H.B. 217

1

HEALTH INSURANCE HIGH RISK POOL
2 ELIGIBILITY AMENDMENTS
3 2006 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: David Litvack
6 Senate Sponsor: Karen Hale
7
8 LONG TITLE
9 General Description:
10 This bill amends the Comprehensive Health Insurance Pool Act to expand eligibility for
11 the pool to certain individuals involuntarily terminated from an individual health
12 insurance policy.
13 Highlighted Provisions:
14 This bill:
15 . allows a person who meets the criteria of uninsurable to qualify for the high risk
16 pool when that person was involuntarily terminated from an individual health
17 insurance policy; and
18 . makes technical amendments.
19 Monies Appropriated in this Bill:
20 None
21 Other Special Clauses:
22 None
23 Utah Code Sections Affected:
24 AMENDS:
25 31A-29-111, as last amended by Chapter 78, Laws of Utah 2005
26 31A-29-115, as last amended by Chapter 2, Laws of Utah 2004
27 31A-30-103, as last amended by Chapters 2 and 90, Laws of Utah 2004

28 31A-30-108, as last amended by Chapters 2 and 329, Laws of Utah 2004
29
30 Be it enacted by the Legislature of the state of Utah:
31 Section 1. Section 31A-29-111 is amended to read:
32 31A-29-111. Eligibility -- Limitations.
33 (1) (a) Except as provided in Subsections (1)(b) and (2), an individual who is not
34 HIPAA eligible is eligible for pool coverage if the individual:
35 (i) pays the established premium;
36 (ii) is a resident of this state; and
37 (iii) meets the health underwriting criteria under Subsection [(5)] (6)(a).
38 (b) Notwithstanding Subsection (1)(a), an individual who is not HIPAA eligible is not
39 eligible for pool coverage if one or more of the following conditions apply:
40 (i) the individual is eligible for health care benefits under Medicaid or Medicare,
41 except as provided in Section 31A-29-112 ;
42 (ii) the individual has terminated coverage in the pool, unless:
43 (A) 12 months have elapsed since the termination date; or
44 (B) the individual demonstrates that creditable coverage has been involuntarily
45 terminated for any reason other than nonpayment of premium;
46 (iii) the pool has paid the maximum lifetime benefit to or on behalf of the individual;
47 (iv) the individual is an inmate of a public institution;
48 (v) the individual is eligible for a public health plan, as defined in federal regulations
49 adopted pursuant to 42 U.S.C. 300gg;
50 (vi) the individual's health condition does not meet the criteria established under
51 Subsection [(5)] (6);
52 (vii) the individual is eligible for coverage under an employer group that offers health
53 insurance or a self-insurance arrangement to its eligible employees, dependents, or members as:
54 (A) an eligible employee;
55 (B) a dependent of an eligible employee; or
56 (C) a member;
57 (viii) the individual:
58 (A) has coverage substantially equivalent to a pool policy, as established by the board

59 in administrative rule, either as an insured or a covered dependent; or
60 (B) would be eligible for the substantially equivalent coverage if the individual elected
61 to obtain the coverage; or
62 (ix) at the time of application, the individual has not resided in Utah for at least 12
63 consecutive months preceding the date of application.
64 (2) (a) Except as provided in Subsections (1) and (2)(b), an individual who is HIPAA
65 eligible is eligible for pool coverage if the individual:
66 (i) pays the established premium; and
67 (ii) is a resident of this state.
68 (b) Notwithstanding Subsections (1) and (2)(a), a HIPAA eligible individual is not
69 eligible for pool coverage if one or more of the following conditions apply:
70 (i) the individual is eligible for health care benefits under Medicaid or Medicare,
71 except as provided in Section 31A-29-112 ;
72 (ii) the individual is eligible for a public health plan, as defined in federal regulations
73 adopted pursuant to 42 U.S.C. 300gg;
74 (iii) the individual is covered under any other health insurance;
75 (iv) the individual is eligible for coverage under an employer group that offers health
76 insurance or self-insurance arrangements to its eligible employees, dependents, or members as:
77 (A) an eligible employee;
78 (B) a dependent of an eligible employee; or
79 (C) a member;
80 (v) the pool has paid the maximum lifetime benefit to or on behalf of the individual; or
81 (vi) the individual is an inmate of a public institution.
82 (3) (a) Notwithstanding Subsection (1)(b)(ix), if otherwise eligible under Subsection
83 (1)(a), an individual whose health insurance coverage from a state high risk pool with similar
84 coverage is terminated because of nonresidency in another state is eligible for coverage under
85 the pool subject to the conditions of Subsections (1)(b)(i) through (viii).
86 (b) Coverage sought under Subsection (3)(a) shall be applied for within 63 days after
87 the termination date of the previous high risk pool coverage.
88 (c) The effective date of this state's pool coverage shall be the date of termination of
89 the previous high risk pool coverage.

