Citations Affected:
IC 27-8-10-2.1
;
IC 27-8-10-2.2.
Synopsis: ICHIA assessment revisions. Provides that an affiliate of a
member of the Indiana comprehensive health insurance association
(ICHIA) may take a tax credit for assessments paid to ICHIA by the
member. Provides that a member that is unable to use the full amount
of tax credits to which the member is entitled for assessments paid to
ICHIA may certify the amount of unused tax credits to the ICHIA
board. Requires the ICHIA board, in determining assessments of
members for a calendar year, to reduce a member's assessment by the
amount of the member's unused tax credit for the preceding year.
Requires the ICHIA board to request reimbursement from appropriated
funds in an amount equal to the amount of unused tax credits deducted
in determining the assessments of members. Limits the gross
assessment that may be imposed on a member to the remainder of 1.5%
of the member's total health insurance premiums minus the member's
Medicare and Medicaid revenues. Makes a continuing appropriation
from the state general fund to provide funds to ICHIA to: (1) equal the
amount by which ICHIA's assessments of members are reduced for
unused tax credits; and (2) cover the amount by which ICHIA's claims
and administrative costs exceed premiums and assessments due to the
limit imposed on ICHIA's assessment of members.
Effective: Upon passage; January 1, 2001 (retroactive).
January 23, 2001, read first time and referred to Committee on Finance.
A BILL FOR AN ACT to amend the Indiana Code concerning
insurance and to make an appropriation.
SECTION 1.
IC 27-8-10-2.1
IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JANUARY 1, 2001 (RETROACTIVE)]:
Sec. 2.1. (a) There is established a nonprofit legal entity to be referred
to as the Indiana comprehensive health insurance association, which
must assure that health insurance is made available throughout the year
to each eligible Indiana resident applying to the association for
coverage. All carriers, health maintenance organizations, limited
service health maintenance organizations, and self-insurers providing
health insurance or health care services in Indiana must be members of
the association. The association shall operate under a plan of operation
established and approved under subsection (c) and shall exercise its
powers through a board of directors established under this section.
(b) The board of directors of the association consists of seven (7)
members whose principal residence is in Indiana selected as follows:
(1) Three (3) members to be appointed by the commissioner from
the members of the association, one (1) of which must be a
representative of a health maintenance organization.
directors will be made and submitted to the commissioner for
approval;
(6) contain additional provisions necessary or proper for the
execution of the powers and duties of the association; and
(7) establish procedures for the periodic advertising of the general
availability of the health insurance coverages from the
association.
(d) The plan of operation may provide that any of the powers and
duties of the association be delegated to a person who will perform
functions similar to those of this association. A delegation under this
section takes effect only with the approval of both the board of
directors and the commissioner. The commissioner may not approve a
delegation unless the protections afforded to the insured are
substantially equivalent to or greater than those provided under this
chapter.
(e) The association has the general powers and authority enumerated
by this subsection in accordance with the plan of operation approved
by the commissioner under subsection (c). The association has the
general powers and authority granted under the laws of Indiana to
carriers licensed to transact the kinds of health care services or health
insurance described in section 1 of this chapter and also has the
specific authority to do the following:
(1) Enter into contracts as are necessary or proper to carry out this
chapter, subject to the approval of the commissioner.
(2) Sue or be sued, including taking any legal actions necessary
or proper for recovery of any assessments for, on behalf of, or
against participating carriers.
(3) Take legal action necessary to avoid the payment of improper
claims against the association or the coverage provided by or
through the association.
(4) Establish a medical review committee to determine the
reasonably appropriate level and extent of health care services in
each instance.
(5) Establish appropriate rates, scales of rates, rate classifications
and rating adjustments, such rates not to be unreasonable in
relation to the coverage provided and the reasonable operational
expenses of the association.
(6) Pool risks among members.
(7) Issue policies of insurance on an indemnity or provision of
service basis providing the coverage required by this chapter.
(8) Administer separate pools, separate accounts, or other plans
or arrangements considered appropriate for separate members or
groups of members.
(9) Operate and administer any combination of plans, pools, or
other mechanisms considered appropriate to best accomplish the
fair and equitable operation of the association.
(10) Appoint from among members appropriate legal, actuarial,
and other committees as necessary to provide technical assistance
in the operation of the association, policy and other contract
design, and any other function within the authority of the
association.
(11) Hire an independent consultant.
(12) Develop a method of advising applicants of the availability
of other coverages outside the association and may promulgate a
list of health conditions the existence of which would deem an
applicant eligible without demonstrating a rejection of coverage
by one (1) carrier.
(13) Provide for the use of managed care plans for insureds,
including the use of:
(A) health maintenance organizations; and
(B) preferred provider plans.
(14) Solicit bids directly from providers for coverage under this
chapter.
(f) Rates for coverages issued by the association may not be
unreasonable in relation to the benefits provided, the risk experience,
and the reasonable expenses of providing the coverage. Separate scales
of premium rates based on age apply for individual risks. Premium
rates must take into consideration the extra morbidity and
administration expenses, if any, for risks insured in the association. The
rates for a given classification may not be more than one hundred fifty
percent (150%) of the average premium rate for that class charged by
the five (5) carriers with the largest premium volume in the state during
the preceding calendar year. In determining the average rate of the five
(5) largest carriers, the rates charged by the carriers shall be actuarially
adjusted to determine the rate that would have been charged for
benefits identical to those issued by the association. All rates adopted
by the association must be submitted to the commissioner for approval.
