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PAG LIN 1 1 Section 1. Section 422.7, Code 1995, is amended by adding 1 2 the following new subsection: 1 3 NEW SUBSECTION. 32. Subtract, to the extent not otherwise 1 4 deducted in computing adjusted gross income, the amounts paid 1 5 by the taxpayer for the purchase of health insurance for the 1 6 taxpayer or taxpayer's spouse or dependent. 1 7 Sec. 2. NEW SECTION. 505.22 SELF-FUNDED EMPLOYER- 1 8 SPONSORED HEALTH BENEFIT PLAN PARTICIPATION IN IOWA INDIVIDUAL 1 9 HEALTH BENEFIT REINSURANCE ASSOCIATION. 1 10 1. A self-funded employer-sponsored health benefit plan 1 11 qualified under the federal Employee Retirement Income 1 12 Security Act of 1974 may voluntarily elect to participate in 1 13 the Iowa individual health benefit reinsurance association 1 14 established in section 513C.10 in accordance with the plan of 1 15 operation and subject to such terms and conditions adopted by 1 16 the board of the association to provide portability and 1 17 continuity to its covered employees and their covered spouses 1 18 and dependents subject to the same terms and conditions as a 1 19 participating insurer. 1 20 2. If the federal Employee Retirement Income Security Act 1 21 of 1974 is amended such that the state may require the 1 22 participation of a self-funded employer, the individual 1 23 reinsurance requirements shall apply equally to such 1 24 employers. 1 25 3. When and if the federal government imposes conditions 1 26 of portability and continuity on self-funded employers 1 27 qualified under the federal Employee Retirement Income 1 28 Security Act of 1974 that the commissioner deems are 1 29 substantially similar to those required of Iowa insurers, 1 30 coverage under such qualified plan shall be deemed qualified 1 31 prior coverage for purposes of chapters 513B and 513C. 1 32 Sec. 3. Section 507B.4, subsection 1, Code 1995, is 1 33 amended by adding the following new paragraph: 1 34 NEW PARAGRAPH. k. Misrepresents the access to health care 1 35 practitioners under a managed care health plan. The 2 1 commissioner shall adopt rules providing for monitoring of 2 2 such plans. 2 3 Sec. 4. Section 513B.2, subsection 12, paragraph a, 2 4 subparagraph (3), Code 1995, is amended to read as follows: 2 5 (3) The individual requests enrollment withinthirtysixty 2 6 days after termination of the qualifying previous coverage. 2 7 Sec. 5. Section 513B.2, subsection 12, paragraph c, Code 2 8 1995, is amended to read as follows: 2 9 c. A court has ordered that coverage be provided for a 2 10 spouse or minor or dependent child under a covered employee's 2 11 health benefit plan and the request for enrollment is made 2 12 withinthirtysixty days after issuance of the court order. 2 13 Sec. 6. Section 513B.37, subsection 1, paragraph a, Code 2 14 1995, is amended to read as follows: 2 15 a. What benefits or direct pay requirements must be 2 16 minimally included in a basic or standard benefit coverage 2 17 policy or subscription contract. 2 18 Sec. 7. Section 513B.38, Code 1995, is amended by adding 2 19 the following new subsection: 2 20 NEW SUBSECTION. 4. Upon the determination of the 2 21 commissioner pursuant to section 513B.37, subsection 1, 2 22 paragraph "a", to include expanded preventative care services 2 23 and mental health and substance abuse treatment coverage, the 2 24 commissioner shall do all of the following: 2 25 a. Adopt by rule, with all due diligence, requirements for 2 26 the provision of expanded coverage for benefits for expanded 2 27 preventative care services. 2 28 b. Adopt by rule, with all due diligence, requirements for 2 29 the provision of coverage for benefits for mental health and 2 30 substance abuse services. 2 31 Sec. 8. NEW SECTION. 513B.44 INDIVIDUAL HEALTH PLAN 2 32 PREMIUM CREDIT. 2 33 1. The division shall adopt rules to implement and 2 34 administer the premium credit authorized by this section, 2 35 which rules shall include the minimum standard application 3 1 form for premium credit eligibility. Forms shall be printed 3 2 by participating insurance companies, health maintenance 3 3 organizations, or health insurance purchasing cooperatives and 3 4 provided to individuals wishing to apply for premium credit 3 5 eligibility. 3 6 2. The amount of the premium credit is equal to twenty- 3 7 five dollars per month, per participating eligible individual 3 8 or fifty dollars per month per eligible family purchasing a 3 9 health plan from an insurer, health maintenance organization, 3 10 or organized delivery system authorized to do business in this 3 11 state, whether purchased directly or through a health 3 12 insurance purchasing cooperative. 3 13 3. An individual or family is eligible for participation 3 14 in the subsidized insurance premium credit health insurance 3 15 plan if the family income is less than or equal to two hundred 3 16 percent of the federal poverty level as published annually in 3 17 the federal register by the United States department of health 3 18 and human services. An application for eligibility is valid 3 19 for up to one year. Notwithstanding the income requirement of 3 20 this subsection, the division by rule may increase the income 3 21 limitation for the purpose of increasing the number of 3 22 eligible individuals and families to assure that the premium 3 23 credit is fully utilized to the extent authorized in this 3 24 section. 3 25 4. The earned premium credit is limited to the first full- 3 26 year equivalent participating eligible applications submitted 3 27 under this section preapproved by the division in any single 3 28 fiscal year, which request in the aggregate four million five 3 29 hundred thousand dollars in earned premium credit. 3 30 5. The carrier shall credit to the participating 3 31 individual's or family's premium liability, an amount equal to 3 32 the premium credit earned pursuant to subsection 2. If 3 33 purchased through a health insurance purchasing cooperative, 3 34 the cooperative shall reduce the member assessment to the 3 35 individual or family by an equal amount. 4 1 6. The premium credit provided by this section is only 4 2 available in connection with either of the following: 4 3 a. A basic benefit plan approved by the commissioner. 