H.B. 207 Enrolled

HEALTH INSURANCE AMENDMENTS
2004 GENERAL SESSION
STATE OF UTAH
Sponsor: Rebecca D. Lockhart

LONG TITLE
General Description:
This bill makes technical and clarifying changes requested by the Department of
Insurance and repeals and reenacts provisions regarding health insurance conversion
rights.
Highlighted Provisions:
This bill:
. changes the date of the department's report to the Health and Human Services
Interim Committee;
. grants rulemaking authority to the commissioner to interpret and implement
out-of-area dependent coverage;
. permits an insured to submit an adverse benefit determination to independent review
in certain circumstances;
. requires a certificate of creditable coverage for HIPAA compliance purposes;
. updates references to Operation Desert Storm to mobilization into the United States
armed forces;
. changes the date on which a small employer carrier must file an actuarial certification
from March 15 to April 1;
. enacts new sections regarding extension of employer group coverage and conversion
coverage;
. repeals sections regarding:
. conversion rights on termination of coverage;
. conversion rules;
. provisions in conversion policies;

. conversion of health benefit plan;
. conversion privileges upon retirement;
. conversion privileges of spouse and child;
. conversion when benefits differ;
. converted policies delivered outside Utah; and
. extension of benefits; and
. makes technical amendments.
Monies Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
31A-2-201, as last amended by Chapter 277, Laws of Utah 2001
31A-22-610.5, as last amended by Chapters 116 and 207, Laws of Utah 2001
31A-22-612, as last amended by Chapter 116, Laws of Utah 2001
31A-22-629, as last amended by Chapter 42, Laws of Utah 2003
31A-22-701, as last amended by Chapter 116, Laws of Utah 2001
31A-22-716, as last amended by Chapter 116, Laws of Utah 2001
31A-22-717, as last amended by Chapter 116, Laws of Utah 2001
31A-30-101, as last amended by Chapter 308, Laws of Utah 2002
31A-30-104, as last amended by Chapter 298, Laws of Utah 2003
31A-30-106, as last amended by Chapter 252, Laws of Utah 2003
ENACTS:
31A-22-722, Utah Code Annotated 1953
31A-22-723, Utah Code Annotated 1953
REPEALS:
31A-22-703, as last amended by Chapters 250 and 308, Laws of Utah 2002

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31A-22-704, as last amended by Chapter 116, Laws of Utah 2001
31A-22-705, as last amended by Chapter 308, Laws of Utah 2002
31A-22-708, as last amended by Chapter 308, Laws of Utah 2002
31A-22-709, as enacted by Chapter 242, Laws of Utah 1985
31A-22-710, as enacted by Chapter 242, Laws of Utah 1985
31A-22-711, as last amended by Chapter 329, Laws of Utah 1998
31A-22-712, as enacted by Chapter 242, Laws of Utah 1985
31A-22-714, as last amended by Chapter 308, Laws of Utah 2002

Be it enacted by the Legislature of the state of Utah:
Section 1. Section 31A-2-201 is amended to read:
31A-2-201. General duties and powers.
(1) The commissioner shall administer and enforce this title.
(2) The commissioner has all powers specifically granted, and all further powers that are
reasonable and necessary to enable him to perform the duties imposed by this title.
(3) (a) The commissioner may make rules to implement the provisions of this title
according to the procedures and requirements of Title 63, Chapter 46a, Utah Administrative
Rulemaking Act.
(b) In addition to the notice requirements of Section 63-46a-4 , the commissioner shall
provide notice under Section 31A-2-303 of hearings concerning insurance department rules.
(4) (a) The commissioner shall issue prohibitory, mandatory, and other orders as
necessary to secure compliance with this title. An order by the commissioner is not effective
unless the order:
(i) is in writing; and
(ii) is signed by the commissioner or under the commissioner's authority.
(b) On request of any person who would be affected by an order under Subsection (4)(a),
the commissioner may issue a declaratory order to clarify the person's rights or duties.
(5) (a) The commissioner may hold informal adjudicative proceedings and public

