CSSB 104(FIN) AM: "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; requiring that uninsured and underinsured motor vehicle insurance apply to claims of an insured even if other policy limits are not exhausted; 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) am 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; requiring that uninsured and 09 underinsured motor vehicle insurance apply to claims of an insured even if 10 other policy limits are not exhausted; repealing delayed provisions relating to 11 dental, vision, and hearing insurance in secs. 3 and 4, ch. 101, SLA 1992; 12 repealing delayed provisions relating to small employer health care insurance in 13 secs. 4, 7, 9, and 12, ch. 39, SLA 1993; repealing the delayed effective date in 14 sec. 5, ch. 101, SLA 1992, and in sec. 13, ch. 39, SLA 1993; and providing for
01 an effective date." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. PURPOSE. The purpose of secs. 3, 11, 12, 31 - 34, 43 - 57, 59 - 90, 99 - 04 102, 108, 111, 112, 115 - 119, and 122 of this Act is to implement the minimum federal 05 standards for health care insurance enacted under P.L. 104-191 (Health Insurance Portability 06 and Accountability Act of 1996). 07 * Sec. 2. AS 21.06.030 is amended by adding a new subsection to read: 08 (h) A volunteer member of an advisory committee who has been appointed by 09 the director under a provision of this title to assist and advise the director on issues or 10 matters concerning a specific area of insurance is not entitled to payment of per diem 11 or travel expenses authorized under AS 39.20.180. 12 * Sec. 3. AS 21.06.085 is amended to read: 13 Sec. 21.06.085. Uniform data and procedures for health claims. (a) The 14 director shall adopt by regulation uniform claims forms, uniform standards, and 15 uniform procedures for the processing of data relating to billing for and payment of 16 health care services provided to state residents. A health care insurer shall use the 17 uniform claims forms and comply with the uniform standards and procedures 18 established under this section. 19 (b) In this section, 20 (1) "health care services" has the meaning given in AS 21.86.900; 21 (2) ["HEALTH INSURANCE" HAS THE MEANING GIVEN IN 22 AS 21.12.050; 23 (3)] "health care insurer" has the meaning given in AS 21.54.500 24 [MEANS AN INSURER TRANSACTING THE BUSINESS OF HEALTH 25 INSURANCE, A HEALTH MAINTENANCE ORGANIZATION UNDER AS 21.86, 26 A HOSPITAL SERVICE CORPORATION UNDER AS 21.87, A MEDICAL 27 SERVICE CORPORATION UNDER AS 21.87, OR A COMBINED MEDICAL 28 SERVICE AND HOSPITAL SERVICE CORPORATION UNDER AS 21.87]. 29 * Sec. 4. AS 21.06.110 is amended to read: 30 Sec. 21.06.110. Director's annual report. As early in each calendar year as 31 is reasonably possible, the director shall prepare and deliver an annual report to the
01 commissioner, who shall notify the legislature that the report is available, showing, 02 with respect to the preceding calendar year, 03 (1) a list of the authorized insurers transacting insurance in this state, 04 with a summary of their financial statement as the director considers appropriate; 05 (2) the name of each insurer whose certificate of authority was 06 surrendered, suspended, or revoked [BUSINESS WAS CLOSED] during the year 07 and [,] the cause of surrender, suspension, or revocation [THE CLOSING, AND 08 THE AMOUNT OF ASCERTAINABLE ASSETS AND LIABILITIES OF EACH 09 CLOSED BUSINESS]; 10 (3) the name of each insurer authorized to do business in this state 11 against which delinquency or similar proceedings were instituted [,] and, if against an 12 insurer domiciled in this state, a concise statement of the facts with respect to each 13 proceeding and its present status; 14 (4) a statement in regard to examination of rating organizations, 15 advisory organizations, joint underwriters, and joint reinsurers as required by 16 AS 21.39.120; 17 (5) the receipt and expenses of the division for the year; 18 (6) recommendations of the director as to amendments or 19 supplementation of laws affecting insurance [,] or the office of director; 20 (7) other pertinent information and matters the director considers 21 proper. 22 * Sec. 5. AS 21.06.160(a) is amended to read: 23 (a) Each person examined, other than [AS TO] examinations under 24 AS 21.06.130, shall pay a reasonable rate calculated on [ALL THE COSTS OF, 25 AND EXPENSES INCURRED BY DIVISION STAFF EXAMINERS, INCLUDING] 26 salary, [AND] benefit costs, and estimated division overhead for time spent directly 27 or indirectly related to the examination. Each person examined, other than 28 examinations under AS 21.06.130, shall pay actual out-of-pocket business 29 expenses, including travel expenses, incurred by division staff examiners [,] and 30 shall pay the compensation of a contract examiner, to be set at a reasonable customary 31 rate, for conducting the examination [,] upon presentation of a detailed account of the
01 charges and expenses by the director or under an order of the director. The 02 accounting may either be presented periodically during the course of the examination 03 or at the termination of the examination. A person may not pay and an examiner may 04 not accept additional compensation for an examination. 05 * Sec. 6. AS 21.09.210(b) is amended to read: 06 (b) Each insurer, and each formerly authorized insurer with respect to 07 premiums received while an authorized insurer in this state, shall pay a tax on the total 08 direct premium income received during the year ending on the preceding December 09 31 and paid for the insurance of property or risks resident or located in the state, other 10 than wet marine and transportation insurance, after deducting from the total direct 11 premium income the applicable cancellations, returned premiums, the unabsorbed 12 portion of any deposit premium, all policy dividends, unabsorbed premiums refunded 13 to policyholders, refunds, savings, savings coupons, and other similar returns paid or 14 credited to policyholders with respect to their policies. No deductions may be made 15 of cash surrender value of policies. Considerations received on annuity contracts are 16 not included in the direct premium income and are not subject to tax. The tax shall be 17 paid to the director at least annually but not more often than once each quarter on 18 the dates specified by the director. The method of payment must be by the 19 electronic or other payment method specified by the director. The tax [OR 20 BEFORE MARCH 1, AND] is computed at the rate of 21 (1) for domestic and foreign insurers, except hospital and medical 22 service corporations, 2.7 percent; 23 (2) for hospital and medical service corporations, six percent of their 24 gross premiums less claims paid. 25 * Sec. 7. AS 21.09.210(d) is amended to read: 26 (d) An authorized insurer shall, with respect to all wet marine and 27 transportation contracts written in this state during the preceding calendar year, [ON 28 OR BEFORE MARCH 1 OF EACH YEAR,] pay to the director a tax of three-quarters 29 of one percent on its gross underwriting profit. The director shall specify the dates 30 that payment is due and the electronic or other method by which payment is to 31 be made. The gross underwriting profit is computed by deducting, from the net
