Insurance - Digest of Bills

Digest of Bills - 1994

INSURANCE

S.B. 94-58 Genetic testing - limitations on the disclosure of information. Recognizes the information derived from genetic testing as confidential and privileged. Prohibits the release, without written consent of the tested person, of genetic testing information that identifies the tested person for any purpose other than diagnosis, treatment, therapy, or criminal investigation. Prohibits any entity that receives genetic information from seeking or using it for nontherapeutic purposes or for underwriting purposes related to the provision of health, group disability, or long-term care insurance. Allows research facilities to use genetic testing information so long as the identity of the tested person is not disclosed to any third party; except that the identity may be disclosed to the tested person's physician with written permission. Excepts from the genetic testing limitations the use of genetic testing information to determine parentage, to determine the cause of damage in a medical malpractice suit, or to identify offenders involved in sexual assaults. Specifies that the genetic testing limitations do not limit the department of health care policy's authority in investigating certain diseases and conditions. Allows the use of genetic testing information in providing life insurance or individual disability insurance. Defines any violation of the act as an "unfair practice", subject to the penalties pertaining to such practices. Specifies the remedies that an individual may recover for an entity's violation of the act.

APPROVED by Governor June 2, 1994
EFFECTIVE June 2, 1994

S.B. 94-78 Life and health insurance protection - coverage -annuity contracts. Requires that the "Life and Health Insurance Protection Association Act" cover any annuity contract that was issued or assumed by an insurer which was ordered into liquidation between July 1, 1991, and August 31, 1991.

APPROVED by Governor April 13, 1994
EFFECTIVE April 13, 1994

S.B. 94-98 Prescription drug benefits - choice of pharmacist by insured under certain plans - prohibition on requiring specific vendor for prescription drugs. Prohibits sickness and accident insurers, nonprofit hospital, medical-surgical, and health service corporations, and health maintenance organizations which offer coverage for prescription drugs from imposing penalties or differentiated copayments upon an insured for buying prescription drugs from a source of the insured's choosing. Specifies that an insurer may still make reasonable professional and administrative requirements of a prescription drug vendor and may adopt a maximum drug reimbursement cost schedule or a uniform drug cost discount formulary. Specifically exempts current or retired employees of the state who are receiving prescription drug benefits pursuant to certain statutes and health maintenance organizations which provide prescription drug benefits pursuant to an in-house pharmacy from coverage by the statute.

Applies to individual sickness and accident insurance policies and health care service or indemnity contracts issued on or after January 1, 1995, and to group accident and sickness policies and group health care service or indemnity contracts issued, renewed, reinstated, or rate-adjusted on or after January 1, 1995.

VETOED by Governor April 15, 1994

H.B. 94-1071 Fraudulent claims - reporting - qualified immunity. Allows any person, not limited to an insurer, to notify authorities in the event of any suspected arson or fraudulent insurance claim. Immunizes persons from liability for doing so, subject to a requirement of good faith. Allows an insurer to cancel an automobile policy based on an insured's knowingly and willfully making a false material statement in connection with a claim.

APPROVED by Governor March 29, 1994
EFFECTIVE July 1, 1994

H.B. 94-1094 Health insurance - catastrophic coverage - requirements - payment of premiums. Establishes the "Colorado Catastrophic Health Insurance Coverage Act", which states that an employer which does not offer health insurance may offer catastrophic health insurance coverage to its employees. Requires that such coverage be in the employee's name, have a minimum deductible of $2,500, and include dependent coverage provisions, a clearly written contract of coverage, and a portability provision. Requires further that the coverage shall be priced pursuant to a modified form of community rating and that the contract shall cover any electing employee who was covered continuously for at least one year under another policy, if such employee would otherwise be eligible except for underwriting considerations relating to health.

States that any employee who elects such insurance shall pay the full cost of the coverage, but that his or her employer may elect to pay all or a portion of the cost of such insurance. States that the cost of such insurance shall be paid through pre-tax payroll deductions and that an employee sign a written election form prior to the date the employer withholds the first contribution. Requires employers to remit the collected payments to the insurer and to report to the department of revenue the amount withheld, pursuant to rules promulgated by that department.

Provides that amounts withheld from an employee's wages for the purpose of paying catastrophic health insurance premiums are not included in such employee's taxable income for state tax purposes.