4 4 b. A major medical policy approved by the commissioner 4 5 providing coverage to an eligible individual or family, either 4 6 on a group or individual basis. An individual or family may 4 7 acquire group coverage for which they are financially 4 8 responsible through an employer's participation in a health 4 9 insurance purchasing cooperative. 4 10 7. The policy shall also satisfy any conditions imposed by 4 11 rules adopted pursuant to subsection 1 which the commissioner 4 12 determines are necessary or convenient to implement and 4 13 administer the premium credit. 4 14 8. a. A person submitting an intentionally fraudulent 4 15 premium credit application forfeits the credit and shall pay 4 16 to the division a liquidated damages penalty of one hundred 4 17 fifty percent of the credit forfeited. 4 18 b. A person submitting a premium credit application which 4 19 that person should have known was false forfeits the credit 4 20 and shall pay to the division a liquidated damages penalty of 4 21 ten percent of the credit forfeited. 4 22 9. The insurance carrier shall receive a premium tax 4 23 credit equal to, at minimum, the premium credit earned by the 4 24 carrier's insureds pursuant to subsection 2. 4 25 10. The division shall submit an annual report to the 4 26 general assembly concerning the number of eligible applicants 4 27 for the individual health plan premium credit established in 4 28 this section, the number of applications approved and the 4 29 aggregate amount of premium credits issued to eligible 4 30 applicants, and the number and amount of liquidated damage 4 31 penalties assessed and collected. 4 32 Sec. 9. NEW SECTION. 513C.1 SHORT TITLE. 4 33 This chapter shall be known and may be cited as the 4 34 "Individual Health Insurance Market Reform Act". 4 35 Sec. 10. NEW SECTION. 513C.2 PURPOSE. 5 1 The purpose and intent of this chapter is to promote the 5 2 availability of health insurance coverage to individuals 5 3 regardless of their health status or claims experience, to 5 4 prevent abusive rating practices, to require disclosure of 5 5 rating practices to purchasers, to establish rules regarding 5 6 the renewal of coverage, to establish limitations on the use 5 7 of preexisting condition exclusions, to assure fair access to 5 8 health plans, and to improve the overall fairness and 5 9 efficiency of the individual health insurance market. 5 10 Sec. 11. NEW SECTION. 513C.3 DEFINITIONS. 5 11 As used in this chapter, unless the context otherwise 5 12 requires: 5 13 1. "Actuarial certification" means a written statement by 5 14 a member of the American academy of actuaries or other 5 15 individual acceptable to the commissioner that an individual 5 16 carrier is in compliance with the provision of section 513C.5 5 17 which is based upon the actuary's or individual's examination, 5 18 including a review of the appropriate records and the 5 19 actuarial assumptions and methods used by the carrier in 5 20 establishing premium rates for applicable individual health 5 21 benefit plans. 5 22 2. "Affiliate" or "affiliated" means any entity or person 5 23 who directly or indirectly through one or more intermediaries, 5 24 controls or is controlled by, or is under common control with, 5 25 a specified entity or person. 5 26 3. "Basic or standard health benefit plan" means the core 5 27 group of health benefits developed pursuant to section 513C.8. 5 28 4. "Block of business" means all the individuals insured 5 29 under the same individual health benefit plan. 5 30 5. "Carrier" means any entity that provides individual 5 31 health benefit plans in this state. For purposes of this 5 32 chapter, carrier includes an insurance company, a group 5 33 hospital or medical service corporation, a fraternal benefit 5 34 society, a health maintenance organization, and any other 5 35 entity providing an individual plan of health insurance or 6 1 health benefits subject to state insurance regulation. 6 2 6. "Commissioner" means the commissioner of insurance. 6 3 7. "Director" means the director of public health 6 4 appointed pursuant to section 135.2. 6 5 8. "Eligible individual" means an individual who is a 6 6 resident of this state and who either has qualifying existing 6 7 coverage or has had qualifying existing coverage within the 6 8 immediately preceding thirty days, or an individual who has 6 9 had a qualifying event occur within the immediately preceding 6 10 thirty days. 6 11 9. "Established service area" means a geographic area, as 6 12 approved by the commissioner and based upon the carrier's 6 13 certificate of authority to transact business in this state, 6 14 within which the carrier is authorized to provide coverage or 6 15 a geographic area, as approved by the director and based upon 6 16 the organized delivery system's license to transact business 6 17 in this state, within which the organized delivery system is 6 18 authorized to provide coverage. 6 19 10. "Filed rate" means, for a rating period related to 6 20 each block of business, the rate charged to all individuals 6 21 with similar rating characteristics for individual health 6 22 benefit plans. 6 23 11. "Individual health benefit plan" means any hospital or 6 24 medical expense incurred policy or certificate, hospital or 6 25 medical service plan, or health maintenance organization 6 26 subscriber contract sold to an individual, or any 6 27 discretionary group trust or association policy providing 6 28 hospital or medical expense incurred coverage to individuals. 6 29 Individual health benefit plan does not include a self-insured 6 30 group health plan, a self-insured multiple employer group 6 31 health plan, a group conversion plan, an insured group health 6 32 plan, accident-only, specified disease, short-term hospital or 6 33 medical, hospital confinement indemnity, credit, dental, 6 34 vision, medicare supplement, long-term care, or disability 6 35 income insurance coverage, coverage issued as a supplement to 7 1 liability insurance, workers' compensation or similar 7 2 insurance, or automobile medical payment insurance. 7 3 12. "Organized delivery system" means an organized 7 4 delivery system licensed by the director. 7 5 13. "Premium" means all moneys paid by an individual and 7 6 eligible dependents as a condition of receiving coverage from 7 7 a carrier or an organized delivery system, including any fees 7 8 or other contributions associated with an individual health 7 9 benefit plan. 7 10 14. "Qualifying event" means any of the following: 7 11 a. Loss of eligibility for medical assistance provided 7 12 pursuant to chapter 249A or medicare coverage provided 7 13 pursuant to Title XVIII of the federal Social Security Act. 7 14 b. Loss or change of dependent status under qualifying 7 15 previous coverage. 