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meetings, for the purpose of investigation, ascertainment of public sentiment, or informing the
public.
(b) No effective rule or order may result from informal hearings and meetings unless the
requirement of a hearing under Section 31A-2-301 is satisfied.
(6) The commissioner shall inquire into violations of this title and may conduct any
examinations and investigations of insurance matters, in addition to examinations and
investigations expressly authorized, that he considers proper to determine:
(a) whether or not any person has violated any provision of this title; or
(b) to secure information useful in the lawful administration of any provision of this title.
(7) (a) Each year, the commissioner shall:
(i) conduct an evaluation of the state's health insurance market;
(ii) report the findings of the evaluation to the Health and Human Services Interim
Committee before [July 31] October 1; and
(iii) publish the findings of the evaluation of the department website.
(b) The evaluation shall:
(i) analyze the effectiveness of the insurance regulations and statutes in promoting a
healthy, competitive health insurance market that meets the needs of Utahns by assessing such
things as the availability and marketing of individual and group products, rate charges, coverage
and demographic changes, benefit trends, market share changes, and accessibility;
(ii) assess complaint ratios and trends within the health insurance market, which
assessment shall integrate complaint data from the Office of Consumer Health Assistance within
the department;
(iii) contain recommendations for action to improve the overall effectiveness of the health
insurance market, administrative rules, and statutes; and
(iv) include claims loss ratio data for each insurance company doing business in the state.
(c) When preparing the evaluation required by this section, the commissioner may seek
the input of insurers, employers, insured persons, providers, and others with an interest in the
health insurance market.

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Section 2. Section 31A-22-610.5 is amended to read:
31A-22-610.5. Dependent coverage.
(1) As used in this section, "child" has the same meaning as defined in Section 78-45-2 .
(2) (a) Any individual or group accident and health insurance policy or health
maintenance organization contract that provides coverage for a policyholder's or certificate
holder's dependent shall not terminate coverage of an unmarried dependent by reason of the
dependent's age before the dependent's 26th birthday and shall, upon application, provide
coverage for all unmarried dependents up to age 26.
(b) The cost of coverage for unmarried dependents 19 to 26 years of age shall be included
in the premium on the same basis as other dependent coverage.
(c) This section does not prohibit the employer from requiring the employee to pay all or
part of the cost of coverage for unmarried dependents.
(3) An individual or group accident and health insurance policy or health maintenance
organization contract shall reinstate dependent coverage, and for purposes of all exclusions and
limitations, shall treat the dependent as if the coverage had been in force since it was terminated;
if:
(a) the dependent has not reached the age of 26 by July 1, 1995;
(b) the dependent had coverage prior to July 1, 1994;
(c) prior to July 1, 1994, the dependent's coverage was terminated solely due to the age
of the dependent; and
(d) the policy has not been terminated since the dependent's coverage was terminated.
(4) (a) When a parent is required by a court or administrative order to provide health
insurance coverage for a child, an accident and health insurer may not deny enrollment of a child
under the accident and health insurance plan of the child's parent on the grounds the child:
(i) was born out of wedlock and is entitled to coverage under Subsection (6);
(ii) was born out of wedlock and the custodial parent seeks enrollment for the child under
the custodial parent's policy;
(iii) is not claimed as a dependent on the parent's federal tax return; or

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(iv) does not reside with the parent or in the insurer's service area.
(b) An accident and health insurer providing enrollment under Subsection (4)(a)(iv) is
subject to the requirements of Subsection (5).
(5) A health maintenance organization or a preferred provider organization may use
alternative delivery systems or indemnity insurers to provide coverage under Subsection (4)(a)(iv)
outside its service area. Section 31A-8-408 does not apply to this Subsection (5).
(6) When a child has accident and health coverage through an insurer of a noncustodial
parent, and when requested by the noncustodial or custodial parent, the insurer shall:
(a) provide information to the custodial parent as necessary for the child to obtain benefits
through that coverage, but the insurer or employer, or the agents or employees of either of them,
are not civilly or criminally liable for providing information in compliance with this Subsection
(6)(a), whether the information is provided pursuant to a verbal or written request;
(b) permit the custodial parent or the service provider, with the custodial parent's
approval, to submit claims for covered services without the approval of the noncustodial parent;
and
(c) make payments on claims submitted in accordance with Subsection (6)(b) directly to
the custodial parent, the child who obtained benefits, the provider, or the state Medicaid agency.
(7) When a parent is required by a court or administrative order to provide health
coverage for a child, and the parent is eligible for family health coverage, the insurer shall:
(a) permit the parent to enroll, under the family coverage, a child who is otherwise
eligible for the coverage without regard to an enrollment season restrictions;
(b) if the parent is enrolled but fails to make application to obtain coverage for the child,
enroll the child under family coverage upon application of the child's other parent, the state
agency administering the Medicaid program, or the state agency administering 42 U.S.C. 651
through 669, the child support enforcement program; and
(c) (i) when the child is covered by an individual policy, not disenroll or eliminate
coverage of the child unless the insurer is provided satisfactory written evidence that:
(A) the court or administrative order is no longer in effect; or

