surety [companies] as defined
             705      in Section 31A-35-102 .
             706          (2) (a) An insurer shall appoint a natural person or agency that has an insurance agent or
             707      managing general agent license to act as an insurance agent on its behalf prior to any agent doing
             708      business for the insurer in this state.
             709          (b) All insurers shall report to the commissioner, at intervals and in the form the


             710      commissioner establishes by rule, all new appointments and all terminations of appointments.
             711          (c) All insurers shall submit to the commissioner on or before July 1 of each
             712      odd-numbered year a list of all agent appointments then in force in this state.
             713          (3) (a) An insurer shall report to the commissioner the cause of termination of an agent's
             714      appointment. The information provided to the commissioner shall remain confidential.
             715          (b) An insurer is immune from civil action, civil penalty, or damages if the insurer
             716      complies in good faith with this Subsection (3) in reporting to the commissioner the cause of
             717      termination of agents' appointments.
             718          (c) Notwithstanding any other provision in this section, an insurer is not immune from any
             719      action or resulting penalty imposed on the reporting insurer as a result of proceedings brought by
             720      or on behalf of the department if the action is based on evidence other than the report submitted
             721      in compliance with this Subsection (3).
             722          (4) If an insurer appoints an agency as its agent, the insurer need not appoint, report, or pay
             723      appointment reporting fees for natural person agents designated on the agency's agent's license
             724      under Section 31A-23-212 .
             725          (5) (a) Each insurer shall maintain with the department[, on forms supplied by the
             726      department, and signed by the president and secretary of the insurer,] a list of natural persons with
             727      authority to appoint and remove the company's agents in this state on forms:
             728          (i) supplied by the department; and
             729          (ii) signed by any officer of the insurer.
             730          (b) The insurer shall submit the [reports] list required under Subsection (5)(a) to the
             731      commissioner pursuant to Subsection (2).
             732          (6) If an insurer lists a licensee as its agent in reports submitted under Subsection (2), there
             733      is a rebuttable presumption that in placing a risk with the insurer the appointed licensee or any of
             734      the licensee's licensed employees acted as the insurer's agent and not as a broker.
             735          Section 18. Section 31A-25-205 is amended to read:
             736           31A-25-205. Financial responsibility.
             737          (1) Every person licensed under this chapter shall, while licensed and for one year after
             738      that date, maintain an insurance policy or surety bond, issued by an authorized insurer, in an
             739      amount specified under Subsection (2), on a policy or contract form which is acceptable under
             740      Subsection (3).


             741          (2) (a) Insurance policies or surety bonds satisfying the requirement of Subsection (1) shall
             742      be in a face amount equal to at least 10% of the total funds handled by the administrator.
             743      However, no policy or bond under this subsection may be in a face amount of less than $5,000 nor
             744      more than $500,000.
             745          (b) In fixing the policy or bond face amount under Subsection (2)(a), the total funds
             746      handled is the greater of the premiums received or claims paid through the administrator during
             747      the previous calendar year, or, if no funds were handled during the preceding year, the total funds
             748      reasonably anticipated to be handled by the administrator during the current calendar year.
             749          (c) This section does not prohibit any person dealing with the administrator from requiring,
             750      by contract, insurance coverage in amounts greater than required under this section.
             751          (3) Insurance policies or surety bonds issued to satisfy Subsection (1) shall be on forms
             752      approved by the commissioner. The policies or bonds shall require the insurer to pay, up to the
             753      policy or bond face amount, any judgment obtained by participants in or beneficiaries of plans
             754      administered by the insured licensee which arise from the negligence or culpable acts of the
             755      licensee or any employee or agent of the licensee in connection with the activities described under
             756      [the first paragraph of Section 31A-25-101 ] Subsection 31A-1-301 (90). The commissioner may
             757      require that policies or bonds issued to satisfy the requirements of this section require the insurer
             758      to give the commissioner 20 day prior notice of policy cancellation.
             759          (4) The commissioner shall establish annual reporting requirements and forms to monitor
             760      compliance with this section.
             761          (5) This section may not be construed as limiting any cause of action an insured would
             762      otherwise have against the insurer.
             763          Section 19. Section 31A-29-111 is amended to read:
             764           31A-29-111. Eligibility -- Limitations.
             765          (1) (a) Except as provided in Subsection (1)(b), a person is eligible for pool coverage if:
             766          (i) (A) the person pays the established premium; and
             767          (B) is a resident of this state; or
             768          (ii) is a dependent child 25 years of age or less of a person described in Subsection
             769      (1)(a)(i).
             770          (b) Notwithstanding Subsection (1)(a), a person is not eligible for pool coverage if one of
             771      the following conditions apply:


             772          (i) at the time of application, the person is eligible for health care benefits under Medicaid
             773      or Medicare, except as provided in Section 31A-29-112 ;
             774          (ii) the person has terminated coverage in the pool, unless:
             775          (A) 12 months have elapsed since the termination date; or
             776          (B) the person demonstrates that continuous other coverage has been involuntarily
             777      terminated for any reason other than nonpayment of premium;
             778          (iii) the pool has paid the maximum lifetime benefit to or on behalf of the person;
             779          (iv) the person is an inmate of a public institution;
             780          (v) the person is eligible for other public programs for which medical care is provided;
             781          (vi) the person's health condition does not meet the criteria established under Subsection
             782      (4);
             783          (vii) the person is an eligible employee or a member of an employer group that offers
             784      health insurance or a self-insurance arrangement to all its eligible employees or members; or
             785          (viii) at the time of application, the person:
             786          (A) is not eligible for coverage that is subject to the Health Insurance Portability and
             787      Accountability Act, P.L. 104-91, 110 Stat. 1962; and
             788          (B) has not resided in Utah for at least 12 consecutive months preceding the date of
             789      application.
             790          (2) (a) Notwithstanding Subsection (1)(b)(viii), if otherwise eligible under Subsection (1),
             791      a person whose health insurance coverage from a state health risk pool with similar coverage is
             792      terminated because of nonresidency in another state may apply for coverage under the pool subject
             793      to the conditions of Subsections (1)(b)(i) through (vii).
             794          (b) (i) [If the coverage is applied for] Coverage sought under Subsection (2)(a) shall be
             795      applied for within [31] 63 days after the termination [and if] date of the previous risk pool
             796      coverage.
             797          (ii) If premiums are paid for the entire coverage period under the pool, the effective date
             798      of the pool's coverage shall be the date of termination of previous coverage.
             799          (iii) If premiums are not paid back to the previous termination date, then the effective date
             800      will be determined by the pool administrator in accordance with the date of application.
             801          (c) The waiting period of a person with a preexisting condition applying for coverage
             802      under this chapter shall be waived if:


             803          (i) the waiting period was satisfied under a similar plan from another state; and
             804          (ii) the other state's benefit limitation was not reached.
             805          (3) If an eligible person applies for pool coverage within 30 days of being denied coverage
             806      by an individual carrier, the effective date for pool coverage shall be set at the first day of the
             807      month following the submission of the completed insurance application to the carrier.
             808          (4) (a) The board shall establish and adjust, as necessary, underwriting criteria based on:
             809          (i) health condition; and
             810          (ii) expected claims so that the expected claims are anticipated to remain within available
             811      funding.
             812          (b) The commissioner may contract with one or more providers under Title 63, Chapter
             813      56, Utah Procurement Code, to develop underwriting criteria under Subsection (4)(a).
             814          (c) If a person is denied coverage under the criteria established in Subsection (4)(a), the
             815      pool shall issue a certificate to the applicant for coverage under Subsection 31A-30-108 (3).
             816          Section 20. Section 31A-29-117 is amended to read:
             817           31A-29-117. Premium rates.
             818          (1) (a) Premium charges for coverage under the pool may not be unreasonable in relation
             819      to:
             820          (i) the benefits provided[,];
             821          (ii) the risk experience[,]; and
             822          (iii) the reasonable expenses provided in the coverage.
             823          (b) Separate schedules of premium rates based on age and other appropriate demographic
             824      characteristics may apply for individual risks.
             825          (2) A small employer carrier shall annually inform the commissioner by April 1 of the
             826      carrier's small employer index premium rates as of March 1 of the current and preceding year.
             827          (3) (a) Premium rates in effect as of January 1, 1997, shall be adjusted on July 1, 1997, and
             828      each following July 1 [based on] may be adjusted by the board.
             829          (b) In adjusting premium rates, the board shall:
             830          (i) consider the average increase in small employer index rates for the five largest small
             831      employer carriers submitted under Subsection (2)[.]; and
             832          (ii) be subject to Subsection (1).
             833          (4) The board may establish a premium scale based on income. The highest rate may not


             834      exceed the expected claims and expenses for the individual.
             835          (5) If a person is an eligible individual as defined in the Health Insurance Portability and
             836      Accountability Act, P.L. 104-191, 110 Stat. 1979, Sec. 2741(b), the maximum premium rate for
             837      that person may not exceed the amount permitted under P.L. 104-191, 110 Stat. 1986, Sec.
             838      2744(c)(2)(B).
             839          (6) All rates and rate schedules shall be submitted by the board to the commissioner for
             840      approval.
             841          Section 21. Section 31A-30-107 is amended to read:
             842           31A-30-107. Renewal -- Limitations -- Exclusions.
             843          (1) A health benefit plan subject to this chapter is renewable with respect to all covered
             844      individuals at the option of the covered insured except in any of the following cases:
             845          (a) nonpayment of the required premiums;
             846          (b) fraud or misrepresentation of:
             847          (i) the employer; or[,]
             848          (ii) with respect to coverage of individual insureds, the insureds or their representatives;
             849          (c) noncompliance with the covered carrier's minimum participation requirements;
             850          (d) noncompliance with the covered carrier's employer contribution requirements;
             851          (e) repeated misuse of a provider network provision; or
             852          (f) an election by the covered carrier to nonrenew all of its health benefit plans issued to
             853      covered insureds in this state, in which case the covered carrier shall:
             854          (i) provide advanced notice of its decision under this Subsection (1) to the commissioner
             855      in each state in which it is licensed; and
             856          (ii) provide notice of the decision not to renew coverage to all affected covered insureds
             857      and to the commissioner in each state in which an affected insured individual is known to reside
             858      [at least 180 days prior to the nonrenewal of any health benefit plans by the covered carrier].
             859          (2) Notice [to the commissioner] under [this] Subsection (1) shall be provided:
             860          (a) to affected covered insureds at least 180 days prior to nonrenewal of any health benefit
             861      plans by the covered carrier; and
             862          (b) to the commissioner at least three working days prior to the notice to the affected
             863      covered insureds.
             864          [(2)] (3) A covered carrier that elects not to renew a health benefit plan under Subsection


