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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


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