01 premiums on wet marine and transportation insurance contracts, the net losses paid 02 during the calendar year under the contracts. In the case of an insurer issuing 03 participating contracts, the gross underwriting profit may not include, for computation 04 of the tax prescribed by this section, the amounts refunded or paid as participation 05 dividends by the insurers to the holders of the contracts. In this subsection, 06 (1) "net losses" means gross losses less salvage and recoveries on 07 reinsurance ceded; 08 (2) "net premiums" means gross premiums less all return premiums and 09 premiums for reinsurance. 10 * Sec. 8. AS 21.09 is amended by adding a new section to read: 11 Sec. 21.09.245. Required notice. (a) If an insurer intends to change the 12 insurer's name, domicile, or other information provided on the certificate of authority, 13 the insurer shall file a notice of the change with the director within 30 days before or 14 after the intended change takes effect. 15 (b) If an insurer changes the insurer's articles of incorporation, bylaws, 16 business address, phone number, or other information maintained by the director, the 17 insurer shall file a notice of the change with the director not later than 90 days after 18 the effective date of the change. 19 (c) Failure by an insurer to provide notification required by this section may 20 result in a civil penalty of up to $1,000 and, additionally, a civil penalty of up to $50 21 for each day that the information is withheld from the director. 22 * Sec. 9. AS 21.09 is amended by adding a new section to read: 23 Sec. 21.09.320. Maintenance of records. (a) An insurer domiciled in a 24 jurisdiction other than this state shall keep at its principal place of business a complete 25 record of its assets, transactions, and affairs in accordance with the methods and 26 systems that are customary or suitable to the kind of insurance transacted. 27 (b) To meet the requirements of (a) of this section, the insurer shall keep the 28 records specified in AS 21.69.390(d) for 10 years from the date the record was created 29 or as required by the record maintenance requirements of the insurer's domicile 30 jurisdiction, whichever is longer. 31 * Sec. 10. AS 21.12.020(a)(4)(A)(iii) is amended to read:
01 (iii) in the case of a single assuming insurer, the trust 02 shall consist of trust money representing the assuming insurer's 03 liabilities attributable to business written in the United States and, in 04 addition, include a trust surplus of not less than $20,000,000; the single 05 assuming insurer shall make available to the director an annual 06 certification of the insurer's solvency [BY THE INSURER'S 07 DOMICILIARY REGULATOR AND] by an independent certified 08 public accountant or an accountant holding a substantially equivalent 09 designation as determined by the director; 10 * Sec. 11. AS 21.12.050 is amended to read: 11 Sec. 21.12.050. Health and health care insurance defined. Health insurance 12 is insurance of human beings (1) against bodily injury, disablement, or death by 13 accident or accidental means; (2) against the resulting expenses of the injury, 14 disablement, or death; (3) against disablement or expense resulting from sickness or 15 childbirth; (4) against expense incurred in prevention of sickness; (5) for dental care; 16 and (6) including every insurance that applies to injury, disablement, or death. 17 Transaction of health insurance includes disability insurance and stop-loss insurance 18 but does not include workers' compensation insurance. Health care insurance 19 described in (b) of this section is a type of health insurance under this subsection. 20 * Sec. 12. AS 21.15.050 is amended by adding new subsections to read: 21 (b) Health care insurance means that part of health insurance that provides 22 benefits for medical care whether provided directly, through reimbursement, or other 23 method. 24 (c) In this section, "stop-loss insurance" means insurance purchased by a self- 25 insured employer to cover benefits the employer incurs in excess of a preset limit. 26 * Sec. 13. AS 21.14.010(a) is amended to read: 27 (a) A life and health domestic insurer, property and casualty domestic insurer, 28 or other insurer required by the director shall, on or before March 1, submit to the 29 director a report of its risk based capital covering the previous calendar year [, IF 30 REQUIRED BY THE DIRECTOR]. The report must be in a form and contain the 31 information required by risk based capital instructions. A domestic insurer required
01 to submit a report under this subsection shall file the report with 02 (1) the National Association of Insurance Commissioners; and 03 (2) the insurance regulatory agency in each state in which the insurer 04 is authorized to transact business [,] if the insurance regulatory agency has requested 05 the report in writing from the insurer; a report requested under this paragraph shall be 06 delivered 07 (A) not later than 15 days from the receipt of a request if the 08 report has already been filed with the director; or 09 (B) at the time the report is filed with the director, if the report 10 has not yet been filed with the director. 11 * Sec. 14. AS 21.14.200(18) is amended to read: 12 (18) "risk based capital instructions" means risk based capital 13 instructions for a life and health insurer or for a property and casualty insurer adopted 14 by order of [REGULATION BY] the director after an open meeting as provided 15 under AS 44.62.310 [AS 21.14.010]; 16 * Sec. 15. AS 21.18.050 is amended to read: 17 Sec. 21.18.050. Reserves and liabilities, in general. In a determination of the 18 financial condition of an insurer, capital stock and liabilities to be charged against its 19 assets shall include 20 (1) the amount of its capital stock outstanding, if any; 21 (2) the amount, estimated consistent with the provisions of this title, 22 necessary to pay all of its unpaid losses and claims incurred on or before the date of 23 statement, whether reported or unreported, together with the expenses of adjustment 24 or settlement; 25 (3) with reference to life and health insurance and annuity contracts, 26 (A) the amount of reserves on life insurance policies and 27 annuity contracts in force, valued according to the tables of mortality, rates of 28 interest, and methods adopted under this title that are applicable; 29 (B) reserves for disability benefits, for both active and disabled 30 lives; 31 (C) reserves for accidental death benefits;
01 (D) additional reserves that may be required by the director, 02 consistent with practice formulated or approved by the National Association of 03 Insurance Commissioners, on account of the insurance; 04 (4) with reference to health insurance, the amount of reserves required 05 under AS 21.18.080 - 21.18.086 [AS 21.18.080]; 06 (5) with reference to insurance other than specified in (3) and (4) of 07 this section, and other than title insurance, the amount of reserves equal to the 08 unearned portions of the gross premiums charged on policies in force, computed in 09 accordance with this chapter; 10 (6) taxes, expenses, and other obligations due or accrued at the date of 11 the statement. 12 * Sec. 16. AS 21.18.080 is repealed and reenacted to read: 13 Sec. 21.18.080. Reserve standards for health insurance. (a) The adequacy 14 of health insurance reserves must be determined based on the sum of policy reserves 15 determined under AS 21.18.082, claim reserves determined under AS 21.18.084, and 16 premium reserves determined under AS 21.18.086. 17 (b) Reserve adequacy must be determined by a prospective gross premium 18 valuation. For policies in force, in a claims status, or in a continuation of benefits 19 status on the valuation date, the gross premium valuation must take into account the 20 present value of all expected benefits unpaid, all expected expenses unpaid, and all 21 unearned or expected premiums, including expected future premium increases. 22 (c) A gross premium valuation must be performed whenever there is an 23 indication that reserves and future premiums may be insufficient to cover future claims 24 for a particular block of policies or for the entire health insurance block. If a reserve 25 inadequacy is determined to exist, the loss must be immediately recognized and 26 reserves increased to account for the inadequacy. The increased reserves will be 27 considered minimum reserves. 28 * Sec. 17. AS 21.18 is amended by adding new sections to read: 29 Sec. 21.18.082. Policy reserves for health insurance. (a) Except as provided 30 in (b) of this section, policy reserves are required for all individual and group health 31 insurance policies or groups of policies
