CSSB 104(FIN): "An Act relating to regulation and examination of insurers and insurance agents; relating to kinds of insurance; relating to payment of insurance taxes and to required insurance reserves; relating to insurance policies; relating to regulation of capital, surplus, and investments by insurers; relating to hospital and medical service corporations; relating to the portability and availability of health care insurance; making amendments to the insurance statutes to conform to federal requirements regarding health insurance; relating to the repeal of certain small employer health care insurance provisions; repealing delayed provisions relating to dental, vision, and hearing insurance in secs. 3 and 4, ch. 101, SLA 1992; repealing delayed provisions relating to small employer health care insurance in secs. 4, 7, 9, and 12, ch. 39, SLA 1993; repealing the delayed effective date in sec. 5, ch. 101, SLA 1992, and in sec. 13, ch. 39, SLA 1993; and providing for an effective date."
00CS FOR SENATE BILL NO. 104(FIN) 01 "An Act relating to regulation and examination of insurers and insurance agents; 02 relating to kinds of insurance; relating to payment of insurance taxes and to 03 required insurance reserves; relating to insurance policies; relating to regulation 04 of capital, surplus, and investments by insurers; relating to hospital and medical 05 service corporations; relating to the portability and availability of health care 06 insurance; making amendments to the insurance statutes to conform to federal 07 requirements regarding health insurance; relating to the repeal of certain small 08 employer health care insurance provisions; repealing delayed provisions relating to 09 dental, vision, and hearing insurance in secs. 3 and 4, ch. 101, SLA 1992; 10 repealing delayed provisions relating to small employer health care insurance in 11 secs. 4, 7, 9, and 12, ch. 39, SLA 1993; repealing the delayed effective date in 12 sec. 5, ch. 101, SLA 1992, and in sec. 13, ch. 39, SLA 1993; and providing for 13 an effective date." 14 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:
01 * Section 1. PURPOSE. The purpose of secs. 3, 11, 12, 31 - 34, 43 - 57, 59 - 90, 99 - 02 102, 108, and 111 - 117, and 120 of this Act is to implement the minimum federal standards 03 for health care insurance enacted under P.L. 104-191 (Health Insurance Portability and 04 Accountability Act of 1996). 05 * Sec. 2. AS 21.06.030 is amended by adding a new subsection to read: 06 (h) A volunteer member of an advisory committee who has been appointed by 07 the director under a provision of this title to assist and advise the director on issues or 08 matters concerning a specific area of insurance is not entitled to payment of per diem 09 or travel expenses authorized under AS 39.20.180. 10 * Sec. 3. AS 21.06.085 is amended to read: 11 Sec. 21.06.085. Uniform data and procedures for health claims. (a) The 12 director shall adopt by regulation uniform claims forms, uniform standards, and 13 uniform procedures for the processing of data relating to billing for and payment of 14 health care services provided to state residents. A health care insurer shall use the 15 uniform claims forms and comply with the uniform standards and procedures 16 established under this section. 17 (b) In this section, 18 (1) "health care services" has the meaning given in AS 21.86.900; 19 (2) ["HEALTH INSURANCE" HAS THE MEANING GIVEN IN 20 AS 21.12.050; 21 (3)] "health care insurer" has the meaning given in AS 21.54.500 22 [MEANS AN INSURER TRANSACTING THE BUSINESS OF HEALTH 23 INSURANCE, A HEALTH MAINTENANCE ORGANIZATION UNDER AS 21.86, 24 A HOSPITAL SERVICE CORPORATION UNDER AS 21.87, A MEDICAL 25 SERVICE CORPORATION UNDER AS 21.87, OR A COMBINED MEDICAL 26 SERVICE AND HOSPITAL SERVICE CORPORATION UNDER AS 21.87]. 27 * Sec. 4. AS 21.06.110 is amended to read: 28 Sec. 21.06.110. Director's annual report. As early in each calendar year as 29 is reasonably possible, the director shall prepare and deliver an annual report to the 30 commissioner, who shall notify the legislature that the report is available, showing, 31 with respect to the preceding calendar year,
01 (1) a list of the authorized insurers transacting insurance in this state, 02 with a summary of their financial statement as the director considers appropriate; 03 (2) the name of each insurer whose certificate of authority was 04 surrendered, suspended, or revoked [BUSINESS WAS CLOSED] during the year 05 and [,] the cause of surrender, suspension, or revocation [THE CLOSING, AND 06 THE AMOUNT OF ASCERTAINABLE ASSETS AND LIABILITIES OF EACH 07 CLOSED BUSINESS]; 08 (3) the name of each insurer authorized to do business in this state 09 against which delinquency or similar proceedings were instituted [,] and, if against an 10 insurer domiciled in this state, a concise statement of the facts with respect to each 11 proceeding and its present status; 12 (4) a statement in regard to examination of rating organizations, 13 advisory organizations, joint underwriters, and joint reinsurers as required by 14 AS 21.39.120; 15 (5) the receipt and expenses of the division for the year; 16 (6) recommendations of the director as to amendments or 17 supplementation of laws affecting insurance [,] or the office of director; 18 (7) other pertinent information and matters the director considers 19 proper. 20 * Sec. 5. AS 21.06.160(a) is amended to read: 21 (a) Each person examined, other than [AS TO] examinations under 22 AS 21.06.130, shall pay a reasonable rate calculated on [ALL THE COSTS OF, 23 AND EXPENSES INCURRED BY DIVISION STAFF EXAMINERS, INCLUDING] 24 salary, [AND] benefit costs, and estimated division overhead for time spent directly 25 or indirectly related to the examination. Each person examined, other than 26 examinations under AS 21.06.130, shall pay actual out-of-pocket business 27 expenses, including travel expenses, incurred by division staff examiners [,] and 28 shall pay the compensation of a contract examiner, to be set at a reasonable customary 29 rate, for conducting the examination [,] upon presentation of a detailed account of the 30 charges and expenses by the director or under an order of the director. The 31 accounting may either be presented periodically during the course of the examination
01 or at the termination of the examination. A person may not pay and an examiner may 02 not accept additional compensation for an examination. 03 * Sec. 6. AS 21.09.210(b) is amended to read: 04 (b) Each insurer, and each formerly authorized insurer with respect to 05 premiums received while an authorized insurer in this state, shall pay a tax on the total 06 direct premium income received during the year ending on the preceding December 07 31 and paid for the insurance of property or risks resident or located in the state, other 08 than wet marine and transportation insurance, after deducting from the total direct 09 premium income the applicable cancellations, returned premiums, the unabsorbed 10 portion of any deposit premium, all policy dividends, unabsorbed premiums refunded 11 to policyholders, refunds, savings, savings coupons, and other similar returns paid or 12 credited to policyholders with respect to their policies. No deductions may be made 13 of cash surrender value of policies. Considerations received on annuity contracts are 14 not included in the direct premium income and are not subject to tax. The tax shall be 15 paid to the director at least annually but not more often than once each quarter on 16 the dates specified by the director. The method of payment must be by the 17 electronic or other payment method specified by the director. The tax [OR 18 BEFORE MARCH 1, AND] is computed at the rate of 19 (1) for domestic and foreign insurers, except hospital and medical 20 service corporations, 2.7 percent; 21 (2) for hospital and medical service corporations, six percent of their 22 gross premiums less claims paid. 23 * Sec. 7. AS 21.09.210(d) is amended to read: 24 (d) An authorized insurer shall, with respect to all wet marine and 25 transportation contracts written in this state during the preceding calendar year, [ON 26 OR BEFORE MARCH 1 OF EACH YEAR,] pay to the director a tax of three-quarters 27 of one percent on its gross underwriting profit. The director shall specify the dates 28 that payment is due and the electronic or other method by which payment is to 29 be made. The gross underwriting profit is computed by deducting, from the net 30 premiums on wet marine and transportation insurance contracts, the net losses paid 31 during the calendar year under the contracts. In the case of an insurer issuing
01 participating contracts, the gross underwriting profit may not include, for computation 02 of the tax prescribed by this section, the amounts refunded or paid as participation 03 dividends by the insurers to the holders of the contracts. In this subsection, 04 (1) "net losses" means gross losses less salvage and recoveries on 05 reinsurance ceded; 06 (2) "net premiums" means gross premiums less all return premiums and 07 premiums for reinsurance. 08 * Sec. 8. AS 21.09 is amended by adding a new section to read: 09 Sec. 21.09.245. Required notice. (a) If an insurer intends to change the 10 insurer's name, domicile, or other information provided on the certificate of authority, 11 the insurer shall file a notice of the change with the director within 30 days before or 12 after the intended change takes effect. 13 (b) If an insurer changes the insurer's articles of incorporation, bylaws, 14 business address, phone number, or other information maintained by the director, the 15 insurer shall file a notice of the change with the director not later than 90 days after 16 the effective date of the change. 17 (c) Failure by an insurer to provide notification required by this section may 18 result in a civil penalty of up to $1,000 and, additionally, a civil penalty of up to $50 19 for each day that the information is withheld from the director. 20 * Sec. 9. AS 21.09 is amended by adding a new section to read: 21 Sec. 21.09.320. Maintenance of records. (a) An insurer domiciled in a 22 jurisdiction other than this state shall keep at its principal place of business a complete 23 record of its assets, transactions, and affairs in accordance with the methods and 24 systems that are customary or suitable to the kind of insurance transacted. 25 (b) To meet the requirements of (a) of this section, the insurer shall keep the 26 records specified in AS 21.69.390(d) for 10 years from the date the record was created 27 or as required by the record maintenance requirements of the insurer's domicile 28 jurisdiction, whichever is longer. 29 * Sec. 10. AS 21.12.020(a)(4)(A)(iii) is amended to read: 30 (iii) in the case of a single assuming insurer, the trust 31 shall consist of trust money representing the assuming insurer's
01 liabilities attributable to business written in the United States and, in 02 addition, include a trust surplus of not less than $20,000,000; the single 03 assuming insurer shall make available to the director an annual 04 certification of the insurer's solvency [BY THE INSURER'S 05 DOMICILIARY REGULATOR AND] by an independent certified 06 public accountant or an accountant holding a substantially equivalent 07 designation as determined by the director; 08 * Sec. 11. AS 21.12.050 is amended to read: 09 Sec. 21.12.050. Health and health care insurance defined. Health insurance 10 is insurance of human beings (1) against bodily injury, disablement, or death by 11 accident or accidental means; (2) against the resulting expenses of the injury, 12 disablement, or death; (3) against disablement or expense resulting from sickness or 13 childbirth; (4) against expense incurred in prevention of sickness; (5) for dental care; 14 and (6) including every insurance that applies to injury, disablement, or death. 15 Transaction of health insurance includes disability insurance and stop-loss insurance 16 but does not include workers' compensation insurance. Health care insurance 17 described in (b) of this section is a type of health insurance under this subsection. 18 * Sec. 12. AS 21.15.050 is amended by adding new subsections to read: 19 (b) Health care insurance means that part of health insurance that provides 20 benefits for medical care whether provided directly, through reimbursement, or other 21 method. 22 (c) In this section, "stop-loss insurance" means insurance purchased by a self- 23 insured employer to cover benefits the employer incurs in excess of a preset limit. 24 * Sec. 13. AS 21.14.010(a) is amended to read: 25 (a) A life and health domestic insurer, property and casualty domestic insurer, 26 or other insurer required by the director shall, on or before March 1, submit to the 27 director a report of its risk based capital covering the previous calendar year [, IF 28 REQUIRED BY THE DIRECTOR]. The report must be in a form and contain the 29 information required by risk based capital instructions. A domestic insurer required 30 to submit a report under this subsection shall file the report with 31 (1) the National Association of Insurance Commissioners; and
01 (2) the insurance regulatory agency in each state in which the insurer 02 is authorized to transact business [,] if the insurance regulatory agency has requested 03 the report in writing from the insurer; a report requested under this paragraph shall be 04 delivered 05 (A) not later than 15 days from the receipt of a request if the 06 report has already been filed with the director; or 07 (B) at the time the report is filed with the director, if the report 08 has not yet been filed with the director. 09 * Sec. 14. AS 21.14.200(18) is amended to read: 10 (18) "risk based capital instructions" means risk based capital 11 instructions for a life and health insurer or for a property and casualty insurer adopted 12 by order of [REGULATION BY] the director after an open meeting as provided 13 under AS 44.62.310 [AS 21.14.010]; 14 * Sec. 15. AS 21.18.050 is amended to read: 15 Sec. 21.18.050. Reserves and liabilities, in general. In a determination of the 16 financial condition of an insurer, capital stock and liabilities to be charged against its 17 assets shall include 18 (1) the amount of its capital stock outstanding, if any; 19 (2) the amount, estimated consistent with the provisions of this title, 20 necessary to pay all of its unpaid losses and claims incurred on or before the date of 21 statement, whether reported or unreported, together with the expenses of adjustment 22 or settlement; 23 (3) with reference to life and health insurance and annuity contracts, 24 (A) the amount of reserves on life insurance policies and 25 annuity contracts in force, valued according to the tables of mortality, rates of 26 interest, and methods adopted under this title that are applicable; 27 (B) reserves for disability benefits, for both active and disabled 28 lives; 29 (C) reserves for accidental death benefits; 30 (D) additional reserves that may be required by the director, 31 consistent with practice formulated or approved by the National Association of
01 Insurance Commissioners, on account of the insurance; 02 (4) with reference to health insurance, the amount of reserves required 03 under AS 21.18.080 - 21.18.086 [AS 21.18.080]; 04 (5) with reference to insurance other than specified in (3) and (4) of 05 this section, and other than title insurance, the amount of reserves equal to the 06 unearned portions of the gross premiums charged on policies in force, computed in 07 accordance with this chapter; 08 (6) taxes, expenses, and other obligations due or accrued at the date of 09 the statement. 10 * Sec. 16. AS 21.18.080 is repealed and reenacted to read: 11 Sec. 21.18.080. Reserve standards for health insurance. (a) The adequacy 12 of health insurance reserves must be determined based on the sum of policy reserves 13 determined under AS 21.18.082, claim reserves determined under AS 21.18.084, and 14 premium reserves determined under AS 21.18.086. 15 (b) Reserve adequacy must be determined by a prospective gross premium 16 valuation. For policies in force, in a claims status, or in a continuation of benefits 17 status on the valuation date, the gross premium valuation must take into account the 18 present value of all expected benefits unpaid, all expected expenses unpaid, and all 19 unearned or expected premiums, including expected future premium increases. 20 (c) A gross premium valuation must be performed whenever there is an 21 indication that reserves and future premiums may be insufficient to cover future claims 22 for a particular block of policies or for the entire health insurance block. If a reserve 23 inadequacy is determined to exist, the loss must be immediately recognized and 24 reserves increased to account for the inadequacy. The increased reserves will be 25 considered minimum reserves. 26 * Sec. 17. AS 21.18 is amended by adding new sections to read: 27 Sec. 21.18.082. Policy reserves for health insurance. (a) Except as provided 28 in (b) of this section, policy reserves are required for all individual and group health 29 insurance policies or groups of policies 30 (1) with level premiums or with a gross premium pricing structure at 31 time of issue that results in future benefits exceeding the corresponding future
01 valuation net premiums at any time; or 02 (2) for which gross premiums are restricted by contract, regulation, or 03 another reason that results in future gross premiums, reduced by expenses for 04 administration, commissions, and taxes, being insufficient to cover future claims. 05 (b) Policy reserves are not required for health insurance policies that cannot 06 be continued after one year from the date of issue. 07 (c) The structure of valuation net premiums used under a health insurance 08 policy must be consistent with the structure of gross premiums on the date the policy 09 is issued. 10 (d) For return of premium benefits, deferred cash benefits, policies with 11 premium rates that are not guaranteed, and where the effects of insurer underwriting 12 by policy duration are specifically used in the valuation morbidity standard, 13 termination rates that exceed the mortality rates in the tables required in (g)(2) of this 14 section may be used but may not exceed the lesser of 15 (1) 80 percent of the total termination rate used in the calculation of 16 gross premiums; or 17 (2) eight percent. 18 (e) The methods and procedures used to determine health insurance policy 19 reserves must be consistent with the methods and procedures used to determine claim 20 reserves for a health insurance policy. 21 (f) Negative reserves on a benefit may be offset against positive reserves for 22 other benefits in the same policy, but the total policy reserve with respect to all 23 benefits combined may not be less than zero. 24 (g) Except as provided in (d) and (h) - (k) of this section, policy reserves for 25 policies issued after July 1, 1997, must be determined based on 26 (1) a maximum interest rate equal to the maximum interest rate allowed 27 under AS 21.18.110 for the valuation of whole life insurance issued on the same date 28 as the health insurance policy; 29 (2) a termination assumption equal to the mortality table allowed under 30 AS 21.18.110 for the valuation of whole life insurance issued on the same date as the 31 health insurance policy or equal to a mortality table approved by the director for use
01 in determining the policy reserves; 02 (3) for long-term care policies issued after July 1, 1997, 03 (A) a mortality assumption equal to the 1983 Group Annuity 04 Mortality Table without projection; 05 (B) a lapse assumption for policy durations one through four 06 equal to the lesser of 80 percent of the voluntary lapse rate used in the 07 calculation of gross premiums or eight percent; and 08 (C) a lapse assumption for policy durations five and later of 100 09 percent of the voluntary lapse rate used in the calculation of the gross 10 premiums or four percent; 11 (4) a two-year full preliminary term method under which the terminal 12 reserve is zero on the first and second policy anniversary dates; 13 (5) a morbidity assumption for 14 (A) individual disability income insurance issued (i) after 15 December 31, 1997, equal to Tables A or B of the 1985 Commissioners' 16 Individual Disability Tables for policies; and (ii) before January 1, 1998, equal 17 to the 1964 or 1985 Commissioners' Individual Disability Tables; the insurer 18 shall indicate which morbidity table the insurer will use for all individual 19 disability income policies issued in a calendar year; 20 (B) group disability income insurance issued 21 (i) after December 31, 1997, equal to the 1987 22 Commissioners' Group Disability Table; and 23 (ii) before January 1, 1998, equal to the morbidity 24 assumption in use by the insurer before January 1, 1998; 25 (C) scheduled or fixed time period hospital, surgical, or 26 maternity benefit policies issued 27 (i) after December 31, 1997, equal to the 1974 Medical 28 Expense Table A from the Transactions of the Society of Actuaries, 29 Volume XXX; and 30 (ii) before January 1, 1998, equal to the morbidity 31 assumption in use by the insurer before January 1, 1998;
01 (D) cancer expense benefits for policies issued 02 (i) after December 31, 1997, equal to the 1985 National 03 Association of Insurance Commissioners Cancer Claim Cost Tables; and 04 (ii) before January 1, 1998, equal to the morbidity 05 assumption in use by the insurer before January 1, 1998; 06 (E) accidental death benefits for policies issued 07 (i) after December 31, 1997, equal to the 1959 08 accidental death benefit table; and 09 (ii) before January 1, 1998, equal to the morbidity 10 assumption in use by the insurer before January 1, 1998; or 11 (F) all other individual or group policy benefits equal to a 12 morbidity table established for reserve determination by an actuary qualified 13 to determine the morbidity table and approved by the director; the morbidity 14 table must contain a pattern of incurred claims cost that reflects the underlying 15 morbidity and may not be constructed for the primary purpose of minimizing 16 reserves. 17 (h) The reserve method for return of premium or other deferred cash benefits 18 must be a preliminary term method that is applied only in relation to the issue date of 19 the policy and is a 20 (1) one-year preliminary term method if benefits are provided before 21 the 20th policy anniversary; or 22 (2) two-year preliminary term method if the benefits are provided only 23 on or after the 20th policy anniversary. 24 (i) The reserve method for long-term care insurance must be calculated on a 25 (1) two-year full preliminary term method for a policy or certificate 26 issued on or before July 1, 1997; and 27 (2) one-year full preliminary term method for a policy or certificate 28 issued after July 1, 1997. 29 (j) Reserve adjustments due to rate changes, revised assumptions, or other 30 reasons for return of premium or other deferred cash benefits must be applied on the 31 effective date of the adoption of the reserve adjustment.