7 16 c. The attainment by an individual of the age of majority. 7 17 15. "Qualifying existing coverage" or "qualifying previous 7 18 coverage" means benefits or coverage provided under any of the 7 19 following: 7 20 a. Any group health insurance that provides benefits 7 21 similar to or exceeding benefits provided under the standard 7 22 health benefit plan, provided that such policy has been in 7 23 effect for a period of at least one year. 7 24 b. An individual health insurance benefit plan, including 7 25 coverage provided under a health maintenance organization 7 26 contract, a hospital or medical service plan contract, or a 7 27 fraternal benefit society contract, that provides benefits 7 28 similar to or exceeding the benefits provided under the 7 29 standard health benefit plan, provided that such policy has 7 30 been in effect for a period of at least one year. 7 31 c. An organized delivery system that provides benefits 7 32 similar to or exceeding the benefits provided under the 7 33 standard health benefit plan, provided that the benefits 7 34 provided by the organized delivery system have been in effect 7 35 for a period of at least one year. 8 1 16. "Rating characteristics" means demographic or other 8 2 objective characteristics of individuals which are considered 8 3 by the carrier in the determination of premium rates for the 8 4 individuals and which are approved by the commissioner. 8 5 17. "Rating period" means the period for which premium 8 6 rates established by a carrier are in effect. 8 7 18. "Restricted network provision" means a provision of an 8 8 individual health benefit plan that conditions the payment of 8 9 benefits, in whole or in part, on the use of health care 8 10 providers that have entered into a contractual arrangement 8 11 with the carrier or the organized delivery system to provide 8 12 health care services to covered individuals. 8 13 Sec. 12. NEW SECTION. 513C.4 APPLICABILITY AND SCOPE. 8 14 This chapter applies to an individual health benefit plan 8 15 delivered or issued for delivery to residents of this state on 8 16 or after July 1, 1995. 8 17 1. Except as provided in subsection 2, for purposes of 8 18 this chapter, carriers that are affiliated companies or that 8 19 are eligible to file a consolidated tax return shall be 8 20 treated as one carrier and any restrictions or limitations 8 21 imposed by this chapter shall apply as if all individual 8 22 health benefit plans delivered or issued for delivery to 8 23 residents of this state by such affiliated carriers were 8 24 issued by one carrier. 8 25 2. An affiliated carrier that is a health maintenance 8 26 organization having a certificate of authority under section 8 27 513C.5 shall be considered to be a separate carrier for the 8 28 purposes of this chapter. 8 29 Sec. 13. NEW SECTION. 513C.5 RESTRICTIONS RELATING TO 8 30 PREMIUM RATES. 8 31 1. Premium rates for any block of individual health 8 32 benefit plan business issued on or after July 1, 1995, by a 8 33 carrier subject to this chapter are subject to the composite 8 34 effect of all of the following: 8 35 a. After making actuarial adjustments based upon benefit 9 1 design and rating characteristics, the filed rate for any 9 2 block of business shall not exceed the filed rate for any 9 3 other block of business by more than twenty percent. 9 4 b. The filed rate for any block of business shall not 9 5 exceed the filed rate for any other block of business by more 9 6 than thirty percent due to factors relating to rating 9 7 characteristics. 9 8 c. The filed rate for any block of business shall not 9 9 exceed the filed rate for any other block of business by more 9 10 than thirty percent due to any other factors approved by the 9 11 commissioner. 9 12 d. Rating characteristics other than age, geographic area, 9 13 and family composition shall not be used by a carrier without 9 14 the prior approval of the commissioner. 9 15 e. Premium rates for individual health benefit plans shall 9 16 comply with the requirements of this section notwithstanding 9 17 any assessments paid or payable by the carrier pursuant to any 9 18 reinsurance program or risk adjustment mechanism. 9 19 f. An adjustment, not to exceed fifteen percent annually 9 20 due to the claim experience or health status of a block of 9 21 business. 9 22 g. For purposes of this subsection, an individual health 9 23 benefit plan that contains a restricted network provision 9 24 shall not be considered similar coverage to an individual 9 25 health benefit plan that does not contain such a provision, 9 26 provided that the differential in payments made to network 9 27 providers results in substantial differences in claim costs. 9 28 2. Notwithstanding subsection 1, the commissioner, with 9 29 the concurrence of the board of the Iowa individual health 9 30 benefit reinsurance association established in section 9 31 513C.10, may by order reduce or eliminate the allowed rating 9 32 bands provided under subsection 1, paragraphs "a", "b", "c", 9 33 and "f", or otherwise limit or eliminate the use of experience 9 34 rating. The commissioner shall also develop a recommendation 9 35 for the elimination of age as a rating characteristic, and 10 1 shall submit such recommendation by January 8, 1996. 10 2 3. A carrier shall not transfer an individual 10 3 involuntarily into or out of a block of business. 10 4 4. The commissioner may suspend for a specified period the 10 5 application of subsection 1, paragraph "a", as to the premium 10 6 rates applicable to one or more blocks of business of a 10 7 carrier for one or more rating periods upon a filing by the 10 8 carrier requesting the suspension and a finding by the 10 9 commissioner that the suspension is reasonable in light of the 10 10 financial condition of the carrier. 10 11 5. A carrier shall make a reasonable disclosure at the 10 12 time of the offering for sale of any individual health benefit 10 13 plan of all of the following: 10 14 a. The extent to which premium rates for a specified 10 15 individual are established or adjusted based upon rating 10 16 characteristics. 