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(B) the child is or will be enrolled in comparable accident and health coverage through
another insurer which will take effect not later than the effective date of disenrollment; or
(ii) when the child is covered by a group policy, not disenroll or eliminate coverage of the
child unless the employer is provided with satisfactory written evidence, which evidence is also
provided to the insurer, that Subsection (10)(c)(i), (ii) or (iii) has happened.
(8) An insurer may not impose requirements on a state agency that has been assigned the
rights of an individual eligible for medical assistance under Medicaid and covered for accident and
health benefits from the insurer that are different from requirements applicable to an agent or
assignee of any other individual so covered.
(9) Insurers may not reduce their coverage of pediatric vaccines below the benefit level in
effect on May 1, 1993.
(10) When a parent is required by a court or administrative order to provide health
coverage, which is available through an employer doing business in this state, the employer shall:
(a) permit the parent to enroll under family coverage any child who is otherwise eligible
for coverage without regard to any enrollment season restrictions;
(b) if the parent is enrolled but fails to make application to obtain coverage of the child,
enroll the child under family coverage upon application by the child's other parent, by the state
agency administering the Medicaid program, or the state agency administering 42 U.S.C. 651
through 669, the child support enforcement program;
(c) not disenroll or eliminate coverage of the child unless the employer is provided
satisfactory written evidence that:
(i) the court order is no longer in effect;
(ii) the child is or will be enrolled in comparable coverage which will take effect no later
than the effective date of disenrollment; or
(iii) the employer has eliminated family health coverage for all of its employees; and
(d) withhold from the employee's compensation the employee's share, if any, of premiums
for health coverage and to pay this amount to the insurer.
(11) An order issued under Section 62A-11-326.1 may be considered a "qualified medical

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support order" for the purpose of enrolling a dependent child in a group accident and health
insurance plan as defined in Section 609(a), Federal Employee Retirement Income Security Act of
1974.
(12) This section does not affect any insurer's ability to require as a precondition of any
child being covered under any policy of insurance that:
(a) the parent continues to be eligible for coverage;
(b) the child shall be identified to the insurer with adequate information to comply with
this section; and
(c) the premium shall be paid when due.
(13) The provisions of this section apply to employee welfare benefit plans as defined in
Section 26-19-2 .
(14) The commissioner shall adopt rules interpreting and implementing this section with
regard to out-of-area court ordered dependent coverage.
Section 3. Section 31A-22-612 is amended to read:
31A-22-612. Conversion privileges for insured former spouse.
(1) An accident and health insurance policy, which in addition to covering the insured also
provides coverage to the spouse of the insured, may not contain a provision for termination of
coverage of a spouse covered under the policy, except by entry of a valid decree of divorce or
annulment between the parties.
(2) Every policy which contains this type of provision shall provide that upon the entry of
the divorce decree the spouse is entitled to have issued an individual policy of accident and health
insurance without evidence of insurability, upon application to the company and payment of the
appropriate premium. The policy shall provide the coverage being issued which is most nearly
similar to the terminated coverage. Probationary or waiting periods in the policy are considered
satisfied to the extent the coverage was in force under the prior policy.
(3) When the insurer receives actual notice that the coverage of a spouse is to be
terminated because of a divorce or annulment, the insurer shall promptly provide the spouse
written notification of the right to obtain individual coverage as provided in Subsection (2), the

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premium amounts required, and the manner, place, and time in which premiums may be paid. The
premium is determined in accordance with the insurer's table of premium rates applicable to the
age and class of risk of the persons to be covered and to the type and amount of coverage
provided. If the spouse applies and tenders the first monthly premium to the insurer within 30
days after receiving the notice provided by this subsection, the spouse shall receive individual
coverage that commences immediately upon termination of coverage under the insured's policy.
(4) This section does not apply to accident and health insurance policies:
(a) offered on a group blanket basis[.]; or
(b) that comply with Section 31A-22-723 .
Section 4. Section 31A-22-629 is amended to read:
31A-22-629. Adverse benefit determination review process.
(1) As used in this section:
(a) (i) "Adverse benefit determination" means the:
(A) denial of a benefit;
(B) reduction of a benefit;
(C) termination of a benefit; or
(D) failure to provide or make payment, in whole or in part, for a benefit.
(ii) "Adverse benefit determination" includes:
(A) denial, reduction, termination, or failure to provide or make payment that is based on
a determination of an insured's or a beneficiary's eligibility to participate in a plan;
(B) with respect to individual or group health plans, and income replacement or disability
income policies, a denial, reduction, or termination of, or a failure to provide or make payment, in
whole or in part, for, a benefit resulting from the application of a utilization review; and
(C) failure to cover an item or service for which benefits are otherwise provided because
it is determined to be:
(I) experimental;
(II) investigational; or
(III) not medically necessary or appropriate.