01 (k) An alternative method or basis of determining policy reserves may be used 02 if the aggregate policy reserve is not less than the aggregate policy reserves determined 03 under (c) - (j) of this section. 04 (l) An insurer shall annually review prospective policy liabilities on policies 05 valued by tabular reserves to determine the continuing adequacy and reasonableness 06 of the tabular reserves given future gross premiums. The insurer shall make 07 adjustments to the tabular reserves if the tests indicate that the basis of the reserves is 08 no longer adequate. 09 (m) Policy reserves that are valued based on the 1964 or 1985 Commissioners 10 Individual Disability Tables must include a provision for a waiver of premium benefit 11 with the minimum reserve for the benefit equal to the valuation net premium to be 12 waived. 13 (n) Policy reserves for long-term care insurance may not be less than the net 14 single premium for any nonforfeiture benefits provided by the policy or certificate. 15 Sec. 21.18.084. Claim reserves for health insurance. (a) Claim reserves are 16 required for all incurred and unpaid claims on all health insurance policies. 17 (b) Claim expense reserves are required for the estimated expense of settlement 18 of all incurred and unpaid claims. 19 (c) Claim reserves for prior valuation years must be tested for adequacy and 20 reasonableness using claim runoff schedules in accordance with the statutory annual 21 statement, including consideration of any residual unpaid liability. Claim reserve 22 adequacy must be determined in the aggregate. 23 (d) Claim reserves must be determined as follows: 24 (1) for policies that require policy reserves under AS 21.18.082(a), 25 based on a maximum interest rate equal to the maximum interest rate allowed under 26 AS 21.18.110 for the valuation of whole life insurance issued on the same date as the 27 date the claim was incurred; 28 (2) for policies that do not require policy reserves under 29 AS 21.18.082(b), based on a maximum interest rate equal to the maximum interest rate 30 allowed under AS 21.18.110 for the valuation of single premium immediate annuities 31 issued on the same date as the date the claim was incurred less 100 basis points;
01 (3) except as provided in (4) and (5) of this subsection, a morbidity 02 assumption for 03 (A) individual disability income insurance must be equal to the 04 morbidity assumption used in determining policy reserves under 05 AS 21.18.082(g)(5); 06 (B) group disability income insurance for policies issued 07 (i) after December 31, 1997, must be equal to the 1987 08 Commissioners Group Disability Table; and 09 (ii) before January 1, 1998, must be equal to the 10 morbidity assumption in use by the insurer before January 1, 1998; 11 (C) accidental death benefits must be equal to the actual amount 12 of claims incurred; and 13 (D) all other individual or group policy benefits must be equal 14 to a morbidity table approved by the director and established for reserve 15 determination by an actuary qualified to determine the morbidity table; 16 (4) for individual or group disability claims with a duration from 17 disablement of less than two years, morbidity assumptions may be based on the 18 insurer's experience if determined credible by the insurer or upon another basis 19 designed to place a sound value on the liabilities as determined by the insurer; 20 (5) if approved by the director, reserves for group disability income 21 claims with a duration from disablement of more than two years but less than five 22 years may be based on the insurer's experience for which the insurer maintains control 23 of underwriting and claim administration; request for approval to use this modified 24 reserve basis must include 25 (A) an analysis of the credibility of the experience; 26 (B) a description of how all the insurer's experience is proposed 27 to be used in setting the reserves; 28 (C) a description and quantification of the margins to be 29 included; 30 (D) a summary of the financial impact that the proposed plan 31 of modification would have on the insurer's last filed annual statement;
01 (E) a copy of the approval from the state of domicile; and 02 (F) all other information requested by the director; 03 (6) any generally accepted actuarial reserving method or other 04 reasonable method approved by the director may be used; the method used to estimate 05 liabilities may be an aggregate method; approximations based on groupings and 06 averages may also be used. 07 (e) Claim reserves that are valued based on the 1964 or 1985 Commissioners' 08 Individual Disability Tables must include a provision for a waiver of premium benefit 09 with the minimum reserve for the benefit equal to the valuation net premium to be 10 waived. 11 Sec. 21.18.086. Premium reserves for health insurance. (a) Unearned 12 premium reserves must be established for the period of coverage for which premiums, 13 other than premiums paid in advance, have been paid beyond the date of valuation. 14 (b) Due and unpaid premiums that are carried as an asset in the annual 15 statement must be treated as premiums in force and are subject to the unearned 16 premium reserve requirements of this section. Unpaid commissions, premium taxes, 17 and costs of collection associated with due and unpaid premiums must be carried in 18 the annual statement as an offsetting liability. 19 (c) Gross premiums paid in advance for a period of coverage starting after the 20 next premium due date following the valuation date may be discounted to the valuation 21 date and must be held as a separate liability in the annual statement or as an addition 22 to the unearned premium reserve established in this section. 23 (d) The minimum unearned premium reserve for a policy is the pro rata 24 unearned modal premium that applies to the valuation period beyond the date of 25 valuation. If a policy reserve is required for a policy, the unearned modal premium 26 is the valuation net modal premium on the policy reserve. If no policy reserve is 27 required for a policy, the unearned modal premium is the gross modal premium for the 28 policy. 29 (e) The sum of the unearned premium and policy reserves for all policies may 30 not be less than the gross modal unearned premium reserve on all policies as of the 31 date of valuation. The total unearned premium and policy reserves may not be less
01 than the expected claims for the period after the valuation date represented by the 02 unearned premium reserve. 03 (f) An insurer may use approximations and estimates in determining premium 04 reserves, including groupings, averages, and aggregate estimates. The approximations 05 or estimates must be tested periodically and not less frequently than triennially to 06 determine adequacy. 07 (g) Premium reserves based on the 1964 or 1985 Commissioners' Individual 08 Disability Tables must include policies on premium waiver as in-force contracts and 09 establish a minimum reserve for a waiver of premium benefit equal to the unearned 10 modal valuation net premium being waived. 11 * Sec. 18. AS 21.21 is amended by adding a new section to read: 12 Sec. 21.21.410. Custodians. (a) A custodial agreement between an insurer and 13 an institution holding the assets, securities, or investments of the insurer must provide 14 that the custodian is obligated to indemnify the insurer for losses involving an 15 insurance company asset or security in the custodian's custody resulting from the 16 negligence or dishonesty of the custodian's officers, employees, or agents, or caused 17 by burglary, robbery, holdup, theft, or mysterious disappearance, including loss by 18 damage or destruction. The agreement must also provide that, in the event of a loss, 19 an asset or security will be promptly replaced or the value of the asset or security and 20 the value of a loss of rights or privileges resulting from the loss will be promptly 21 replaced. 22 (b) The custodian for assets, securities, or investments of the insurer may only 23 be a bank, trust company, or securities firm that is properly authorized by the insurer 24 and approved by the director. 25 * Sec. 19. AS 21.27.010(f) is amended to read: 26 (f) A person who performs management services under a written contract for 27 an admitted insurer is not required to be licensed as a managing general agent [,] if 28 (1) either 29 (A) the person is a United States manager of the United States 30 branch of an alien admitted insurer; or 31 (B) the person's compensation is not based on the volume of
01 premium written; and 02 (2) the person 03 (A) is a wholly-owned subsidiary of the admitted insurer; 04 (B) wholly owns the admitted insurer; or 05 (C) is a wholly-owned subsidiary of the insurance holding 06 company subject to AS 21.22 that owns or controls the admitted insurer. 07 * Sec. 20. AS 21.27.010(i) is amended to read: 08 (i) A person licensed under AS 21.75 as an attorney-in-fact, or a person who 09 meets the requirements for exemption from licensure under AS 21.75, is not 10 required to be additionally licensed under this chapter while acting on behalf of 11 subscribers and within the scope and authority of a subscribers agreement of a 12 reciprocal insurer or exchange licensed under AS 21.75. 13 * Sec. 21. AS 21.27.040(a) is amended to read: 14 (a) Application for a license shall be made to the director upon forms 15 prescribed by the director. As a part of or in connection with [,] the application, the 16 applicant shall furnish information concerning the applicant's identity, personal 17 history, experience, business record, purposes, [OF THE APPLICANT] and other 18 pertinent facts [CONCERNING THE APPLICANT] that the director may reasonably 19 require. The applicant shall declare under oath and subject to penalty of denial, 20 nonrenewal, suspension, or revocation of a license issued by the director that the 21 statements made in or in connection with the application are true, correct, and 22 complete to the best of the applicant's knowledge and belief. Payment of an 23 application fee established under AS 21.06.250 must be submitted with the application. 24 * Sec. 22. AS 21.27.370(b) is amended to read: 25 (b) A person [LICENSEE] may not be promised or paid, directly or indirectly, 26 compensation for procuring an application or for placing a kind or class of insurance 27 for which the person [LICENSEE] is not then licensed to procure or place or for 28 insurance that the person [LICENSEE] is prohibited by this title from procuring or 29 placing. 30 * Sec. 23. AS 21.27.390(b) is amended to read: 31 (b) Except as otherwise provided by law, a [A] temporary license may not
01 be in effect for more than 90 consecutive days [,] and may not be renewed or reissued 02 for more than one additional 90-day period. 03 * Sec. 24. AS 21.27.405(b) is amended to read: 04 (b) If the director determines that a person has violated this chapter, the 05 director shall serve an order upon the person charged requiring that person to cease 06 and desist from engaging in the act or practice. [SERVICE REQUIRED UNDER 07 THIS SUBSECTION SHALL BE BY MAIL WITH A CERTIFICATE OF MAILING 08 FROM THE UNITED STATES POSTAL SERVICE.] A person aggrieved by the 09 cease and desist order may demand a hearing under AS 21.06.170 - 21.06.240. 10 * Sec. 25. AS 21.27.440(a) is amended to read: 11 (a) In addition to any other penalty provided by law, a person that the director 12 determines under AS 21.06.170 - 21.06.240 has violated the provisions of this chapter 13 is subject to 14 (1) a civil penalty equal to the compensation promised, paid, or to be 15 paid, directly or indirectly, to a person [LICENSEE] in regard to each violation; 16 (2) either a civil penalty of not more than $10,000 for each violation 17 or a civil penalty of not more than $25,000 for each violation if the director determines 18 that the person wilfully violated the provisions of this chapter; and 19 (3) denial, nonrenewal, suspension, or revocation of a license. 20 * Sec. 26. AS 21.27.640(b)(5) is amended to read: 21 (5) provide in or with its application 22 (A) all basic organizational documents of the third-party 23 administrator, including articles of incorporation, articles of association, 24 partnership agreement, trade name certificate, trust agreement, shareholder 25 agreement, and other applicable documents and all endorsements to the 26 required documents; 27 (B) the bylaws, rules, regulations, or similar documents 28 regulating the internal affairs of the administrator; 29 (C) the names, mailing addresses, physical addresses, official 30 positions, and professional qualifications of persons who are responsible for the 31 conduct of affairs of the third-party administrator; including the members of the
01 board of directors, board of trustees, executive committee, or other governing 02 board or committee; the principal officers in the case of a corporation or the 03 partners or members in the case of partnership or association; shareholders 04 holding directly or indirectly 10 percent or more of the voting securities of the 05 third-party administrator; and any other person who exercises control or 06 influence over the affairs of the third-party administrator; 07 (D) certified financial statements for the prior two years, or for 08 each year and partial year that the applicant has been in business if less 09 than two years, prepared by an independent certified public accountant 10 establishing [THAT ESTABLISH] that the applicant is solvent, that the 11 applicant's system of accounting, internal control, and procedure is operating 12 effectively to provide reasonable assurance that money is promptly accounted 13 for and paid to the person entitled to the money, and any other information that 14 the director may require to review the current financial condition of the 15 applicant; and 16 (E) a statement describing the business plan, including 17 information on staffing levels and activities proposed in this state and in other 18 jurisdictions and providing details establishing the third-party administrator's 19 capability for providing a sufficient number of experienced and qualified 20 personnel in the areas of claims handling, underwriting, and record keeping; 21 * Sec. 27. AS 21.34.040(c)(4) is amended to read: 22 (4) a Lloyd's syndicate or an insurer belonging to a [OTHER] similar 23 group, including incorporated and individual unincorporated insurers 24 [UNDERWRITERS], may qualify if it maintains a trust fund jointly and severally 25 with the other members of the group in an amount not less than $50,000,000, as 26 security to the full amount, for the protection of all policyholders [ITS POLICY 27 HOLDERS] and creditors of each member of the group in the United States; the 28 incorporated members may not be engaged in any business other than underwriting as 29 a member of the group and shall be subject to the same level of solvency regulation 30 and control by the group's domiciliary regulator as are the unincorporated members; 31 the trust fund must consist of instruments of substantially the same character and
01 quality as those that are eligible investments for the capital and statutory reserves of 02 admitted insurers authorized to write like kinds of insurance in this state or of 03 irrevocable, clean, and unconditional letters of credit; the trust fund must have an 04 expiration date that at no time is less than five years; 05 * Sec. 28. AS 21.34.040(c)(5) is amended to read: 06 (5) each syndicate or insurer belonging to an insurance exchange 07 created by the laws of individual states may qualify if the insurance exchange [IT] 08 maintains capital and surplus, or the substantial equivalent, of not less than 09 $50,000,000 in the aggregate; for insurance exchanges that maintain funds for the 10 protection of all insurance exchange policyholders, each individual syndicate shall 11 maintain minimum capital and surplus, or the substantial equivalent, of not less than 12 $3,000,000; in the event the insurance exchange does not maintain funds for the 13 protection of all its policyholders, each individual syndicate shall meet the minimum 14 requirements of (1) or (2) of this subsection; 15 * Sec. 29. AS 21.34.180(b) is amended to read: 16 (b) The surplus lines tax is due on the date specified by the director and 17 may [SECOND DAY OF MARCH FOLLOWING THE CALENDAR YEAR IN 18 WHICH THE PREMIUM IS WRITTEN. THE TAX SHALL] be paid by electronic 19 or other means as specified by the director. The tax shall be [TO AND] reported 20 on forms prescribed by the director [,] or, upon the director's order, paid to and 21 reported on forms prescribed by the surplus lines association. 22 * Sec. 30. AS 21.34.190(a) is amended to read: 23 (a) The fee for filing the statement under AS 21.34.180(b) is an amount equal 24 to one percent on gross premium charged less any return premiums as reported on the 25 statement [DURING THE PRECEDING CALENDAR YEAR]. The surplus lines 26 broker shall pay the fee at the time of filing of the statement. 27 * Sec. 31. AS 21.36.095(a) is amended to read: 28 (a) A health care [AN] insurer may not deny enrollment of a child under the 29 health care insurance of the child's parent on the ground that the child 30 (1) was born out of wedlock; 31 (2) is not claimed as a dependent on the parent's federal income tax
01 return; 02 (3) does not reside with the parent; or 03 (4) does not reside in the health care insurer's service area. 04 * Sec. 32. AS 21.36.095(b) is amended to read: 05 (b) If a parent is required under AS 25.27.020(a)(9) or 25.27.060(c) to provide 06 medical support for a child and the parent is eligible for family health care insurance 07 coverage through an insurer, the parent's health care insurer 08 (1) shall allow the parent to enroll the child under the family health 09 care insurance coverage without regard to restrictions relating to enrollment periods 10 if the child is otherwise eligible; 11 (2) shall, if the parent fails to apply for enrollment of a child under (1) 12 of this subsection, enroll the child under the parent's family health care insurance 13 coverage upon application by the child's other parent or custodian, the child support 14 enforcement agency, or the Department of Health and Social Services; and 15 (3) may not disenroll or eliminate health care insurance coverage of 16 the child unless the insurer has received written evidence that 17 (A) the parent with the insurance coverage is no longer required 18 by court order or administrative order to provide the child's medical support; 19 or 20 (B) the child is or will be enrolled in comparable health care 21 insurance coverage through another insurer that will take effect not later than 22 the effective date of the disenrollment or elimination of coverage. 23 * Sec. 33. AS 21.36.095(c) is amended to read: 24 (c) A health care [AN] insurer who provides health care insurance coverage 25 of a child through family health care insurance coverage of a parent who does not 26 have sole physical custody of the child shall 27 (1) provide to the child's other parent or custodian the information that 28 may be necessary for the child to obtain benefits through the family health care 29 insurance coverage; 30 (2) allow the child's other parent or custodian, or the child's health care 31 provider with the parent's or custodian's approval, to submit claims for covered