01 (1) with level premiums or with a gross premium pricing structure at 02 time of issue that results in future benefits exceeding the corresponding future 03 valuation net premiums at any time; or 04 (2) for which gross premiums are restricted by contract, regulation, or 05 another reason that results in future gross premiums, reduced by expenses for 06 administration, commissions, and taxes, being insufficient to cover future claims. 07 (b) Policy reserves are not required for health insurance policies that cannot 08 be continued after one year from the date of issue. 09 (c) The structure of valuation net premiums used under a health insurance 10 policy must be consistent with the structure of gross premiums on the date the policy 11 is issued. 12 (d) For return of premium benefits, deferred cash benefits, policies with 13 premium rates that are not guaranteed, and where the effects of insurer underwriting 14 by policy duration are specifically used in the valuation morbidity standard, 15 termination rates that exceed the mortality rates in the tables required in (g)(2) of this 16 section may be used but may not exceed the lesser of 17 (1) 80 percent of the total termination rate used in the calculation of 18 gross premiums; or 19 (2) eight percent. 20 (e) The methods and procedures used to determine health insurance policy 21 reserves must be consistent with the methods and procedures used to determine claim 22 reserves for a health insurance policy. 23 (f) Negative reserves on a benefit may be offset against positive reserves for 24 other benefits in the same policy, but the total policy reserve with respect to all 25 benefits combined may not be less than zero. 26 (g) Except as provided in (d) and (h) - (k) of this section, policy reserves for 27 policies issued after July 1, 1997, must be determined based on 28 (1) a maximum interest rate equal to the maximum interest rate allowed 29 under AS 21.18.110 for the valuation of whole life insurance issued on the same date 30 as the health insurance policy; 31 (2) a termination assumption equal to the mortality table allowed under
01 AS 21.18.110 for the valuation of whole life insurance issued on the same date as the 02 health insurance policy or equal to a mortality table approved by the director for use 03 in determining the policy reserves; 04 (3) for long-term care policies issued after July 1, 1997, 05 (A) a mortality assumption equal to the 1983 Group Annuity 06 Mortality Table without projection; 07 (B) a lapse assumption for policy durations one through four 08 equal to the lesser of 80 percent of the voluntary lapse rate used in the 09 calculation of gross premiums or eight percent; and 10 (C) a lapse assumption for policy durations five and later of 100 11 percent of the voluntary lapse rate used in the calculation of the gross 12 premiums or four percent; 13 (4) a two-year full preliminary term method under which the terminal 14 reserve is zero on the first and second policy anniversary dates; 15 (5) a morbidity assumption for 16 (A) individual disability income insurance issued (i) after 17 December 31, 1997, equal to Tables A or B of the 1985 Commissioners' 18 Individual Disability Tables for policies; and (ii) before January 1, 1998, equal 19 to the 1964 or 1985 Commissioners' Individual Disability Tables; the insurer 20 shall indicate which morbidity table the insurer will use for all individual 21 disability income policies issued in a calendar year; 22 (B) group disability income insurance issued 23 (i) after December 31, 1997, equal to the 1987 24 Commissioners' Group Disability Table; and 25 (ii) before January 1, 1998, equal to the morbidity 26 assumption in use by the insurer before January 1, 1998; 27 (C) scheduled or fixed time period hospital, surgical, or 28 maternity benefit policies issued 29 (i) after December 31, 1997, equal to the 1974 Medical 30 Expense Table A from the Transactions of the Society of Actuaries, 31 Volume XXX; and
01 (ii) before January 1, 1998, equal to the morbidity 02 assumption in use by the insurer before January 1, 1998; 03 (D) cancer expense benefits for policies issued 04 (i) after December 31, 1997, equal to the 1985 National 05 Association of Insurance Commissioners Cancer Claim Cost Tables; and 06 (ii) before January 1, 1998, equal to the morbidity 07 assumption in use by the insurer before January 1, 1998; 08 (E) accidental death benefits for policies issued 09 (i) after December 31, 1997, equal to the 1959 10 accidental death benefit table; and 11 (ii) before January 1, 1998, equal to the morbidity 12 assumption in use by the insurer before January 1, 1998; or 13 (F) all other individual or group policy benefits equal to a 14 morbidity table established for reserve determination by an actuary qualified 15 to determine the morbidity table and approved by the director; the morbidity 16 table must contain a pattern of incurred claims cost that reflects the underlying 17 morbidity and may not be constructed for the primary purpose of minimizing 18 reserves. 19 (h) The reserve method for return of premium or other deferred cash benefits 20 must be a preliminary term method that is applied only in relation to the issue date of 21 the policy and is a 22 (1) one-year preliminary term method if benefits are provided before 23 the 20th policy anniversary; or 24 (2) two-year preliminary term method if the benefits are provided only 25 on or after the 20th policy anniversary. 26 (i) The reserve method for long-term care insurance must be calculated on a 27 (1) two-year full preliminary term method for a policy or certificate 28 issued on or before July 1, 1997; and 29 (2) one-year full preliminary term method for a policy or certificate 30 issued after July 1, 1997. 31 (j) Reserve adjustments due to rate changes, revised assumptions, or other
01 reasons for return of premium or other deferred cash benefits must be applied on the 02 effective date of the adoption of the reserve adjustment. 03 (k) An alternative method or basis of determining policy reserves may be used 04 if the aggregate policy reserve is not less than the aggregate policy reserves determined 05 under (c) - (j) of this section. 06 (l) An insurer shall annually review prospective policy liabilities on policies 07 valued by tabular reserves to determine the continuing adequacy and reasonableness 08 of the tabular reserves given future gross premiums. The insurer shall make 09 adjustments to the tabular reserves if the tests indicate that the basis of the reserves is 10 no longer adequate. 11 (m) Policy reserves that are valued based on the 1964 or 1985 Commissioners 12 Individual Disability Tables must include a provision for a waiver of premium benefit 13 with the minimum reserve for the benefit equal to the valuation net premium to be 14 waived. 15 (n) Policy reserves for long-term care insurance may not be less than the net 16 single premium for any nonforfeiture benefits provided by the policy or certificate. 17 Sec. 21.18.084. Claim reserves for health insurance. (a) Claim reserves are 18 required for all incurred and unpaid claims on all health insurance policies. 19 (b) Claim expense reserves are required for the estimated expense of settlement 20 of all incurred and unpaid claims. 21 (c) Claim reserves for prior valuation years must be tested for adequacy and 22 reasonableness using claim runoff schedules in accordance with the statutory annual 23 statement, including consideration of any residual unpaid liability. Claim reserve 24 adequacy must be determined in the aggregate. 25 (d) Claim reserves must be determined as follows: 26 (1) for policies that require policy reserves under AS 21.18.082(a), 27 based on a maximum interest rate equal to the maximum interest rate allowed under 28 AS 21.18.110 for the valuation of whole life insurance issued on the same date as the 29 date the claim was incurred; 30 (2) for policies that do not require policy reserves under 31 AS 21.18.082(b), based on a maximum interest rate equal to the maximum interest rate