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(b) "Independent review" means a process that:
(i) is a voluntary option for the resolution of an adverse benefit determination;
(ii) is conducted at the discretion of the claimant;
(iii) is conducted by an independent review organization designated by the insurer;
(iv) renders an independent and impartial decision on an adverse benefit determination
submitted by an insured; and
(v) may not require the insured to pay a fee for requesting the independent review.
(c) "Insured" is as defined in Section 31A-1-301 and includes a person who is authorized
to act on the insured's behalf.
(d) "Insurer" is as defined in Section 31A-1-301 and includes:
(i) a health maintenance organization; and
(ii) a third-party administrator that offers, sells, manages, or administers a health
insurance policy or health maintenance organization contract that is subject to this title.
(e) "Internal review" means the process an insurer uses to review an insured's adverse
benefit determination before the adverse benefit determination is submitted for independent
review.
(2) This section applies generally to health insurance policies, health maintenance
organization contracts, and income replacement or disability income policies.
(3) (a) An insured may submit an adverse benefit determination to the insurer.
(b) The insurer shall conduct an internal review of the insured's adverse benefit
determination.
(c) An insured who disagrees with the results of an internal review may submit the
adverse benefit determination for an independent review if the adverse benefit determination
involves payment of a claim or denial of coverage regarding medical necessity.
(4) Before October 1, 2000, the commissioner shall adopt rules that establish minimum
standards for:
(a) internal reviews;
(b) independent reviews to ensure independence and impartiality;

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(c) the types of adverse benefit determinations that may be submitted to an independent
review; and
(d) the timing of the review process, including an expedited review when medically
necessary.
(5) Nothing in this section may be construed as:
(a) expanding, extending, or modifying the terms of a policy or contract with respect to
benefits or coverage;
(b) permitting an insurer to charge an insured for the internal review of an adverse benefit
determination;
(c) restricting the use of arbitration in connection with or subsequent to an independent
review; or
(d) altering the legal rights of any party to seek court or other redress in connection with:
(i) an adverse decision resulting from an independent review, except that if the insurer is
the party seeking legal redress, the insurer shall pay for the reasonable [attorneys] attorneys' fees
of the insured related to the action and court costs; or
(ii) an adverse benefit determination or other claim that is not eligible for submission to
independent review.
Section 5. Section 31A-22-701 is amended to read:
31A-22-701. Groups eligible for group or blanket insurance.
(1) A group or blanket accident and health insurance policy may be issued to:
(a) any group to which a group life insurance policy may be issued under Sections
31A-22-502 through 31A-22-507 ; or
[(b) a policy issued pursuant to a conversion privilege under Part VII; or]
[(c)] (b) a group specifically authorized by the commissioner under Section 31A-22-509 ,
upon a finding that:
(i) authorization is not contrary to the public interest;
(ii) the proposed group is actuarially sound;
(iii) formation of the proposed group may result in economies of scale in administrative,

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marketing, and brokerage costs; and
(iv) the health insurance policy, certificate, or other indicia of coverage that will be
offered to the proposed group is substantially equivalent to policies that are otherwise available to
similar groups.
(2) Blanket policies may also be issued to:
(a) any common carrier or any operator, owner, or lessee of a means of transportation, as
policyholder, covering persons who may become passengers as defined by reference to their travel
status;
(b) an employer, as policyholder, covering any group of employees, dependents, or
guests, as defined by reference to specified hazards incident to any activities of the policyholder;
(c) an institution of learning, including a school district, school jurisdictional units, or the
head, principal, or governing board of any of those units, as policyholder, covering students,
teachers, or employees;
(d) any religious, charitable, recreational, educational, or civic organization, or branch of
those organizations, as policyholder, covering any group of members or participants as defined by
reference to specified hazards incident to the activities sponsored or supervised by the
policyholder;
(e) a sports team, camp, or sponsor of the team or camp, as policyholder, covering
members, campers, employees, officials, or supervisors;
(f) any volunteer fire department, first aid, civil defense, or other similar volunteer
organization, as policyholder, covering any group of members or participants as defined by
reference to specified hazards incident to activities sponsored, supervised, or participated in by the
policyholder;
(g) a newspaper or other publisher, as policyholder, covering its carriers;
(h) an association, including a labor union, which has a constitution and bylaws and which
has been organized in good faith for purposes other than that of obtaining insurance, as
policyholder, covering any group of members or participants as defined by reference to specified
hazards incident to the activities or operations sponsored or supervised by the policyholder;