01 services without the approval of the parent whose health care insurance covers the 02 child; and 03 (3) make payment on claims submitted under (2) of this subsection 04 directly to the child's other parent or custodian, the health care provider, or a state 05 agency to which the child's medical support rights have been assigned under 06 AS 25.27.120 or AS 47.07.025. 07 * Sec. 34. AS 21.36.095(e) is repealed and reenacted to read: 08 (e) In this section, "health care insurer" has the meaning given in 09 AS 21.54.500 and includes the Comprehensive Health Insurance Association as 10 described in AS 21.55.010. 11 * Sec. 35. AS 21.36 is amended by adding a new section to read: 12 Sec. 21.36.185. Maintenance of complaint handling records. An insurer 13 shall maintain a complete record of all the complaints received by the insurer since the 14 date of the insurer's last market conduct examination under AS 21.06.120 or for four 15 years, whichever occurs first. This record must indicate the total number of 16 complaints, the classification of each complaint by line of insurance, the nature of each 17 complaint, the disposition of each complaint, and the time it took to process each 18 complaint. For purposes of this section, "complaint" means any written 19 communication primarily expressing a grievance. 20 * Sec. 36. AS 21.36.240 is amended to read: 21 Sec. 21.36.240. Failure to renew. An insurer may only [NOT] fail to renew 22 a personal insurance policy on the policy's annual anniversary [IN FORCE FOR 23 LESS THAN 12 MONTHS]. An insurer may not fail to renew a policy unless a 24 written notice of nonrenewal is mailed to the named insured as required by 25 AS 21.36.260 at least 20 days for a personal insurance policy, and at least 45 days for 26 a business or commercial insurance policy, before the expiration date of the policy or 27 of the anniversary date of a policy written for a term longer than one year or with no 28 fixed expiration date. If notice of nonrenewal is not given as required by this section, 29 the existing policy shall continue until the insurer provides notice for the time period 30 required by this section for that policy. This section does not apply 31 (1) if the insurer has in good faith manifested its willingness to renew;
01 (2) in case of nonpayment of premium for the expiring policy; or 02 (3) if the insured fails to pay the premium as required by the insurer 03 for renewal. 04 * Sec. 37. AS 21.36.290 is amended to read: 05 Sec. 21.36.290. Policy period. (a) A [EXCEPT AS DESCRIBED IN (b) OF 06 THIS SECTION, A] policy with a policy period or term [OF LESS THAN 12 07 MONTHS SHALL, FOR THE PURPOSES OF AS 21.36.210 - 21.36.310, BE 08 CONSIDERED TO BE WRITTEN FOR A POLICY PERIOD OR TERM OF 12 09 MONTHS EXCEPT IN CASE OF CANCELLATION UNDER ANY OF THE 10 CIRCUMSTANCES SPECIFIED IN AS 21.36.210, AND A POLICY WRITTEN FOR 11 A TERM] longer than one year or a policy with no fixed expiration date shall be 12 considered to be written for successive policy periods or terms of one year, and 13 termination by an insurer effective on an anniversary date of the policy shall be 14 considered a failure to renew. 15 (b) The rate for [FOR DETERMINING THE APPROPRIATE RATE OR 16 PREMIUM,] a personal automobile insurance policy may not be changed more 17 frequently than once every [WITH A POLICY PERIOD OR TERM OF LESS THAN 18 SIX MONTHS SHALL, FOR THE PURPOSES OF AS 21.36.210 - 21.36.310, BE 19 CONSIDERED TO BE WRITTEN FOR A POLICY PERIOD OR TERM OF] six 20 months. 21 * Sec. 38. AS 21.36.390 is repealed and reenacted to read: 22 Sec. 21.36.390. Notice to director. (a) An insurer or licensee that has reason 23 to believe that a fraudulent claim has been made against it shall send the director a 24 report disclosing information that the director may require. 25 (b) An insurer or licensee that has reason to believe that an insurance producer 26 with which it is doing business is involved in a defalcation, embezzlement, or violation 27 of the provisions of AS 21.36.360 shall immediately send the director a report 28 disclosing the basis for that belief and any other information that the director may 29 require. 30 (c) An insurer or licensee, its employee or agent, or another person acting in 31 good faith is not civilly liable for damages resulting from the filing of the report or the
01 furnishing of information required by this section or by the director. 02 (d) The director shall investigate facts reported under this section and shall refer 03 facts indicating a violation of law to the app0o,r0ate prosecutor or agency. 04 * Sec. 39. AS 21.39.045(b) is amended to read: 05 (b) The director shall accept a rate filing for workers' compensation insurance 06 if the filing includes a reasonable method of recognizing differences in rates of pay for 07 the construction industry, and the method uses a credit scale that begins at an 08 amount equal to the average weekly wage in this state for the construction industry 09 as determined by the Department of Labor. 10 * Sec. 40. AS 21.42.130 is amended to read: 11 Sec. 21.42.130. Grounds for disapproval. The director shall disapprove a 12 form filed under AS 21.42.120 or withdraw a previous approval of the form [,] only 13 if the form 14 (1) is in any respect in violation of or does not comply with this title; 15 (2) contains or incorporates by reference, where incorporation is 16 permissible, an inconsistent, ambiguous, or misleading clause, or exception and 17 condition that deceptively affects the risk purported to be assumed in the general 18 coverage of the contract; 19 (3) has a title, heading, or other indication of its provisions that is 20 misleading; 21 (4) is printed or otherwise reproduced in a manner that renders a 22 provision of the form substantially illegible; 23 (5) provides benefits for Medicare supplement [SUPPLEMENTAL 24 AND INDIVIDUAL HEALTH] insurance that are unreasonable in relation to the 25 premium charged. 26 * Sec. 41. AS 21.42 is amended by adding a new section to read: 27 Sec. 21.42.205. Coordination of benefits. (a) Unless prohibited by federal 28 law, an insurer authorized under AS 21.09 to offer, issue for delivery, deliver, or renew 29 an individual or group health insurance policy for major medical coverage on an 30 expense incurred basis; a health maintenance organization authorized under AS 21.86 31 to offer a contract to provide major medical health care services on a prepaid basis;
01 or a service corporation authorized under AS 21.87 to offer or renew an individual or 02 group subscriber's contract for major medical coverage shall include a coordination of 03 benefits provision in a major medical policy or contract. 04 (b) The director may adopt regulations to implement this section. 05 * Sec. 42. AS 21.42 is amended by adding a new section to read: 06 Sec. 21.42.265. Effective date of coverage. Unless otherwise provided by 07 law, the effective date of a change relating to coverage under an insurance contract as 08 a result of a change to this title is the issue date for a new policy or the renewal date 09 for a renewal policy. 10 * Sec. 43. AS 21.42.345 is repealed and reenacted to read: 11 Sec. 21.42.345. Required provision for coverage of dependents. (a) A 12 health care insurance plan providing coverage for a dependent of a covered individual 13 shall, as to the dependent's coverage, also provide that the health care insurance 14 benefits applicable for dependents shall be payable with respect to 15 (1) a newly born child of a covered individual from the moment of 16 birth; 17 (2) a child adopted by a covered individual from the date of adoption; 18 (3) a child placed with a covered individual for adoption from the date 19 of placement for adoption; and 20 (4) a spouse from not later than the first day of the first month 21 beginning after the date the request for enrollment is received, but the insurer may 22 require that a request for enrollment be received within 31 days of the date of 23 marriage. 24 (b) The coverage for a newly born child under this section shall consist of 25 coverage of injury or sickness, including the necessary care and treatment of medically 26 diagnosed congenital defects and birth abnormalities. 27 (c) If payment of a specific charge is required to provide coverage for a child 28 under this section, the policy or contract may require that notification of birth of a 29 newly born child, adopted child, or child placed for adoption and payment of the 30 required premium or fees may be required to be furnished to the health care insurer 31 within 31 days after the date of birth, adoption, or placement for adoption in order to
01 have the coverage continue beyond the 31-day period. 02 (d) Under (a) - (c) of this section, a health care insurer shall offer coverage for 03 a family member, including a newly born child, adopted child, or child placed for 04 adoption, regardless of the marital status of the covered individual. 05 * Sec. 44. AS 21.42.347(a) is amended to read: 06 (a) A health care [AN] insurer who provides coverage for the costs of 07 childbirth shall also provide coverage for the costs of hospitalization or medical care 08 following childbirth for a period of not less than 09 (1) 48 hours after a vaginal birth; and 10 (2) 96 hours after a caesarean birth. 11 * Sec. 45. AS 21.42.347(b) is amended to read: 12 (b) Except as otherwise required to provide coverage specified under (a) of this 13 section, this section does not affect a payment arrangement entered into between a 14 hospital or health care provider [PHYSICIAN] and a health care [AN] insurer. 15 * Sec. 46. AS 21.42.347(d)(2) is repealed and reenacted to read: 16 (2) "health care insurer" has the meaning given in AS 21.54.500; 17 "health care insurer" includes the Comprehensive Health Insurance Association as 18 described in AS 21.55.010. 19 * Sec. 47. AS 21.42.353 is repealed and reenacted to read: 20 Sec. 21.42.353. Coverage for the costs of acupuncture treatment. Except 21 for a fraternal benefit society, a health care insurer that offers, issues for delivery, 22 delivers, or renews in this state a health care insurance plan may offer coverage for 23 services of an acupuncturist licensed under AS 08.06 if the plan covers acupuncture 24 treatment by a health care provider who is subject to other provisions of AS 08. 25 * Sec. 48. AS 21.42.355 is amended to read: 26 Sec. 21.42.355. Coverage for cost of services provided by nurse midwives. 27 (a) If a health care insurance plan or an excepted benefits policy or contract [AN 28 INDIVIDUAL OR GROUP HEALTH INSURANCE POLICY, SUBSCRIBER'S 29 CONTRACT, ENROLLEE CONTRACT, OR FRATERNAL BENEFIT SOCIETY 30 CERTIFICATE] provides indemnity for the cost of services of a physician provided 31 to women during pregnancy, childbirth, and the period after childbirth, indemnity in
01 a reasonable amount shall also be provided for the cost of an advanced nurse 02 practitioner who provides the same services. Indemnity may be provided under this 03 subsection only if the advanced nurse practitioner is certified to practice as a nurse 04 midwife in accordance with regulations adopted under AS 08.68.100(a), and the 05 services provided are within the scope of practice authorized by that certification. 06 (b) If a health care insurance plan or an excepted benefits policy or 07 contract [AN INDIVIDUAL OR GROUP HEALTH INSURANCE POLICY, 08 SUBSCRIBER'S CONTRACT, ENROLLEE CONTRACT, OR FRATERNAL 09 BENEFIT SOCIETY CERTIFICATE] provides for furnishing those services required 10 of a physician in the care of women during pregnancy, childbirth, and the period after 11 childbirth, the contract shall also provide that an advanced nurse practitioner may 12 furnish those same services instead of a physician. Services may be provided under 13 this subsection only if the advanced nurse practitioner is certified to practice as a nurse 14 midwife in accordance with regulations adopted under AS 08.68.100(a), and the 15 services provided are within the scope of practice authorized by that certification. 16 * Sec. 49. AS 21.42.365 is repealed and reenacted to read: 17 Sec. 21.42.365. Coverage for treatment of alcoholism or drug abuse. (a) 18 Except for a fraternal benefit society, a health care insurer that offers, issues for 19 delivery, delivers, or renews in this state a health care insurance plan, except for 20 catastrophic illness insurance, providing coverage for five or more employees of an 21 employer in the group market shall provide a covered employee or the employee's 22 dependent the following coverage for treatment of alcoholism or drug abuse: 23 (1) benefits of at least $9,600 over two consecutive benefit years; and 24 (2) lifetime benefits of at least $19,200. 25 (b) The benefits described in (a) of this section shall be adjusted 26 January 1, 1999, by the director and every three years thereafter to correspond with the 27 change in the medical care component of the consumer price index for all urban 28 consumers for the Anchorage Metropolitan Area compiled by the Bureau of Labor 29 Statistics, United States Department of Labor. The base year for the first adjustment 30 shall be calendar year 1996. 31 (c) A health care insurer that offers a health care insurance plan providing
01 coverage under this section may not 02 (1) require that a covered employee or the employee's dependent be 03 responsible for a deductible or copayment that is different for the determination of 04 benefits relating to treating alcoholism or drug abuse than for the determination of 05 benefits for treating another covered illness; 06 (2) use a different claim payment methodology in determining the 07 benefits relating to treating alcoholism or drug abuse than that used in determining the 08 benefits for treating another covered illness; 09 (3) require prenotification of treatment or a second opinion unless the 10 requirement is applicable to other covered major illnesses; 11 (4) limit coverage by provisions of the insurance contract that are not 12 applicable to other covered major illnesses, including provisions concerning preexisting 13 illnesses or provisions requiring that the exact date of onset be known; 14 (5) limit treatment services under the insurance contract to either an 15 inpatient or outpatient service; 16 (6) exclude from coverage the cost of medically necessary treatment, 17 including medical or psychiatric evaluation, activity or family therapy, counseling, or 18 prescription drugs or supplies received at an approved treatment facility; or 19 (7) deny reimbursement for actual services rendered solely because 20 treatment was interrupted or not completed. 21 (d) Notwithstanding (a) of this section, if an employer employs fewer than 20 22 permanent, full-time employees for each working day during each of at least 20 23 calendar workweeks in either the current calendar year or the preceding calendar year, 24 a health care insurer is not required to provide the coverage specified in (a) of this 25 section to the employer but shall offer that coverage to the employer as optional 26 coverage. 27 (e) In this section, 28 (1) "alcoholism or drug abuse" means an illness characterized by 29 (A) a physiological or psychological dependency, or both, on 30 alcoholic beverages or controlled substances as defined in AS 11.71.900; or 31 (B) habitual lack of self-control in using alcoholic beverages or
01 controlled substances to the extent that the person's health is substantially 02 impaired or the person's social or economic function is substantially disrupted; 03 (2) "approved treatment facility" means treatment in a facility that is 04 either approved under AS 47.37.140 or located and licensed for treatment of 05 alcoholism or drug abuse in another state; 06 (3) "catastrophic illness insurance" means a health care insurance plan 07 that provides benefits for hospital and medical care with a lifetime maximum benefit 08 per insured of at least $250,000 and that has a deductible of at least $5,000; 09 (4) "cost" means the least of the following: 10 (A) the actual charge for the treatment received for alcoholism 11 or drug abuse; 12 (B) the usual, customary, and reasonable charge for the 13 treatment as determined by the contract of coverage; or 14 (C) the charged agreed to by contract between the treatment 15 provider and the health care insurer; 16 (5) "treatment" means medical care, including detoxification, as an 17 inpatient or outpatient at an approved treatment facility. 18 * Sec. 50. AS 21.42.375(a) is repealed and reenacted to read: 19 (a) Except for a fraternal benefit society, a health care insurer that offers, 20 issues for delivery, delivers, or renews in this state a health care insurance plan shall 21 provide coverage for low-dose mammography screening under the schedule described 22 in (b) of this section if the plan covers mastectomies and prosthetic devices and 23 reconstructive surgery incident to mastectomies. 24 * Sec. 51. AS 21.42.375(b) is amended to read: 25 (b) The minimum coverage required under (a) of this section includes 26 (1) a baseline mammogram for a covered individual [PERSON] who 27 is at least 35 years of age but less than 40 years of age; 28 (2) one mammogram every two years for a covered individual 29 [PERSON] who is at least 40 years of age but less than 50 years of age; 30 (3) an annual mammogram for a covered individual [PERSON] who 31 is at least 50 years of age;
01 (4) a mammogram at any age for a covered individual [PERSON] with 02 a history of breast cancer or whose parent or sibling has a history of breast cancer, 03 upon referral by a physician. 04 * Sec. 52. AS 21.42.375(c) is amended to read: 05 (c) The coverage required by this section 06 (1) must be included in the health care insurance plan [POLICY OR 07 CONTRACT] on a basis that is not less favorable than for other radiological 08 examinations; 09 (2) may be subject to standard policy provisions applicable to other 10 benefits, such as deductible or copayment provisions. 11 * Sec. 53. AS 21.42.380 is repealed and reenacted to read: 12 Sec. 21.42.380. Coverage for treatment of phenylketonuria. (a) Except for 13 a fraternal benefit society, a health care insurer that offers, issues for delivery, delivers, 14 or renews in this state a health care insurance plan shall provide coverage under the 15 plan for the formulas necessary for the treatment of phenylketonuria. This subsection 16 does not apply to a health care insurance plan that the director has determined by order 17 should be excluded from this subsection. 18 (b) A health care insurer providing coverage under this section may impose 19 reasonable contract limitations but may not refuse coverage based on a preexisting 20 condition of phenylketonuria or require that an individual covered under the plan pay 21 a higher deductible or copayment for the cost of treating phenylketonuria than for the 22 cost of treating another condition or illness. 23 (c) In this section, "cost" means the lowest of the following: 24 (1) the actual charge for the treatment received for phenylketonuria; 25 (2) the usual, customary, and reasonable charge for the treatment as 26 determined by the contract of coverage; or 27 (3) the charge agreed to by contract between the treatment provider and 28 the health care insurer. 29 * Sec. 54. AS 21.42.385 is repealed and reenacted to read: 30 Sec. 21.42.385. Dental, vision, and hearing coverage. (a) Except for a 31 fraternal benefit society, a health care insurer that offers, issues for delivery, delivers,
