House File 2477 - Introduced
HOUSE FILE
BY STRUYK and KAUFMANN
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act authorizing small employer association health benefit
2 plans, a small business health care tax credit, wellness
3 incentives, a small employer catastrophic risk health care
4 reinsurance program, providing an appropriation, and providing
5 for effective, retroactive, and applicability dates.
6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
7 TLSB 5827YH 81
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PAG LIN
1 1 DIVISION I
1 2 ASSOCIATION GROUP HEALTH PLANS
1 3 Section 1. Section 513B.2, Code 2005, is amended by adding
1 4 the following new subsection:
1 5 NEW SUBSECTION. 1A. "Association" means an organization
1 6 with membership of not less than fifty small employers which
1 7 has been formed for purposes other than obtaining insurance.
1 8 Sec. 2. NEW SECTION. 513B.4B PREMIUM RATES ==
1 9 EXCEPTIONS.
1 10 1. Notwithstanding section 513B.4, a small employer
1 11 carrier that offers health insurance coverage in the small
1 12 group market may offer a health benefit plan to members of an
1 13 association with premium rates determined by the total number
1 14 of lives insured by the plan, not the number of lives of each
1 15 small employer in the association.
1 16 2. a. A plan offered pursuant to subsection 1 shall
1 17 include a continuous program of general health education for
1 18 disease prevention and identification without additional cost
1 19 to the enrollees. Such a program may include publications,
1 20 media presentations, and classroom instruction.
1 21 b. Programs of wellness education including stress
1 22 management, smoking cessation, nutritional education, physical
1 23 fitness programs, and other such programs as approved by the
1 24 division of insurance, by rules adopted pursuant to chapter
1 25 17A, shall be open to all enrollees in a plan offered pursuant
1 26 to subsection 1, on a voluntary basis, and may be subject to
1 27 copayment requirements. These programs shall be conducted by
1 28 qualified personnel.
1 29 3. An employer that purchases an association plan offered
1 30 pursuant to subsection 1 shall also give each enrollee in the
1 31 plan who is employed by the employer the opportunity to
1 32 participate in a health savings account, as defined in section
1 33 223(d) of the Internal Revenue Code.
1 34 DIVISION II
1 35 SMALL EMPLOYER HEALTH CARE TAX CREDIT
2 1 Sec. 3. NEW SECTION. 422.11M SMALL BUSINESS HEALTH CARE
2 2 TAX CREDIT.
2 3 1. a. The taxes imposed under this division, less the
2 4 amounts of nonrefundable credits allowed under this division,
2 5 shall be reduced by a small business health care tax credit,
2 6 to the extent available, for the cost to a small business of
2 7 providing health care benefits or contributions to employees
2 8 of the business. The amount of the credit for each employee
2 9 equals the first one thousand dollars of the cost of providing
2 10 health care benefits to the employee or the first one thousand
2 11 dollars of the contribution made on behalf of the employee to
2 12 a health savings account of that employee.
2 13 b. The total amount of all credits for all employees under
2 14 paragraph "a" shall not exceed twenty=five thousand dollars.
2 15 c. For purposes of this section:
2 16 (1) "Health savings account" means a health savings
2 17 account as defined in section 223(d) of the Internal Revenue
2 18 Code.
2 19 (2) "Small business" means a for=profit enterprise that
2 20 employed during the tax year less than fifty full=time
2 21 equivalent employees.
2 22 d. Any credit in excess of the tax liability shall be
2 23 refunded. In lieu of claiming a refund, a taxpayer may elect
2 24 to have the overpayment shown on the taxpayer's final,
2 25 completed return credited to the tax liability for the
2 26 following taxable year.
2 27 2. An individual may claim a small business health care
2 28 tax credit allowed a partnership, limited liability company, S
2 29 corporation, estate, or trust electing to have the income
2 30 taxed directly to the individual. The amount claimed by the
2 31 individual shall be based upon the pro rata share of the
2 32 individual's earnings of the partnership, limited liability
2 33 company, S corporation, estate, or trust.
