H.B. 85

1

HEALTH INSURANCE HIGH RISK POOL -
2 ELIGIBILITY AMENDMENTS
3 2005 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: David Litvack
6
7 LONG TITLE
8 General Description:
9 This bill amends the Comprehensive Health Insurance Pool Act to expand eligibility for
10 the pool to certain individuals involuntarily terminated from an individual health
11 insurance policy.
12 Highlighted Provisions:
13 This bill:
14 . allows a person who meets the criteria of uninsurable to qualify for the high risk
15 pool when that person was involuntarily terminated from an individual health
16 insurance policy; and
17 . makes technical amendments.
18 Monies Appropriated in this Bill:
19 None
20 Other Special Clauses:
21 None
22 Utah Code Sections Affected:
23 AMENDS:
24 31A-29-111, as last amended by Chapter 2, Laws of Utah 2004
25 31A-29-115, as last amended by Chapter 2, Laws of Utah 2004
26 31A-30-103, as last amended by Chapters 2 and 90, Laws of Utah 2004
27 31A-30-108, as last amended by Chapters 2 and 329, Laws of Utah 2004

28
29 Be it enacted by the Legislature of the state of Utah:
30 Section 1. Section 31A-29-111 is amended to read:
31 31A-29-111. Eligibility -- Limitations.
32 (1) (a) Except as provided in Subsections (1)(b) and (2), an individual who is not
33 HIPAA eligible is eligible for pool coverage if the individual:
34 (i) pays the established premium;
35 (ii) is a resident of this state; and
36 (iii) meets the health underwriting criteria under Subsection [(5)] (6)(a).
37 (b) Notwithstanding Subsection (1)(a), an individual who is not HIPAA eligible is not
38 eligible for pool coverage if one or more of the following conditions apply:
39 (i) the individual is eligible for health care benefits under Medicaid or Medicare,
40 except as provided in Section 31A-29-112 ;
41 (ii) the individual has terminated coverage in the pool, unless:
42 (A) 12 months have elapsed since the termination date; or
43 (B) the individual demonstrates that creditable coverage has been involuntarily
44 terminated for any reason other than nonpayment of premium;
45 (iii) the pool has paid the maximum lifetime benefit to or on behalf of the individual;
46 (iv) the individual is an inmate of a public institution;
47 (v) the individual is eligible for other public programs for which medical care is
48 provided;
49 (vi) the individual's health condition does not meet the criteria established under
50 Subsection [(5)] (6);
51 (vii) the individual is eligible for coverage under an employer group that offers health
52 insurance or a self-insurance arrangement to its eligible employees, dependents, or members as:
53 (A) an eligible employee;
54 (B) a dependent of an eligible employee; or
55 (C) a member;
56 (viii) the individual:
57 (A) has coverage substantially equivalent to a pool policy, as established by the board
58 in administrative rule, either as an insured or a covered dependent; or

59 (B) would be eligible for the substantially equivalent coverage if the individual elected
60 to obtain the coverage; or
61 (ix) at the time of application, the individual has not resided in Utah for at least 12
62 consecutive months preceding the date of application.
63 (2) (a) Except as provided in Subsections (1) and (2)(b), an individual who is HIPAA
64 eligible is eligible for pool coverage if the individual:
65 (i) pays the established premium; and
66 (ii) is a resident of this state.
67 (b) Notwithstanding Subsections (1) and (2)(a), a HIPAA eligible individual is not
68 eligible for pool coverage if one or more of the following conditions apply:
69 (i) the individual is eligible for health care benefits under Medicaid or Medicare,
70 except as provided in Section 31A-29-112 ;
71 (ii) the individual is eligible for other public programs for which medical care is
72 provided;
73 (iii) the individual is covered under any other health insurance;
74 (iv) the individual is eligible for coverage under an employer group that offers health
75 insurance or self-insurance arrangements to its eligible employees, dependents, or members as:
76 (A) an eligible employee;
77 (B) a dependent of an eligible employee; or
78 (C) a member;
79 (v) the pool has paid the maximum lifetime benefit to or on behalf of the individual; or
80 (vi) the individual is an inmate of a public institution.
81 (3) (a) Notwithstanding Subsection (1)(b)(ix), if otherwise eligible under Subsection
82 (1)(a), an individual whose health insurance coverage from a state high risk pool with similar
83 coverage is terminated because of nonresidency in another state may apply for coverage under
84 the pool subject to the conditions of Subsections (1)(b)(i) through (viii).
85 (b) Coverage sought under Subsection (3)(a) shall be applied for within 63 days after
86 the termination date of the previous high risk pool coverage.
87 (c) The effective date of this state's pool coverage shall be the date of termination of the
88 previous high risk pool coverage.
89 (d) The waiting period of an individual with a preexisting condition applying for