01 or renews in this state a health care insurance plan, including a Medicare supplement 02 policy to the extent not prohibited by 42 U.S.C. 1395, shall offer to each plan sponsor 03 or individual minimum dental, vision, and hearing coverage described in (b) of this 04 section. Coverage required under this subsection may be offered as a rider or in a 05 separate policy. 06 (b) The minimum coverage required under (a) of this section may 07 (1) be provided under contract with another health care insurer; and 08 (2) not be less than the dental, vision, and hearing coverage provided 09 on January 1, 1992, to an individual entitled to medical benefits under AS 39.35.535 10 (public employees' retirement system of Alaska). 11 (c) This section does not apply to a health care insurer that has written less 12 than $300,000 in premiums in the previous calendar year. A health care insurer 13 exempt under this subsection shall disclose the exemption when offering, issuing for 14 delivery, delivering, or renewing a health care insurance plan or an excepted benefits 15 contract, and shall advise the individual covered under the plan that health care 16 insurers that have written more than $300,000 in premiums in the previous calendar 17 year are required to offer coverage under (a) and (b) of this section. 18 (d) This section does not require an insurer who offers only group insurance 19 coverage under AS 21.54 to offer dental, vision, and hearing coverage to an individual. 20 * Sec. 55. AS 21.42.395(a) is repealed and reenacted to read: 21 (a) Except for a fraternal benefit society, a health care insurer that offers, 22 issues for delivery, delivers, or renews in this state a health care insurance plan shall 23 provide coverage for the costs of prostate cancer screening tests as required under the 24 schedule described in (b) of this section and shall provide coverage for the costs of 25 cervical cancer screening tests as required under (c) of this section. The coverage 26 required by this section is subject to standard policy provisions applicable to other 27 benefits, including deductible or copayment provisions. If a physician recommends 28 that a covered individual undergo prostate cancer screening by taking a prostate 29 antigen blood test, coverage may not be denied because the covered individual has 30 already had a digital rectal examination and the examination results were negative. 31 * Sec. 56. AS 21.42 is amended by adding a new section to read:
01 Sec. 21.42.500. Definitions. In AS 21.42.345 - 21.42.395, 02 (1) "copayment" means the portion of medical care expenses in excess 03 of the deductible to be paid by a covered individual; 04 (2) "deductible" means the portion of medical care expenses for which 05 a covered individual must pay before benefits become payable; 06 (3) "excepted benefits" has the meaning given in AS 21.54.160; 07 (4) "fraternal benefit society" has the meaning given in AS 21.84.900; 08 (5) "health care insurance plan" has the meaning given in 09 AS 21.54.500; 10 (6) "health care insurer" has the meaning given in AS 21.54.500; 11 (7) "placed for adoption" has the meaning given in AS 21.54.500. 12 * Sec. 57. AS 21.53.090 is amended to read: 13 Sec. 21.53.090. Required regulations. The director shall adopt regulations 14 regarding 15 (1) the sale of long-term care insurance that provide minimum 16 standards for 17 (A) [(1)] terms of renewability; 18 (B) [(2)] initial and subsequent conditions of eligibility; 19 (C) [(3)] nonduplication of coverage provisions; 20 (D) [(4)] coverage of dependents; 21 (E) benefit triggers; 22 (F) [(5)] preexisting conditions and recurrent conditions; 23 (G) [(6)] termination of insurance; 24 (H) [(7)] continuation or conversion; 25 (I) [(8)] probationary periods, limitations, exceptions, 26 reductions, and elimination periods; [,] and 27 (J) requirements for replacement; 28 (2) standard definitions of long-term care insurance terms; 29 (3) nonforfeiture or minimum value requirements; and 30 (4) consumer protection standards, including standards for full and 31 fair disclosure setting out the manner and content of required disclosures.
01 * Sec. 58. AS 21.54 is amended by adding a new section to read: 02 Sec. 21.54.015. Rate requirements. Rates charged for a group health 03 insurance policy may not be excessive, inadequate, or unfairly discriminatory. 04 * Sec. 59. AS 21.54 is amended by adding new sections to read: 05 Article 2. Health Care Insurance Provisions. 06 Sec. 21.54.100. Unfair discrimination. (a) A health care insurer that offers, 07 issues for delivery, delivers, or renews a health care insurance plan in the group market 08 may not establish rules for eligibility, including continued eligibility and waiting 09 periods under the plan, for an individual or dependent of an individual based on 10 (1) health status; 11 (2) medical condition, including physical and mental illnesses; 12 (3) claims experience; 13 (4) receipt of health care; 14 (5) medical history; 15 (6) genetic information; 16 (7) evidence of insurability, including conditions arising from acts of 17 domestic violence; or 18 (8) disability. 19 (b) A health care insurer may not require an individual, as a condition of 20 enrollment or continued enrollment under a health care insurance plan offered in the 21 group market, to pay a premium, contribution, or policy fee greater than a premium, 22 contribution, or policy fee for a similarly situated individual already enrolled in the 23 plan on the basis of a health status factor for the individual or a dependent of the 24 individual. 25 Sec. 21.54.110. Preexisting condition exclusion. (a) A health care insurance 26 plan offered, issued for delivery, delivered, or renewed in the group market may not 27 contain a preexisting condition exclusion that 28 (1) relates to a condition, regardless of cause, for which medical advice, 29 diagnosis, care, or treatment was recommended or received more than six months 30 before the enrollment date; 31 (2) considers genetic information as a condition for which a preexisting
01 condition exclusion may be imposed in absence of a diagnosis of the condition related 02 to the information; 03 (3) extends for more than 12 months after the enrollment date of a 04 covered individual; or 05 (4) excludes a condition relating to pregnancy. 06 (b) A period of a preexisting condition exclusion permissible under (a) of this 07 section must be reduced by the aggregate of periods of creditable coverage, if any, as 08 determined in AS 21.54.120, applicable to the participant or beneficiary as of the 09 enrollment date. The aggregate of periods of creditable coverage is determined by 10 adding together all periods of creditable coverage before the enrollment date, excluding 11 periods of creditable coverage before a continuous break in coverage of more than 90 12 days. A waiting period or affiliation period may not be considered in determining the 13 90-day period. This subsection does not apply if an individual's most recent period 14 of creditable coverage ended on a date more than 90 days before the enrollment date. 15 This subsection does not preclude application of a waiting period to all new enrollees 16 under a health care insurance plan. 17 (c) A health care insurance plan offered, issued for delivery, delivered, or 18 renewed in this state in the group market may not apply a preexisting condition 19 exclusion to an individual who is (1) a newborn covered under creditable coverage as 20 of the last day of the 30-day period beginning with the date of birth; or (2) adopted 21 or placed for adoption before attaining 18 years of age and who is covered under 22 creditable coverage as of the last day of the 30-day period beginning with the date of 23 adoption or placement for adoption. This subsection does not apply to an individual 24 after the end of the first continuous 90-day period during all of which the individual 25 was not covered under creditable coverage. 26 (d) A health care insurance plan offered, issued for delivery, delivered, or 27 renewed in this state in the group market may exclude coverage for late enrollees for 28 the greater of 18 months or an 18-month preexisting condition exclusion. If both a 29 waiting period and a preexisting condition exclusion under (a) of this section are 30 applicable to a late enrollee, the combined period may not exceed 18 months from the 31 date the individual enrolls for coverage under a health care insurance plan.
01 Sec. 21.54.120. Creditable coverage. (a) A health care insurer that offers, 02 issues for delivery, delivers, or renews in this state a health care insurance plan in the 03 group market shall count a period of creditable coverage based on 04 (1) the standard method authorized by 42 U.S.C. 300gg (Health 05 Insurance Portability and Accountability Act of 1996) for determining creditable 06 coverage without regard to the specific benefits covered during the period; or 07 (2) an alternative method based on coverage of benefits within each of 08 several classes or categories of benefits specified in federal regulation if 09 (A) made on a uniform basis for all participants and 10 beneficiaries; and 11 (B) the insurer counts a period of creditable coverage with 12 respect to any class or category of benefits if any level of benefits is covered 13 within the class or category. 14 (b) A health care insurer that offers, issues for delivery, delivers, or renews in 15 this state a health care insurance plan in the group market shall provide a certification 16 of coverage 17 (1) at the time an individual ceases to be covered under a health care 18 insurance plan or becomes covered under a federal continuation provision; 19 (2) at the time an individual ceases to be covered under a federal 20 continuation provision; and 21 (3) upon request by an individual or on behalf of an individual with 24 22 months after the date coverage under the health care insurance plan or a federal 23 continuation provision ceases. 24 (c) A health care insurer that offers, issues for delivery, delivers, or renews in 25 this state a health care insurance plan in the group market shall establish periods of 26 creditable coverage with respect to an individual through certification under (b) of this 27 section or as specified in federal regulation. 28 (d) A health care insurer that offers, issues for delivery, delivers, or renews in 29 this state a health care insurance plan in the group market shall prominently state and 30 describe the effect of the health care insurer's election to count a period of creditable 31 coverage using a permissible alternative method
01 (1) in any disclosure statement concerning the health care insurance 02 plan or coverage; 03 (2) to each enrollee at the time of enrollment; and 04 (3) to each employer at the time of offer or sale of coverage. 05 (e) A health care insurer issuing a certification under (b) of this section shall 06 disclose information regarding coverage of classes and categories of health benefits 07 available under the health care insurer's plan at the request of an entity that 08 (1) enrolls an individual who has provided the certification of coverage; 09 (2) elects to count a period of creditable coverage according to a 10 permissible alternative method under (a)(2) of this section; and 11 (3) pays the health care insurer for the reasonable cost, if any, of 12 disclosing the information described in this subsection. 13 Sec. 21.54.130. Renewability, termination, and modification of coverage. 14 (a) Except for a multiple employer welfare arrangement, a health care insurer that 15 offers, issues for delivery, delivers, or renews in this state a health care insurance plan 16 in the group market shall renew or continue in force the coverage under the plan at the 17 option of the plan sponsor unless 18 (1) the plan sponsor has failed to pay premiums or contributions in 19 accordance with the terms of the health care insurance plan or the health care insurer 20 has not received timely premium payments; 21 (2) the plan sponsor has performed an act or practice that constitutes 22 fraud or made an intentional misrepresentation of material fact under the terms of the 23 coverage; 24 (3) the plan sponsor has failed to comply with a material plan provision 25 relating to minimum participation or employer contribution requirements; 26 (4) the health care insurer ceases to offer coverage in accordance with 27 (b) and (c) of this section; 28 (5) the health care insurer offers the plan only through a network plan 29 and there is no longer an enrollee in connection with the plan who lives, resides, or 30 works in the service area of the insurer or in the area for which the insurer is 31 authorized to transact business; or
01 (6) in the case of a plan that is made available only through a bona fide 02 association, the employer's membership in the association ceases and coverage is 03 terminated uniformly without regard to a health status factor of a covered individual. 04 (b) A health care insurer may discontinue offering a particular type of health 05 care insurance plan in the group market as permitted by this title if the insurer 06 (1) provides written notice of the decision to discontinue coverage to 07 all affected plan sponsors, participants, and beneficiaries and to the insurance 08 regulatory official in each state in which an affected covered employee or dependent 09 is known to reside; notice required under this paragraph must be given at least 180 10 days before the insurer fails to renew the health care insurance plan; 11 (2) provides written notice of the decision to discontinue coverage to 12 the director and to the insurance regulatory official in each state in which the insurer 13 is licensed at least 30 days before notice is given to the affected plan sponsors, 14 participants, and beneficiaries as described under (1) of this subsection; 15 (3) offers to each plan sponsor who is provided the particular type of 16 health care insurance plan the option to purchase another health care insurance plan 17 currently being offered by the insurer to plan sponsors in the same market in the state; 18 and 19 (4) acts uniformly without regard to the claims experience of those plan 20 sponsors or to any health status factor of a covered participant or beneficiary or a new 21 participant or beneficiary who may become eligible for coverage. 22 (c) A health care insurer may discontinue offering and renewing all health care 23 insurance plans in the group market as permitted by this title if the insurer 24 (1) provides written notice of the decision to discontinue coverage to 25 all affected plan sponsors, participants, and beneficiaries and to the insurance 26 regulatory official in each state in which an affected covered employee or dependent 27 is known to reside; notice required under this paragraph must be given at least 180 28 days before discontinuation of the plans; 29 (2) provides written notice of the decision to discontinue coverage to 30 the director and to the insurance regulatory official in each state in which the insurer 31 is licensed at least 30 days before the notice is given to the affected plan sponsors,
01 participants, and beneficiaries as described under (1) of this subsection; and 02 (3) does not issue a health care insurance plan in the group market in 03 this state for five years from the date the last group health care insurance plan was 04 discontinued. 05 (d) A health care insurer may modify a large employer's health care insurance 06 plan at the time of plan renewal. 07 (e) Except for coverage available only through a bona fide association, a health 08 care insurer may modify a small employer's health care insurance plan consistent with 09 this title at the time of plan renewal only if the modification is uniform for all small 10 employers with the same health care insurance plan. 11 (f) If a covered employee or dependent has committed a fraudulent act or 12 made an intentional misrepresentation of a material fact in regard to a health care 13 insurance plan, a health care insurer may terminate the coverage of the employee or 14 the dependent under the plan. 15 (g) For purposes of this section, a plan sponsor includes an employer member 16 of a bona fide association for a health care insurance plan made available by the health 17 care insurer only through a bona fide association. 18 Sec. 21.54.140. Renewability of coverage for a multiple employer welfare 19 arrangement. A health benefit plan that is a multiple employer welfare arrangement 20 subject to this title may not deny an employer whose employees are covered under the 21 plan continued access to the same or a different plan according to the terms of the 22 plan, except 23 (1) for nonpayment of contributions; 24 (2) for fraud or other intentional misrepresentation of material fact by 25 the employer; 26 (3) for noncompliance with material plan provisions; 27 (4) where the plan is ceasing to offer any coverage in a geographic 28 area; 29 (5) for a health benefit plan that offers benefits through a network plan 30 if 31 (A) there is no longer an individual enrolled through the
01 employer who lives, resides, or works in the service area of the network plan; 02 and 03 (B) the multiple employer welfare arrangement applies this 04 paragraph without regard to the claims experience of the employer or a health 05 status factor in relation to an individual or an individual's dependent; and 06 (6) for failure to meet the terms of an applicable collective bargaining 07 agreement to renew a collective bargaining or other agreement requiring or authorizing 08 contributions to the plan or to employ employees covered by a collective bargaining 09 agreement. 10 Sec. 21.54.150. Mental health benefits. (a) Except as provided in (d) of this 11 section, a health care insurance plan sold in the large employer group market that 12 provides both medical and surgical benefits and mental health benefits shall meet the 13 following requirements: 14 (1) if the plan does not include an aggregate lifetime limit on 15 substantially all medical and surgical benefits, the plan may not provide for an 16 aggregate lifetime limit on mental health benefits; 17 (2) if the plan includes an aggregate lifetime limit on substantially all 18 medical and surgical benefits, the plan must 19 (A) include the mental health benefits within the aggregate 20 lifetime limit and may not distinguish in the application of the limit between 21 medical and surgical benefits and mental health benefits; or 22 (B) provide an aggregate lifetime limit for mental health 23 benefits that is not less than the aggregate lifetime limit for medical and 24 surgical benefits; 25 (3) if the plan includes different aggregate lifetime limits or none on 26 different categories of medical and surgical benefits, the plan must provide for 27 aggregate lifetime limits on mental health benefits consistent with federal law; 28 (4) if the plan does not include an annual limit on substantially all 29 medical and surgical benefits, the plan may not provide for an annual limit on mental 30 health benefits; 31 (5) if the plan includes an annual limit on substantially all medical and