10 17 b. The carrier's right to change premium rates, and the 10 18 factors, other than claim experience, that affect changes in 10 19 premium rates. 10 20 c. The provisions relating to the renewal of policies and 10 21 contracts. 10 22 d. Any provisions relating to any preexisting condition. 10 23 e. All plans offered by the carrier, the prices of such 10 24 plans, and the availability of such plans to the individual. 10 25 6. A carrier shall maintain at its principal place of 10 26 business a complete and detailed description of its rating 10 27 practices, including information and documentation that 10 28 demonstrate that its rating methods and practices are based 10 29 upon commonly accepted actuarial assumptions and are in 10 30 accordance with sound actuarial principles. 10 31 7. A carrier shall file with the commissioner annually on 10 32 or before March 15, an actuarial certification certifying that 10 33 the carrier is in compliance with this chapter and that the 10 34 rating methods of the carrier are actuarially sound. The 10 35 certification shall be in a form and manner and shall contain 11 1 information as specified by the commissioner. A copy of the 11 2 certification shall be retained by the carrier at its 11 3 principal place of business. Rate adjustments made in order 11 4 to comply with this section are exempt from loss ratio 11 5 requirements. 11 6 8. A carrier shall make the information and documentation 11 7 maintained pursuant to subsection 5 available to the 11 8 commissioner upon request. The information and documentation 11 9 shall be considered proprietary and trade secret information 11 10 and shall not be subject to disclosure by the commissioner to 11 11 persons outside of the division except as agreed to by the 11 12 carrier or as ordered by a court of competent jurisdiction. 11 13 Sec. 14. NEW SECTION. 513C.6 RENEWAL OF COVERAGE. 11 14 1. An individual health benefit plan is renewable at the 11 15 option of the individual, except in any of the following 11 16 cases: 11 17 a. Nonpayment of the required premiums. 11 18 b. Fraud or misrepresentation. 11 19 c. The insured individual becomes eligible for medicare 11 20 coverage under Title XVIII of the federal Social Security Act. 11 21 d. The carrier elects not to renew all of its individual 11 22 health benefit plans in the state. In such case, the carrier 11 23 shall provide notice of the decision not to renew coverage to 11 24 all affected individuals and to the commissioner in each state 11 25 in which an affected insured individual is known to reside at 11 26 least ninety days prior to the nonrenewal of the health 11 27 benefit plan by the carrier. Notice to the commissioner under 11 28 this paragraph shall be provided at least three working days 11 29 prior to the notice to the affected individuals. 11 30 e. The commissioner finds that the continuation of the 11 31 coverage would not be in the best interests of the 11 32 policyholders or certificate holders, or would impair the 11 33 carrier's ability to meet its contractual obligations. 11 34 2. A carrier that elects not to renew all of its 11 35 individual health benefit plans in this state shall be 12 1 prohibited from writing new individual health benefit plans in 12 2 this state for a period of five years from the date of the 12 3 notice to the commissioner. 12 4 3. With respect to a carrier doing business in an 12 5 established geographic service area of the state, this section 12 6 applies only to the carrier's operations in the service area. 12 7 Sec. 15. NEW SECTION. 513C.7 AVAILABILITY OF COVERAGE. 12 8 1. A carrier or an organized delivery system issuing an 12 9 individual health benefit plan in this state shall issue a 12 10 basic or standard health benefit plan to an eligible 12 11 individual who applies for a plan and agrees to make the 12 12 required premium payments and to satisfy other reasonable 12 13 provisions of the basic or standard health benefit plan. A 12 14 carrier or an organized delivery system is not required to 12 15 issue a basic or standard health benefit plan to an individual 12 16 who meets any of the following criteria: 12 17 a. The individual is covered or is eligible for coverage 12 18 under a health benefit plan provided by the individual's 12 19 employer. 12 20 b. An eligible individual who does not apply for a basic 12 21 or standard health benefit plan within thirty days of a 12 22 qualifying event or within thirty days upon becoming 12 23 ineligible for qualifying existing coverage. 12 24 c. The individual is covered or is eligible for any 12 25 continued group coverage under section 4980b of the Internal 12 26 Revenue Code, sections 601 through 608 of the federal Employee 12 27 Retirement Income Security Act of 1974, sections 2201 through 12 28 2208 of the federal Public Health Service Act, or any state- 12 29 required continued group coverage. For purposes of this 12 30 subsection, an individual who would have been eligible for 12 31 such continuation of coverage, but is not eligible solely 12 32 because the individual or other responsible party failed to 12 33 make the required coverage election during the applicable time 12 34 period, is deemed to be eligible for such group coverage until 12 35 the date on which the individual's continuing group coverage 13 1 would have expired had an election been made. 13 2 2. A carrier or an organized delivery system shall issue 13 3 the basic or standard health benefit plan to an individual 13 4 currently covered by an underwritten benefit plan issued by 13 5 that carrier or an organized delivery system at the option of 13 6 the individual. This option must be exercised within thirty 13 7 days of notification of a premium rate increase applicable to 13 8 the underwritten benefit plan. 13 9 3. a. A carrier shall file with the commissioner, in a 13 10 form and manner prescribed by the commissioner, the basic or 13 11 standard health benefit plan to be used by the carrier. A 13 12 basic or standard health benefit plan filed pursuant to this 13 13 paragraph may be used by a carrier beginning thirty days after 13 14 it is filed unless the commissioner disapproves of its use. 13 15 The commissioner may at any time, after providing notice 13 16 and an opportunity for a hearing to the carrier, disapprove 13 17 the continued use by a carrier of a basic or standard health 13 18 benefit plan on the grounds that the plan does not meet the 13 19 requirements of this chapter. 