AN ACT MAKING CHANGES TO THE INSURANCE STATUTES.

This bill makes substantive and technical changes to the insurance statutes. It:

1. revises the private health insurance coverage requirements for children;

2. redefines “limited coverage” for purposes of determining which health insurance policies must disclose that they do not provide comprehensive benefits;

3. exempts state-funded federally qualified health centers (FQHCs), which are preferred provider networks (PPNs), that provide services only to recipients of programs the Department of Social Services (DSS) administers from the PPN law's net worth and reserve requirements and requires the DSS commissioner to adopt regulations to establish criteria to certify these FQHCs;

4. deletes the 60-day, and leaves a five-business-day, deadline for managed care organizations (MCOs) and health insurers to provide appeal-related information before a presumption of coverage applies during an appeal review;

5. specifies that the Connecticut Life and Health Insurance Guaranty Association does not protect stop-loss and excess-loss insurance policies covering life, health, or annuity benefits;

6. subjects TriCare supplement coverage to state health insurance laws and regulations;

7. requires the insurance commissioner to adopt regulations establishing standards for selling annuities to all consumers, instead of senior consumers only;

8. requires reinsurers and risk retention groups to file financial statements electronically; and

9. allows the commissioner to notify health insurance entities of certain new laws electronically, as an alternative to in writing.

*House Amendment “A” excludes certain FQHCs from the net worth and financial reserve requirements of the PPN law, requires the DSS commissioner to adopt regulations that establish certification criteria for certain FQHCs, and revises the “limited coverage” definition to refer to fixed-dollar benefits of less than $ 20,000 on any core services. The definition in the underlying bill referenced fixed-dollar benefits of less than $ 20,000 on core services.

EFFECTIVE DATE: October 1, 2008, except for the dependent children provisions, which are effective January 1, 2009, and the FQHC and commissioner's rule-making authority provisions, which are effective upon passage.

The bill revises the criteria for determining when a child loses coverage under a private health insurance policy that the legislature enacted in 2007 and made effective January 1, 2009.

The 2007 acts (PA 07-185 and PA 07-2, JSS) require that a child's health insurance coverage under an individual policy continue at least until the policy's anniversary date on or after the date the child marries or turns age 26, whichever occurs first, as long the child is a Connecticut resident, unless he or she is living out-of-state (1) as a full-time student at an accredited school of higher education or (2) with a custodial parent pursuant to a child custody determination.

The bill instead requires a child's coverage under an individual policy to continue at least until the policy anniversary date on or after the date the child:

1. marries;

2. ends his or her Connecticut residency, unless he or she is (a) under age 19 or (b) a full-time student at an accredited school of higher education;

3. becomes covered under a group health plan through his or her employment; or

4. turns age 26.

The 2007 acts require group comprehensive health care plans to (1) extend coverage eligibility to unmarried children who are under age 26 and Connecticut residents and (2) offer continuation coverage to the end of the month following the month in which the child marries or turns age 26, as long as the child is a Connecticut resident, unless he or she is living out-of-state (a) as a full-time student at an accredited school of higher education or (b) with a custodial parent pursuant to a child custody determination.

The bill instead requires group comprehensive care plans to (1) extend coverage eligibility to unmarried children under age 26 (thus eliminating the residency requirement and related exception) and (2) to offer continuation coverage to the end of the month in which the child meets the criteria for losing coverage under an individual policy.

The bill defines “limited coverage” as a health insurance policy covering basic hospital expenses, basic medical-surgical expenses, major medical expenses, or hospital or medical services, including an HMO contract, that includes (1) an annual maximum benefit of less than $ 100,000 or (2) fixed-dollar benefits of less than $ 20,000 on any core services, instead of a per-service or -condition benefit limit of less than $ 20,000. It defines “core services” as medical, surgical, and hospital services, including inpatient and outpatient physician, laboratory, and imaging services.

By law, each individual and group health insurance policy, contract, or certificate issued in Connecticut that provides limited coverage, and any related advertising, marketing, and enrollment material, must include a conspicuous statement that the plan does not provide comprehensive medical coverage. It also prohibits insurers and other entities from replacing an employer-sponsored comprehensive health insurance plan with a policy that provides limited coverage.

The bill specifies that a state-funded FQHC consortium that provides services only to recipients of DSS-administered programs are exempt from the provisions of the law governing PPNs that require the networks to (1) have a minimum net worth and (2) maintain minimum reserves to pay outstanding amounts due to providers (see BACKGROUND).

The bill requires the DSS commissioner to adopt regulations to establish criteria, including minimum reserve requirements, to certify these FQHCs.

DSS currently contracts with an FQHC consortium to deliver services to State Administered General Assistance recipients. By law, DSS may contract with an FQHC consortium to deliver services to Charter Oak Health Plan recipients, and the consortium must obtain certification from the DSS commissioner to participate in the plan in accordance with criteria, including minimum reserve requirements, that the commissioner establishes.

Under current law, an insurer's or MCO's failure to provide appeal-related information or notify a plan sponsor of a plan document request within five business days from the request or the 60-day appeal period, whichever is later, creates certain presumptions and may require the MCO or insurer to pay appeal-related costs. The bill eliminates the 60-day timeframe for this purpose, and instead allows the presumptions and payment responsibility to apply after the five business days pass.