             865      (1)(f) is prohibited from writing new business subject to this chapter in this state for a period of
             866      five years from the date of notice to the commissioner.
             867          [(3)] (4) When a covered carrier is doing business subject to this chapter in one service
             868      area of this state, Subsections (1) [and (2)] through (3) apply only to the covered carrier's
             869      operations in that service area.
             870          [(4)] (5) Health benefit plans covering covered insureds shall comply with [the following
             871      provisions:] Subsections (5)(a) and (b).
             872          (a) (i) A health benefit plan may not deny, exclude, or limit benefits for a covered
             873      individual for losses incurred more than 12 months, or 18 months in the case of a late enrollee, as
             874      defined in P.L. 104-191, 110 Stat. 1940, Sec. 101, following the effective date of the individual's
             875      coverage due to a preexisting condition.
             876          (ii) A health benefit plan may not define a preexisting condition more restrictively than:
             877          (A) a condition for which medical advice, diagnosis, care, or treatment was recommended
             878      or received during the six months immediately preceding the earlier of:
             879          (I) the enrollment date; or
             880          (II) the effective date of coverage; or
             881          (B) for an individual insurance policy, a pregnancy existing on the effective date of
             882      coverage.
             883          (b) (i) A covered carrier shall waive any time period applicable to a preexisting condition
             884      exclusion or limitation period with respect to particular services in a health benefit plan for the
             885      period of time the individual was previously covered by public or private health insurance or by
             886      any other health benefit arrangement that provided benefits with respect to such services, provided
             887      that:
             888          (A) the previous coverage was continuous to a date not more than [62] 63 days prior to the
             889      effective date of the new coverage; and
             890          (B) the insured provides notification of previous coverage to the covered carrier within 36
             891      months of the coverage effective date if the insurer has previously requested such notification.
             892          (ii) The period of continuous coverage under Subsection [(4)] (5)(b)(i)(A) [shall] may not
             893      include any waiting period for the effective date of the new coverage applied by the employer or
             894      the carrier. This Subsection (5)(b)(ii) does not preclude application of any waiting period
             895      applicable to all new enrollees under [such] the plan.
             895a      S Section 21. Coordination clause.
             895b          (1) IF THIS BILL AND S.B. 164, MEDICAL EXCLUSIONS IN INDIVIDUAL HEALTH INSURANCE
             895c      POLICIES, BOTH PASS, IT IS THE INTENT OF THE LEGISLATURE THAT: s


             895d      S    (a) THE AMENDMENTS IN THIS BILL TO SECTION 31A-30-107 SUPERSEDE THE
             895e      AMENDMENTS TO SECTION 31A-30-107 IN S.B. 164 EXCEPT THAT SUBSECTIONS 31A-30-107(4)(a)(iii)
             895f      AND 31A-30-107(4)(b)(iii) IN S.B. 164 SHALL BE ADDED AS SUBSECTIONS 31A-30-107(5)(a)(iii) AND
             895g      31A-30-107(5)(b)(iii) IN THIS BILL; AND
             895h          (b) THE INTERNAL REFERENCE CITATIONS CHANGED ACCORDINGLY.
             895i          (2) IF THIS BILL AND 1st SUB. H.B. 254, INSURANCE DEPARTMENT - HEALTH INSURANCE
             895j      REPORTING REQUIREMENTS, BOTH PASS, IT IS THE INTENT OF THE LEGISLATURE THAT:
             895k          (a) THE AMENDMENTS IN THIS BILL TO SUBSECTION 31A-22-613.5(9)(b) SUPERSEDE THE
             895l      DELETION OF SUBSECTION 31A-22-613.5(6)(b) IN 1st SUB. H.B. 254; AND
             895m          (b) THE AFFECTED SUBSECTIONS BE RENUMBERED ACCORDINGLY. s






Legislative Review Note
    as of 2-3-00 2:36 PM


This legislation raises the following constitutional or statutory concerns:

This bill modifies an existing requirement that to participate in the Comprehensive Health
Insurance Pool a person must be a resident of this state for 12 months unless that person was
covered by a similar pool in another state. A 1999 United States Supreme Court case has found
a durational residency requirement related to welfare benefits unconstitutional. Saenz v. Roe, 526
U.S. 489 (1999). However, in as much as this bill extends the period to transfer from another
state's pool and clarifies the effective date of coverage, this bill may facilitate the insurance
coverage of some persons that do not meet the existing 12-month residency requirement.

Office of Legislative Research and General Counsel


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