90 coverage under this chapter shall be waived:
91 (i) to the extent to which the waiting period was satisfied under a similar plan from
92 another state; and
93 (ii) if the other state's benefit limitation was not reached.
94 (4) (a) Notwithstanding Subsection (1)(b)(ix), if otherwise eligible under Subsection
95 (1)(a), an individual whose individual health insurance coverage was involuntarily terminated,
96 is eligible for coverage and may apply for coverage under the pool subject to the conditions of
97 Subsections (1)(b)(i) through (viii).
98 (b) Coverage sought under Subsection (4)(a) shall be applied for within 63 days after
99 the termination date of the previous individual health insurance coverage.
100 (c) The effective date of pool coverage shall be the date of termination of the previous
101 individual health insurance coverage.
102 (d) The waiting period of an individual with a preexisting condition applying for
103 coverage under this chapter shall be waived to the extent to which the waiting period was
104 satisfied under an individual health insurance plan.
105 [(4)] (5) (a) If an eligible individual applies for pool coverage within 30 days of being
106 denied coverage by an individual carrier, the effective date for pool coverage shall be no later
107 than the first day of the month following the date of submission of the completed insurance
108 application to the carrier.
109 (b) Notwithstanding Subsection [(4)] (5)(a), for individuals eligible for coverage under
110 Subsection [(3)] (4), the effective date shall be the date of termination of the previous high risk
111 pool coverage.
112 [(5)] (6) (a) The board shall establish and adjust, as necessary, health underwriting
113 criteria based on:
114 (i) health condition; and
115 (ii) expected claims so that the expected claims are anticipated to remain within
116 available funding.
117 (b) The board, with approval of the commissioner, may contract with one or more
118 providers under Title 63, Chapter 56, Utah Procurement Code, to develop underwriting criteria
119 under Subsection [(5)] (6)(a).
120 (c) If an individual is denied coverage by the pool under the criteria established in

121 Subsection (5)(a), the pool shall issue a certificate of insurability to the individual for coverage
122 under Subsection 31A-30-108 (3).
123 Section 2. Section 31A-29-115 is amended to read:
124 31A-29-115. Cancellation -- Notice.
125 (1) (a) On the date of renewal, the pool may cancel an enrollee's policy if:
126 (i) the enrollee's health condition does not meet the criteria established in Subsection
127 31A-29-111 [(5)](6);
128 (ii) the pool has provided written notice to the enrollee's last-known address no less
129 than 60 days before cancellation; and
130 (iii) at least one individual carrier has not reached the individual enrollment cap
131 established in Section 31A-30-110 .
132 (b) The pool shall issue a certificate of insurability to an enrollee whose policy is
133 cancelled under Subsection (1)(a) for coverage under Subsection 31A-30-108 (3) if the
134 requirements of Subsection 31A-29-111 [(5)](6) are met.
135 (2) The pool may cancel an enrollee's policy at any time if:
136 (a) the pool has provided written notice to the enrollee's last-known address no less
137 than 15 days before cancellation; and
138 (b) (i) the enrollee establishes a residency outside of Utah for three consecutive
139 months;
140 (ii) there is nonpayment of premiums; or
141 (iii) the pool determines that the enrollee does not meet the eligibility requirements set
142 forth in Section 31A-29-111 , in which case:
143 (A) the policy may be retroactively terminated for the period of time in which the
144 enrollee was not eligible;
145 (B) retroactive termination may not exceed three years; and
146 (C) the board's remedy under this Subsection (2)(b) shall be a cause of action against
147 the enrollee for benefits paid during the period of ineligibility in accordance with Subsection
148 31A-29-119 (3).
149 Section 3. Section 31A-30-103 is amended to read:
150 31A-30-103. Definitions.
151 As used in this chapter:

152 (1) "Actuarial certification" means a written statement by a member of the American
153 Academy of Actuaries or other individual approved by the commissioner that a covered carrier
154 is in compliance with Section 31A-30-106 , based upon the examination of the covered carrier,
155 including review of the appropriate records and of the actuarial assumptions and methods used
156 by the covered carrier in establishing premium rates for applicable health benefit plans.
157 (2) "Affiliate" or "affiliated" means any entity or person who directly or indirectly
158 through one or more intermediaries, controls or is controlled by, or is under common control
159 with, a specified entity or person.
160 (3) "Base premium rate" means, for each class of business as to a rating period, the
161 lowest premium rate charged or that could have been charged under a rating system for that
162 class of business by the covered carrier to covered insureds with similar case characteristics for
163 health benefit plans with the same or similar coverage.
164 (4) "Basic coverage" means the coverage provided in the Basic Health Care Plan under
165 Subsection 31A-22-613.5 (2).
166 (5) "Carrier" means any person or entity that provides health insurance in this state
167 including:
168 (a) an insurance company;
169 (b) a prepaid hospital or medical care plan;
170 (c) a health maintenance organization;
171 (d) a multiple employer welfare arrangement; and
172 (e) any other person or entity providing a health insurance plan under this title.
173 (6) (a) Except as provided in Subsection (6)(b), "case characteristics" means
174 demographic or other objective characteristics of a covered insured that are considered by the
175 carrier in determining premium rates for the covered insured.
176 (b) "Case characteristics" does not include:
177 (i) duration of coverage since the policy was issued;
178 (ii) claim experience; and
179 (iii) health status.
180 (7) "Class of business" means all or a separate grouping of covered insureds
181 established under Section 31A-30-105 .
182 (8) "Conversion policy" means a policy providing coverage under the conversion

183 provisions required in Chapter 22, Part 7, Group Accident and Health Insurance.
184 (9) "Covered carrier" means any individual carrier or small employer carrier subject to
185 this chapter.
186 (10) "Covered individual" means any individual who is covered under a health benefit
187 plan subject to this chapter.
188 (11) "Covered insureds" means small employers and individuals who are issued a
189 health benefit plan that is subject to this chapter.
190 (12) "Dependent" means an individual to the extent that the individual is defined to be
191 a dependent by:
192 (a) the health benefit plan covering the covered individual; and
193 (b) Chapter 22, Part 6, Accident and Health Insurance.
194 (13) "Established geographic service area" means a geographical area approved by the
195 commissioner within which the carrier is authorized to provide coverage.
196 (14) "Index rate" means, for each class of business as to a rating period for covered
197 insureds with similar case characteristics, the arithmetic average of the applicable base
198 premium rate and the corresponding highest premium rate.
199 (15) "Individual carrier" means a carrier that provides coverage on an individual basis
200 through a health benefit plan regardless of whether:
201 (a) coverage is offered through:
202 (i) an association;
203 (ii) a trust;
204 (iii) a discretionary group; or
205 (iv) other similar groups; or
206 (b) the policy or contract is situated out-of-state.
207 (16) "Individual conversion policy" means a conversion policy issued to:
208 (a) an individual; or
209 (b) an individual with a family.
210 (17) "Individual coverage count" means the number of natural persons covered under a
211 carrier's health benefit products that are individual policies.
212 (18) "Individual enrollment cap" means the percentage set by the commissioner in
213 accordance with Section 31A-30-110 .