01 surgical benefits, the plan must 02 (A) include the mental health benefits with the annual limit and 03 may not distinguish in the application of the limit between medical and surgical 04 benefits and mental health benefits; or 05 (B) provide an annual limit for mental health benefits that is not 06 less than the annual limit for medical and surgical benefits; and 07 (6) if the plan includes different annual limits or none on different 08 categories of medical and surgical benefits, the plan must provide for annual limits on 09 mental health benefits consistent with federal law. 10 (b) Except as provided otherwise in this title, a health care insurance plan is 11 not required to provide mental health benefits. 12 (c) Except as otherwise provided in this title, this section does not affect the 13 terms and conditions relating to the amount, duration, or scope of mental health 14 benefits under a health care insurance plan that provides mental health benefits, 15 including cost sharing, limits on number of visits or days of coverage, and 16 requirements relating to medical necessity. 17 (d) This section does not apply if application of this section would result in 18 an increase in the cost under the health care insurance plan of at least one percent. 19 Sec. 21.54.160. "Excepted benefits" defined. "Excepted benefits" means 20 benefits under one or more or any combination of the following: 21 (1) benefits under 22 (A) coverage only for accident, disability income insurance, or 23 both; 24 (B) coverage issued as a supplement to liability insurance; 25 (C) liability insurance, including general liability insurance and 26 automobile liability insurance; 27 (D) workers' compensation or substantially similar insurance; 28 (E) automobile medical payment insurance; 29 (F) credit-only insurance; 30 (G) coverage for on-site medical clinics; or 31 (H) other similar insurance coverage, as specified in federal law,
01 under which benefits for medical care are secondary or incidental to other 02 insurance benefits; 03 (2) if offered as a separate insurance policy and otherwise not an 04 integral part of a health care insurance plan, benefits under 05 (A) limited scope dental or vision coverage; 06 (B) coverage for long-term care, nursing home care, home 07 health care, community-based care, or any combination; or 08 (C) other similar limited benefits as specified in federal law; 09 (3) if offered as independent noncoordinated benefits, benefits under 10 coverage only for a specified disease or illness, or hospital indemnity or other fixed 11 indemnity insurance; as used in this paragraph, "independent, noncoordinated benefits" 12 means benefits that are provided under a separate policy if 13 (A) there is no coordination between the provision of the 14 benefits and an exclusion of benefits under a health care insurance plan 15 maintained by the same plan sponsor; and 16 (B) the benefits are paid with respect to an event without regard 17 to whether benefits are provided for the event under a health care insurance 18 plan maintained by the same plan sponsor; 19 (4) if offered as a separate insurance policy, benefits under 20 (A) Medicare supplement health insurance as defined in 42 21 U.S.C. 1345ss(g)(1) (Social Security Act); 22 (B) coverage supplemental to the coverage provided under 10 23 U.S.C. 1071 - 1090; or 24 (C) similar supplemental coverage provided to coverage under 25 a health benefit plan. 26 Sec. 21.54.170. Determination of size of employer. The determination of 27 whether an employer is a large or small employer is subject to the following: 28 (1) the size of an employer that was not in existence throughout the 29 preceding calendar year must be based on the average number of employees that the 30 employer is reasonably expected to employ on the business days in the current 31 calendar year;
01 (2) all persons treated as a single employer under 26 U.S.C. 414(b), (c), 02 (m), or (o) must be treated as one employer; and 03 (3) a reference to a large or small employer includes by reference any 04 predecessor of that employer. 05 Article 3. Definitions. 06 Sec. 21.54.500. Definitions. In this chapter, 07 (1) "aggregate lifetime limit" means a dollar limit on the total amount 08 that may be paid for benefits under a health care insurance plan offered in the group 09 market with respect to an individual or unit of coverage; 10 (2) "annual limit" means a dollar limit on the total amount that may be 11 paid for benefits in a 12-month period under the plan with respect to an individual or 12 unit of coverage; 13 (3) "beneficiary" has the meaning given under 29 U.S.C. 1002(8) 14 (Employee Retirement Income Security Act of 1974); 15 (4) "bona fide association" means an association that 16 (A) has been actively in existence for five years; 17 (B) has been formed and maintained in good faith for purposes 18 other than obtaining insurance; 19 (C) does not condition membership in the association on a 20 health status factor relating to an individual; 21 (D) makes health care insurance available to all members and 22 dependents of members regardless of a health status factor in relation to the 23 member or dependent; 24 (E) does not offer a health care insurance plan to an individual 25 other than in connection with a member of the association; and 26 (F) meets any other requirement established by the director in 27 regulations; 28 (5) "certification of coverage" means a written certification of 29 (A) the period of creditable coverage of an individual under a 30 health benefit plan or health care insurance plan offered in the group market, 31 including coverage under a federal continuation provision; and
01 (B) the waiting period imposed with respect to the individual 02 for coverage under the health benefit plan or health care insurance plan offered 03 in the group market; 04 (6) "church plan" has the meaning given under 29 U.S.C. 1002(33) 05 (Employee Retirement Income Security Act of 1974); 06 (7) "creditable coverage" means, with respect to an individual, 07 coverage, excluding excepted benefits, calculated as required under AS 21.54.120 and 08 applicable under 09 (A) a health care insurance plan offered in the group market; 10 (B) a health benefit plan; 11 (C) 42 U.S.C. 1395c or 1395j (Part A or Part B of Title XVIII 12 of the Social Security Act): 13 (D) 42 U.S.C. 1396 (Title XIX of the Social Security Act), 14 other than coverage consisting solely of benefits under 42 U.S.C. 1396s; 15 (E) 10 U.S.C. 1071 - 1090; 16 (F) a medical care program of the Indian Health Service or of 17 a tribal organization; 18 (G) AS 21.55; 19 (H) 5 U.S.C. 8901 - 8914; 20 (I) a public health plan as defined under federal law; or 21 (J) a health benefit plan under 22 U.S.C. 2504(e) (Peace Corps 22 Act); 23 (8) "employee" has the meaning given under 29 U.S.C. 1002(6) 24 (Employee Retirement Income Security Act of 1974); 25 (9) "employer" has the meaning given under 29 U.S.C. 1002(5) 26 (Employee Retirement Income Security Act of 1974); for purposes of this chapter, 27 "employer" includes a large or small employer, including a person, firm, corporation, 28 partnership, association, or political subdivision, that is actively engaged in business; 29 (10) "enrollment date" means the date of enrollment of an individual 30 in a health benefit plan or health care insurance plan offered in the group market or 31 the first day of the waiting period for enrollment, whichever occurs first;
01 (11) "federal continuation provision" means a "COBRA continuation 02 provision" as defined in 42 U.S.C. 300gg-91(d) (Health Insurance Portability and 03 Accountability Act of 1996); 04 (12) "federal governmental plan" means a governmental plan 05 established or maintained for employees of the United States government or by an 06 agency or instrumentality of the United States government; 07 (13) "governmental plan" has the meaning given under 29 U.S.C. 08 1002(32) Employee Retirement Income Security Act of 1974); 09 (14) "group market" means the health care insurance market in which 10 individuals obtain health care insurance coverage on behalf of themselves and their 11 dependents through a health benefit plan maintained by a large or small employer; 12 "group market" includes a health benefit plan for a small employer in the group market 13 that includes an arrangement under which 14 (A) a portion of the premium or benefits is paid by a small 15 employer; 16 (B) a covered individual or dependent is reimbursed, through 17 wage adjustments or otherwise, by or on behalf of a small employer for all or 18 a portion of the premium; or 19 (C) the health benefit plan is treated by the employer or any of 20 the eligible employees or dependents as part of a plan or program for the 21 purposes of 26 U.S.C. 106 or 26 U.S.C. 162 (Internal Revenue Code); 22 (15) "health benefit plan" means an employee welfare benefit plan as 23 defined in 29 U.S.C. 1002(1) (Employee Retirement Income Security Act of 1974), 24 and includes a plan, fund, or program established or maintained by a partnership, to 25 the extent that the plan, fund, or program provides medical care, including items and 26 services paid for as medical care to employees, present or former partners, or their 27 dependents, as defined under the terms of the plan, fund, or program, directly or 28 through insurance, reimbursement, or other method; 29 (16) "health care insurance plan" means a health care insurance policy 30 or contract provided by a health care insurer but does not include an excepted benefits 31 policy or contract;
01 (17) "health care insurer" means a person transacting the business of 02 health care insurance, including an insurance company licensed under AS 21.09, a 03 hospital or medical service corporation licensed under AS 21.87, a fraternal benefit 04 society licensed under AS 21.84, a health maintenance organization licensed under 05 AS 21.86, a multiple employer welfare arrangement, a church plan, and a 06 governmental plan, except for a nonfederal governmental plan that elects to be 07 excluded under 40 U.S.C. 300gg-21(b)(2) (Health Insurance Portability and 08 Accountability Act of 1996); 09 (18) "health status factor" means any of the factors described in 10 AS 21.54.100(a); 11 (19) "large employer" means an employer that employed an average of 12 at least 51 employees on the business days during the preceding calendar year and that 13 employs at least two employees on the first day of a health benefit plan year; 14 (20) "late enrollee" means a participant or beneficiary who requests 15 enrollment in an employer's health care insurance plan following the initial enrollment 16 period for which the participant or beneficiary was eligible to enroll under the terms 17 of a health care insurance plan, except that a participant or beneficiary may not be 18 considered a late enrollee if 19 (A) the individual requests enrollment within 30 days after the 20 termination of the creditable coverage or the exhaustion of coverage and 21 (i) was covered under creditable coverage at the time of 22 the initial enrollment; 23 (ii) has lost creditable coverage as a result of the 24 termination of employer contributions toward coverage or the 25 termination of eligibility, including death, divorce, dissolution of 26 marriage, legal separation, or a reduction in number of hours of 27 employment; or 28 (iii) had coverage under a federal continuation provision 29 and the coverage under that provision was exhausted; 30 (B) the individual is employed by an employer who offers 31 multiple health care insurance plans and the individual elects a different health
01 care insurance plan during an open enrollment period; or 02 (C) a court has ordered coverage to be provided for a spouse 03 or minor child under a covered employee's plan and request for enrollment is 04 made within 30 days after issuance of the court order; 05 (21) "medical and surgical benefits" means benefits provided for 06 medical or surgical services, but does not include mental health benefits; 07 (22) "mental health benefits" means benefits provided for mental health 08 services as defined under the terms of the health care insurance plan, but does not 09 include benefits for treatment of substance abuse or chemical dependency; 10 (23) "network plan" means a health care insurance plan offered in the 11 group market or by an insurer under which the financing and delivery of medical care, 12 including items and services paid for as medical care, are provided in whole or in part 13 through a defined set of providers under contract with the insurer; 14 (24) "participant" has the meaning given under 29 U.S.C. 1002(7) 15 (Employee Retirement Income Security Act of 1974); "participant" includes a 16 (A) partner in relation to a partnership; or 17 (B) self-employed individual if the individual or the individual's 18 beneficiaries are or may become eligible to receive benefits under a health 19 benefit plan maintained by the self-employed individual; 20 (25) "placed for adoption" means the assumption and retention by an 21 individual of a legal obligation for total or partial support of a child in anticipation of 22 adopting the child; 23 (26) "plan sponsor" has the meaning given under 29 U.S.C. 24 1002(16)(B) (Employee Retirement Income Security Act of 1974); 25 (27) "preexisting condition exclusion" means a limitation or exclusion 26 of benefits relating to a physical or mental condition that was present before the 27 enrollment date, regardless of whether medical advice, diagnosis, care, or treatment 28 was recommended or received before the enrollment date; 29 (28) "small employer" means an employer that employed an average 30 of at least two but not more than 50 employees on the business days during the 31 preceding calendar year and that employs at least two employees on the first day of
01 a health benefit plan year; 02 (29) "waiting period" means the period that must pass before an 03 individual who is a potential participant or beneficiary in a health care insurance plan 04 offered in the group market is eligible to be covered for benefits under the terms of 05 the plan. 06 * Sec. 60. AS 21.55.100(a) is amended to read: 07 (a) The association shall make available to residents who are high risks or to 08 federally defined eligible individuals an individual state plan of health insurance. 09 The association shall offer three alternatives related to deductibles as described in 10 AS 21.55.120 and may offer additional deductible alternatives. 11 * Sec. 61. AS 21.55.100(c) is amended to read: 12 (c) The association may not refuse to offer coverage under a state plan to 13 residents who are high risks, or to federally defined eligible individuals, [AND] who 14 are eligible under this chapter. The association may not refuse coverage under a state 15 plan to residents who are high risks, or to federally defined eligible individuals, who 16 [,] are eligible under this chapter, apply for coverage, and pay the required premium. 17 * Sec. 62. AS 21.55.100(d) is amended to read: 18 (d) The association may make available to residents who are high risks and 19 to federally defined eligible individuals coverage through a health maintenance 20 organization or other managed care arrangement as approved by the director. 21 * Sec. 63. AS 21.55.130 is amended by adding a new subsection to read: 22 (d) A state plan issued to a federally defined eligible individual may not 23 impose a preexisting condition exclusion. 24 * Sec. 64. AS 21.55.300(a) is amended to read: 25 (a) Except as provided in this section, a state resident who is a high risk or 26 a federally defined eligible individual is eligible to enroll in a state plan described 27 in AS 21.55.100. 28 * Sec. 65. AS 21.55.300(b) is amended to read: 29 (b) Except for a federally defined eligible individual, a [A] person may not 30 be covered by the state plan 31 (1) while covered by another health insurance policy or subscriber
01 contract; or 02 (2) if the person is eligible to be covered by a plan subject to the 03 requirements of AS 21.56.110 - 21.56.250. 04 * Sec. 66. AS 21.55.310 is amended to read: 05 Sec. 21.55.310. Enrollment by an eligible person. A person may enroll in 06 a state plan by applying to the writing carrier. The application must include the 07 following: 08 (1) name, address, age, and length of residency of the applicant; 09 (2) a designation of the plan desired, including deductible option 10 chosen; 11 (3) information relevant to whether the person is a high risk or a 12 federally defined eligible individual; and 13 (4) payment of the first premium. 14 * Sec. 67. AS 21.55.500(9) is repealed and reenacted to read: 15 (9) "resident" means 16 (A) except for a federally defined eligible individual and an 17 individual who is absent from the state for more than 90 consecutive days for 18 reasons other than for medical treatment or education, an individual who 19 (i) is physically present in the state, has lived in the 20 state for at least the 12 consecutive months immediately preceding the 21 application for a state plan, and intends to remain permanently in the 22 state; or 23 (ii) is not physically present in the state if the person 24 lived in the state for at least nine of the 12 months immediately 25 preceding application for a state plan and the person's absence from the 26 state is for medical treatment or education; 27 (B) for a federally defined eligible individual, an individual who 28 is legally domiciled in this state. 29 * Sec. 68. AS 21.55.500 is amended by adding new paragraphs to read: 30 (14) "creditable coverage" has the meaning given in AS 21.54.500; 31 (15) "federal continuation provision" has the meaning given in
01 AS 21.54.500; 02 (16) "federally defined eligible individual" means an individual 03 (A) with an aggregate of all periods of creditable coverage as 04 provided under AS 21.54.110(b) that is greater than 18 months as of the date 05 that the individual seeks coverage under this chapter; 06 (B) whose most recent prior creditable coverage was under a 07 health benefit plan or health care insurance plan offered in the group market; 08 (C) who is not eligible for coverage under a health benefit plan, 09 42 U.S.C. 1395c or 42 U.S.C. 1395j (Part A or Part B of Title XVIII of the 10 Social Security Act), or a state plan under 42 U.S.C. 1396 (Title XIX of the 11 Social Security Act), and who does not have other health care insurance 12 coverage; 13 (D) whose most recent coverage within the period of aggregate 14 creditable coverage as provided under AS 21.54.110(b) was not terminated 15 based on a factor relating to nonpayment of premiums or fraud; 16 (E) who, having been offered and having elected continuation 17 coverage under a federal continuation provision or a similar state program, has 18 exhausted coverage under the continuation provision or program; 19 (17) "group market" has the meaning given in AS 21.54.500; 20 (18) "health benefit plan" has the meaning given in AS 21.54.500; 21 (19) "health care insurance plan" has the meaning given in 22 AS 21.54.500; 23 (20) "health care insurer" has the meaning given in AS 21.54.500; 24 (21) "preexisting condition exclusion" has the meaning given in 25 AS 21.54.500. 26 * Sec. 69. AS 21.56.010 is amended to read: 27 Sec. 21.56.010. Creation; membership. A nonprofit incorporated legal entity 28 to be known as the Small Employer Health Reinsurance Association is established. 29 Membership consists of all health care insurers [LICENSED TO TRANSACT 30 HEALTH INSURANCE IN THE STATE THAT OFFER A HEALTH BENEFIT 31 PLAN]. All members shall maintain membership in the reinsurance association as