01 allowed under AS 21.18.110 for the valuation of single premium immediate annuities 02 issued on the same date as the date the claim was incurred less 100 basis points; 03 (3) except as provided in (4) and (5) of this subsection, a morbidity 04 assumption for 05 (A) individual disability income insurance must be equal to the 06 morbidity assumption used in determining policy reserves under 07 AS 21.18.082(g)(5); 08 (B) group disability income insurance for policies issued 09 (i) after December 31, 1997, must be equal to the 1987 10 Commissioners Group Disability Table; and 11 (ii) before January 1, 1998, must be equal to the 12 morbidity assumption in use by the insurer before January 1, 1998; 13 (C) accidental death benefits must be equal to the actual amount 14 of claims incurred; and 15 (D) all other individual or group policy benefits must be equal 16 to a morbidity table approved by the director and established for reserve 17 determination by an actuary qualified to determine the morbidity table; 18 (4) for individual or group disability claims with a duration from 19 disablement of less than two years, morbidity assumptions may be based on the 20 insurer's experience if determined credible by the insurer or upon another basis 21 designed to place a sound value on the liabilities as determined by the insurer; 22 (5) if approved by the director, reserves for group disability income 23 claims with a duration from disablement of more than two years but less than five 24 years may be based on the insurer's experience for which the insurer maintains control 25 of underwriting and claim administration; request for approval to use this modified 26 reserve basis must include 27 (A) an analysis of the credibility of the experience; 28 (B) a description of how all the insurer's experience is proposed 29 to be used in setting the reserves; 30 (C) a description and quantification of the margins to be 31 included;
01 (D) a summary of the financial impact that the proposed plan 02 of modification would have on the insurer's last filed annual statement; 03 (E) a copy of the approval from the state of domicile; and 04 (F) all other information requested by the director; 05 (6) any generally accepted actuarial reserving method or other 06 reasonable method approved by the director may be used; the method used to estimate 07 liabilities may be an aggregate method; approximations based on groupings and 08 averages may also be used. 09 (e) Claim 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 Sec. 21.18.086. Premium reserves for health insurance. (a) Unearned 14 premium reserves must be established for the period of coverage for which premiums, 15 other than premiums paid in advance, have been paid beyond the date of valuation. 16 (b) Due and unpaid premiums that are carried as an asset in the annual 17 statement must be treated as premiums in force and are subject to the unearned 18 premium reserve requirements of this section. Unpaid commissions, premium taxes, 19 and costs of collection associated with due and unpaid premiums must be carried in 20 the annual statement as an offsetting liability. 21 (c) Gross premiums paid in advance for a period of coverage starting after the 22 next premium due date following the valuation date may be discounted to the valuation 23 date and must be held as a separate liability in the annual statement or as an addition 24 to the unearned premium reserve established in this section. 25 (d) The minimum unearned premium reserve for a policy is the pro rata 26 unearned modal premium that applies to the valuation period beyond the date of 27 valuation. If a policy reserve is required for a policy, the unearned modal premium 28 is the valuation net modal premium on the policy reserve. If no policy reserve is 29 required for a policy, the unearned modal premium is the gross modal premium for the 30 policy. 31 (e) The sum of the unearned premium and policy reserves for all policies may
01 not be less than the gross modal unearned premium reserve on all policies as of the 02 date of valuation. The total unearned premium and policy reserves may not be less 03 than the expected claims for the period after the valuation date represented by the 04 unearned premium reserve. 05 (f) An insurer may use approximations and estimates in determining premium 06 reserves, including groupings, averages, and aggregate estimates. The approximations 07 or estimates must be tested periodically and not less frequently than triennially to 08 determine adequacy. 09 (g) Premium reserves based on the 1964 or 1985 Commissioners' Individual 10 Disability Tables must include policies on premium waiver as in-force contracts and 11 establish a minimum reserve for a waiver of premium benefit equal to the unearned 12 modal valuation net premium being waived. 13 * Sec. 18. AS 21.21 is amended by adding a new section to read: 14 Sec. 21.21.410. Custodians. (a) A custodial agreement between an insurer and 15 an institution holding the assets, securities, or investments of the insurer must provide 16 that the custodian is obligated to indemnify the insurer for losses involving an 17 insurance company asset or security in the custodian's custody resulting from the 18 negligence or dishonesty of the custodian's officers, employees, or agents, or caused 19 by burglary, robbery, holdup, theft, or mysterious disappearance, including loss by 20 damage or destruction. The agreement must also provide that, in the event of a loss, 21 an asset or security will be promptly replaced or the value of the asset or security and 22 the value of a loss of rights or privileges resulting from the loss will be promptly 23 replaced. 24 (b) The custodian for assets, securities, or investments of the insurer may only 25 be a bank, trust company, or securities firm that is properly authorized by the insurer 26 and approved by the director. 27 * Sec. 19. AS 21.27.010(f) is amended to read: 28 (f) A person who performs management services under a written contract for 29 an admitted insurer is not required to be licensed as a managing general agent [,] if 30 (1) either 31 (A) the person is a United States manager of the United States
01 branch of an alien admitted insurer; or 02 (B) the person's compensation is not based on the volume of 03 premium written; and 04 (2) the person 05 (A) is a wholly-owned subsidiary of the admitted insurer; 06 (B) wholly owns the admitted insurer; or 07 (C) is a wholly-owned subsidiary of the insurance holding 08 company subject to AS 21.22 that owns or controls the admitted insurer. 09 * Sec. 20. AS 21.27.010(i) is amended to read: 10 (i) A person licensed under AS 21.75 as an attorney-in-fact, or a person who 11 meets the requirements for exemption from licensure under AS 21.75, is not 12 required to be additionally licensed under this chapter while acting on behalf of 13 subscribers and within the scope and authority of a subscribers agreement of a 14 reciprocal insurer or exchange licensed under AS 21.75. 15 * Sec. 21. AS 21.27.040(a) is amended to read: 16 (a) Application for a license shall be made to the director upon forms 17 prescribed by the director. As a part of or in connection with [,] the application, the 18 applicant shall furnish information concerning the applicant's identity, personal 19 history, experience, business record, purposes, [OF THE APPLICANT] and other 20 pertinent facts [CONCERNING THE APPLICANT] that the director may reasonably 21 require. The applicant shall declare under oath and subject to penalty of denial, 22 nonrenewal, suspension, or revocation of a license issued by the director that the 23 statements made in or in connection with the application are true, correct, and 24 complete to the best of the applicant's knowledge and belief. Payment of an 25 application fee established under AS 21.06.250 must be submitted with the application. 26 * Sec. 22. AS 21.27.370(b) is amended to read: 27 (b) A person [LICENSEE] may not be promised or paid, directly or indirectly, 28 compensation for procuring an application or for placing a kind or class of insurance 29 for which the person [LICENSEE] is not then licensed to procure or place or for 30 insurance that the person [LICENSEE] is prohibited by this title from procuring or 31 placing.