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(i) a health insurance purchasing association organized and controlled solely by
participating employers as defined in Section 31A-34-103 ; and
(j) any other class of risks which, in the judgment of the commissioner, may be properly
eligible for blanket accident and health insurance.
(3) The judgment of the commissioner may be exercised on the basis of:
(a) individual risks;
(b) class of risks; or
(c) both Subsections (3)(a) and (b).
Section 6. Section 31A-22-716 is amended to read:
31A-22-716. Required provision for notice of termination.
(1) Every policy for group or blanket accident and health coverage issued or renewed
after July 1, 1990, shall include a provision that obligates the policyholder to give 30 days prior
written notice of termination to each employee or group member and to notify each employee or
group member of his rights to continue coverage upon termination.
(2) An insurer's monthly notice to the policyholder of premium payments due shall include
a statement of the policyholder's obligations as set forth in Subsection (1). Insurers shall provide
a sample notice to the policyholder at least once a year.
(3) For the purpose of compliance with federal law and the Health Insurance Portability
and Accountability Act, P.L. No. 104-191, 110 Stat. 1960, all health benefit plans, health insurers,
and student health plans must provide a certificate of creditable coverage to each covered person
upon their termination from the plan as soon as reasonably possible.
Section 7. Section 31A-22-717 is amended to read:
31A-22-717. Provisions pertaining to service members and their families affected
by mobilization into the armed forces.
For any group or blanket accident and health coverage, an insurer:
(1) may not refuse to reinstate an insured or his family whose coverage lapsed due to the
insured's [participation in Operation Desert Shield or Operation Desert Storm] mobilization into
the United States armed forces provided application is made within 180 days of release from

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active duty;
(2) shall reinstate an insured in full upon payment of the first premium without the
requirement of a waiting period or exclusion for preexisting conditions or any other underwriting
requirements that were covered previously; and
(3) may not increase the insured's premium in excess of what it would have been
increased in the normal course of time had the insured not [participated in Operation Desert
Shield or Operation Desert Storm] been mobilized into the United States armed forces.
Section 8. Section 31A-22-722 is enacted to read:
31A-22-722. Utah mini-COBRA benefits for employer group coverage.
(1) An insured has the right to extend the employee's coverage under the group policy for
a period of six months, except as provided in Subsection (2). The right to extend coverage
includes:
(a) voluntary termination;
(b) involuntary termination;
(c) retirement;
(d) death;
(e) divorce or legal separation;
(f) loss of dependent status;
(g) sabbatical;
(h) any disability;
(i) leave of absence; or
(j) reduction of hours.
(2) (a) Notwithstanding the provisions of Subsection (1), an employee does not have the
right to extend coverage under the group policy if the employee:
(i) failed to pay any required individual contribution;
(ii) acquires other group coverage covering all preexisting conditions including maternity,
if the coverage exists;
(iii) performed an act or practice that constitutes fraud in connection with the coverage;

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(iv) made an intentional misrepresentation of material fact under the terms of the
coverage;
(v) was terminated for gross misconduct;
(vi) has not been continuously covered under a group policy for a period of six months
immediately prior to the termination of the policy due to the events set forth in Subsection (1); or
(vii) is eligible for any extension of coverage required by federal law.
(b) The right to extend coverage under Subsection (1) applies to any spouse or dependent
coverages, including a surviving spouse or dependents whose coverage under the policy
terminates by reason of the death of the employee or member.
(3) (a) The employer shall provide written notification of the right to extend group
coverage and the payment amounts required for extension of coverage, including the manner,
place, and time in which the payments shall be made to:
(i) the terminated insured;
(ii) the ex-spouse; or
(iii) if Subsection (2)(b) applies:
(A) to a surviving spouse; and
(B) the guardian of surviving dependents, if different from a surviving spouse.
(b) The notification shall be sent first class mail within 30 days after the termination date
of the group coverage to:
(i) the terminated insured's home address as shown on the records of the employer;
(ii) the address of the surviving spouse, if different from the insured's address and if
shown on the records of the employer;
(iii) the guardian of any dependents address, if different from the insured's address, and if
shown on the records of the employer; and
(iv) the address of the ex-spouse, if shown on the records of the employer.
(4) The insurer shall provide the employee, spouse, or any eligible dependent the
opportunity to extend the group coverage at the payment amount stated in this Subsection (3) if:
(a) the employer policyholder does not provide the terminated insured the written