APPROVED by Governor April 20, 1994
EFFECTIVE January 1, 1995

H.B. 94-1162 "No-fault" motor vehicle insurance - exclusion of named party - refusal to write, cancellation, or failure to renew. Changes the language that prohibits an insurer from refusing to write or renew a policy solely because of an accident or accidents which were not the fault of the named insured or a household member to a prohibition, which is extended to include applicants for insurance and permissive users, on using such accident or accidents as a factor whether used in conjunction with other factors or alone. Prohibits the use of the driving record of one or more but fewer than all of the residents of a household as a basis for refusal to write a policy.

Mandates that an insurer offer to exclude any member of a household from a complying policy by name if the claim experience or driving record of that person would normally justify a refusal to write a policy in such person's name. Specifies that when a policy which specifically excludes a named person is renewed that the renewal notice for such policy name the person to be excluded.

Changes the requirement that complying policies beapproved by the commissioner to a requirement that complying policies be filed with the commissioner before implementation by an insurer.

Applies to complying no-fault insurance policies written or renewed on or after July 1, 1994.

APPROVED by Governor April 28, 1994
EFFECTIVE July 1, 1994

H.B. 94-1169 Captive insurance companies - certificates of authority - application and license fees - investments - premium tax provisions - penalties. Simplifies the classification of captive insurance companies by dividing them into "pure" captives, insuring only their parent companies and affiliates, and "group" captives, insuring an association of entities with similar or related risks that collectively own the company. Allows captives to issue employee benefits coverages.

Requires a captive insurance company issuing employee benefits coverages to provide the minimum mandated coverages generally applicable to insurance companies. Removes the requirement that an association captive insurance company or industrial insured captive insurance company applying for authority demonstrate that coverage of all risks of its members would develop at least $1,000,000 of gross annual premiums.

Prohibits a captive insurance company from adopting the name of any existing company, regardless of its business, or from adopting any name which may be misleading to the public regardless of any intent to mislead.

Permits the commissioner and the attorney general to refuse to accept an applicant's organizational documents filed for purposes of obtaining a certificate of authority. Requires filing of amendments to such documents with the commissioner and the secretary of state. Replaces existing requirements for a deposit or letter of credit and financial examination with the requirement for filing of a detailed plan of operation and a feasibility study, subject to the commissioner's approval. Imposes an application and an annual license fee of $500. Limits exposure to loss on any one risk or hazard to 10% or less of capital or surplus unless the risk is reinsured or other safeguards are provided.

Simplifies provisions governing organization and control of operations. Removes current authority of the commissioner of insurance to waive prohibitions on service as a director of a person convicted of a felony.

Provides for automatic renewal of certificates of authority upon payment of all fees and filing of all required reports. Shortens the period within which the division of insurance must act on applications for certificates from 60 to 30 business days after receipt of a complete filing.

Allows filing of annual reports at the end of each fiscal year rather than as of March 1 each year. Delegates to the insurance commissioner the authority to prescribe the form and contents of annual reports.

Expands the commissioner's authority to revoke or suspend certificates, allowing such action in cases where an insurer departs from itsapproved plan of operation, fails to pay taxes, penalties, or fees, or violates any other statutory or regulatory provision. Deletes obsolete language regarding hearing procedures. Allows the commissioner to appoint a supervisor for the company or commence a delinquency action or a liquidation or rehabilitation action where appropriate. Provides for appeal of the commissioner's decisions to the Colorado court of appeals.

Replaces the current three-tiered system of capital and surplus requirements with a uniform requirement of at least $500,000 total capital. Authorizes the insurance commissioner to increase the requirement for a particular company upon a written finding that such increase is necessary. Repeals the current 20% limit on expenses incurred in the sale of new capital stock.

Simplifies provisions for examinations and investigations of captive insurers and of applicants for operating authority.

Simplifies provisions governing investments of captive insurers. Allows group captive insurers to make investments that would be permissible for other types of insurers. Allows a pure captive insurer to make any investments that are consistent with the company's plan of operation and do not threaten the company's solvency. Eliminates the requirement of a fidelity bond where sufficient other safeguards are demonstrated.

Simplifies provisions relating to reinsurance, allowing a captive insurance company to cede risks in the manner provided for other insurers and take credit for reserves on risks thus ceded. Authorizes the commissioner to give advance written approval for cession of risks to a reinsurer that does not meet the generally applicable standards.

Eliminates current requirements for filing of rating data and approval of claims-made policy forms. Authorizes the commissioner to require a pure captive insurance company to file rating or funding data if it provides or plans to provide employee benefits.

With regard to guaranty fund coverage, which is not required of captive insurance companies, provides that policy forms or other evidence of coverage must disclose that guaranty fund coverage is not available.