01 * Sec. 23. AS 21.27.390(b) is amended to read: 02 (b) Except as otherwise provided by law, a [A] temporary license may not 03 be in effect for more than 90 consecutive days [,] and may not be renewed or reissued 04 for more than one additional 90-day period. 05 * Sec. 24. AS 21.27.405(b) is amended to read: 06 (b) If the director determines that a person has violated this chapter, the 07 director shall serve an order upon the person charged requiring that person to cease 08 and desist from engaging in the act or practice. [SERVICE REQUIRED UNDER 09 THIS SUBSECTION SHALL BE BY MAIL WITH A CERTIFICATE OF MAILING 10 FROM THE UNITED STATES POSTAL SERVICE.] A person aggrieved by the 11 cease and desist order may demand a hearing under AS 21.06.170 - 21.06.240. 12 * Sec. 25. AS 21.27.440(a) is amended to read: 13 (a) In addition to any other penalty provided by law, a person that the director 14 determines under AS 21.06.170 - 21.06.240 has violated the provisions of this chapter 15 is subject to 16 (1) a civil penalty equal to the compensation promised, paid, or to be 17 paid, directly or indirectly, to a person [LICENSEE] in regard to each violation; 18 (2) either a civil penalty of not more than $10,000 for each violation 19 or a civil penalty of not more than $25,000 for each violation if the director determines 20 that the person wilfully violated the provisions of this chapter; and 21 (3) denial, nonrenewal, suspension, or revocation of a license. 22 * Sec. 26. AS 21.27.640(b)(5) is amended to read: 23 (5) provide in or with its application 24 (A) all basic organizational documents of the third-party 25 administrator, including articles of incorporation, articles of association, 26 partnership agreement, trade name certificate, trust agreement, shareholder 27 agreement, and other applicable documents and all endorsements to the 28 required documents; 29 (B) the bylaws, rules, regulations, or similar documents 30 regulating the internal affairs of the administrator; 31 (C) the names, mailing addresses, physical addresses, official
01 positions, and professional qualifications of persons who are responsible for the 02 conduct of affairs of the third-party administrator; including the members of the 03 board of directors, board of trustees, executive committee, or other governing 04 board or committee; the principal officers in the case of a corporation or the 05 partners or members in the case of partnership or association; shareholders 06 holding directly or indirectly 10 percent or more of the voting securities of the 07 third-party administrator; and any other person who exercises control or 08 influence over the affairs of the third-party administrator; 09 (D) certified financial statements for the prior two years, or for 10 each year and partial year that the applicant has been in business if less 11 than two years, prepared by an independent certified public accountant 12 establishing [THAT ESTABLISH] that the applicant is solvent, that the 13 applicant's system of accounting, internal control, and procedure is operating 14 effectively to provide reasonable assurance that money is promptly accounted 15 for and paid to the person entitled to the money, and any other information that 16 the director may require to review the current financial condition of the 17 applicant; and 18 (E) a statement describing the business plan, including 19 information on staffing levels and activities proposed in this state and in other 20 jurisdictions and providing details establishing the third-party administrator's 21 capability for providing a sufficient number of experienced and qualified 22 personnel in the areas of claims handling, underwriting, and record keeping; 23 * Sec. 27. AS 21.34.040(c)(4) is amended to read: 24 (4) a Lloyd's syndicate or an insurer belonging to a [OTHER] similar 25 group, including incorporated and individual unincorporated insurers 26 [UNDERWRITERS], may qualify if it maintains a trust fund jointly and severally 27 with the other members of the group in an amount not less than $50,000,000, as 28 security to the full amount, for the protection of all policyholders [ITS POLICY 29 HOLDERS] and creditors of each member of the group in the United States; the 30 incorporated members may not be engaged in any business other than underwriting as 31 a member of the group and shall be subject to the same level of solvency regulation
01 and control by the group's domiciliary regulator as are the unincorporated members; 02 the trust fund must consist of instruments of substantially the same character and 03 quality as those that are eligible investments for the capital and statutory reserves of 04 admitted insurers authorized to write like kinds of insurance in this state or of 05 irrevocable, clean, and unconditional letters of credit; the trust fund must have an 06 expiration date that at no time is less than five years; 07 * Sec. 28. AS 21.34.040(c)(5) is amended to read: 08 (5) each syndicate or insurer belonging to an insurance exchange 09 created by the laws of individual states may qualify if the insurance exchange [IT] 10 maintains capital and surplus, or the substantial equivalent, of not less than 11 $50,000,000 in the aggregate; for insurance exchanges that maintain funds for the 12 protection of all insurance exchange policyholders, each individual syndicate shall 13 maintain minimum capital and surplus, or the substantial equivalent, of not less than 14 $3,000,000; in the event the insurance exchange does not maintain funds for the 15 protection of all its policyholders, each individual syndicate shall meet the minimum 16 requirements of (1) or (2) of this subsection; 17 * Sec. 29. AS 21.34.180(b) is amended to read: 18 (b) The surplus lines tax is due on the date specified by the director and 19 may [SECOND DAY OF MARCH FOLLOWING THE CALENDAR YEAR IN 20 WHICH THE PREMIUM IS WRITTEN. THE TAX SHALL] be paid by electronic 21 or other means as specified by the director. The tax shall be [TO AND] reported 22 on forms prescribed by the director [,] or, upon the director's order, paid to and 23 reported on forms prescribed by the surplus lines association. 24 * Sec. 30. AS 21.34.190(a) is amended to read: 25 (a) The fee for filing the statement under AS 21.34.180(b) is an amount equal 26 to one percent on gross premium charged less any return premiums as reported on the 27 statement [DURING THE PRECEDING CALENDAR YEAR]. The surplus lines 28 broker shall pay the fee at the time of filing of the statement. 29 * Sec. 31. AS 21.36.095(a) is amended to read: 30 (a) A health care [AN] insurer may not deny enrollment of a child under the 31 health care insurance of the child's parent on the ground that the child