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notification required by Subsection (3)(a); and
(b) the employee or other individual eligible for extension contacts the insurer within 60
days of coverage termination.
(5) The premium amount for extended group coverage may not exceed 102% of the
group rate in effect for a group member, including an employer's contribution, if any, for a group
insurance policy.
(6) Except as provided in this Subsection (6), the coverage extends without interruption
for six months and may not terminate if the terminated insured or, with respect to a minor, the
parent or guardian of the terminated insured:
(a) elects to extend group coverage within 60 days of losing group coverage; and
(b) tenders the amount required to the employer or insurer.
(7) The insured's coverage may be terminated prior to six months if the terminated
insured:
(a) establishes residence outside of this state;
(b) moves out of the insurer's service area;
(c) fails to pay premiums or contributions in accordance with the terms of the policy,
including any timeliness requirements;
(d) performs an act or practice that constitutes fraud in connection with the coverage;
(e) makes an intentional misrepresentation of material fact under the terms of the
coverage;
(f) becomes eligible for similar coverage under another group policy; or
(g) employer's coverage is terminated, except as provided in Subsection (8).
(8) If the employer coverage is terminated and the employer replaces coverage with
similar coverage under another group policy, without interruption, the terminated insured, spouse,
or the surviving spouse and guardian of dependents if Subsection (2)(b) applies, have the right to
obtain extension of coverage under the replacement group policy:
(a) for the balance of the period the terminated insured would have extended coverage
under the replaced group policy; and

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(b) if the terminated insured is otherwise eligible for extension of coverage.
(9) (a) Within 30 days of the insured's exhaustion of extension of coverage, the employer
shall provide the terminated insured and the ex-spouse, or, in the case of the death of the insured,
the surviving spouse, or guardian of any dependents, written notification of the right to an
individual conversion policy.
(b) The notification required by Subsection (9)(a):
(i) shall be sent first class mail to:
(A) the insured's last-known address as shown on the records of the employer;
(B) the address of the surviving spouse, if different from the insured's address, and if
shown on the records of the employer;
(C) the guardian of any dependents last known address as shown on the records of the
employer, if different from the address of the surviving spouse; and
(D) the address of the ex-spouse as shown on the records of the employer, if applicable;
and
(ii) shall contain the name, address, and telephone number of the insurer that will provide
the conversion coverage.
Section 9. Section 31A-22-723 is enacted to read:
31A-22-723. Group and blanket conversion coverage.
(1) Notwithstanding Subsection 31A-1-103 (3)(f), and except as provided in Subsection
(3), all policies of accident and health insurance offered on a group basis under this title, or Title
49, Chapter 20, Public Employees' Benefit and Insurance Program Act, shall provide that a person
whose insurance under the group policy has been terminated is entitled to choose a converted
individual policy of similar accident and health insurance.
(2) A person who has lost group coverage may elect conversion coverage with the insurer
that provided prior group coverage if the person:
(a) has been continuously covered under a group policy for a period of six months
immediately prior to termination; and
(b) has exhausted either Utah mini-COBRA coverage as required in Section 31A-22-722

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or federal COBRA coverage, if offered; and
(c) has not acquired or is not covered under any other group coverage that covers all
preexisting conditions including maternity, if the coverage exists.
(3) This section does not apply if the person's prior group coverage:
(a) is a stand alone policy that only provides one of the following:
(i) catastrophic benefits;
(ii) aggregate stop loss benefits;
(iii) specific stop loss benefits;
(iv) benefits for specific diseases;
(v) accidental injuries only;
(vi) dental; or
(vii) vision;
(b) is an income replacement policy; or
(c) was terminated because the insured:
(i) failed to pay any required individual contribution;
(ii) performed an act or practice that constitutes fraud in connection with the coverage; or
(iii) made intentional misrepresentation of material fact under the terms of coverage.
(4) (a) The employer shall provide written notification of the right to an individual
conversion policy within 30 days of the insured's termination of coverage to:
(i) the terminated insured;
(ii) the ex-spouse; or
(iii) in the case of the death of the insured:
(A) the surviving spouse; or
(B) the guardian of any dependents, if different from a surviving spouse.
(b) The notification required by Subsection (4)(a) shall:
(i) be sent by first class mail;
(ii) contain the name, address, and telephone number of the insurer that will provide the
conversion coverage; and

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(iii) be sent to the insured's last-known address as shown on the records of the employer
of:
(A) the insured;
(B) the ex-spouse; and
(C) if the policy terminates by reason of the death of the insured to:
(I) the surviving spouse; or
(II) the guardian of any dependents if different from a surviving spouse.
(5) (a) An insurer is not required to issue a converted policy which provides benefits in
excess of those provided under the group policy from which conversion is made.
(b) Except as provided in Subsection (5)(c), if the conversion is made from a health
benefit plan, the employee or member must be offered at least the basic benefit plan as provided in
Subsection 31A-22-613.5 (2)(a).
(c) If the benefit levels required under Subsection (5)(b) exceed the benefit levels
provided under the group policy, the conversion policy may offer benefits which are substantially
similar to those provided under the group policy.
(6) Written application for the converted policy shall be made and the first premium paid
to the insurer no later than 60 days after termination of the group accident and health insurance.
(7) The converted policy shall be issued without evidence of insurability.
(8) (a) The initial premium for the converted policy for the first 12 months and
subsequent renewal premiums shall be determined in accordance with premium rates applicable to
age, class of risk of the person, and the type and amount of insurance provided.
(b) The initial premium for the first 12 months may not be raised based on pregnancy of a
covered insured.
(c) The premium for converted policies shall be payable monthly or quarterly as required
by the insurer for the policy form and plan selected, unless another mode or premium payment is
mutually agreed upon.
(9) The converted policy becomes effective at the time the insurance under the group
policy terminates.