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

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

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

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

214 accordance with Section 31A-30-110 .
215 (19) "New business premium rate" means, for each class of business as to a rating
216 period, the lowest premium rate charged or offered, or that could have been charged or offered,
217 by the carrier to covered insureds with similar case characteristics for newly issued health
218 benefit plans with the same or similar coverage.
219 (20) "Preexisting condition" is as defined in Section 31A-1-301 .
220 (21) "Premium" means all monies paid by covered insureds and covered individuals as
221 a condition of receiving coverage from a covered carrier, including any fees or other
222 contributions associated with the health benefit plan.
223 (22) (a) "Rating period" means the calendar period for which premium rates
224 established by a covered carrier are assumed to be in effect, as determined by the carrier.
225 (b) A covered carrier may not have:
226 (i) more than one rating period in any calendar month; and
227 (ii) no more than 12 rating periods in any calendar year.
228 (23) "Resident" means an individual who has resided in this state for at least 12
229 consecutive months immediately preceding the date of application.
230 (24) "Short-term limited duration insurance" means a health benefit product that:
231 (a) is not renewable; and
232 (b) has an expiration date specified in the contract that is less than 364 days after the
233 date the plan became effective.
234 (25) "Small employer carrier" means a carrier that provides health benefit plans
235 covering eligible employees of one or more small employers in this state, regardless of
236 whether:
237 (a) coverage is offered through:
238 (i) an association;
239 (ii) a trust;
240 (iii) a discretionary group; or
241 (iv) other similar grouping; or
242 (b) the policy or contract is situated out-of-state.
243 (26) "Uninsurable" means an individual who:
244 (a) is eligible for the Comprehensive Health Insurance Pool coverage under the

245 underwriting criteria established in Subsection 31A-29-111 [(5)](6); or
246 (b) (i) is issued a certificate for coverage under Subsection 31A-30-108 (3); and
247 (ii) has a condition of health that does not meet consistently applied underwriting
248 criteria as established by the commissioner in accordance with Subsections 31A-30-106 (1)(i)
249 and (j) for which coverage the applicant is applying.
250 (27) "Uninsurable percentage" for a given calendar year equals UC/CI where, for
251 purposes of this formula:
252 (a) "CI" means the carrier's individual coverage count as of December 31 of the
253 preceding year; and
254 (b) "UC" means the number of uninsurable individuals who were issued an individual
255 policy on or after July 1, 1997.
256 Section 4. Section 31A-30-108 is amended to read:
257 31A-30-108. Eligibility for small employer and individual market.
258 (1) (a) Small employer carriers shall accept residents for small group coverage as set
259 forth in the Health Insurance Portability and Accountability Act, P.L. 104-191, 110 Stat. 1962,
260 Sec. 2701(f) and 2711(a).
261 (b) Individual carriers shall accept residents for individual coverage pursuant:
262 (i) to P.L. 104-191, 110 Stat. 1979, Sec. 2741(a)-(b); and
263 (ii) Subsection (3).
264 (2) (a) Small employer carriers shall offer to accept all eligible employees and their
265 dependents at the same level of benefits under any health benefit plan provided to a small
266 employer.
267 (b) Small employer carriers may:
268 (i) request a small employer to submit a copy of the small employer's quarterly income
269 tax withholdings to determine whether the employees for whom coverage is provided or
270 requested are bona fide employees of the small employer; and
271 (ii) deny or terminate coverage if the small employer refuses to provide documentation
272 requested under Subsection (2)(b)(i).
273 (3) Except as provided in Subsections (5) and (6) and Section 31A-30-110 , individual
274 carriers shall accept for coverage individuals to whom all of the following conditions apply:
275 (a) the individual is not covered or eligible for coverage:

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

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

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




Legislative Review Note
as of 11-14-05 2:04 PM

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