Insurance and Real Estate Committee
AN ACT MAKING CHANGES TO THE INSURANCE STATUTES
SUMMARY: This act makes substantive and technical changes to the insurance statutes. It:
1. revises 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) that provide services only to recipients of programs the Department of Social Services (DSS) administers from net worth and reserve requirements applicable to preferred provider networks 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 only senior consumers;
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.
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.
§§ 8 & 9 — HEALTH INSURANCE FOR CHILDREN
The act revises the criteria for determining when a child loses coverage under a private health insurance policy that the legislature enacted in 2007 (PA 07-185 and PA 07-2, JSS).
Individual Policy
The 2007 acts require, effective January 1, 2009, a child's health insurance coverage under an individual policy to 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 as 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.
This act instead requires the coverage to continue at least until the policy anniversary date on or after the date the child:
1. marries;
2. ends 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 his or her employer's group health plan; or
4. turns age 26.
Group Plan and Continued Coverage
The 2007 acts require, effective January 1, 2009, 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.
This act eliminates the residency requirement and related exception and instead requires the plans to (1) extend coverage eligibility to unmarried children under age 26 and (2) offer continuation coverage to the end of the month in which the child meets the criteria for losing coverage under an individual policy.
Health Insurance Coverage for Children until January 1, 2009
Existing law, which is in effect until January 1, 2009, prohibits a child's coverage under an individual health insurance policy 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 age 23 if a full-time student at an accredited school of higher education, 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. Group comprehensive care plans must 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 age 23 if a full-time student at an accredited school of higher education, whichever occurs first.
§§ 11 & 12 — LIMITED COVERAGE DEFINITION
The act revises the criteria for a health insurance policy to be considered a “limited benefit” plan. It defines “limited coverage” as a health insurance policy that covers basic hospital expenses, basic medical-surgical expenses, major medical expenses, or hospital or medical services, including an HMO contract, and 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. (With respect to the second condition, prior law referred to a per-service or -condition benefit limit of less than $20,000. ) The act 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. The law also prohibits insurers and other entities from replacing an employer-sponsored comprehensive health insurance plan with a policy that provides limited coverage.
§ 14 — NET WORTH AND RESERVE EXEMPTION
The act specifies that a state-funded FQHC consortium that provides services only to recipients of DSS-administered programs is 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 providers. It 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.
PA 08-184 (§ 43) makes the same change.
§ 7 — APPEAL-RELATED INFORMATION
Under prior 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 after the request or the 60-day appeal period, whichever was later, created certain presumptions and may have resulted in the MCO or insurer having to pay appeal-related costs. The act eliminates the 60-day timeframe and allows the presumptions and payment responsibility to apply after five business days.
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.
§ 10 — LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION
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 act 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. )
§ 5 — TRICARE SUPPLEMENT COVERAGE
Existing law defines “health insurance” for purposes of the insurance statutes. This act 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. )
The law already includes in the definition of “health insurance” insurance providing benefits for illness or injury resulting in death, loss of earnings, or expenses incurred that includes 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 coverage.
§ 13 — REGULATIONS FOR ANNUITY SALES
The act requires the insurance commissioner to adopt regulations establishing standards and procedures for annuity transactions (sales or exchanges) involving all consumers. Prior law required regulations establishing standards and procedures for annuity transactions involving senior consumers (those age 65 or older).
§§ 1- 4 — FINANCIAL REPORTING
The act 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 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. Those set up in other states can do business in Connecticut if they register with the Insurance Department.
§ 6 — INSURANCE DEPARTMENT NOTICE
By law, the insurance commissioner must give written notice to 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, at least 30 days before the benefit or modification takes effect. The act permits the commissioner to send the notice electronically.
BACKGROUND
PPN Requirements
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.
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