2 34 3. A taxpayer claiming a credit under this section shall
2 35 not be precluded, in computing taxable income, from deducting
3 1 the amount of costs for providing health care benefits allowed
3 2 under any section of the Internal Revenue Code.
3 3 4. To receive the small business health care tax credit, a
3 4 small business must submit an application to the department.
3 5 If the taxpayer meets the criteria for eligibility, the
3 6 department shall issue to the taxpayer a certification of
3 7 entitlement for the small business health care tax credit.
3 8 However, the combined amount of tax credits that may be
3 9 approved for a fiscal year under this section, section 422.33,
3 10 subsection 20, section 422.60, subsection 11, section 432.12H,
3 11 and section 533.24, subsection 8, shall not exceed the amount
3 12 specified in subsection 5. Tax credit certificates shall be
3 13 issued on an earliest filed application basis. The
3 14 certification shall contain the taxpayer's name, address, tax
3 15 identification number, the amount of the credit, and tax year
3 16 for which the certificate applies. The taxpayer must file the
3 17 tax credit certificate with the taxpayer's tax return in order
3 18 to claim the tax credit. The department shall adopt rules to
3 19 administer this section and shall provide by rule for the
3 20 method to be used to determine for which fiscal year the tax
3 21 credits are approved.
3 22 5. For purposes of subsection 4, the combined amount of
3 23 small business health care tax credits that may be approved in
3 24 a fiscal year is as follows:
3 25 a. For the fiscal year beginning July 1, 2006, the
3 26 combined amount equals fifty million dollars.
3 27 b. For the fiscal year beginning July 1, 2007, the
3 28 combined amount equals one hundred million dollars.
3 29 c. For the fiscal year beginning July 1, 2008, the
3 30 combined amount equals one hundred fifty million dollars.
3 31 d. For the fiscal year beginning July 1, 2009, the
3 32 combined amount equals two hundred million dollars.
3 33 e. For each fiscal year beginning on or after July 1,
3 34 2010, the combined amount equals two hundred fifty million
3 35 dollars.
4 1 Sec. 4. Section 422.33, Code Supplement 2005, is amended
4 2 by adding the following new subsection:
4 3 NEW SUBSECTION. 20. The taxes imposed under this division
4 4 shall be reduced by a small business health care tax credit,
4 5 to the extent available, provided for in section 422.11M. The
4 6 tax credit shall be subject to the same conditions,
4 7 requirements, and dollar limitations as provided for in
4 8 section 422.11M.
4 9 Sec. 5. Section 422.60, Code Supplement 2005, is amended
4 10 by adding the following new subsection:
4 11 NEW SUBSECTION. 11. The taxes imposed under this division
4 12 shall be reduced by a small business health care tax credit,
4 13 to the extent available, provided for in section 422.11M. The
4 14 tax credit shall be subject to the same conditions,
4 15 requirements, and dollar limitations as provided for in
4 16 section 422.11M.
4 17 Sec. 6. NEW SECTION. 432.12H SMALL BUSINESS HEALTH CARE
4 18 TAX CREDIT.
4 19 The taxes imposed under this chapter shall be reduced by a
4 20 small business health care tax credit, to the extent
4 21 available, provided for in section 422.11M. The tax credit
4 22 shall be subject to the same conditions, requirements, and
4 23 dollar limitations as provided for in section 422.11M.
4 24 Sec. 7. Section 533.24, Code Supplement 2005, is amended
4 25 by adding the following new subsection:
4 26 NEW SUBSECTION. 8. The moneys and credits tax imposed
4 27 under this section shall be reduced by a small business health
4 28 care tax credit, to the extent available, provided for in
4 29 section 422.11M. The tax credit shall be subject to the same
4 30 conditions, requirements, and dollar limitations as provided
4 31 for in section 422.11M.
4 32 DIVISION III
4 33 HEALTH INSURANCE == WELLNESS INCENTIVES
4 34 Sec. 8. NEW SECTION. 513B.9B WELLNESS INCENTIVES.