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(10) (a) A newly issued converted policy covers the employee or the member and must
also cover all dependents covered by the group policy at the date of termination of the group
coverage.
(b) The only dependents that may be added after the policy has been issued are children
and dependents as required by Section 31A-22-610 and Subsections 31A-22-610.5 (6) and (7).
(c) At the option of the insurer, a separate converted policy may be issued to cover any
dependent.
(11) (a) To the extent the group policy provided maternity benefits, the conversion policy
shall provide maternity benefits equal to the lesser of the maternity benefits of the group policy or
the conversion policy until termination of a pregnancy that exists on the date of conversion if one
of the following is pregnant on the date of the conversion:
(i) the insured;
(ii) a spouse of the insured; or
(iii) a dependent of the insured.
(b) The requirements of this Subsection (11) do not apply to a pregnancy that occurs after
the date of conversion.
(12) Except as provided in this Subsection (12), a converted policy is renewable with
respect to all individuals or dependents at the option of the insured. An insured may be
terminated from a converted policy for the following reasons:
(a) a dependent is no longer eligible under the policy;
(b) for a network plan, if the individual no longer lives, resides, or works in:
(i) the insured's service area; or
(ii) the area for which the covered carrier is authorized to do business; or
(c) the individual fails to pay premiums or contributions in accordance with the terms of
the converted policy, including any timeliness requirements;
(d) the individual performs an act or practice that constitutes fraud in connection with the
coverage;
(e) the individual makes an intentional misrepresentation of material fact under the terms

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of the coverage; or
(f) coverage is terminated uniformly without regard to any health status-related factor
relating to any covered individual.
(13) Conditions pertaining to health may not be used as a basis for classification under
this section.
Section 10. Section 31A-30-101 is amended to read:
31A-30-101. Title.
This chapter is known as the "Individual, Small Employer, and Group [Employer] Health
Insurance Act."
Section 11. 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:
(i) individuals;
(ii) small employers; or
(iii) both Subsections (1)(a)(i) and (ii); or
(b) individual conversion policy for purposes of Sections 31A-30-106.5 and
31A-30-107.5 .
(2) This chapter applies to a health benefit plan that provides coverage to small employers
or individuals regardless of:
(a) whether the contract is issued to:
(i) an association;
(ii) a trust;
(iii) a discretionary group; or
(iv) other similar grouping; or
(b) the situs of delivery of the policy or contract.
(3) This chapter does not apply to:
(a) a large employer health benefit plan; [or]

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(b) short-term limited duration health insurance[.]; or
(c) federally funded or partially funded programs.
(4) (a) Except as provided in Subsection (4)(b), for the purposes of this chapter:
(i) carriers that are affiliated companies or that are eligible to file a consolidated tax return
shall be treated as one carrier; and
(ii) 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 the affiliated carriers
were issued by one carrier.
(b) Upon a finding of the commissioner, 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.
(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 the ceding arrangements would result in less than 50%
of the insurance obligation or risk for the health benefit plans being retained by the ceding carrier.
(d) Section 31A-22-1201 applies 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.
(5) (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 a trust or carrier described in Subsection (5)(a) 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.

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(c) A waiver granted under this Subsection (5) may not apply to an individual if the
person participates in a Taft Hartley trust as an associate member of any employee organization.
(6) Sections 31A-30-106 , 31A-30-106.5 , 31A-30-106.7 , 31A-30-107 , 31A-30-108 , and
31A-30-111 apply to:
(a) any insurer engaging in the business of insurance related to the risk of a small
employer for medical, surgical, hospital, or ancillary health care expenses of the small employer's
employees provided as an employee benefit; and
(b) any contract of an insurer, other than a workers' compensation policy, related to the
risk of a small employer for medical, surgical, hospital, or ancillary health care expenses of the
small employer's employees provided as an employee benefit.
(7) The commissioner may make rules requiring that the marketing practices be consistent
with this chapter for:
(a) a small employer carrier;
(b) a small employer carrier's agent;
(c) an insurance producer; and
(d) an insurance consultant.
Section 12. Section 31A-30-106 is amended to read:
31A-30-106. Premiums -- Rating restrictions -- Disclosure.
(1) Premium rates for health benefit plans under this chapter are subject to the provisions
of this Subsection (1).
(a) The index rate for a rating period for any class of business may not exceed the index
rate for any other class of business by more than 20%.
(b) (i) 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 30% of the index rate, except as provided in Section
31A-22-625 .
(ii) A covered carrier that offers individual and small employer health benefit plans may

