SOURCE: IC 27-1-20-35; (02)IN1172.1.2. -->
IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2002 (RETROACTIVE)]: Sec. 35. (a) Each year, an
insurance company that does business in Indiana and files a report
shall, at the time the report is filed, pay to the
Indiana comprehensive health insurance association established by
an Indiana comprehensive health insurance
association fee equal to the amount of gross premiums for the year,
less the allowable deductions provided for under subsection (b),
multiplied by the following rate for the year the report covers:
(1) For 2001, one-tenth percent (0.1%).
(2) For 2002, two-tenths percent (0.2%).
(3) For 2003, three-tenths percent (0.3%).
(4) For 2004, five-tenths percent (0.5%).
(5) For 2005 and thereafter, seven-tenths percent (0.7%).
(b) The calculation of an insurance company's Indiana
comprehensive health insurance association fee under subsection
(a) shall be based on the gross amount of all premiums received by
the insurance company on policies of insurance covering risks in
Indiana or, in the case of marine or transportation risks, on
policies made, written, or renewed in Indiana during the twelve
(12) month period ending December 31 of the preceding calendar
year. The following shall be deducted from the amount of gross
premiums described in this subsection:
(1) Consideration received for reinsurance of risks in Indiana
from companies authorized to transact an insurance business
(2) The amount of dividends paid or credited to resident
insureds or used to reduce current premiums of resident
(3) The amount of premiums actually returned to residents on
account of applications not accepted or on account of policies
(4) The amount of unearned premiums returned on account
of the cancellation of policies covering risks in Indiana.
(c) An insurer that pays the Indiana comprehensive health
insurance association fee under this section may take a credit equal
to the amount of the fee paid against:
(1) premium taxes under
(2) gross income taxes under IC 6-2.1;
(3) adjusted gross income taxes under
(4) supplemental corporate net income taxes under
(5) any combination of these or similar taxes;
on revenues or income of the insurer that may be imposed by the
state, up to the amount of the taxes due for each calendar year in
which the Indiana comprehensive health insurance association fee
was paid, and for succeeding years until the aggregate of the fees
has been offset by credits against the taxes.
(d) Indiana comprehensive health insurance association fees
collected under this section shall be retained by the Indiana
comprehensive health insurance association established by
and may be used only to pay the cost of providing
coverage under association policies (as defined in
that exceeds premiums collected by the association.
SOURCE: IC 27-8-10-2.1; (02)IN1172.1.3. -->
IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JANUARY 1, 2002 (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.
(2) Two (2) members to be appointed by the commissioner shall
be consumers representing policyholders.
(3) Two (2) members shall be the state budget director or
designee and the commissioner of the department of insurance or
The commissioner shall appoint the chairman of the board, and the
board shall elect a secretary from its membership. The term of office
of each appointed member is three (3) years, subject to eligibility for
reappointment. Members of the board who are not state employees may
be reimbursed from the association's funds for expenses incurred in
attending meetings. The board shall meet at least semiannually, with
the first meeting to be held not later than May 15 of each year.
(c) The association shall submit to the commissioner a plan of
operation for the association and any amendments to the plan necessary
or suitable to assure the fair, reasonable, and equitable administration
of the association. The plan of operation becomes effective upon
approval in writing by the commissioner consistent with the date on
which the coverage under this chapter must be made available. The
commissioner shall, after notice and hearing, approve the plan of
operation if the plan is determined to be suitable to assure the fair,
reasonable, and equitable administration of the association and
provides for the sharing of association losses on an equitable,
proportionate basis among the member carriers, health maintenance
organizations, limited service health maintenance organizations, and
self-insurers. If the association fails to submit a suitable plan of
operation within one hundred eighty (180) days after the appointment
of the board of directors, or at any time thereafter the association fails
to submit suitable amendments to the plan, the commissioner shall
adopt rules under
necessary or advisable to implement this
section. These rules are effective until modified by the commissioner
or superseded by a plan submitted by the association and approved by
the commissioner. The plan of operation must:
(1) establish procedures for the handling and accounting of assets
and money of the association;
(2) establish the amount and method of reimbursing members of
(3) establish regular times and places for meetings of the board of
(4) establish procedures for records to be kept of all financial
transactions, and for the annual fiscal reporting to the
(5) establish procedures whereby selections for the board of
directors will be made and submitted to the commissioner for
(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
(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
(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
(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
(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
(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;
(2) the total amount of Indiana comprehensive health
insurance association fees collected under
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
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.
(n) Members who after July 1, 1983, during any calendar year, have
paid one (1) or more assessments levied under this chapter may either:
(1) take a credit against premium taxes, gross income taxes,
adjusted gross income taxes, supplemental corporate net income
taxes, or any combination of these, or similar taxes upon revenues
or income of member insurers that may be imposed by the state,
up to the amount of the taxes due for each calendar year in which
the assessments were paid and for succeeding years until the
aggregate of those assessments have been offset by
against those taxes;
or refunds from the association;
any member insurer may
include in the rates for premiums
charged for insurance policies to which this chapter applies
amounts sufficient to recoup a sum equal to the amounts paid to
the association by the member less any amounts returned to the
member insurer by the association, and the rates shall not be
deemed excessive by virtue of including an amount reasonably
calculated to recoup assessments paid by the member.
(o) The association shall provide for the option of monthly
collection of premiums.
SOURCE: ; (02)IN1172.1.4. -->
SECTION 4. [EFFECTIVE JANUARY 1, 2002 (RETROACTIVE)]
The first payment made under
(a), as added by this
act, is due not later than July 1, 2002, and is based on the insurance
company's gross premiums for calendar year 2001.