4 35 1. A carrier or organized delivery system that offers
5 1 health insurance in the small group market may reduce the
5 2 required out=of=pocket expenditures for an enrollee in a
5 3 health benefit plan based upon the member's increased wellness
5 4 activities such as smoking cessation or compliance with a
5 5 personal health improvement plan completed by the enrollee, as
5 6 approved by the commission, by rules adopted pursuant to
5 7 chapter 17A.
5 8 2. An employer shall not do any of the following:
5 9 a. Require an employee or a prospective employee to
5 10 refrain from using tobacco products outside the course of
5 11 employment as a term or condition of employment or continued
5 12 employment.
5 13 b. Discriminate against an employee or prospective
5 14 employee with respect to the employee's or prospective
5 15 employee's compensation or benefits based on the employee's or
5 16 prospective employee's use of tobacco products outside the
5 17 course of employment, except as allowed under the federal
5 18 Health Insurance Portability and Accountability Act of 1996,
5 19 Pub. L. No. 104=191.
5 20 DIVISION IV
5 21 SMALL EMPLOYER CATASTROPHIC RISK HEALTH CARE
5 22 REINSURANCE PROGRAM AND APPROPRIATION
5 23 Sec. 9. NEW SECTION. 513B.13A SMALL EMPLOYER
5 24 CATASTROPHIC RISK HEALTH CARE REINSURANCE PROGRAM.
5 25 1. DEFINITIONS. As used in this section, unless the
5 26 context otherwise requires:
5 27 a. "Fund" means the small employer catastrophic risk
5 28 health care reinsurance fund.
5 29 b. "Qualified carrier" means a carrier, as defined in
5 30 section 513B.2 that meets the requirements contained in
5 31 subsection 4.
5 32 c. "Reinsurance program" means the small employer
5 33 catastrophic risk health care reinsurance program.
5 34 d. "Small employer group health insurance plan" means a
5 35 group health insurance plan that provides health insurance
6 1 coverage for employees of a small employer.
6 2 2. REINSURANCE FUND.
6 3 a. A small employer catastrophic risk health care
6 4 reinsurance fund is created as a separate fund in the state
6 5 treasury under the control of the commissioner of insurance.
6 6 b. The treasurer of state shall act as custodian of the
6 7 fund and shall disburse amounts contained in the fund as
6 8 directed by the commissioner.
6 9 c. The commissioner shall keep accounts in relation to the
6 10 appropriation of moneys to the fund and all amounts of
6 11 approved vouchers for reimbursements to qualified carriers
6 12 chargeable to the fund.
6 13 3. SMALL EMPLOYER CATASTROPHIC RISK HEALTH CARE
6 14 REINSURANCE PROGRAM.
6 15 a. A small employer catastrophic risk health care
6 16 reinsurance program is created in the insurance division of
6 17 the department of commerce to administer the fund and to make
6 18 expenditures from the fund pursuant to this section.
6 19 b. Moneys in the fund shall be used to reimburse a
6 20 qualified carrier that offers a small employer group health
6 21 insurance plan in which at least eighty=five percent of the
6 22 eligible employees of the small employer participate, for
6 23 certain claims paid by the qualified carrier. The amount of
6 24 reimbursement shall be fifty percent of the cost of each claim
6 25 that amounts to at least fifty thousand dollars that is paid
6 26 by a qualified carrier under such a plan in a year.
6 27 c. The commissioner shall submit an annual report not
6 28 later than January 1 to the governor, the general assembly,
6 29 and the legislative services agency evaluating the fund and
6 30 reinsurance program, including but not limited to
6 31 consideration of the factors contained in subsection 5,
6 32 paragraph "b", summarizing the status of the fund and
6 33 reinsurance program, and proposing modifications to or
6 34 suspension of the operation of the fund and reinsurance
6 35 program as deemed necessary by the commissioner.
7 1 4. QUALIFIED CARRIERS.