Amends premium tax provisions to allow credit for premiums returned to policyholders and to simplify the calculation of premium taxes. Allows the commissioner to require quarterly payments of premium taxes.

Authorizes new penalties for failure to make reports or pay taxes, including interest on unpaid amounts, subject to hearings and judicial review.

APPROVED by Governor April 6, 1994
EFFECTIVE April 6, 1994

H.B. 94-1185 State employees and officials group insurance - essential provider coverage. Effective January 1, 1995, requires the state personnel director to include in the state employees' and officials' group health benefit plan coverage for all health care services of essential providers located in the state of Colorado. Defines the term "essential provider" to mean any health care facility which has a teaching and research mission and a community service mission, and any associated or affiliated institutions or health care facilities. Requires that the rates for such services may not exceed the highest rates currently in effect for state employees and officials at other Colorado health care facilities. Exempts health benefit plans offered through health maintenance organizations from the requirement.

APPROVED by Governor April 7, 1994
EFFECTIVE April 7, 1994

H.B. 94-1209 "No-fault" motor vehicle insurance - rehabilitation limitations. Limits the required no-fault coverage for rehabilitation expenses in a complying policy to expenses incurred up to $50,000 within 10 years after the accident. Declares that the original intention of the "Colorado Auto Accident Reparations Act" for no-fault coverage was to incorporate limitations on both the dollar amount and period of time for rehabilitation benefits.

Applies to all complying policies issued under the provisions of the "Colorado Auto Accident Reparations Act", on and after July 1, 1994.

APPROVED by Governor May 4, 1994
EFFECTIVE July 1, 1994

H.B. 94-1210 Health care coverage reform - guaranteed issue of basic and standard health benefit plans - reinsurance program - automatic termination of requirement - premium rate restrictions - limitation on use of preexisting condition clauses - coverage conversion and continuation provisions - fair marketing standards - regulation of excess loss coverage for self-insured plans - appropriation. Beginning January 1, 1995, requires small employer health insurance carriers, as a condition of transacting business in this state, to offer small employers the choice of a basic health benefit plan or a standard health benefit plan (guaranteed issue). Makes certain exceptions to such requirement, including situations involving the financial solvency of the insurer. Specifies that a small employer is eligible if it employed 2 or more eligible employees and no more than 50 employees on at least 50% of its working days during the preceding calendar quarter and that after January 1, 1996, such eligibility will extend to businesses with at least one employee and no more than 50 employees. Requires the insurance commissioner to promulgate rules, effective January 1, 1995, to implement the guaranteed issue of basic and standard health benefit plans. Requires the health benefit plan advisory committee to submit its recommendations for the components of the basic and standard health benefit plans and the Colorado cost containment and guaranteed access commission to submit its comments thereon to the insurance commissioner by July 1, 1994. Requires the commissioner to review and approve such plans by August 15, 1994. Authorizes the health benefit plan advisory committee to submit recommendations to the commissioner for changes in such plans annually beginning July 1, 1995. Requires the commissioner to act on such annual recommendations within 60 days after submittal.

Provides that the small employer health care coverage availability (reinsurance) program and the "Colorado Health Care Coverage Act" apply to any health benefit plan that provides coverage to the employees of an employer in this state with certain exceptions. Specifies that such program does not apply to certain multiple employer health trusts or multiple employer welfare arrangements. Extends the automatic repeal dates for the small employer health care coverage availability program and the health benefit plan advisory committee from July 1, 1996, to July 1, 2001. Requires each small employer carrier to notify the commissioner by August 1, 1994, whether such carrier intends to operate as a risk assuming carrier or a reinsuring carrier under the program. Requires that after approval of the plan of operation of such program by the commissioner, the program shall be operational no later than September 30, 1994. Specifies that small employer carriers will not be required to offer guaranteed issue of the basic and standard health benefit plan until the small employer health care coverage availability program is operational. Requires the board of directors of the program to establish premium rates for reinsurance under the program in a fair and equitable manner designed to spread the excess cost of high risk cases as broadly as possible. Changes the number of directors from 8 to 9 and makes the commissioner an ex officio nonvoting director of the program.

Sets requirements for premium rates for health benefit plans issued to small employers. Requires rates to be based on a single, same index rate applicable to all small employers, adjusted for case characteristics and coverage, subject to a rate adjustment factor to be utilized during a phase-in period until January 1, 1997, if risk adjustment rules are developed by the commissioner in consultation with the department of health care policy and financing. If such risk adjustment rules are not developed, the rate adjustment factor for the 1997 calendar year shall continue to be utilized for determining premium rates for small employer policies.