01 (1) was born out of wedlock; 02 (2) is not claimed as a dependent on the parent's federal income tax 03 return; 04 (3) does not reside with the parent; or 05 (4) does not reside in the health care insurer's service area. 06 * Sec. 32. AS 21.36.095(b) is amended to read: 07 (b) If a parent is required under AS 25.27.020(a)(9) or 25.27.060(c) to provide 08 medical support for a child and the parent is eligible for family health care insurance 09 coverage through an insurer, the parent's health care insurer 10 (1) shall allow the parent to enroll the child under the family health 11 care insurance coverage without regard to restrictions relating to enrollment periods 12 if the child is otherwise eligible; 13 (2) shall, if the parent fails to apply for enrollment of a child under (1) 14 of this subsection, enroll the child under the parent's family health care insurance 15 coverage upon application by the child's other parent or custodian, the child support 16 enforcement agency, or the Department of Health and Social Services; and 17 (3) may not disenroll or eliminate health care insurance coverage of 18 the child unless the insurer has received written evidence that 19 (A) the parent with the insurance coverage is no longer required 20 by court order or administrative order to provide the child's medical support; 21 or 22 (B) the child is or will be enrolled in comparable health care 23 insurance coverage through another insurer that will take effect not later than 24 the effective date of the disenrollment or elimination of coverage. 25 * Sec. 33. AS 21.36.095(c) is amended to read: 26 (c) A health care [AN] insurer who provides health care insurance coverage 27 of a child through family health care insurance coverage of a parent who does not 28 have sole physical custody of the child shall 29 (1) provide to the child's other parent or custodian the information that 30 may be necessary for the child to obtain benefits through the family health care 31 insurance coverage;
01 (2) allow the child's other parent or custodian, or the child's health care 02 provider with the parent's or custodian's approval, to submit claims for covered 03 services without the approval of the parent whose health care insurance covers the 04 child; and 05 (3) make payment on claims submitted under (2) of this subsection 06 directly to the child's other parent or custodian, the health care provider, or a state 07 agency to which the child's medical support rights have been assigned under 08 AS 25.27.120 or AS 47.07.025. 09 * Sec. 34. AS 21.36.095(e) is repealed and reenacted to read: 10 (e) In this section, "health care insurer" has the meaning given in 11 AS 21.54.500 and includes the Comprehensive Health Insurance Association as 12 described in AS 21.55.010. 13 * Sec. 35. AS 21.36 is amended by adding a new section to read: 14 Sec. 21.36.185. Maintenance of complaint handling records. An insurer 15 shall maintain a complete record of all the complaints received by the insurer since the 16 date of the insurer's last market conduct examination under AS 21.06.120 or for four 17 years, whichever occurs first. This record must indicate the total number of 18 complaints, the classification of each complaint by line of insurance, the nature of each 19 complaint, the disposition of each complaint, and the time it took to process each 20 complaint. For purposes of this section, "complaint" means any written 21 communication primarily expressing a grievance. 22 * Sec. 36. AS 21.36.240 is amended to read: 23 Sec. 21.36.240. Failure to renew. An insurer may only [NOT] fail to renew 24 a personal insurance policy on the policy's annual anniversary [IN FORCE FOR 25 LESS THAN 12 MONTHS]. An insurer may not fail to renew a policy unless a 26 written notice of nonrenewal is mailed to the named insured as required by 27 AS 21.36.260 at least 20 days for a personal insurance policy, and at least 45 days for 28 a business or commercial insurance policy, before the expiration date of the policy or 29 of the anniversary date of a policy written for a term longer than one year or with no 30 fixed expiration date. If notice of nonrenewal is not given as required by this section, 31 the existing policy shall continue until the insurer provides notice for the time period
01 required by this section for that policy. This section does not apply 02 (1) if the insurer has in good faith manifested its willingness to renew; 03 (2) in case of nonpayment of premium for the expiring policy; or 04 (3) if the insured fails to pay the premium as required by the insurer 05 for renewal. 06 * Sec. 37. AS 21.36.290 is amended to read: 07 Sec. 21.36.290. Policy period. (a) A [EXCEPT AS DESCRIBED IN (b) OF 08 THIS SECTION, A] policy with a policy period or term [OF LESS THAN 12 09 MONTHS SHALL, FOR THE PURPOSES OF AS 21.36.210 - 21.36.310, BE 10 CONSIDERED TO BE WRITTEN FOR A POLICY PERIOD OR TERM OF 12 11 MONTHS EXCEPT IN CASE OF CANCELLATION UNDER ANY OF THE 12 CIRCUMSTANCES SPECIFIED IN AS 21.36.210, AND A POLICY WRITTEN FOR 13 A TERM] longer than one year or a policy with no fixed expiration date shall be 14 considered to be written for successive policy periods or terms of one year, and 15 termination by an insurer effective on an anniversary date of the policy shall be 16 considered a failure to renew. 17 (b) The rate for [FOR DETERMINING THE APPROPRIATE RATE OR 18 PREMIUM,] a personal automobile insurance policy may not be changed more 19 frequently than once every [WITH A POLICY PERIOD OR TERM OF LESS THAN 20 SIX MONTHS SHALL, FOR THE PURPOSES OF AS 21.36.210 - 21.36.310, BE 21 CONSIDERED TO BE WRITTEN FOR A POLICY PERIOD OR TERM OF] six 22 months. 23 * Sec. 38. AS 21.36.390 is repealed and reenacted to read: 24 Sec. 21.36.390. Notice to director. (a) An insurer or licensee that has reason 25 to believe that a fraudulent claim has been made against it shall send the director a 26 report disclosing information that the director may require. 27 (b) An insurer or licensee that has reason to believe that an insurance producer 28 with which it is doing business is involved in a defalcation, embezzlement, or violation 29 of the provisions of AS 21.36.360 shall immediately send the director a report 30 disclosing the basis for that belief and any other information that the director may 31 require.