13 20 b. An organized delivery system shall file with the 13 21 director, in a form and manner prescribed by the director, the 13 22 basic or standard health benefit plan to be used by the 13 23 organized delivery system. A basic or standard health benefit 13 24 plan filed pursuant to this paragraph may be used by the 13 25 organized delivery system beginning thirty days after it is 13 26 filed unless the director disapproves of its use. 13 27 The director may at any time, after providing notice and an 13 28 opportunity for a hearing to the organized delivery system, 13 29 disapprove the continued use by an organized delivery system 13 30 of a basic or standard health benefit plan on the grounds that 13 31 the plan does not meet the requirements of this chapter. 13 32 4. a. The individual basic or standard health benefit 13 33 plan shall not deny, exclude, or limit benefits for a covered 13 34 individual for losses incurred more than twelve months 13 35 following the effective date of the individual's coverage due 14 1 to a preexisting condition. A preexisting condition shall not 14 2 be defined more restrictively than any of the following: 14 3 (1) A condition that would cause an ordinarily prudent 14 4 person to seek medical advice, diagnosis, care, or treatment 14 5 during the twelve months immediately preceding the effective 14 6 date of coverage. 14 7 (2) A condition for which medical advice, diagnosis, care, 14 8 or treatment was recommended or received during the twelve 14 9 months immediately preceding the effective date of coverage. 14 10 (3) A pregnancy existing on the effective date of 14 11 coverage. 14 12 b. A carrier or an organized delivery system shall waive 14 13 any time period applicable to a preexisting condition 14 14 exclusion or limitation period with respect to particular 14 15 services in an individual health benefit plan for the period 14 16 of time an individual was previously covered by qualifying 14 17 previous coverage that provided benefits with respect to such 14 18 services, provided that the qualifying previous coverage was 14 19 continuous to a date not more than thirty days prior to the 14 20 effective date of the new coverage. 14 21 5. A carrier or an organized delivery system is not 14 22 required to offer coverage or accept applications pursuant to 14 23 subsection 1 from any individual not residing in the carrier's 14 24 or the organized delivery system's established geographic 14 25 access area. 14 26 6. A carrier or an organized delivery system shall not 14 27 modify a basic or standard health benefit plan with respect to 14 28 an individual or dependent through riders, endorsements, or 14 29 other means to restrict or exclude coverage for certain 14 30 diseases or medical conditions otherwise covered by the health 14 31 benefit plan. 14 32 Sec. 16. NEW SECTION. 513C.8 HEALTH BENEFIT PLAN 14 33 STANDARDS. 14 34 The commissioner shall adopt by rule the form and level of 14 35 coverage of the basic health benefit plan and the standard 15 1 health benefit plan for the individual market which shall be 15 2 substantially similar to those as provided for under chapter 15 3 513B with respect to small group coverage. 15 4 Sec. 17. NEW SECTION. 513C.9 STANDARDS TO ASSURE FAIR 15 5 MARKETING. 15 6 1. A carrier or an organized delivery system issuing 15 7 individual health benefit plans in this state shall make 15 8 available the basic or standard health benefit plan to 15 9 residents of this state. If a carrier or an organized 15 10 delivery system denies other individual health benefit plan 15 11 coverage to an eligible individual on the basis of the health 15 12 status or claims experience of the eligible individual, or the 15 13 individual's dependents, the carrier or the organized delivery 15 14 system shall offer the individual the opportunity to purchase 15 15 a basic or standard health benefit plan. 15 16 2. A carrier, or an organized delivery system, or an agent 15 17 shall not do either of the following: 15 18 a. Encourage or direct individuals to refrain from filing 15 19 an application for coverage with the carrier or the organized 15 20 delivery system because of the health status, claims 15 21 experience, industry, occupation, or geographic location of 15 22 the individuals. 15 23 b. Encourage or direct individuals to seek coverage from 15 24 another carrier or another organized delivery system because 15 25 of the health status, claims experience, industry, occupation, 15 26 or geographic location of the individuals. 15 27 3. Subsection 2, paragraph "a", shall not apply with 15 28 respect to information provided by a carrier or an organized 15 29 delivery system or an agent to an individual regarding the 15 30 established geographic service area of the carrier or the 15 31 organized delivery system, or the restricted network provision 15 32 of the carrier or the organized delivery system. 15 33 4. A carrier or an organized delivery system shall not, 15 34 directly or indirectly, enter into any contract, agreement, or 15 35 arrangement with an agent that provides for, or results in, 16 1 the compensation paid to an agent for a sale of a basic or 16 2 standard health benefit plan to vary because of the health 16 3 status or permitted rating characteristics of the individual 16 4 or the individual's dependents. 16 5 5. Subsection 4 does not apply with respect to the 16 6 compensation paid to an agent on the basis of percentage of 16 7 premium, provided that the percentage shall not vary because 16 8 of the health status or other permitted rating characteristics 16 9 of the individual or the individual's dependents. 16 10 6. Denial by a carrier or an organized delivery system of 16 11 an application for coverage from an individual shall be in 16 12 writing and shall state the reason or reasons for the denial. 16 13 7. A violation of this section by a carrier or an agent is 16 14 an unfair trade practice under chapter 507B. 16 15 8. If a carrier or an organized delivery system enters 16 16 into a contract, agreement, or other arrangement with a third- 16 17 party administrator to provide administrative, marketing, or 16 18 other services related to the offering of individual health 16 19 benefit plans in this state, the third-party administrator is 16 20 subject to this section as if it were a carrier or an 16 21 organized delivery system. 16 22 Sec. 18. NEW SECTION. 