01 a condition of transacting [DOING] health care insurance business [, OR BEING 02 ABLE TO OFFER SUBSCRIBER CONTRACTS,] in the state. 03 * Sec. 70. AS 21.56.020(a) is amended to read: 04 (a) The board of directors of the reinsurance association consists of nine 05 individuals selected by participating members, subject to approval by the director. The 06 director shall endeavor to appoint at least six board members who are also small 07 employer insurers. If the director is unable to appoint six board members who are also 08 small employer insurers, the director may fill the remaining seats with any insurer. In 09 selecting members of the board, the director shall consider, among other things, 10 whether all types of participating members are fairly represented. 11 * Sec. 71. AS 21.56.020(b) is amended to read: 12 (b) To the extent possible, one board member shall represent a health 13 maintenance organization, one board member shall represent a hospital or medical 14 service corporation, one board member's principal health insurance business shall be 15 in the small employer group market, and one board member's principal health 16 insurance business shall be in the large employer group market. Members of the 17 board may be reimbursed from the reinsurance association for expenses incurred by 18 them as members, but may not otherwise be compensated by the reinsurance 19 association for their services. The costs of conducting meetings of the reinsurance 20 association and its board of directors shall be borne by the reinsurance association. 21 * Sec. 72. AS 21.56.030 is amended to read: 22 Sec. 21.56.030. General powers. The reinsurance association may 23 (1) exercise the powers granted to insurers under the laws of the state, 24 except that the reinsurance association may not issue insurance; 25 (2) sue or be sued; 26 (3) enter into contracts with insurers, similar reinsurance associations 27 in other states, or with other persons for the performance of administrative functions; 28 (4) establish administrative and accounting procedures for the operation 29 of the reinsurance association; 30 (5) take legal action as necessary to avoid the payment of improper 31 claims against the reinsurance association;
01 (6) define the array of health coverage products for which reinsurance 02 will be provided and issue reinsurance policies; 03 (7) establish rules, conditions, and procedures pertaining to the 04 reinsurance of members' risks by the reinsurance association; 05 (8) establish actuarial functions appropriate to the operation of the 06 reinsurance association; 07 (9) assess members under the provisions of this chapter and make 08 advance interim assessments as may be reasonable and necessary for organizational 09 and interim operating expenses; interim assessments shall be credited as offsets against 10 regular assessments due following the close of the calendar year; 11 (10) appoint appropriate legal, actuarial, and other committees as are 12 necessary to provide technical assistance in the operation of the reinsurance 13 association, design of a policy or contract, or to assist in other functions of the 14 reinsurance association; 15 (11) borrow money to accomplish the purposes of the reinsurance 16 association; notes or other evidence of indebtedness of the reinsurance association that 17 are not in default are investments for insurers and may be carried as admitted assets. 18 * Sec. 73. AS 21.56.040 is amended to read: 19 Sec. 21.56.040. Plan of operation. (a) The reinsurance association shall 20 submit to the director a plan of operation and amendments necessary or suitable to 21 assure the fair, reasonable, and equitable administration of the reinsurance association. 22 The director may, after notice and hearing, approve the plan of operation if the director 23 determines it to be suitable to assure the fair, reasonable, and equitable administration 24 of the program on a proportionate basis under the provisions of this section and it does 25 not shift program costs to other insured persons or the state. The plan of operation 26 and amendments become effective upon approval in writing by the director. 27 (b) All members of the reinsurance association shall comply with the plan of 28 operation. 29 (c) The plan of operation must establish procedures for 30 (1) handling and accounting of program assets and money of the 31 reinsurance association and for an annual fiscal report to the director;
01 (2) reinsuring risks under the provisions of this section; 02 (3) collecting assessments from all members to provide for claims 03 reinsured by the reinsurance association and for administrative expenses incurred or 04 estimated to be incurred by the reinsurance association; 05 (4) selection of an administering insurer and establishing the 06 administering insurer's powers and duties; 07 (5) effectuating a methodology for applying the dollar thresholds 08 contained in this section for insurers that pay or reimburse health care providers by 09 capitation or salary; and 10 (6) provisions necessary or proper for the execution of the powers and 11 duties of the reinsurance association. 12 * Sec. 74. AS 21.56.050 is amended to read: 13 Sec. 21.56.050. Health care reinsurance. (a) A member may reinsure health 14 care coverage of an eligible employee of a small employer or a dependent of an 15 eligible employee of a small employer with the reinsurance association only under the 16 following provisions: 17 (1) regarding a small employer basic or standard health care insurance 18 [BENEFIT] plan, the reinsurance association shall reinsure the level of coverage 19 provided; 20 (2) regarding a health care plan other than a small employer health care 21 insurance [BENEFIT] plan, the reinsurance association shall reinsure the level of 22 coverage provided up to, but not exceeding, the level of coverage provided in a small 23 employer basic or standard health benefit plan; 24 (3) a small employer insurer may reinsure an entire employer group 25 within 60 days of the commencement of the group's coverage under a health care 26 insurance [BENEFIT] plan; 27 (4) a small employer insurer may reinsure an eligible employee or 28 dependent within a period of 60 days following the commencement of the coverage 29 with the small employer; a newly eligible employee or dependent of a reinsured small 30 employer may be reinsured within 60 days of the commencement of coverage; 31 (5) the reinsurance association may not reimburse a reinsuring insurer
01 regarding the claims of a reinsured employee or dependent until the insurer has paid 02 an initial level of claims for the employee or dependent of $5,000 in a calendar year 03 for benefits covered by the reinsurance association; 04 (6) a small employer insurer may terminate reinsurance for one or more 05 of the reinsured employees or dependents of a small employer on any plan anniversary. 06 (b) Premium rates charged for coverage reinsured by the reinsurance 07 association shall be established as required under (e) of this section and adjusted as 08 follows: 09 (1) for whole group small employer reinsurance coverage, 1.5 10 multiplied by the base premium rate established by the reinsurance association for 11 eligible employees, and dependents of eligible employees, of a small employer all of 12 whose health insurance coverage is reinsured with the reinsurance association; 13 (2) for eligible employee or dependent health reinsurance coverage, 5.0 14 multiplied by the base premium rate established by the reinsurance association. 15 (c) If a health care insurance [BENEFIT] plan coverage for a small employer 16 is entirely or partially reinsured with the reinsurance association, the premium charged 17 to the small employer for a rating period for the coverage issued under this section 18 shall meet the premium rate requirements established under AS 21.56.120. 19 (d) On or before March 1 of each year, the board shall determine and report 20 to the director the reinsurance association's net loss for the previous calendar year, 21 including administrative expenses and incurred losses for the year, taking into account 22 investment income and other appropriate gains and losses. A net loss for the year 23 shall be recovered by assessments collected from reinsuring insurers. The board shall 24 establish, as part of the plan of operation, a formula by which to make assessments 25 against reinsuring insurers. The assessment formula must be based on each reinsuring 26 insurer's share of the total premiums earned in the preceding calendar year from health 27 care insurance [BENEFIT] plans delivered or issued for delivery to small employers 28 in this state by reinsuring carriers and each reinsuring insurer's share of the premiums 29 earned in the preceding calendar year from newly issued health care insurance 30 [BENEFIT] plans delivered or issued for delivery during the calendar year to small 31 employers in this state by reinsuring insurers. In determining an assessment, if any,
01 that is collected from a member, the following provisions apply: 02 (1) the formula established under this subsection may not result in a 03 reinsuring insurer having an assessment share that is less than 50 percent or more than 04 150 percent of an amount that is based on the proportion of the reinsuring insurer's 05 total premiums earned in the preceding calendar year from health care insurance 06 [BENEFIT] plans delivered or issued for delivery to small employers in this state by 07 reinsuring insurers to total premiums earned in the preceding calendar year from health 08 care insurance [BENEFIT] plans delivered or issued for delivery to small employers 09 in this state by all reinsuring carriers; 10 (2) the board may, with approval of the director, change the assessment 11 formula established under this section from time to time, as appropriate; the board may 12 provide for the shares of the assessment base attributable to premiums from all health 13 care insurance [BENEFIT] plans and to premiums from newly issued health care 14 insurance [BENEFIT] plans to vary during a transition period; 15 (3) subject to the approval of the director, the board shall make an 16 adjustment to the assessment formula for reinsuring carriers that are approved health 17 maintenance organizations that are federally qualified under 42 U.S.C. 300, to the 18 extent, if any, that restrictions are imposed on those organizations that are not imposed 19 on other small employer insurers [CARRIERS]; 20 (4) annually before March 1, the board shall determine and file with 21 the director an estimate of the assessments needed to fund losses incurred by the 22 reinsurance association in the previous calendar year; 23 (5) if the board determines that the assessments needed to fund the 24 losses incurred by the reinsurance association in the previous calendar year will 25 exceed five percent of total premiums earned in the previous year from health care 26 insurance [BENEFIT] plans delivered or issued for delivery to small employers in this 27 state by reinsuring insurers, the board shall evaluate the operation of the program and 28 report its findings, including any recommendations for changes to the plan of 29 operation, to the director within 90 days following the end of the calendar year in 30 which the losses were incurred; the evaluation must include an estimate of future 31 assessments, the administrative costs of the program, the appropriateness of the
01 premiums charged, and the level of insurer retention under the program and the costs 02 of coverage for small employers; if the board fails to file a report with the director 03 within 90 days following the end of the applicable calendar year, the director may 04 evaluate the operations of the program and implement amendments to the plan of 05 operation the director determines necessary to reduce future losses and assessments; 06 (6) if assessments exceed net losses of the reinsurance association, the 07 excess shall be held in an interest bearing account and used by the board to offset 08 future losses or to reduce reinsurance association premiums; in this paragraph, "future 09 losses" include a reserve for incurred but not reported claims; 10 (7) the board shall annually determine a member's proportion of 11 participation in the reinsurance association based on annual statements and other 12 reports determined necessary by the board and filed by the member with the board; an 13 insurer shall report to the board a claim payment made and administrative expense 14 incurred in this state on a semi-annual basis on a form prescribed by the director; 15 (8) the plan of operation must include a provision for the imposition 16 of an interest penalty for late payment of assessments; 17 (9) a member may request a deferment from the director, in whole or 18 in part, from an assessment issued by the board; the director may defer, in whole or 19 in part, the assessment of a member if, in the opinion of the director payment of the 20 assessment would endanger the ability of the member to fulfill the member's 21 contractual obligations; 22 (10) in the event an assessment against a member is deferred in whole 23 or in part, the amount by which the assessment is deferred may be assessed against the 24 other members in a manner consistent with the basis for assessments set out in this 25 subsection; the member receiving a deferment shall remain liable to the reinsurance 26 association for the amount deferred; the director may attach conditions to a deferment; 27 a member receiving a deferment may not reinsure an individual or group as provided 28 under this section until the assessment is paid. 29 (e) The board, as part of the plan of operation, shall establish a methodology 30 for determining premium rates to be charged by the program for reinsuring small 31 employers and individuals under this section. The methodology must include a system
01 for classification of small employers that reflects the types of case characteristics 02 commonly used by small employer insurers in the state. The methodology must 03 provide for the development of base reinsurance premium rates that shall be multiplied 04 by the factors set out in (b) of this section to determine the premium rates for the 05 reinsurance association. The base reinsurance premium rates shall be established by 06 the board, subject to the approval of the director, and shall be set at levels that 07 reasonably approximate gross premiums charged to small employers by small employer 08 insurers for health care insurance [BENEFIT] plans with benefits similar to the 09 standard health care insurance [BENEFIT] plan. The board shall review the 10 methodology established under this subsection to ensure that the methodology 11 reasonably reflects the claims experience of the program. Changes to the methodology 12 may be proposed by the board [,] and are subject to approval by the director. In this 13 subsection, "gross premiums" means the premium charged for insurance before 14 reducing the premium for a dividend or rate credit. 15 * Sec. 75. AS 21.56.060 is amended to read: 16 Sec. 21.56.060. Health care insurance [BENEFIT] plan committee. (a) 17 The health care insurance [BENEFIT] plan committee is established in the 18 reinsurance association. The committee is composed of seven members selected by 19 the director as follows: 20 (1) three members who are representatives of participating insurers; 21 (2) one member who represents small employers; 22 (3) one member who represents employees of small employers; 23 (4) one member who represents health care providers; and 24 (5) one member who represents agents or brokers. 25 (b) The committee shall recommend benefit levels, cost sharing levels, 26 exclusions and limitations for the basic and standard health care insurance 27 [BENEFIT] plan offered under AS 21.56.140. The committee shall also design a basic 28 health care insurance [BENEFIT] plan and a standard health care insurance 29 [BENEFIT] plan that contain benefit and cost sharing levels that are consistent with 30 the basic method of operation and the benefit plans of health maintenance 31 organizations, including restrictions imposed by federal law. The plans recommended
01 by the committee may include the following cost containment features: 02 (1) utilization review of health care services, including review of the 03 medical necessity of hospital and physician services; 04 (2) case management; 05 (3) selective contracting with hospitals, physicians, and other health 06 care providers; 07 (4) reasonable benefit differentials applicable to providers that 08 participate or do not participate in arrangements using restricted network provisions; 09 and 10 (5) other managed care provisions. 11 * Sec. 76. AS 21.56.070 is amended to read: 12 Sec. 21.56.070. Required report. The board shall study and report at least 13 once every two years to the director on the effectiveness of this chapter. The report 14 must analyze the effectiveness of the chapter in promoting rate stability, product 15 availability, and coverage affordability. The report may contain recommendations for 16 actions to improve the overall effectiveness, efficiency, and fairness of the small group 17 health care insurance marketplace. The report must address whether insurers, agents, 18 brokers, managing general agents, and third-party administrators are fairly and actively 19 marketing or issuing health care insurance [BENEFIT] plans to small employers in 20 fulfillment of the purposes of the chapter. The report may contain recommendations 21 for market conduct or other regulatory standards or action. The board shall notify the 22 legislature that the report is available. 23 * Sec. 77. AS 21.56 is amended by adding a new section to read: 24 Sec. 21.56.075. Premium report. A member shall file not later than 25 March 15 of each year in a form prescribed by the director a report of total premiums 26 earned in the preceding calendar year and other information required by the director 27 for health care insurance plans delivered or issued for delivery to small employers in 28 this state. 29 * Sec. 78. AS 21.56.080 is amended to read: 30 Sec. 21.56.080. Administrative Procedure Act. The reinsurance association 31 is exempt from AS 44.62 (Administrative Procedure Act).