01 (c) An insurer or licensee, its employee or agent, or another person acting in 02 good faith is not civilly liable for damages resulting from the filing of the report or the 03 furnishing of information required by this section or by the director. 04 (d) The director shall investigate facts reported under this section and shall refer 05 facts indicating a violation of law to the appropriate prosecutor or agency. 06 * Sec. 39. AS 21.39.045(b) is amended to read: 07 (b) The director shall accept a rate filing for workers' compensation insurance 08 if the filing includes a reasonable method of recognizing differences in rates of pay for 09 the construction industry, and the method uses a credit scale that begins at an 10 amount equal to the average weekly wage in this state for the construction industry 11 as determined by the Department of Labor. 12 * Sec. 40. AS 21.42.130 is amended to read: 13 Sec. 21.42.130. Grounds for disapproval. The director shall disapprove a 14 form filed under AS 21.42.120 or withdraw a previous approval of the form [,] only 15 if the form 16 (1) is in any respect in violation of or does not comply with this title; 17 (2) contains or incorporates by reference, where incorporation is 18 permissible, an inconsistent, ambiguous, or misleading clause, or exception and 19 condition that deceptively affects the risk purported to be assumed in the general 20 coverage of the contract; 21 (3) has a title, heading, or other indication of its provisions that is 22 misleading; 23 (4) is printed or otherwise reproduced in a manner that renders a 24 provision of the form substantially illegible; 25 (5) provides benefits for Medicare supplement [SUPPLEMENTAL 26 AND INDIVIDUAL HEALTH] insurance that are unreasonable in relation to the 27 premium charged. 28 * Sec. 41. AS 21.42 is amended by adding a new section to read: 29 Sec. 21.42.205. Coordination of benefits. (a) Unless prohibited by federal 30 law, an insurer authorized under AS 21.09 to offer, issue for delivery, deliver, or renew 31 an individual or group health insurance policy for major medical coverage on an
01 expense incurred basis; a health maintenance organization authorized under AS 21.86 02 to offer a contract to provide major medical health care services on a prepaid basis; 03 or a service corporation authorized under AS 21.87 to offer or renew an individual or 04 group subscriber's contract for major medical coverage shall include a coordination of 05 benefits provision in a major medical policy or contract. 06 (b) The director may adopt regulations to implement this section. 07 * Sec. 42. AS 21.42 is amended by adding a new section to read: 08 Sec. 21.42.265. Effective date of coverage. Unless otherwise provided by 09 law, the effective date of a change relating to coverage under an insurance contract as 10 a result of a change to this title is the issue date for a new policy or the renewal date 11 for a renewal policy. 12 * Sec. 43. AS 21.42.345 is repealed and reenacted to read: 13 Sec. 21.42.345. Required provision for coverage of dependents. (a) A 14 health care insurance plan providing coverage for a dependent of a covered individual 15 shall, as to the dependent's coverage, also provide that the health care insurance 16 benefits applicable for dependents shall be payable with respect to 17 (1) a newly born child of a covered individual from the moment of 18 birth; 19 (2) a child adopted by a covered individual from the date of adoption; 20 (3) a child placed with a covered individual for adoption from the date 21 of placement for adoption; and 22 (4) a spouse from not later than the first day of the first month 23 beginning after the date the request for enrollment is received, but the insurer may 24 require that a request for enrollment be received within 31 days of the date of 25 marriage. 26 (b) The coverage for a newly born child under this section shall consist of 27 coverage of injury or sickness, including the necessary care and treatment of medically 28 diagnosed congenital defects and birth abnormalities. 29 (c) If payment of a specific charge is required to provide coverage for a child 30 under this section, the policy or contract may require that notification of birth of a 31 newly born child, adopted child, or child placed for adoption and payment of the
01 required premium or fees may be required to be furnished to the health care insurer 02 within 31 days after the date of birth, adoption, or placement for adoption in order to 03 have the coverage continue beyond the 31-day period. 04 (d) Under (a) - (c) of this section, a health care insurer shall offer coverage for 05 a family member, including a newly born child, adopted child, or child placed for 06 adoption, regardless of the marital status of the covered individual. 07 * Sec. 44. AS 21.42.347(a) is amended to read: 08 (a) A health care [AN] insurer who provides coverage for the costs of 09 childbirth shall also provide coverage for the costs of hospitalization or medical care 10 following childbirth for a period of not less than 11 (1) 48 hours after a vaginal birth; and 12 (2) 96 hours after a caesarean birth. 13 * Sec. 45. AS 21.42.347(b) is amended to read: 14 (b) Except as otherwise required to provide coverage specified under (a) of this 15 section, this section does not affect a payment arrangement entered into between a 16 hospital or health care provider [PHYSICIAN] and a health care [AN] insurer. 17 * Sec. 46. AS 21.42.347(d)(2) is repealed and reenacted to read: 18 (2) "health care insurer" has the meaning given in AS 21.54.500; 19 "health care insurer" includes the Comprehensive Health Insurance Association as 20 described in AS 21.55.010. 21 * Sec. 47. AS 21.42.353 is repealed and reenacted to read: 22 Sec. 21.42.353. Coverage for the costs of acupuncture treatment. Except 23 for a fraternal benefit society, a health care insurer that offers, issues for delivery, 24 delivers, or renews in this state a health care insurance plan may offer coverage for 25 services of an acupuncturist licensed under AS 08.06 if the plan covers acupuncture 26 treatment by a health care provider who is subject to other provisions of AS 08. 27 * Sec. 48. AS 21.42.355 is amended to read: 28 Sec. 21.42.355. Coverage for cost of services provided by nurse midwives. 29 (a) If a health care insurance plan or an excepted benefits policy or contract [AN 30 INDIVIDUAL OR GROUP HEALTH INSURANCE POLICY, SUBSCRIBER'S 31 CONTRACT, ENROLLEE CONTRACT, OR FRATERNAL BENEFIT SOCIETY
01 CERTIFICATE] provides indemnity for the cost of services of a physician provided 02 to women during pregnancy, childbirth, and the period after childbirth, indemnity in 03 a reasonable amount shall also be provided for the cost of an advanced nurse 04 practitioner who provides the same services. Indemnity may be provided under this 05 subsection only if the advanced nurse practitioner is certified to practice as a nurse 06 midwife in accordance with regulations adopted under AS 08.68.100(a), and the 07 services provided are within the scope of practice authorized by that certification. 08 (b) If a health care insurance plan or an excepted benefits policy or 09 contract [AN INDIVIDUAL OR GROUP HEALTH INSURANCE POLICY, 10 SUBSCRIBER'S CONTRACT, ENROLLEE CONTRACT, OR FRATERNAL 11 BENEFIT SOCIETY CERTIFICATE] provides for furnishing those services required 12 of a physician in the care of women during pregnancy, childbirth, and the period after 13 childbirth, the contract shall also provide that an advanced nurse practitioner may 14 furnish those same services instead of a physician. Services may be provided under 15 this subsection only if the advanced nurse practitioner is certified to practice as a nurse 16 midwife in accordance with regulations adopted under AS 08.68.100(a), and the 17 services provided are within the scope of practice authorized by that certification. 