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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.
(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;
(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,
except as provided in Section 31A-22-625 ; 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) (i) Adjustments in rates for claims experience, health status, and duration from issue
may not be charged to individual employees or dependents.
(ii) Any adjustment described in Subsection (1)(d)(i) shall be applied uniformly to the
rates charged for all employees and dependents of the small employer.
(e) A covered carrier may use 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%.
(f) (i) Covered carriers shall apply rating factors, including case characteristics,
consistently with respect to all covered insureds in a class of business.
(ii) Rating factors shall produce premiums for identical groups that:
(A) differ only by the amounts attributable to plan design; and
(B) do not reflect differences due to the nature of the groups assumed to select particular
health benefit products.
(iii) A covered carrier shall treat all health benefit plans issued or renewed in the same
calendar month as having the same rating period.

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(g) For the purposes of this Subsection (1), a health benefit plan that uses a restricted
network provision may not be considered similar coverage to a health benefit plan that does not
use such a network, provided that use of the restricted network provision results in substantial
difference in claims costs.
(h) The covered carrier may not, without prior approval of the commissioner, use case
characteristics other than:
(i) age;
(ii) gender;
(iii) industry;
(iv) geographic area;
(v) family composition; and
(vi) group size.
(i) (i) The commissioner may establish rules in accordance with Title 63, Chapter 46a,
Utah Administrative Rulemaking Act, to:
(A) implement this chapter; and
(B) assure that rating practices used by covered carriers are consistent with the purposes
of this chapter.
(ii) The rules described in Subsection (1)(i)(i) may include rules that:
(A) assure that differences in rates charged for health benefit products 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 products;
(B) prescribe the manner in which case characteristics may be used by covered carriers;
(C) implement the individual enrollment cap under Section 31A-30-110 , including
specifying:
(I) the contents for certification;
(II) auditing standards;
(III) underwriting criteria for uninsurable classification; and
(IV) limitations on high risk enrollees under Section 31A-30-111 ; and

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(D) establish the individual enrollment cap under Subsection 31A-30-110 (1).
(j) 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.
(k) The commissioner shall revise rules issued for Sections 31A-22-602 and 31A-22-605
regarding individual accident and health policy rates to allow rating in accordance with this
section.
(2) For purposes of Subsection (1)(c)(i), if a health benefit product is a health benefit
product 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 the change does
not exceed, on a percentage basis, the change in the new business premium rate for the most
similar health benefit product into which the covered carrier is actively enrolling new covered
insureds.
(3) (a) A covered carrier may not transfer a covered insured involuntarily into or out of a
class of business.
(b) A covered carrier may not offer to transfer a covered insured into or out of a class of
business unless the offer is made to transfer all covered insureds in the class of business without
regard:
(i) to case characteristics;
(ii) claim experience;
(iii) health status; or
(iv) duration of coverage since issue.
(4) (a) Each covered carrier shall maintain at the covered carrier's principal place of
business a complete and detailed description of its rating practices and renewal underwriting
practices, including information and documentation that demonstrate that the covered carrier's
rating methods and practices are:

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(i) based upon commonly accepted actuarial assumptions; and
(ii) in accordance with sound actuarial principles.
(b) (i) Each covered carrier shall file with the commissioner, on or before [March 15]
April 1 of each year, in a form, manner, and containing such information as prescribed by the
commissioner, an actuarial certification certifying that:
(A) the covered carrier is in compliance with this chapter; and
(B) the rating methods of the covered carrier are actuarially sound.
(ii) A copy of the certification required by Subsection (4)(b)(i) shall be retained by the
covered carrier at the covered carrier's principal place of business.
(c) A covered carrier shall make the information and documentation described in this
Subsection (4) available to the commissioner upon request.
(d) Records submitted to the commissioner under this section shall be maintained by the
commissioner as protected records under Title 63, Chapter 2, Government Records Access and
Management Act.
Section 13. Repealer.
This bill repeals:
Section 31A-22-703, Conversion rights on termination of group accident and health
insurance coverage.
Section 31A-22-704, Conversion rules and procedures.
Section 31A-22-705, Provisions in conversion policies.
Section 31A-22-708, Conversion of health benefit plan.
Section 31A-22-709, Conversion privilege upon retirement.
Section 31A-22-710, Conversion privilege of spouse and children.
Section 31A-22-711, If conversion plan benefits exceed group policy benefits.
Section 31A-22-712, Converted policies delivered outside Utah.
Section 31A-22-714, Extension of benefits.

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