Citations Affected: IC 27-8-10.
Synopsis: ICHIA assessments, tax credits, and limits. Limits the
annual total assessment to members of the comprehensive health
insurance association (ICHIA) to $100,000,000. Provides that the
amount of an annual net loss of more than $100,000,000 shall be
assessed to and paid from the state general fund. Limits payments
under an association policy to $1,000,000 during an insured's lifetime.
Provides for the assignment of unused tax credits by a member of
ICHIA for use by a business entity during the same taxable year.
Effective: July 1, 2004.
January 13, 2004, read first time and referred to Committee on Insurance, Corporations and
A BILL FOR AN ACT to amend the Indiana Code concerning
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) The board shall obtain an actuarial recommendation for development of an equitable methodology for determination of member assessments.
(g) 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
(1) not 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 for an insured whose family income is less than three hundred fifty-one percent (351%) of the federal income
poverty level for the same size family; and
(2) an amount equal to:
(A) not less than one hundred fifty-one percent (151%); and
(B) not more than two hundred percent (200%);
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, for an insured whose family income is more than three hundred fifty percent (350%) of the federal income poverty level for the same size family.
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) (h) 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. The amount of any
net loss that does not exceed one hundred million dollars
($100,000,000) 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. Except as provided in sections 12 and 13
of this chapter, 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. The amount of a net
loss that exceeds one hundred million dollars ($100,000,000) shall
be assessed to and paid from the state general fund.
(h) (i) 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) (j) 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) (k) 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) (l) 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 insurance producer's
referral fee of twenty-five dollars ($25) to each insurance agent
producer who refers an applicant to the association if that applicant
(m) The association and the premium collected by the association shall be exempt from the premium tax, the adjusted gross income tax, or any combination of these 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, adjusted gross 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 either credits against those taxes or refunds from the association; or
(2) 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.
be applied to the first five hundred dollars ($500) of eligible expenses
incurred by the covered person.
(b) Subject to the limitation provided in subsection (c), a mandatory coinsurance requirement shall be imposed at the rate of twenty percent (20%) of eligible expenses in excess of the mandatory deductible.
(c) The maximum aggregate out-of-pocket payments for eligible expenses by the insured in the form of deductibles and coinsurance may not exceed one thousand five hundred dollars ($1,500) per individual or two thousand five hundred dollars ($2,500) per family, per policy year.
(d) The maximum amount that may be paid under an association policy for eligible expenses of an insured during the insured's lifetime may not exceed one million dollars ($1,000,000). This subsection applies to payment for eligible expenses incurred after June 30, 2004.