7 2 a. In order to qualify for participation in the
7 3 reinsurance program for the first time, a carrier shall
7 4 certify to the commissioner that the carrier will immediately
7 5 reduce its base premium rates or otherwise demonstrate to the
7 6 commissioner that the carrier will immediately effectively
7 7 reduce premiums, according to accepted actuarial guidelines
7 8 adopted by the commissioner by rule under chapter 17A, for all
7 9 small employer group health insurance plans offered by the
7 10 carrier for the plan benefit year in an amount that reflects
7 11 the estimated reimbursement the carrier will receive from
7 12 participating in the reinsurance program during that plan
7 13 benefit year, as determined by the commissioner according to
7 14 accepted actuarial guidelines adopted by rule under chapter
7 15 17A.
7 16 b. In order to qualify for continued participation in the
7 17 reinsurance program, a carrier shall certify to the
7 18 commissioner that for the plan benefit year for which
7 19 reimbursement from the fund is claimed, the carrier reduced
7 20 its base premium rates or otherwise demonstrate to the
7 21 commissioner that the carrier effectively reduced premiums,
7 22 according to accepted actuarial guidelines adopted by the
7 23 commissioner by rule under chapter 17A, for all small employer
7 24 group health insurance plans offered by the carrier for that
7 25 plan benefit year.
7 26 c. A qualified carrier may claim reimbursement from the
7 27 fund for the cost of eligible claims annually, by filing, with
7 28 the commissioner, a claim in a form prescribed by the
7 29 commissioner by rule.
7 30 5. MONITORING AND EVALUATION.
7 31 a. The commissioner shall develop and implement criteria
7 32 to monitor and evaluate the fund and reinsurance program on an
7 33 ongoing basis and may make recommendations to the general
7 34 assembly, including proposed modifications to or suspension of
7 35 the operation of the fund and reinsurance program.
8 1 b. In monitoring and evaluating the reinsurance program,
8 2 the commissioner shall consider such factors as the population
8 3 whose claims are being reimbursed by the reinsurance program,
8 4 the number and percentage of qualified carriers electing to
8 5 utilize the reinsurance program, health care reform measures
8 6 implemented in the state, premium costs of small employer
8 7 group health insurance plans offered by qualified carriers
8 8 that participate in the reinsurance program compared to
8 9 carriers that do not, and other factors deemed relevant by the
8 10 commissioner.
8 11 Sec. 10. APPROPRIATION. There is appropriated annually
8 12 from the healthy Iowans tobacco trust created in section 12.65
8 13 to the insurance division of the department of commerce the
8 14 sum of twenty=two million dollars for the purpose of
8 15 establishing the small employer catastrophic risk health care
8 16 reinsurance program and fund. Notwithstanding section 12C.7,
8 17 subsection 2, interest or earnings on moneys deposited in the
8 18 fund shall be credited to the fund. Notwithstanding section
8 19 8.33, moneys credited to the fund shall not revert to the
8 20 general fund of the state at the close of a fiscal year.
8 21 DIVISION V
8 22 EFFECTIVE, RETROACTIVE, AND APPLICABILITY DATES
8 23 Sec. 11. EFFECTIVE DATE. This Act, being deemed of
8 24 immediate importance, takes effect upon enactment.
8 25 Sec. 12. RETROACTIVE AND APPLICABILITY DATE. Sections 3
8 26 through 7 of this Act apply retroactively to January 1, 2006,
8 27 for tax years beginning on or after that date.
8 28 EXPLANATION
8 29 This bill authorizes small employer association health
8 30 benefit plans, a small employer health care tax credit,
8 31 wellness incentives, and a small employer catastrophic risk
8 32 reinsurance program.
8 33 DIVISION I == ASSOCIATION GROUP HEALTH PLANS. The bill
8 34 allows a small employer carrier that offers health insurance
8 35 coverage in the small group market to offer a health benefit
9 1 plan to members of an association with premium rates
9 2 determined by the total number of lives insured by the plan,
9 3 not the number of lives of each small employer in the
9 4 association.