513C.10 IOWA INDIVIDUAL HEALTH 16 23 BENEFIT REINSURANCE ASSOCIATION. 16 24 1. A nonprofit corporation is established to be known as 16 25 the Iowa individual health benefit reinsurance association. 16 26 All persons that provide health benefit plans in this state 16 27 including insurers providing accident and sickness insurance 16 28 under chapter 509, 514, or 514A; fraternal benefit societies 16 29 providing hospital, medical, or nursing benefits under chapter 16 30 512B; health maintenance organizations, organized delivery 16 31 systems, and all other entities providing health insurance or 16 32 health benefits subject to state insurance regulation shall be 16 33 members of this association. The association shall be 16 34 incorporated under chapter 504A, shall operate under a plan of 16 35 operation established and approved pursuant to chapter 504A, 17 1 and shall exercise its powers through a board of directors 17 2 established under this section. 17 3 2. The initial board of directors of the association shall 17 4 consist of seven members appointed by the commissioner as 17 5 follows: 17 6 a. Four members shall be representatives of the four 17 7 largest carriers of individual health insurance in the state, 17 8 excluding medicare supplement coverage premiums, as of the 17 9 calendar year ending December 31, 1994. 17 10 b. Three members shall be representatives of the three 17 11 largest writers of health insurance in the state which are not 17 12 otherwise represented. 17 13 After an initial term, board members shall be nominated and 17 14 elected by the members of the association. 17 15 Members of the board may be reimbursed from the funds of 17 16 the association for expenses incurred by them as members, but 17 17 shall not otherwise be compensated by the association for 17 18 their services. 17 19 3. The association shall submit to the commissioner a plan 17 20 of operation for the association and any amendments to the 17 21 association's articles of incorporation necessary and 17 22 appropriate to assure the fair, reasonable, and equitable 17 23 administration of the association. The plan shall provide for 17 24 the sharing of losses related to basic and standard plans, if 17 25 any, on an equitable and proportional basis among the members 17 26 of the association. If the association fails to submit a 17 27 suitable plan of operation within one hundred eighty days 17 28 after the appointment of the board of directors, the 17 29 commissioner shall adopt rules necessary to implement this 17 30 section. The rules shall continue in force until modified by 17 31 the commissioner or superseded by a plan submitted by the 17 32 association and approved by the commissioner. In addition to 17 33 other requirements, the plan of operation shall provide for 17 34 all of the following: 17 35 a. The handling and accounting of assets and funds of the 18 1 association. 18 2 b. The amount of and method for reimbursing the expenses 18 3 of board members. 18 4 c. Regular times and places for meetings of the board of 18 5 directors. 18 6 d. Records to be kept relating to all financial 18 7 transactions, and annual fiscal reporting to the commissioner. 18 8 e. Procedures for selecting the board of directors. 18 9 f. Additional provisions necessary or proper for the 18 10 execution of the powers and duties of the association. 18 11 4. The plan of operation may provide that the powers and 18 12 duties of the association may be delegated to a person who 18 13 will perform functions similar to those of the association. A 18 14 delegation under this section takes effect only upon the 18 15 approval of the board of directors. 18 16 5. The association has the general powers and authority 18 17 enumerated by this section and executed in accordance with the 18 18 plan of operation approved by the commissioner under 18 19 subsection 3. In addition, the association may do any of the 18 20 following: 18 21 a. Enter into contracts as necessary or proper to 18 22 administer this chapter. 18 23 b. Sue or be sued, including taking any legal action 18 24 necessary or proper for recovery of any assessments for, on 18 25 behalf of, or against members of the association or other 18 26 participating persons. 18 27 c. Appoint from among members appropriate legal, 18 28 actuarial, and other committees as necessary to provide 18 29 technical assistance in the operation of the association, 18 30 including the hiring of independent consultants as necessary. 18 31 d. Perform any other functions within the authority of the 18 32 association. 18 33 6. Rates for basic and standard coverages as provided in 18 34 this chapter shall be determined by each carrier or organized 18 35 delivery system as the average of the lowest rate available 19 1 for issuance by that carrier or organized delivery system 19 2 adjusted for rate characteristics and benefits and the maximum 19 3 rate allowable by law after adjustments for rate 19 4 characteristics and benefits. 19 5 7. Following the close of each calendar year, the 19 6 association, in conjunction with the commissioner, shall 19 7 require each carrier or organized delivery system to report 19 8 the amount of earned premiums and the associated paid losses 19 9 for all basic and standard plans issued by the carrier or 19 10 organized delivery system. The reporting of these amounts 19 11 must be certified by an officer of the carrier or the 19 12 organized delivery system. 19 13 8. The board shall determine the amount of loss, if any, 19 14 from all basic and standard plans issued in the state by all 19 15 carriers and organized delivery systems by aggregating the 19 16 data reported in subsection 7. A loss shall be equal to 19 17 ninety percent of earned premiums minus total paid claims. 19 18 9. The loss plus necessary operating expenses for the 19 19 association, plus any additional expenses as provided by law, 19 20 shall be assessed by the association to all members in 19 21 proportion to their respective shares of total health 19 22 insurance premiums or payments for subscriber contracts 19 23 received in Iowa during the second preceding calendar year, or 19 24 with paid losses in the year, coinciding with or ending during 19 25 the calendar year, or on any other equitable basis as provided 19 26 in the plan of operation. In sharing losses, the association 19 27 may abate or defer any part of the assessment of a member, if, 19 28 in the opinion of the board, payment of the assessment would 19 29 endanger the ability of the member to fulfill its contractual 19 30 obligations. The association may also provide for an initial 19 31 or interim assessment against members of the association if 19 32 necessary to assure the financial viability of the association 19 33 to meet the operating expenses of the association until the 19 34 next calendar year is completed. 