214 (19) "New business premium rate" means, for each class of business as to a rating
215 period, the lowest premium rate charged or offered, or that could have been charged or offered,
216 by the carrier to covered insureds with similar case characteristics for newly issued health
217 benefit plans with the same or similar coverage.
218 (20) "Preexisting condition" is as defined in Section 31A-1-301 .
219 (21) "Premium" means all monies paid by covered insureds and covered individuals as
220 a condition of receiving coverage from a covered carrier, including any fees or other
221 contributions associated with the health benefit plan.
222 (22) (a) "Rating period" means the calendar period for which premium rates
223 established by a covered carrier are assumed to be in effect, as determined by the carrier.
224 (b) A covered carrier may not have:
225 (i) more than one rating period in any calendar month; and
226 (ii) no more than 12 rating periods in any calendar year.
227 (23) "Resident" means an individual who has resided in this state for at least 12
228 consecutive months immediately preceding the date of application.
229 (24) "Short-term limited duration insurance" means a health benefit product that:
230 (a) is not renewable; and
231 (b) has an expiration date specified in the contract that is less than 364 days after the
232 date the plan became effective.
233 (25) "Small employer carrier" means a carrier that provides health benefit plans
234 covering eligible employees of one or more small employers in this state, regardless of
235 whether:
236 (a) coverage is offered through:
237 (i) an association;
238 (ii) a trust;
239 (iii) a discretionary group; or
240 (iv) other similar grouping; or
241 (b) the policy or contract is situated out-of-state.
242 (26) "Uninsurable" means an individual who:
243 (a) is eligible for the Comprehensive Health Insurance Pool coverage under the
244 underwriting criteria established in Subsection 31A-29-111 [(5)](6); or

245 (b) (i) is issued a certificate for coverage under Subsection 31A-30-108 (3); and
246 (ii) has a condition of health that does not meet consistently applied underwriting
247 criteria as established by the commissioner in accordance with Subsections 31A-30-106 (1)(i)
248 and (j) for which coverage the applicant is applying.
249 (27) "Uninsurable percentage" for a given calendar year equals UC/CI where, for
250 purposes of this formula:
251 (a) "CI" means the carrier's individual coverage count as of December 31 of the
252 preceding year; and
253 (b) "UC" means the number of uninsurable individuals who were issued an individual
254 policy on or after July 1, 1997.
255 Section 4. Section 31A-30-108 is amended to read:
256 31A-30-108. Eligibility for small employer and individual market.
257 (1) (a) Small employer carriers shall accept residents for small group coverage as set
258 forth in the Health Insurance Portability and Accountability Act, P.L. 104-191, 110 Stat. 1962,
259 Sec. 2701(f) and 2711(a).
260 (b) Individual carriers shall accept residents for individual coverage pursuant:
261 (i) to P.L. 104-191, 110 Stat. 1979, Sec. 2741(a)-(b); and
262 (ii) Subsection (3).
263 (2) (a) Small employer carriers shall offer to accept all eligible employees and their
264 dependents at the same level of benefits under any health benefit plan provided to a small
265 employer.
266 (b) Small employer carriers may:
267 (i) request a small employer to submit a copy of the small employer's quarterly income
268 tax withholdings to determine whether the employees for whom coverage is provided or
269 requested are bona fide employees of the small employer; and
270 (ii) deny or terminate coverage if the small employer refuses to provide documentation
271 requested under Subsection (2)(b)(i).
272 (3) Except as provided in Subsections (5) and (6) and Section 31A-30-110 , individual
273 carriers shall accept for coverage individuals to whom all of the following conditions apply:
274 (a) the individual is not covered or eligible for coverage:
275 (i) (A) as an employee of an employer;

276 (B) as a member of an association; or
277 (C) as a member of any other group; and
278 (ii) under:
279 (A) a health benefit plan; or
280 (B) a self-insured arrangement that provides coverage similar to that provided by a
281 health benefit plan as defined in Section 31A-1-301 ;
282 (b) the individual is not covered and is not eligible for coverage under any public
283 health benefits arrangement including:
284 (i) the Medicare program established under Title XVIII of the Social Security Act;
285 (ii) the Medicaid program established under Title XIX of the Social Security Act;
286 (iii) any act of Congress or law of this or any other state that provides benefits
287 comparable to the benefits provided under this chapter; or
288 (iv) coverage under the Comprehensive Health Insurance Pool Act created in Chapter
289 29, Comprehensive Health Insurance Pool Act;
290 (c) unless the maximum benefit has been reached the individual is not covered or
291 eligible for coverage under any:
292 (i) Medicare supplement policy;
293 (ii) conversion option;
294 (iii) continuation or extension under COBRA; or
295 (iv) state extension;
296 (d) the individual has not terminated or declined coverage described in Subsection
297 (3)(a), (b), or (c) within 93 days of application for coverage, unless the individual is eligible for
298 individual coverage under P.L. 104-191, 110 Stat. 1979, Sec. 2741(b), in which case, the
299 requirement of this Subsection (3)(d) does not apply; and
300 (e) the individual is certified as ineligible for the Health Insurance Pool if:
301 (i) the individual applies for coverage with the Comprehensive Health Insurance Pool
302 within 30 days after being rejected or refused coverage by the covered carrier and reapplies for
303 coverage with that covered carrier within 30 days after the date of issuance of a certificate
304 under Subsection 31A-29-111 [(5)](6)(c); or
305 (ii) the individual applies for coverage with any individual carrier within 45 days after:
306 (A) notice of cancellation of coverage under Subsection 31A-29-115 (1); or