9 5 Such a plan is required to include general health education
9 6 for disease prevention and identification at no additional
9 7 cost to enrollees. The plan is also required to include other
9 8 wellness programs such as stress management, smoking
9 9 cessation, nutritional education, physical fitness programs,
9 10 and other programs as approved by the commissioner of
9 11 insurance by rules adopted pursuant to Code chapter 17A, which
9 12 are voluntary and may be subject to copayment requirements.
9 13 The bill requires an employer that purchases such an
9 14 association plan to offer each enrollee in the plan the
9 15 opportunity to participate in a health savings account as
9 16 defined in section 223(d) of the Internal Revenue Code.
9 17 For purposes of the bill, "association" means an
9 18 organization with membership of not less than 50 small
9 19 employers which has been formed for purposes other than
9 20 obtaining insurance.
9 21 DIVISION II == SMALL BUSINESS HEALTH CARE TAX CREDIT. The
9 22 bill provides for a small business health care tax credit.
9 23 The credit can be used to reduce the individual and corporate
9 24 income taxes, franchise tax, premiums tax, and moneys and
9 25 credits tax liabilities. A small business is a for=profit
9 26 enterprise with fewer than 50 permanent full=time equivalent
9 27 employees during the tax year. To be eligible for the credit,
9 28 the small business must provide health care benefits to its
9 29 employees or contribute to health savings accounts established
9 30 for them pursuant to federal law. The amount of the credit
9 31 equals the first $1,000 of the cost of the benefits or the
9 32 first $1,000 of the contribution to the account. The total
9 33 credits for the business cannot exceed $25,000. Any excess
9 34 credit is refundable or the excess may be carried forward to
9 35 the next tax year.
10 1 The bill provides for a limit on the combined amount of
10 2 credits that may be approved in a fiscal year. For the first
10 3 fiscal year, FY 2006=2007, $50 million may be approved. The
10 4 amount increases by $50 million for each subsequent fiscal
10 5 year until the maximum of $250 million may be approved for FY
10 6 2010=2011 and each subsequent fiscal year.
10 7 The bill applies retroactively to January 1, 2006, for tax
10 8 years beginning on or after that date.
10 9 DIVISION III == HEALTH INSURANCE == WELLNESS INCENTIVES.
10 10 The bill provides that a carrier or organized delivery system
10 11 that offers health insurance in the small group market may
10 12 reduce the required out=of=pocket expenditures for an enrollee
10 13 in a health benefit plan based upon the member's participation
10 14 in wellness activities such as smoking cessation or compliance
10 15 with a personal health improvement plan, as approved by the
10 16 commissioner of insurance, by rules adopted pursuant to Code
10 17 chapter 17A.
10 18 The bill also provides that an employer shall not require
10 19 an employee or a prospective employee to refrain from using
10 20 tobacco products outside the course of employment as a term or
10 21 condition of employment or continued employment, or
10 22 discriminate against an employee or prospective employee with
10 23 respect to compensation or benefits based on the use of
10 24 tobacco products outside the course of employment, except as
10 25 allowed under the federal Health Insurance Portability and
10 26 Accountability Act of 1996.
10 27 DIVISION IV == SMALL EMPLOYER CATASTROPHIC RISK HEALTH CARE
10 28 REINSURANCE PROGRAM AND APPROPRIATION. The bill creates a
10 29 small employer catastrophic risk health care reinsurance
10 30 program for health care claims made under small employer group
10 31 health insurance plans.
10 32 The bill provides reimbursement of certain claims paid by
10 33 qualified insurance carriers under group health insurance
10 34 plans that provide health insurance to a small employer, which
10 35 employs two to 50 full=time equivalent employees.
11 1 The small employer catastrophic risk health care
11 2 reinsurance fund is created as a separate fund in the state
11 3 treasury under the control of the commissioner of insurance.
11 4 An appropriation of $22 million is made annually from the
11 5 healthy Iowans tobacco trust of the state to the insurance
11 6 division of the department of commerce for the purpose of
11 7 establishing the reinsurance program and fund.