19 35 10. The collected assessments shall be disbursed to a 20 1 carrier or an organized delivery system in proportion to the 20 2 loss that carrier or organized delivery system represented of 20 3 the aggregate loss as determined in subsection 8. 20 4 11. A carrier or an organized delivery system may petition 20 5 the association board to seek remedy from writing a 20 6 significantly disproportionate share of basic and standard 20 7 policies in relation to total premiums written in the state 20 8 for health benefit plans. Upon a finding that a carrier or an 20 9 organized delivery system has written a disproportionate 20 10 share, the board may agree to compensate the carrier or the 20 11 organized delivery system either by paying to the carrier or 20 12 the organized delivery system an additional fee not to exceed 20 13 two percent of earned premiums from basic and standard 20 14 policies for that carrier or organized delivery system or by 20 15 petitioning the commissioner or director, as appropriate, for 20 16 remedy. 20 17 12. a. The commissioner, upon a finding that the 20 18 acceptance of the offer of basic and standard coverage by 20 19 individuals pursuant to this chapter would place the 20 20 individual health insurance carrier in a financially impaired 20 21 condition, shall not require the carrier to offer coverage or 20 22 accept applications for any period of time the financial 20 23 impairment is deemed to exist. 20 24 b. The director, upon a finding that the acceptance of the 20 25 offer of basic and standard coverage by individuals pursuant 20 26 to this chapter would place the organized delivery system in a 20 27 financially impaired condition, shall not require the 20 28 organized delivery system to offer coverage or accept 20 29 applications for any period of time the financial impairment 20 30 is deemed to exist. 20 31 Sec. 19. NEW SECTION. 513C.11 INSURANCE DIVISION 20 32 REPORTS. 20 33 1. The insurance division shall annually provide a written 20 34 report to the general assembly beginning January 1, 1996, 20 35 which evaluates the effect of this chapter on providing 21 1 universal coverage for all Iowans. This report may be 21 2 completed in conjunction with the report required by section 21 3 505.21 relating to the establishment of a requirement that an 21 4 employer provide access to health care to the employer's 21 5 employees. 21 6 2. The insurance division shall submit an annual report to 21 7 the general assembly on or before January 15 of each year 21 8 concerning the aggregate number of insureds who have coverage 21 9 through an individual health benefit plan issued under this 21 10 chapter and the net increase or decrease in the number of 21 11 insureds from the previous year. 21 12 Sec. 20. INSURANCE DIVISION STUDIES. The insurance 21 13 division shall review, study, and make recommendations to the 21 14 general assembly concerning the Iowa comprehensive health 21 15 insurance association established under chapter 514E, with the 21 16 intent to merge the Iowa comprehensive health insurance 21 17 program with an individual health reinsurance program. The 21 18 division shall submit a written report to the general assembly 21 19 no later than January 8, 1996, including the division's 21 20 findings and recommendations. 21 21 It is the intent of the general assembly that any merger of 21 22 the Iowa comprehensive health insurance program with an 21 23 individual health reinsurance program shall only occur if 21 24 those whom the Iowa comprehensive health insurance association 21 25 presently serves or would serve in the future are able to 21 26 obtain health coverage equal to or better than such coverage 21 27 in terms of cost, coverage, and plan restrictions than 21 28 presently available through the Iowa comprehensive health 21 29 insurance association. 21 30 Sec. 21. INTERIM STUDY REQUEST. The legislative council 21 31 is requested to establish an interim study committee to review 21 32 the potential for adoption of a variety of plans which may be 21 33 formed to enable an individual or family to participate in 21 34 financial instruments which provide for accumulation of 21 35 deposits for the potential payment of health care 22 1 expenditures. In particular, the committee should review the 22 2 potential offered by family health accounts and their 22 3 applicability in the provision of health security for 22 4 individuals and families. Issues to be reviewed shall include 22 5 limitations on deposits, extent of usage for health care 22 6 expenditures, tax consequences, extent to which deposits can 22 7 be used, the role of financial institutions, withdrawal 22 8 parameters, and penalties. A report with recommendations 22 9 shall be presented to the general assembly no later than 22 10 January 3, 1996. 22 11 Sec. 22. STUDY PROPOSAL. The insurance division, on or 22 12 before September 1, 1995, shall provide a written proposal to 22 13 the legislative council of the general assembly, and the 22 14 chairperson, vice chairperson, and ranking member of the 22 15 Senate and House committees on human resources detailing a 22 16 plan for the study of all available financing mechanisms and 22 17 cost containment mechanisms which might assist in the 22 18 attainment of universal coverage for all Iowa citizens. 22 19 Sec. 23. APPLICABILITY. Notwithstanding the provisions of 22 20 sections 513C.4 and 513C.5, chapter 513C, as enacted in this 22 21 Act, is not applicable to an individual health benefit plan 22 22 delivered or issued for delivery in this state or to a block 22 23 of individual health benefit plan business until such time as 22 24 rules implementing the chapter have been adopted by the 22 25 insurance division pursuant to chapter 17A. 22 26 Sec. 24. EFFECTIVE DATE. Section 1 of this Act, which 22 27 amends section 422.7 by adding a new subsection 32, is 22 28 effective January 1, 1996, for tax years beginning on or after 22 29 that date. 22 30 EXPLANATION 22 31 This bill relates to health care reform and health care 22 32 costs by amending or creating provisions relating to insurance 22 33 regulation, establishing a tax deduction, and requiring 22 34 certain state agency studies. 