307 (B) the date of issuance of a certificate under Subsection 31A-29-111 [(5)](6)(c) if the
308 individual applied first for coverage with the Comprehensive Health Insurance Pool.
309 (4) (a) If coverage is obtained under Subsection (3)(e)(i) and the required premium is
310 paid, the effective date of coverage shall be the first day of the month following the individual's
311 submission of a completed insurance application to that covered carrier.
312 (b) If coverage is obtained under Subsection (3)(e)(ii) and the required premium is
313 paid, the effective date of coverage shall be the day following the:
314 (i) cancellation of coverage under Subsection 31A-29-115 (1); or
315 (ii) submission of a completed insurance application to the Comprehensive Health
316 Insurance Pool.
317 (5) (a) An individual carrier is not required to accept individuals for coverage under
318 Subsection (3) if the carrier issues no new individual policies in the state after July 1, 1997.
319 (b) A carrier described in Subsection (5)(a) may not issue new individual policies in
320 the state for five years from July 1, 1997.
321 (c) Notwithstanding Subsection (5)(b), a carrier may request permission to issue new
322 policies after July 1, 1999, which may only be granted if:
323 (i) the carrier accepts uninsurables as is required of a carrier entering the market under
324 Subsection 31A-30-110 ; and
325 (ii) the commissioner finds that the carrier's issuance of new individual policies:
326 (A) is in the best interests of the state; and
327 (B) does not provide an unfair advantage to the carrier.
328 (6) (a) If the Comprehensive Health Insurance Pool as set forth under Title 31A,
329 Chapter 29, is dissolved or discontinued, or if enrollment is capped or suspended, an individual
330 carrier may decline to accept individuals applying for individual enrollment, other than
331 individuals applying for coverage as set forth in P.L. 104-191, 110 Stat. 1979, Sec. 2741
332 (a)-(b).
333 (b) Within two calendar days of taking action under Subsection (6)(a), an individual
334 carrier will provide written notice to the Utah Insurance Department.
335 (7) (a) If a small employer carrier offers health benefit plans to small employers
336 through a network plan, the small employer carrier may:
337 (i) limit the employers that may apply for the coverage to those employers with eligible

338 employees who live, reside, or work in the service area for the network plan; and
339 (ii) within the service area of the network plan, deny coverage to an employer if the
340 small employer carrier has demonstrated to the commissioner that the small employer carrier:
341 (A) will not have the capacity to deliver services adequately to enrollees of any
342 additional groups because of the small employer carrier's obligations to existing group contract
343 holders and enrollees; and
344 (B) applies this section uniformly to all employers without regard to:
345 (I) the claims experience of an employer, an employer's employee, or a dependent of an
346 employee; or
347 (II) any health status-related factor relating to an employee or dependent of an
348 employee.
349 (b) (i) A small employer carrier that denies a health benefit product to an employer in
350 any service area in accordance with this section may not offer coverage in the small employer
351 market within the service area to any employer for a period of 180 days after the date the
352 coverage is denied.
353 (ii) This Subsection (7)(b) does not:
354 (A) limit the small employer carrier's ability to renew coverage that is in force; or
355 (B) relieve the small employer carrier of the responsibility to renew coverage that is in
356 force.
357 (c) Coverage offered within a service area after the 180-day period specified in
358 Subsection (7)(b) is subject to the requirements of this section.




Legislative Review Note
as of 1-17-05 11:53 AM

Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.

Office of Legislative Research and General Counsel