01 * Sec. 79. AS 21.56.090 is amended to read: 02 Sec. 21.56.090. Tax exemption. The reinsurance association is exempt from 03 the payment of fees and taxes levied by the state or any of its political subdivisions 04 except taxes levied on real or personal property. 05 * Sec. 80. AS 21.56.100 is amended to read: 06 Sec. 21.56.100. Limitation of liability. A member of the reinsurance 07 association is not liable for civil damages resulting from an act or omission of the 08 member on behalf of the reinsurance association unless the member acts with gross 09 negligence or intentional misconduct. 10 * Sec. 81. AS 21.56.110(a) is repealed and reenacted to read: 11 (a) A health care insurance plan offered, issued for delivery, delivered, or 12 renewed to small employers in this state is subject to the provisions of this chapter. 13 * Sec. 82. AS 21.56.110(c) is amended to read: 14 (c) Except as provided in this subsection, for purposes of this chapter, insurers 15 that are affiliated companies or that are eligible to file a consolidated tax return shall 16 be treated as one insurer and a restriction or limitation imposed under this chapter shall 17 apply as if all health care insurance [BENEFIT] plans delivered or issued for delivery 18 to a small employer in this state by an affiliated insurer were issued by one insurer. 19 An affiliated insurer that is a health maintenance organization having a certificate of 20 authority under AS 21.86 may be considered to be a separate insurer for the purposes 21 of this chapter. 22 * Sec. 83. AS 21.56.120(a) is amended to read: 23 (a) A premium rate for a health care insurance [BENEFIT] plan subject to 24 this chapter is subject to the following provisions: 25 (1) the premium rate charged or offered during a rating period to small 26 employers with similar case characteristics as determined by the insurer for the same 27 or similar coverage may not vary from the applicable index rate by more than 35 28 percent of the applicable index rate; 29 (2) regarding a health care insurance [BENEFIT] plan issued before 30 July 1, 1993, if premium rates charged or offered for the same or similar coverage 31 under a health care insurance [BENEFIT] plan covering a small employer with
01 similar case characteristics as determined by the insurer exceeds the applicable index 02 rate by more than 35 percent, an increase in premium rates for a new rating period 03 may not exceed the sum of 04 (A) a percentage change in the base premium rate measured 05 from the first day of the prior rating period to the first day of the new rating 06 period; plus 07 (B) adjustments due to changes in case characteristics or plan 08 design of the small employer, as determined by the insurer; 09 (3) the percentage increase in the premium rate charged to a small 10 employer for a new rating period may not exceed the sum of the following: 11 (A) the percentage change in the new business premium rate 12 measured from the first day of the prior rating period to the first day of the 13 new rating period; in the case of a health benefit plan into which the small 14 employer insurer is no longer enrolling new small employers, the small 15 employer insurer shall use the percentage change in the base premium rate, 16 provided that the change does not exceed, on a percentage basis, the change in 17 the new business premium rate for the most similar health care insurance 18 [BENEFIT] plan into which the small employer insurer is actively enrolling 19 new small employers; 20 (B) any adjustment, not to exceed 15 percent annually and 21 adjusted pro rata for rating periods of less than one year, due to the claim 22 experience, health status, or duration of coverage of the employees or 23 dependents of the small employer as determined from the small employer 24 insurer's rate manual; and 25 (C) any adjustment due to change in coverage or change in the 26 case characteristics of the small employer, as determined from the small 27 employer insurer's rate manual; 28 (4) adjustments in rates for claim experience, health status, and duration 29 of coverage may not be charged to individual employees or dependents; any 30 adjustment must be applied uniformly to the rates charged for all employees and 31 dependents of the small employer;
01 (5) a premium rate for a health care insurance [BENEFIT] plan shall 02 comply with the requirements of this section notwithstanding an assessment paid or 03 payable by small employer insurers under AS 21.56.050(d); 04 (6) a small employer insurer may use [UTILIZE] industry as a case 05 characteristic in establishing premium rates, provided that the rate factor associated 06 with an industry classification may not vary by more than 15 percent from the 07 arithmetic average of the highest and lowest rate factors associated with all industry 08 classifications; 09 (7) a small employer insurer shall 10 (A) apply rating factors, including case characteristics, 11 consistently with respect to all small employers; rating factors must produce 12 premiums for identical groups that differ only by amounts attributable to plan 13 design and do not reflect differences due to the nature of the groups assumed 14 to select particular health care insurance [BENEFIT] plans; and 15 (B) treat all health care insurance [BENEFIT] plans issued or 16 renewed in the same calendar month as having the same rating period; 17 (8) for the purposes of this subsection, a health care insurance 18 [BENEFIT] plan that contains a restricted provider network may not be considered 19 similar coverage to a health care insurance [BENEFIT] plan that does not use 20 [UTILIZE] a restricted provider network if the restriction of benefits to network 21 providers results in substantial differences in claim costs; 22 (9) a small employer insurer may not use case characteristics, other 23 than age, sex, industry, geographic area, family composition, and group size without 24 prior approval of the director. 25 * Sec. 84. AS 21.56.120(b) is amended to read: 26 (b) In connection with the offering for sale of a health care insurance 27 [BENEFIT] plan to a small employer, a small employer insurer shall [MAKE A 28 REASONABLE DISCLOSURE], as part of its solicitation and sales materials, disclose 29 in a manner understandable by the average small employer and sufficient to 30 reasonably inform small employers of their rights and obligations under the 31 health care insurance plan [OF THE FOLLOWING:]
01 (1) the extent that premium rates for a specified small employer are 02 established or adjusted based upon the actual or expected variation in claims costs or 03 actual or expected variation in health status of the employees of the small employer 04 and their dependents; and 05 (2) the provisions of the health care insurance [BENEFIT] plan 06 (A) concerning the small employer insurer's right to change 07 premium rates and factors [, OTHER THAN CLAIM EXPERIENCE] that 08 affect changes in premium rates; 09 (B) relating to renewability of policies and contracts; [AND] 10 (C) relating to any preexisting condition provision; and 11 (D) concerning the benefits and premiums available under 12 all health care insurance plans for which the small employer qualifies. 13 * Sec. 85. AS 21.56.120(d) is amended to read: 14 (d) The director may adopt regulations to implement the provisions of this 15 section and to ensure that rating practices used by small employer insurers are 16 consistent with the purposes of this chapter, including ensuring that differences in rates 17 charged for health care insurance [BENEFIT] plans by small employer insurers are 18 reasonable and reflect objective differences in plan design, not including differences 19 due to the nature of the groups assumed to select particular health care insurance 20 [BENEFIT] plans. 21 * Sec. 86. AS 21.56.140 is repealed and reenacted to read: 22 Sec. 21.56.140. Required offer of coverage. (a) Except as provided under 23 AS 21.56.160, a small employer insurer shall, as a condition of transacting business 24 in this state with small employers, offer to small employers all health care insurance 25 plans the small employer actively markets to small employers in this state, including 26 a basic health care insurance plan and a standard health care insurance plan. 27 (b) A small employer insurer shall issue a health care insurance plan to a small 28 employer that applies for a plan and shall accept for enrollment under the health care 29 insurer coverage all eligible employees and their dependents who apply for enrollment 30 during the period in which the employee first becomes eligible to enroll under the 31 terms of the plan. A small employer insurer may not place a restriction on an eligible
01 employee or dependent with respect to being a participant or beneficiary that is 02 inconsistent with AS 21.54.100. 03 (c) A small employer insurer may not increase a requirement for minimum 04 employee participation or for minimum employer contribution applicable to a small 05 employer at any time after the small employer has been accepted for coverage, except 06 that a small employer insurer may vary application of minimum participation and 07 employer contribution requirements by the size of the small employer group. 08 (d) If a small employer insurer offers coverage to a small employer, the small 09 employer insurer shall offer coverage to all of the eligible employees of the small 10 employer and their dependents. A small employer insurer may not offer coverage to 11 only certain individuals in a small employer group or to only part of the group, except 12 in the case of late enrollees as provided in AS 21.54.110(d). 13 (e) The small employer insurer shall apply this section uniformly to all small 14 employers without regard to the claims experience of the small employers and their 15 employees and dependents or a health status factor of an employee or dependent. 16 (f) A small employer insurer may not, directly or indirectly, encourage or 17 direct small employers to refrain from filing an application for coverage with a small 18 employer insurer or to seek coverage from another insurer because of a health status 19 factor, the claims experience, the industry, the occupation, or the geographic location 20 of the small employer. 21 (g) Except as provided in AS 21.54.110, a small employer insurer may not, by 22 a rider or amendment applicable to a specific individual, restrict or exclude coverage 23 or benefits by type of illness, treatment, medical condition, or service otherwise 24 covered by the plan. 25 (h) This section does not apply to health care insurance plans offered by a 26 small employer insurer if the insurer makes the health care insurance plans available 27 in the small employer market only through a bona fide association. 28 * Sec. 87. AS 21.56.160 is repealed and reenacted to read: 29 Sec. 21.56.160. Exemption from required offer of coverage. (a) A small 30 employer insurer offering health care insurance through a network plan is not required 31 to offer or renew coverage or accept applications under AS 21.56.140(a) if
01 (1) the small employer does not have eligible employees or dependents 02 who live, work, or reside in the service area for the network plan; or 03 (2) the small employer insurer demonstrates to the director that the 04 small employer insurer 05 (A) will not have the capacity to deliver services adequately to 06 eligible employees or dependents of additional groups because of the small 07 employer insurer's obligation to existing group contract holders and covered 08 employees or dependents; and 09 (B) applies this subsection uniformly without regard to the 10 claims experience of the employers and their employees and dependents or to 11 a health status factor relating to the employees and dependents. 12 (b) A small employer insurer offering health care insurance is not required to 13 offer or accept applications under AS 21.56.140(a) if 14 (1) the small employer insurer is only maintaining in-force business and 15 has ceased enrolling new employer groups on or before January 1, 1993; or 16 (2) the certificate of authority or bylaws of an insurer does not permit 17 the insurer to issue coverage on a marketwide basis; however, an insurer described in 18 this paragraph shall comply with AS 21.56.140 regarding small employers that meet 19 the requirements of the insurer's certificate of authority or bylaws. 20 (c) A small employer insurer who denies health care insurance coverage in a 21 service area under (a) of this section may not offer coverage in the small employer 22 market within that service area for a period of 180 days after the date the coverage is 23 denied. 24 (d) If a small employer insurer demonstrates or the director determines under 25 AS 21.09.175 that a small employer insurer does not have the financial reserves 26 necessary to underwrite additional coverage, the small employer insurer may not offer 27 or renew health care insurance coverage in the small employer group market. The 28 small employer insurer may not reenter the small employer group market until the 29 director has determined that the insurer has sufficient financial reserves to underwrite 30 additional coverage. 31 * Sec. 88. AS 21.56.180 is repealed and reenacted to read:
01 Sec. 21.56.180. Fair marketing standards. (a) A small employer insurer 02 may not, directly or indirectly, enter into a contract, agreement, or arrangement with 03 an insurance producer, a managing general agent, or a third-party administrator that 04 provides for or results in the compensation paid to an insurance producer for the sale 05 of a health care insurance plan to vary based on the health status, claims experience, 06 industry, occupation, or geographic location of the small employer. This subsection 07 does not apply to a compensation arrangement that provides compensation to an 08 insurance producer, a managing general agent, or a third-party administrator on the 09 basis of a percentage of premium that does not vary based on the health status, claims 10 experience, industry, occupation, or geographic area of the small employer. 11 (b) A small employer insurer shall provide reasonable compensation, as 12 provided under the plan of operation of the program, to an insurance producer, a 13 managing general agent, or a third-party administrator, if any, for the sale of a basic 14 or standard health care insurance plan. 15 (c) A small employer insurer, an insurance producer, a managing general 16 agent, or a third-party administrator may not induce or otherwise encourage a small 17 employer to separate or otherwise exclude an employee from health coverage or 18 benefits provided in connection with the employee's employment. 19 (d) A small employer insurer may only deny an application for coverage from 20 a small employer in writing, and the writing must state the reasons for the denial. 21 (e) The director may establish by regulation additional standards to provide for 22 the fair marketing of health care insurance plans to small employers in this state. 23 (f) A person who enters into a contract, agreement, or other arrangement with 24 a small employer insurer to provide administrative, marketing, or other services related 25 to the offering of health care insurance plans to small employers in this state is subject 26 to this section as if it were a small employer insurer. 27 (g) A violation of this section by a person is an unfair trade practice for 28 purposes of AS 21.36. 29 * Sec. 89. AS 21.56.190 is amended to read: 30 Sec. 21.56.190. Mandatory reissue of coverage. The director may adopt 31 regulations to require small employer insurers, as a condition of transacting business
01 with small employers in this state after July 1, 1993, to reissue a health care 02 insurance [BENEFIT] plan to a small employer who has had its health care insurance 03 [BENEFIT] plan terminated or not renewed by the insurer after January 1, 1993. The 04 director may prescribe the terms for the reissue of coverage that the director 05 determines are reasonable and necessary to provide continuity of coverage to small 06 employers. 07 * Sec. 90. AS 21.56.250 is repealed and reenacted to read: 08 Sec. 21.56.250. Definitions. In this chapter, 09 (1) "actuarial certification" means a written statement by a member of 10 the American Academy of Actuaries or another individual acceptable to the director 11 indicating that, based on the person's examination, including a review of the 12 appropriate records, actuarial assumptions, and methods used by the insurer in 13 establishing premium rates for applicable health insurance plans, a small employer 14 insurer is in compliance with the provisions of AS 21.56.120; 15 (2) "affiliated" means a person who directly or indirectly, through one 16 or more intermediaries, controls or is controlled by or is under common control with 17 a specified person; 18 (3) "base premium rate" means the lowest premium rate charged or that 19 could have been charged under the rating system by the small employer insurer to 20 small employers with similar case characteristics for health care insurance plans with 21 the same or similar coverage; 22 (4) "basic health care insurance plan" means a lower cost plan offered 23 under AS 21.56.140; 24 (5) "beneficiary" has the meaning given in AS 21.54.500; 25 (6) "board" means the board of directors of the Small Employer Health 26 Reinsurance Association; 27 (7) "bona fide association" has the meaning given in AS 21.54.500; 28 (8) "case characteristics" means demographic or other objective 29 characteristics of a small employer that are considered by the small employer insurer 30 in the determination of premium rates for the small employer, except that claim 31 experience, health status, and duration of coverage may not be case characteristics for
01 the purposes of this chapter; 02 (9) "committee" means the health benefit plan committee established 03 in AS 21.56.060; 04 (10) "eligible employee" means an employee who works on a full-time 05 basis, with a normal work week of 30 or more hours; "eligible employee" includes a 06 sole proprietor, a partner of a partnership, or an independent contractor if the sole 07 proprietor, partner, or contractor is included as an employee under a health care 08 insurance plan of a small employer, but does not include an employee who works on 09 a part-time, temporary, or substitute basis; 10 (11) "employee" has the meaning given in AS 21.54.500; 11 (12) "group market" has the meaning given in AS 21.54.500; 12 (13) "health care insurance plan" has the meaning given in 13 AS 21.54.500; 14 (14) "health care insurer" has the meaning given in AS 21.54.500; 15 (15) "health status factor" has the meaning given in AS 21.54.500; 16 (16) "index rate" means, for small employers with similar case 17 characteristics and plan designs as determined by the insurer for a rating period, the 18 arithmetic average of the applicable base premium rate and the corresponding highest 19 premium rate, 20 (17) "large employer" has the meaning given in AS 21.54.500; 21 (18) "late enrollee" has the meaning given in AS 21.54.500; 22 (19) "member" means a health care insurer; 23 (20) "network plan" has the meaning given in AS 21.54.500; 24 (21) "new business premium rate" means the lowest premium rate 25 charged or offered, or that could have been charged or offered, by the small employer 26 insurer to small employers with similar case characteristics for newly issued health 27 care insurance plans with the same or similar coverage; 28 (22) "plan of operation" means the plan of operation of the reinsurance 29 association adopted by the board under AS 21.56.040; 30 (23) "rating period" means the calendar period for which premium rates 31 established by a small employer insurer are assumed to be in effect;
01 (24) "reinsurance association" means the Small Employer Health 02 Reinsurance Association created in AS 21.56.010; 03 (25) "reinsuring insurer" means a small employer insurer participating 04 in the reinsurance association created in AS 21.56.010; 05 (26) "small employer" has the meaning given in AS 21.54.500; 06 (27) "small employer insurer" means a health care insurer offering, 07 issuing for delivery, delivering, or renewing health care insurance to small employers 08 in the state; 09 (28) "standard health care insurance plan" means a health care 10 insurance plan offered under AS 21.56.140 that includes more comprehensive benefits 11 than under a basic health care insurance plan. 12 * Sec. 91. AS 21.66.110(a) is amended to read: 13 (a) Each [ANNUALLY EACH] title insurance company shall pay [ON OR 14 BEFORE MARCH 1,] a tax of one percent of the amount of gross title insurance 15 premiums received by it, including as premium income received from guaranteed 16 certificates of title and other guarantees of title [DURING THE PRECEDING 17 CALENDAR YEAR] covering property in this state, as shown by its annual statement 18 to the director. The director shall specify the due dates and the method of 19 payment. 20 * Sec. 92. AS 21.66.390(a) is amended to read: 21 (a) A title insurance company shall make rates that are not excessive or 22 inadequate, [AND] that do not unfairly discriminate between risks in this state that 23 involve essentially the same exposure to loss and expense elements, and that give due 24 consideration to 25 (1) the desirability for stability of rate structures; 26 (2) the necessity of assuring the financial solvency of title insurance 27 companies in periods of economic depression by encouraging growth in assets of title 28 insurance companies in periods of high business activity; [AND] 29 (3) the necessity for assuring a reasonable margin of underwriting and 30 operating profit; and 31 (4) investment income.