22 35 Section 422.7 is amended to implement the deduction of 100 23 1 percent of a taxpayer's cost for the purchase of health 23 2 insurance from adjusted gross income in computing state 23 3 individual income tax. 23 4 New section 505.22 is created which provides that a self- 23 5 funded employer-sponsored health benefit plan qualified under 23 6 the federal Employee Retirement Incomes Security Act of 1974 23 7 may voluntarily elect to participate in the individual 23 8 reinsurance pool to provide portability and continuity to the 23 9 employer's covered employees and their spouses and dependents 23 10 subject to the same terms and conditions as a participating 23 11 insurer. 23 12 Section 507B.4, subsection 1, which relates to unfair 23 13 methods of competition and unfair or deceptive acts, is 23 14 amended to include the misrepresentation by an individual of 23 15 access to health care practitioners under a managed care 23 16 health plan. 23 17 Section 513B.2, subsection 12, which defines a late 23 18 enrollee for purposes of small group health coverage, is 23 19 amended to not include an individual, or a spouse or minor 23 20 dependent child under a court order requiring coverage, who, 23 21 in addition to existing requirements, requests enrollment 23 22 within 60 days after termination of qualifying previous 23 23 coverage for an individual, or within 60 days after the 23 24 issuance of the court order. Currently, such request for 23 25 coverage must be made within 30 days. 23 26 Section 513B.37 is amended to provide that the commissioner 23 27 is to determine what benefits or direct pay requirements must 23 28 be minimally included in a standard health benefit plan. 23 29 Section 513B.38 is amended to provide that the commissioner 23 30 may extend standard benefits to include preventative care 23 31 services and mental health and substance abuse treatment 23 32 coverage. 23 33 New section 513B.44 is created and directs the insurance 23 34 division to implement and administer a premium credit to be 23 35 provided to individuals wishing to apply for the premium 24 1 credit. 24 2 New chapter 513C is created relating to individual health 24 3 coverage. New section 513C.1 provides the title, the 24 4 Individual Health Insurance Market Reform Act. 24 5 New section 513C.2 states the purpose of the chapter. 24 6 New section 513C.3 establishes the definitions of key terms 24 7 used in the chapter. 24 8 New section 513C.4 provides that the chapter applies to an 24 9 individual health benefit plan delivered or issued for 24 10 delivery to residents in this state on or after July 1, 1995. 24 11 New section 513C.5 establishes restrictions relating to 24 12 premium rates for individual health benefit plans. Among 24 13 those factors, the carrier is not to apply gender or industry 24 14 classification rating characteristics, and experience rating 24 15 characteristics only apply when an individual who is obtaining 24 16 health coverage does not currently have qualifying coverage, 24 17 as defined in the chapter. Certain other restrictions apply 24 18 relating to the transfer of an individual into and out of a 24 19 block of business, and required disclosures relating to the 24 20 coverage are enumerated. 24 21 New section 513C.6 relates to the renewal of an individual 24 22 health benefit plan. Such plan is renewable at the option of 24 23 the individual, except under certain enumerated circumstances. 24 24 The section also provides that a carrier that elects not to 24 25 renew all of its individual health benefit plans in this state 24 26 shall be prohibited from writing new individual health benefit 24 27 plans in this state for a period of five years from the date 24 28 of the notice required to be provided to the commissioner of 24 29 such election. 24 30 New section 513C.7 provides that a carrier issuing 24 31 individual health benefit plans must issue such plan to an 24 32 individual applying for the plan except under certain defined 24 33 circumstances. 24 34 New section 513C.8 provides that the commissioner is to 24 35 adopt rules relating to the form and level of coverage of the 25 1 basic and standard health benefit plan for the individual 25 2 market. 25 3 New section 513C.9 establishes standards to assure fair 25 4 marketing of individual basic and standard health benefit 25 5 plans. Restrictions are also established relating to carrier 25 6 and the agent concerning the marketing of such plans. 25 7 New section 513C.10 establishes an Iowa individual health 25 8 benefit reinsurance association to provide for the sharing of 25 9 losses related to basic and standard plans, if any, on an 25 10 equitable and proportional basis among the members of the 25 11 association. 25 12 New section 513C.11 is established requiring the insurance 25 13 division to annually report to the general assembly regarding 25 14 the effect of new chapter 513C on providing universal coverage 25 15 for all Iowans, and regarding the number of aggregate number 25 16 of insureds who have coverage through an individual health 25 17 benefit plan issued under chapter 513C. 25 18 The bill directs the insurance division to review, develop, 25 19 and submit a plan for the establishment of an individual 25 20 health coverage reinsurance program. The division is also to 25 21 provide a written proposal on or before September 1, 1995, 25 22 detailing all available financing and cost containment 25 23 mechanisms which might assist in attaining universal coverage 25 24 for all Iowans. 25 25 The bill also provides that the tax deduction established 25 26 in chapter 422 is effective for tax years beginning on or 25 27 after January 1, 1996. 25 28 The bill requests the legislative council to establish an 25 29 interim committee to review the potential for adoption of a 25 30 variety of plans which may be formed to enable an individual 25 31 or family to participate in financial instruments which 25 32 provide for accumulation of deposits for the potential payment 25 33 of health care expenditures. 25 34 LSB 1854SC 76 25 35 mj/sc/14
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