By law, when an insurer or MCO does not reply within the stated time period, it (1) creates a presumption that the benefit or service being appealed is a covered benefit for purposes of the Insurance Department or its designated review entity to accept the appeal for full review and (2) entitles the insurance commissioner to require the insurer or MCO to reimburse the department for appeal-related expenses. The presumption does not create or authorize benefits or services exceeding those in the enrollee's policy or contract.

The Connecticut Life and Health Insurance Guaranty Association pays certain life, health, and annuity claims when a life and health insurance company becomes financially impaired or insolvent. By law, it does not provide protection against impaired HMOs, fraternal benefit societies, unauthorized or unlicensed insurers, self-funded plans, and stop-loss group insurance plans.

The bill changes “stop-loss group insurance plans” to stop-loss or excess-loss insurance policies providing (1) indemnification or (2) payment to a policy or contract owner, plan, or other person obligated to pay life, health, or annuity benefits. (Stop-loss and excess-loss policies are insurance policies that cover losses over a stated amount. )

Existing law defines “health insurance” for purposes of the insurance statutes. This bill adds TriCare supplement coverage to the list of coverage types that a health insurance policy may include. (TriCare is a federal health benefit program for military personnel and their dependents. )

By law, unless an insurance statute specifically indicates or the context requires something different, a “health insurance” policy (1) is insurance providing benefits for illness or injury resulting in death, loss of earnings, or expenses incurred and (2) includes coverage for basic hospital or medical-surgical expense, hospital confinement indemnity, major medical expense, disability income, accident only, long-term care, specified accident, Medicare supplement, limited benefit, hospital or medical service plan, hospital and medical coverage an HMO provides, or specified disease.

The bill requires the insurance commissioner to adopt regulations establishing standards and procedures for annuity transactions (sales or exchanges) involving all consumers, instead of senior consumers (those age 65 or older) only.

The bill requires assuming and accredited reinsurers and risk retention groups (RRGs) doing business in Connecticut to file complete, accurate financial reports by March 1 annually for the previous calendar year with the insurance commissioner by electronically filing them with the National Association of Insurance Commissioners (NAIC). The company president or vice-president and secretary or assistant secretary must sign and swear to the reports.

A reinsurer must prepare its reports following NAIC instructions and accounting practices and procedures, unless the commissioner requires or approves any deviations. An RRG must prepare its reports as its home state requires. Assuming reinsurers must also give the commissioner a paper copy of the report.

By law, an annual statement filed electronically with the NAIC must include any additional information the insurance commissioner prescribes, the signed jurat (notary) page, and actuarial certification. Financial analysis ratios and examination synopses concerning companies that NAIC provides the Insurance Department are confidential and not to subject to public disclosure.

A reinsurer is an insurance company for other insurance companies. An assuming reinsurer accepts all or part of the other insurer's risks in accordance with a reinsurance contract. An accredited reinsurer is not licensed in Connecticut, but must meet certain specified financial requirements.

An RRG is a type of captive insurance company that federal law permits. It can form as an in-state or out-of-state company. Those set up in other states can do business in Connecticut if they register with the Insurance Department.

By law, the insurance commissioner must notify insurers and other entities providing individual or group health insurance plans of any benefits the law requires them to provide, or any modifications in those benefits, in writing at least 30 days before the benefit or modification takes effect. The bill permits the commissioner to send the notice electronically.

Until the changes in the 2007 acts take effect, a child's coverage under an individual policy is prohibited from ending before the policy anniversary date on or after the date the child (1) marries; (2) is no longer dependent on the policyholder; or (3) turns age 19 or, if a full-time student at an accredited school of higher education, 23, whichever occurs first.

Group comprehensive plans must extend eligibility to each eligible employee's dependent, unmarried children who are under age 19, or, for full-time students at accredited schools of higher education, 23.

The law also requires group comprehensive care plans to offer a child the option to continue coverage until the end of the month following the month in which the child (1) marries; (2) ceases to be dependent on the employee; or (3) turns age 19 or, if a full-time student at an accredited school of higher education, 23, whichever occurs first.

PPNs, which are subject to Insurance Department regulation, (1) pay claims for health care services rendered; (2) accept financial risk; and (3) establish, operate, or maintain arrangements or contracts with providers. By law, each PPN must maintain a minimum net worth of either (1) the greater of $ 250,000 or 8% of annual expenditures or (2) an amount the insurance commissioner prescribes. In addition, they must maintain or arrange for a letter of credit, bond, surety, reinsurance, reserve, or other financial security that the commissioner approves for the exclusive use of paying any outstanding amounts owed participating providers in the event of insolvency or nonpayment. At a minimum, this must be the greater of (1) an amount sufficient to pay providers for two months, (2) the actual outstanding amount owed providers, or (3) an amount the commissioner determines. This amount can be credited against the minimum net worth requirement.

sHB 5617 excludes state-funded FQHCs providing services only to DSS-administered programs from the net worth and financial reserve requirements of the PPN law. It requires the FQHCs to obtain (1) certification from the DSS commissioner in accordance with criteria he establishes and (2) a license from the insurance commissioner if required under law.