01 * Sec. 93. AS 21.69.310(a) is amended to read: 02 (a) Meetings of stockholders or members of a domestic insurer shall be held 03 in the city or town of its principal office or place of business in this state. The 04 meetings may be held, for good cause, in another location within the state upon 05 approval of the director. 06 * Sec. 94. AS 21.69.520(a) is amended to read: 07 (a) Subject to the director's prior written approval, a [A] domestic stock 08 or mutual insurer may borrow money to defray the expenses of its organization or [,] 09 provide it with surplus funds [, OR FOR ANY PURPOSE OF ITS BUSINESS,] upon 10 a written agreement that the money is required to be repaid only out of the insurer's 11 surplus in excess of that stipulated in the agreement. The agreement may provide for 12 interest not exceeding six per cent a year, which interest may or may not constitute a 13 liability of the insurer as to its funds other than the excess of surplus, as stipulated in 14 the agreement. A commission or promotion expense may not be paid in connection 15 with the loan. 16 * Sec. 95. AS 21.75.045(a) is amended to read: 17 (a) A person may not act in the capacity of attorney-in-fact for a subscriber 18 regarding a subject that is resident, located, or to be performed in this state or for a 19 reciprocal insurer licensed to do business in this state unless the person is licensed 20 under this chapter. The director may adopt regulations that establish qualifications for 21 being licensed as an attorney-in-fact. The attorney-in-fact for a [DOMESTIC] 22 reciprocal insurer [TRANSACTING ALL OF ITS INSURANCE ACTIVITIES ON A 23 SUBJECT RESIDENT, LOCATED, AND TO BE PERFORMED IN THIS STATE] 24 is exempt from licensing under this title if the attorney-in-fact 25 (1) is a wholly-owned subsidiary of the reciprocal; and 26 (2) does not act as attorney-in-fact for another unaffiliated reciprocal 27 insurer. 28 * Sec. 96. AS 21.76.020(b) is amended to read: 29 (b) By October 1 of each year, the administrator of a joint insurance 30 arrangement shall prepare and deliver to the Legislative Budget and Audit Committee 31 and the director a report showing the true and correct financial condition of the joint
01 insurance arrangement. The report must 02 (1) be attested to by the administrator and the board of directors; 03 (2) include an analysis, certified by a member of the American 04 Academy of Actuaries, of the sufficiency of the loss reserves; and 05 (3) be certified by a certified public accountant. 06 * Sec. 97. AS 21.76.080(e) is amended to read: 07 (e) Within 150 [60] days of the end of the fiscal year, the administrator shall 08 furnish a detailed report of the operation and condition of the fund to the board of 09 directors and the director of the division of insurance. [THE REPORT FURNISHED 10 TO THE DIRECTOR OF INSURANCE SHALL BE 11 (1) FILED IN THE GENERAL FORM AND CONTEXT 12 ACCEPTABLE TO THE DIRECTOR; 13 (2) IN ACCORDANCE WITH ACCOUNTING PRINCIPLES 14 ESTABLISHED UNDER THIS TITLE; AND 15 (3) AVAILABLE FOR PUBLIC INSPECTION.] 16 * Sec. 98. AS 21.78.293(b) is amended to read: 17 (b) The court shall review and adopt [MAY APPROVE, DISAPPROVE, OR 18 MODIFY] the receiver's report on claims by approving those claims that are 19 supported by substantial evidence and disapproving allowed claims that are not 20 supported by substantial evidence. Claims in a report that are not disapproved 21 [MODIFIED] by the court within a period of 120 [60] days following submission by 22 the receiver shall be treated by the receiver as allowed claims. 23 * Sec. 99. AS 21.84.590 is amended to read: 24 Sec. 21.84.590. Other provisions applicable. In addition to the provisions 25 contained in this chapter, the following provisions of this title apply to fraternal benefit 26 societies to the extent applicable and not in conflict with the express provisions of this 27 chapter and the reasonable implications of this chapter: 28 (1) AS 21.03; 29 (2) AS 21.06; 30 (3) AS 21.09.050 and 21.09.100; 31 (4) AS 21.09.200 and 21.09.205;
01 (5) AS 21.18; 02 (6) AS 21.21; 03 (7) AS 21.27; 04 (8) AS 21.33; 05 (9) AS 21.36; 06 (10) AS 21.42.290, 21.42.347, and 21.42.355; 07 (11) AS 21.53; 08 (12) AS 21.54; 09 (13) AS 21.56; 10 (14) AS 21.69.370 and 21.69.640; 11 (15) [(13)] AS 21.78; 12 (16) [(14)] AS 21.89.060. 13 * Sec. 100. AS 21.86.150 is amended by adding new subsections to read: 14 (g) A health maintenance organization that offers, renews, issues for delivery, 15 or delivers in this state a health care insurance plan in the group market that does not 16 impose a preexisting condition exclusion with respect to a particular coverage option 17 under the plan may impose an affiliation period for that coverage option only if the 18 affiliation period 19 (1) is applied uniformly without regard to a health status factor; 20 (2) does not exceed two months for new enrollees and three months for 21 late enrollees; 22 (3) begins on the enrollment date; and 23 (4) runs concurrently with any waiting period under the plan. 24 (h) A health maintenance organization may use a method other than a 25 preexisting condition exclusion or an affiliation period to lessen the risk of adverse 26 selection only with prior written approval of the director. 27 * Sec. 101. AS 21.86.260(a) is amended to read: 28 (a) Except as provided in AS 21.36, AS 21.42, AS 21.54, AS 21.56 and in this 29 chapter, this title does not apply to a health maintenance organization that obtains a 30 certificate of authority under this chapter. This subsection does not apply to an insurer 31 licensed under AS 21.09 or a hospital or medical service corporation licensed under
01 AS 21.87 except with respect to its health maintenance organization activities 02 authorized by and regulated under this chapter. 03 * Sec. 102. AS 21.86.900 is amended by adding new paragraphs to read: 04 (10) "affiliation period" means a period of time under a contract with 05 a health maintenance organization 06 (A) that must expire before coverage becomes effective; 07 (B) during which the health maintenance organization is not 08 required to provide health care services or benefits; and 09 (C) for which no premium is charged to the participant or 10 beneficiary for coverage during the period; 11 (11) "beneficiary" has the meaning given in AS 21.54.500; 12 (12) "enrollment date" has the meaning given in AS 21.54.500; 13 (13) "group market" has the meaning given in AS 21.54.500; 14 (14) "health status factor" has the meaning given in AS 21.54.500; 15 (15) "participant" has the meaning given in AS 21.54.500; 16 (16) "preexisting condition exclusion" has the meaning given in 17 AS 21.54.500; 18 (17) "waiting period" has the meaning given in AS 21.54.500. 19 * Sec. 103. AS 21.87.140(c) is amended to read: 20 (c) Each service agreement shall further effectively provide in substance that 21 (1) the participant provider shall be compensated for services rendered 22 to a subscriber in accordance with terms [A SCHEDULE OF FEES] contained in the 23 agreement or attached to and made a part of the agreement [,] and that the participant 24 provider may not request or receive from the service corporation compensation for the 25 services that [WHICH] is not in accord with the terms [SCHEDULE]; 26 (2) compensation for services may be prorated and settled under the 27 circumstances and in the manner referred to in AS 21.87.300; 28 (3) if the participant provider withdraws from the agreement, the 29 withdrawal may not be effective as to a subscriber's contract in force on the date of 30 the withdrawal until the termination of the subscriber's contract or the next anniversary 31 of the subscriber's contract, whichever date is the earlier.
01 * Sec. 104. AS 21.87.150(c) is amended to read: 02 (c) Each service agreement must further effectively in substance provide that 03 (1) the participant hospitals shall be compensated for services rendered 04 to a subscriber in accordance with terms [A SCHEDULE OF CHARGES] contained 05 in the agreement or attached to and made a part of the agreement [,] and that the 06 hospital may not request or receive from the service corporation compensation for the 07 services that is not in accord with the terms [SCHEDULE]; 08 (2) compensation for services may be prorated and settled under the 09 circumstances and in the manner referred to in AS 21.87.300; 10 (3) if the participant hospital withdraws from the agreement, the 11 withdrawal may not be effective as to a subscriber's contract in force on the date of 12 the withdrawal until the termination of the subscriber's contract or the next anniversary 13 of the subscriber's contract, whichever date is the earlier. 14 * Sec. 105. AS 21.87.180(a) is amended to read: 15 (a) A service corporation may not issue or use a basic form of service 16 agreement or subscriber's contract, or application, identification, supplement, or 17 endorsement to be connected with the agreement or contract, until the form has been 18 filed with and approved by the director. This provision does not apply to riders 19 [AGREEMENTS, CONTRACTS, APPLICATIONS, IDENTIFICATION 20 SUPPLEMENTS], endorsements, or other forms of unique character designed for and 21 used with relation to a particular subject [SET OF CIRCUMSTANCES]. 22 * Sec. 106. AS 21.87.190(b) is amended to read: 23 (b) The service corporation shall, before use, file with the director (1) a 24 schedule of subscription rates, fees, or payments of any kind to be charged subscribers; 25 (2) every rating manual, schedule, plan, rule, or formula; and (3) [SHALL FILE] 26 before use, any modification to the rating manual, schedule, plan, rule, or formula. 27 Each filing must state the effective date and must provide a comprehensive 28 description of the coverage. The director may withhold the rating formula from 29 public inspection for as long as the director determines that withholding the 30 rating formula is necessary to protect the service corporation against unwarranted 31 injury or is in the public interest [EVERY PROPOSED CHANGE OR
01 MODIFICATION IN THE RATES, FEES, OR PAYMENTS]. 02 * Sec. 107. AS 21.87.200 is repealed and reenacted to read: 03 Sec. 21.87.200. Reserves. In addition to the surplus fund provided for in 04 AS 21.87.210, each service corporation shall establish and maintain unimpaired 05 reserves and liabilities required under AS 21.18.050. 06 * Sec. 108. AS 21.87.340 is amended to read: 07 Sec. 21.87.340. Other provisions applicable. In addition to the provisions 08 contained or referred to previously in this chapter, the following chapters and 09 provisions of this title also apply with respect to service corporations to the extent 10 applicable and not in conflict with the express provisions of this chapter and the 11 reasonable implications of the express provisions, and, for the purposes of the 12 application, the corporations shall be considered to be mutual "insurers": 13 (1) AS 21.03; 14 (2) AS 21.06; 15 (3) AS 21.09, except AS 21.09.090; 16 (4) AS 21.18.010; 17 (5) AS 21.18.030; 18 (6) AS 21.18.040; 19 (7) AS 21.18.120; 20 (8) AS 21.21.321; 21 (9) AS 21.36; 22 (10) AS 21.42.345 - 21.42.365 and 21.42.375 - 21.42.395 [, 21.42.375, 23 21.42.380, AND 21.42.385]; 24 (11) AS 21.51.120; 25 (12) AS 21.53; 26 (13) AS 21.54 [AS 21.54.020]; 27 (14) AS 21.56; 28 (15) AS 21.69.400; 29 (16) AS 21.69.520; 30 (17) AS 21.69.600, 21.69.620, and 21.69.630; 31 (18) AS 21.78;
01 (19) AS 21.89.040; 02 (20) AS 21.89.060; 03 (21) AS 21.90. 04 * Sec. 109. AS 21.89.020(f) is amended to read: 05 (f) An automobile liability insurance policy must provide 06 (1) that all expenses and fees, not including counsel fees or adjuster 07 fees, incurred because of arbitration or mediation shall be paid as determined by the 08 arbitrator; 09 (2) liability coverage in the amount set out in AS 28.22.101(d) for 10 motor vehicles rented in the United States or Canada by a person insured under the 11 policy; 12 (3) physical damage coverage for motor vehicles rented in the United 13 States or Canada, if the policy provides physical damage coverage; if the insured 14 declines physical damage coverage, the insurer shall offer physical damage coverage 15 for rented vehicles; 16 (4) that payments from applicable coverage provided under (2) and 17 (3) of this subsection will be made in the following order of priority: 18 (A) from a policy or coverage purchased by the operator 19 from the person who has the vehicle available for rent; 20 (B) from a policy or coverage covering the operator of a 21 rented vehicle but not purchased from the person who has the vehicle 22 available for rent; and 23 (C) from a policy or coverage of the person who has the 24 vehicle available for rent. 25 * Sec. 110. AS 21.89.020(g) is amended to read: 26 (g) An insurance company offering automobile liability insurance in this state 27 shall offer a short term policy valid for no more than seven days. The coverage 28 available for the short term policy must be comparable to coverage available for longer 29 term policies. The provisions of AS 21.36.210 - 21.36.310 do not apply to short 30 term policies issued under this subsection. 31 * Sec. 111. AS 21.90.900(29) is amended to read:
01 (29) "policy" means the written contract of or written agreement for or 02 effecting insurance, by whatever name called, and includes all clauses, riders, 03 endorsements, and papers attached to it and a part of it; for a group, trust, 04 association, or similar entity, "policy" also means a certificate or other evidence 05 of insurance that establishes the written contract of or written agreement for or 06 effecting insurance for an insured or other beneficiary of the entity; 07 * Sec. 112. AS 21.90.900 is amended by adding new paragraphs to read: 08 (41) "certified financial statement" means a financial statement upon 09 which an independent certified public accountant, or an accountant holding a 10 substantially equivalent designation as determined by the director, renders or disclaims 11 an opinion after performance of an audit; 12 (42) "medical care" means amounts paid for 13 (A) diagnosis, care, mitigation, treatment, or prevention of 14 disease, or amounts paid for the purpose of affecting any structure or function 15 of the body; 16 (B) transportation primarily for and essential to medical care 17 described in (A) of this paragraph; and 18 (C) insurance covering medical care described in (A) and (B) 19 of this paragraph. 20 * Sec. 113. AS 21.42.375(d), 21.42.395(d); AS 21.56.110(b), 21.56.110(d), 21.56.130, 21 21.56.150, 21.56.170; and AS 21.81 are repealed. 22 * Sec. 114. AS 21.54.150, enacted by sec. 59 of this Act, is repealed. 23 * Sec. 115. Sections 3, 4, and 5, ch. 101, SLA 1992, are repealed. 24 * Sec. 116. Sections 4, 7, 9, 12, and 13, ch. 39, SLA 1993, are repealed. 25 * Sec. 117. AS 21.54.150, enacted by sec. 59 of this Act, takes effect January 1, 1998. 26 * Sec. 118. Sections 6, 7, 27 - 30, and 91 of this Act take effect January 1, 1998. 27 * Sec. 119. Except as provided in secs. 117, 118, and 120 of this Act, this Act takes effect 28 July 1, 1997. 29 * Sec. 120. Section 114 of this Act takes effect September 20, 2001.