(g) Following the close of the association's fiscal year, the
association shall determine the net premiums, the expenses of
administration, and the incurred losses for the year. Any net loss shall
be assessed by the association to all members in proportion to their
respective shares of total health insurance premiums, excluding
premiums for Medicaid contracts with the state of Indiana, received in
Indiana during the calendar year (or with paid losses in the year)
coinciding with or ending during the fiscal year of the association or
any other equitable basis as may be provided in the plan of operation.
For self-insurers, health maintenance organizations, and limited service
health maintenance organizations that are members of the association,
the proportionate share of losses must be determined through the
application of an equitable formula based upon claims paid, excluding
claims for Medicaid contracts with the state of Indiana, or the value of
services provided. In sharing losses, the association may abate or defer
in any part the assessment of a member, if, in the opinion of the board,
payment of the assessment would endanger the ability of the member
to fulfill its contractual obligations. The association may also provide
for interim assessments against members of the association if necessary
to assure the financial capability of the association to meet the incurred
or estimated claims expenses or operating expenses of the association
until the association's next fiscal year is completed. Net gains, if any,
must be held at interest to offset future losses or allocated to reduce
future premiums. Assessments must be determined by the board
members specified in subsection (b)(1), subject to final approval by the
commissioner.
(h) The association shall conduct periodic audits to assure the
general accuracy of the financial data submitted to the association, and
the association shall have an annual audit of its operations by an
independent certified public accountant.
(i) The association is subject to examination by the department of
insurance under
IC 27-1-3.1.
The board of directors shall submit, not
later than March 30 of each year, a financial report for the preceding
calendar year in a form approved by the commissioner.
(j) All policy forms issued by the association must conform in
substance to prototype forms developed by the association, must in all
other respects conform to the requirements of this chapter, and must be
filed with and approved by the commissioner before their use.
(k) The association may not issue an association policy to any
individual who, on the effective date of the coverage applied for, does
not meet the eligibility requirements of section 5.1 of this chapter.
(l) The association shall pay an agent's referral fee of twenty-five
dollars ($25) to each insurance agent who refers an applicant to the
association if that applicant is accepted.
(m) The association and the premium collected by the association
shall be exempt from the premium tax, the gross income tax, the
adjusted gross income tax, supplemental corporate net income, or any
combination of these, or similar taxes upon revenues or income that
may be imposed by the state.
members under subsection (o) and section 2.2 of this chapter;
and
(2) request payment to the association of an amount equal to
the total of the deductions granted in determining the net
assessments of members under subsection (o) and section 2.2
of this chapter.
(q) Gross assessments imposed upon a member after December
31, 2001, for a calendar year may not exceed the remainder of one
and one-half percent (1.5%) of the member's total health insurance
premiums for the calendar year minus revenues from Medicare
premiums and Medicaid contracts with the state for the calendar
year, as set forth in the annual statement filed with the department
of insurance under
IC 27-1-20-21.
If the limitation on assessments
set forth in this subsection restricts the resources of the board to
pay medical claims and administrative costs for any year:
(1) the board shall submit to the department of insurance a
request for payment to the association of an amount equal to
the amount by which medical claims and administrative costs
exceed insurance premiums from policyholders and
assessments paid by members of the association;
(2) the department of insurance shall review and verify the
accuracy of the amount requested under subdivision (1); and
(3) the department of insurance shall reimburse the
association an amount equal to the amount by which medical
claims and administrative costs exceed insurance premiums
from policyholders and assessments paid by members of the
association.
(r) The association shall provide for the option of monthly
collection of premiums.
(s) There is annually appropriated to the department of
insurance from the state general fund an amount sufficient to pay
to the association the amounts properly requested under
subsections (p) and (q).
SECTION 2.
IC 27-8-10-2.2
IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 2.2. (a) Notwithstanding section 2.1(o) of
this chapter, a member who has unused tax credits on December
31, 2000, must certify the amount of the member's unused tax
credits to the board before June 1, 2001. However, if a member is
unable, before June 1, 2001, to compute the member's unused tax
credits as of December 31, 2000, the member may certify the
member's total of unused tax credits before June 1, 2002.
(b) In determining the net assessment of a member for each of
the calendar years 2001, 2002, and 2003, the board shall:
(1) compute an annual gross assessment for the calendar year;
(2) subtract from the gross assessment the amount of unused
tax credits certified by the member under section 2.1(o); and
(3) subtract from the remainder determined under
subdivision (2), in equal amounts for each of the three (3)
calendar years, not more than one-third (1/3) of the amount
of the member's unused tax credits as of December 31, 2000,
as certified under subsection (a).
(c) A member who does not, before June 1, 2001, certify the
amount of the member's unused tax credits as of December 31,
2000, is not eligible under this section for the deduction of those
unused tax credits in the determination of the member's net
assessment for the calendar year 2001, but is eligible for the
deduction of those unused tax credits in the determination of the
member's net assessment for the calendar years 2002, 2003, and
2004.
SECTION 3. [EFFECTIVE JANUARY 1, 2001 (RETROACTIVE)]
(a) As used in this SECTION, "affiliate" has the meaning set forth
in
IC 27-1-23-1.
(b) As used in this SECTION, "member" means an insurer (as
defined in
IC 27-1-2-3
) that is a member of the Indiana
comprehensive health insurance association under
IC 27-8-10.
(c) For any tax year beginning after December 31, 2000, an
affiliate of a member may, under
IC 27-8-10-2.1
(n)(1), as amended
by this act, take a tax credit against tax liability of the affiliate for
assessments paid by the member. However, notwithstanding
IC 27-8-10-2.1
(n)(1), as amended by this act, an affiliate of a
member may take a credit for an assessment paid by the member
in 2001 against tax liability incurred by the affiliate after
December 31, 1998, and before January 1, 2001.
(d) This SECTION expires January 1, 2005.
SECTION 4. An emergency is declared for this act.