Requires the commissioner, in cooperation with the executive director of the department of health care policy and financing, to report annually to the executive committee of the legislative council of the general assembly on the implementation of the guaranteed issue provisions of this act. Specifies the matters to be contained in such reports. Requires the legislative council during the 2001 regular session of the general assembly to conduct a review of the guaranteed issue provisions of this law and to recommend any legislation deemed necessary based on the annual reports required under this law and any other available information. Specifies that the guaranteed issue provisions of this law shall terminate July 1, 2001, unless the general assembly acts by bill to extend such requirements beyond July 1, 2001.

Amends Colorado provisions related to the conversion and continuation of health care coverage policies to extend the period of time for which such continuation is available and expands such provisions to cover situations in which an employee dies or has a change of marital status, in which case the surviving dependents or spouse may elect to continue coverage. Requires small employer carriers to offer individuals the choice of a basic or standard health benefit plan upon termination of a group policy by the carrier or employer for reasons other than replacement with another group policy or fraud and abuse in procuring and utilizing coverage. Deletes obsolete provisions of these laws.

Enacts fair marketing standards for small employer carriers and specifies that violation of such standards, as well as any requirements for the guaranteed issue of basic and standard health benefit plans, is an unfair method of competition and unfair or deceptive act or practice under the insurance laws.

Limits the applicability of preexisting condition limitations in comprehensive individual and employer-group major medical coverage offered by entities subject to regulation by the commissioner of insurance.

Enacts requirements for excess loss insurance used in conjunction with self-insured employer benefit plans under the federal "Employee Retirement Income Security Act".

Makes provisions of the "Colorado Catastrophic Health Insurance Coverage Act" consistent with the provisions of this act.

Appropriates $40,795 and 0.8 FTE from the division of insurance cash fund to the division of insurance for the implementation of this act.

APPROVED by Governor June 2, 1994
EFFECTIVE July 1, 1994

H.B. 94-1266 Workers' compensation - assessment of premium surcharges - effect of impermissibly high deductibles. Directs the commissioner of insurance to adopt regulations on or before January 1, 1995, to ensure that payments to the subsequent injury fund and the major medical insurance fund from insurance premium surcharges be calculated so as to correct for the effect of any deductible which exceed the legal maximum imposed by statute.

APPROVED by Governor May 22, 1994
EFFECTIVE May 22, 1994

H.B. 94-1275 Nonprofit hospital, medical-surgical, and health service corporations - requirements - conversion to a mutual insurance company. Requires nonprofit hospital, medical-surgical, and health service corporations to file information using the convention blank form of the national association of insurance commissioners. Increases minimum surplus requirements for such entities from $50,000 to $100,000 and maximum guarantee fund deposit requirements from $150,000 to $1,500,000. Authorizes the commissioner of insurance by rule to establish standards consistent with the risk-based capital models developed or adopted by the national association of insurance commissioners that would require a corporation to maintain a greater minimum level of surplus. Repeals the statutory provision for the licensing of enrollment representatives of such corporations. Makes examination requirements consistent with those for insurers. Changes the frequency of examinations of corporations from every 3 years to periodic examinations.

Authorizes nonprofit hospital, medical-surgical, and health service corporations to convert to mutual insurance companies. Requires such entities to file a plan with the insurance commissioner for approval prior to making such conversion. Sets standards for approval of such plans by the insurance commissioner. Requires the corporation to publish notice of the proposed plan of conversion. Specifies that after conversion to a mutual insurance company, a nonprofit hospital, medical-surgical, and health service corporation shall be subject to all of the laws and rules and regulations applicable to mutual insurance companies.

APPROVED by Governor April 7, 1994
EFFECTIVE April 7, 1994

H.B. 94-1347 Licensing - exemption for representatives of fraternal benefit societies. Restores and modifies an exemption from licensing for part-time representatives of fraternal benefit societies that was omitted from the 1993 enactment of the "Colorado Single Insurance Producer Licensing Act". Makes the exemption only applicable to an agent, representative, or member of such a society who in the preceding calendar year solicited or procured insurance contracts not exceeding $50,000 or solicited or procured other types of insurance on behalf of not more than 25 individuals and who received no commissions or compensation and does not reasonably expect to be soliciting or procuring insurance on behalf of more than 25 individuals in the current year.

APPROVED by Governor April 19, 1994
EFFECTIVE April 19, 1994