11 8 The small employer catastrophic risk health care
11 9 reinsurance program is created in the insurance division of
11 10 the department of commerce to administer the reinsurance fund
11 11 and to make expenditures from the fund.
11 12 The reinsurance program is required to reimburse a
11 13 qualified carrier that offers a small employer group health
11 14 insurance plan, in which at least 85 percent of the eligible
11 15 employees of the small employer participate, for certain
11 16 claims paid. The reimbursement amount is 50 percent of the
11 17 cost of each claim, of $50,000 or more, which is paid by a
11 18 qualified carrier under such a plan each year.
11 19 For the purposes of the bill, a "qualified carrier" means a
11 20 carrier under Code section 513B.2, which is an entity subject
11 21 to the insurance laws and regulations of this state, or
11 22 subject to the jurisdiction of the commissioner, that
11 23 contracts or offers to contract to provide, deliver, arrange
11 24 for, pay for, or reimburse any of the costs of health care
11 25 services, including an insurance company offering sickness and
11 26 accident plans, a health maintenance organization, a nonprofit
11 27 health service corporation, or any other entity providing a
11 28 plan of health insurance, health benefits, or health services,
11 29 that meets the requirements of the bill.
11 30 In order to qualify for participation in the reinsurance
11 31 program for the first time, a carrier is required to certify
11 32 to the commissioner that the carrier will immediately reduce
11 33 its base premium rates or otherwise demonstrate to the
11 34 commissioner that the carrier will immediately effectively
11 35 reduce premiums, according to accepted actuarial guidelines
12 1 adopted by the commissioner by rule under Code chapter 17A,
12 2 for all small employer group health insurance plans offered by
12 3 the carrier for the plan benefit year in an amount that
12 4 reflects the estimated reimbursement the carrier will receive
12 5 from participating in the reinsurance program during that plan
12 6 benefit year, as determined by the commissioner according to
12 7 accepted actuarial guidelines adopted by rule under Code
12 8 chapter 17A.
12 9 In order to qualify for continued participation in the
12 10 reinsurance program, a carrier shall certify to the
12 11 commissioner that for the plan benefit year for which
12 12 reimbursement from the fund is claimed, the carrier reduced
12 13 its base premium rates or otherwise demonstrate to the
12 14 commissioner that the carrier effectively reduced premiums,
12 15 according to accepted actuarial guidelines adopted by the
12 16 commissioner by rule under Code chapter 17A, for all small
12 17 employer group health insurance plans offered by the carrier
12 18 for that plan benefit year.
12 19 The commissioner is required to develop and implement
12 20 criteria to monitor and evaluate the reinsurance program and
12 21 may make recommendations to the general assembly, including
12 22 proposed modifications to or suspension of the operation of
12 23 the reinsurance fund and program. The criteria shall include
12 24 consideration of factors such as the population whose claims
12 25 are being reimbursed by the program, the number and percentage
12 26 of qualified carriers electing to utilize the program, health
12 27 care reform measures implemented in the state, premium costs
12 28 of small employer group health insurance plans offered by
12 29 qualified carriers that participate in the program compared to
12 30 carriers that do not, and other factors deemed relevant by the
12 31 commissioner.
12 32 The commissioner is required to submit an annual report by
12 33 January 1 to the governor, general assembly, and legislative
12 34 services agency evaluating the reinsurance fund and program,
12 35 including but not limited to consideration of the factors
13 1 involved in developing and implementing the reinsurance
13 2 program and fund, summarizing the status of the program and
13 3 fund, and proposing modifications to or suspension of the
13 4 operation of the fund and program as deemed necessary by the
13 5 commissioner.
13 6 DIVISION V == EFFECTIVE, APPLICABILITY, AND RETROACTIVE
13 7 DATES. The bill is effective upon enactment. The provisions
13 8 of the bill providing for a small employer health care tax
13 9 credit in sections 3 through 7 of the bill apply retroactively
13 10 to January 1, 2006, for tax years beginning on or after that
13 11 date.
13 12 LSB 5827YH 81
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