18 * Sec. 49. AS 21.42.365 is repealed and reenacted to read: 19 Sec. 21.42.365. Coverage for treatment of alcoholism or drug abuse. (a) 20 Except for a fraternal benefit society, a health care insurer that offers, issues for 21 delivery, delivers, or renews in this state a health care insurance plan, except for 22 catastrophic illness insurance, providing coverage for five or more employees of an 23 employer in the group market shall provide a covered employee or the employee's 24 dependent the following coverage for treatment of alcoholism or drug abuse: 25 (1) benefits of at least $9,600 over two consecutive benefit years; and 26 (2) lifetime benefits of at least $19,200. 27 (b) The benefits described in (a) of this section shall be adjusted 28 January 1, 1999, by the director and every three years thereafter to correspond with the 29 change in the medical care component of the consumer price index for all urban 30 consumers for the Anchorage Metropolitan Area compiled by the Bureau of Labor 31 Statistics, United States Department of Labor. The base year for the first adjustment
01 shall be calendar year 1996. 02 (c) A health care insurer that offers a health care insurance plan providing 03 coverage under this section may not 04 (1) require that a covered employee or the employee's dependent be 05 responsible for a deductible or copayment that is different for the determination of 06 benefits relating to treating alcoholism or drug abuse than for the determination of 07 benefits for treating another covered illness; 08 (2) use a different claim payment methodology in determining the 09 benefits relating to treating alcoholism or drug abuse than that used in determining the 10 benefits for treating another covered illness; 11 (3) require prenotification of treatment or a second opinion unless the 12 requirement is applicable to other covered major illnesses; 13 (4) limit coverage by provisions of the insurance contract that are not 14 applicable to other covered major illnesses, including provisions concerning preexisting 15 illnesses or provisions requiring that the exact date of onset be known; 16 (5) limit treatment services under the insurance contract to either an 17 inpatient or outpatient service; 18 (6) exclude from coverage the cost of medically necessary treatment, 19 including medical or psychiatric evaluation, activity or family therapy, counseling, or 20 prescription drugs or supplies received at an approved treatment facility; or 21 (7) deny reimbursement for actual services rendered solely because 22 treatment was interrupted or not completed. 23 (d) Notwithstanding (a) of this section, if an employer employs fewer than 20 24 permanent, full-time employees for each working day during each of at least 20 25 calendar workweeks in either the current calendar year or the preceding calendar year, 26 a health care insurer is not required to provide the coverage specified in (a) of this 27 section to the employer but shall offer that coverage to the employer as optional 28 coverage. 29 (e) In this section, 30 (1) "alcoholism or drug abuse" means an illness characterized by 31 (A) a physiological or psychological dependency, or both, on
01 alcoholic beverages or controlled substances as defined in AS 11.71.900; or 02 (B) habitual lack of self-control in using alcoholic beverages or 03 controlled substances to the extent that the person's health is substantially 04 impaired or the person's social or economic function is substantially disrupted; 05 (2) "approved treatment facility" means treatment in a facility that is 06 either approved under AS 47.37.140 or located and licensed for treatment of 07 alcoholism or drug abuse in another state; 08 (3) "catastrophic illness insurance" means a health care insurance plan 09 that provides benefits for hospital and medical care with a lifetime maximum benefit 10 per insured of at least $250,000 and that has a deductible of at least $5,000; 11 (4) "cost" means the least of the following: 12 (A) the actual charge for the treatment received for alcoholism 13 or drug abuse; 14 (B) the usual, customary, and reasonable charge for the 15 treatment as determined by the contract of coverage; or 16 (C) the charged agreed to by contract between the treatment 17 provider and the health care insurer; 18 (5) "treatment" means medical care, including detoxification, as an 19 inpatient or outpatient at an approved treatment facility. 20 * Sec. 50. AS 21.42.375(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 low-dose mammography screening under the schedule described 24 in (b) of this section if the plan covers mastectomies and prosthetic devices and 25 reconstructive surgery incident to mastectomies. 26 * Sec. 51. AS 21.42.375(b) is amended to read: 27 (b) The minimum coverage required under (a) of this section includes 28 (1) a baseline mammogram for a covered individual [PERSON] who 29 is at least 35 years of age but less than 40 years of age; 30 (2) one mammogram every two years for a covered individual 31 [PERSON] who is at least 40 years of age but less than 50 years of age;
01 (3) an annual mammogram for a covered individual [PERSON] who 02 is at least 50 years of age; 03 (4) a mammogram at any age for a covered individual [PERSON] with 04 a history of breast cancer or whose parent or sibling has a history of breast cancer, 05 upon referral by a physician. 06 * Sec. 52. AS 21.42.375(c) is amended to read: 07 (c) The coverage required by this section 08 (1) must be included in the health care insurance plan [POLICY OR 09 CONTRACT] on a basis that is not less favorable than for other radiological 10 examinations; 11 (2) may be subject to standard policy provisions applicable to other 12 benefits, such as deductible or copayment provisions. 13 * Sec. 53. AS 21.42.380 is repealed and reenacted to read: 14 Sec. 21.42.380. Coverage for treatment of phenylketonuria. (a) Except for 15 a fraternal benefit society, a health care insurer that offers, issues for delivery, delivers, 16 or renews in this state a health care insurance plan shall provide coverage under the 17 plan for the formulas necessary for the treatment of phenylketonuria. This subsection 18 does not apply to a health care insurance plan that the director has determined by order 19 should be excluded from this subsection. 20 (b) A health care insurer providing coverage under this section may impose 21 reasonable contract limitations but may not refuse coverage based on a preexisting 22 condition of phenylketonuria or require that an individual covered under the plan pay 23 a higher deductible or copayment for the cost of treating phenylketonuria than for the 24 cost of treating another condition or illness. 25 (c) In this section, "cost" means the lowest of the following: 26 (1) the actual charge for the treatment received for phenylketonuria; 27 (2) the usual, customary, and reasonable charge for the treatment as 28 determined by the contract of coverage; or 29 (3) the charge agreed to by contract between the treatment provider and 30 the health care insurer. 31 * Sec. 54. AS 21.42.385 is repealed and reenacted to read:
01 Sec. 21.42.385. Dental, vision, and hearing coverage. (a) Except for a 02 fraternal benefit society, a health care insurer that offers, issues for delivery, delivers, 03 or renews in this state a health care insurance plan, including a Medicare supplement 04 policy to the extent not prohibited by 42 U.S.C. 1395, shall offer to each plan sponsor 05 or individual minimum dental, vision, and hearing coverage described in (b) of this 06 section. Coverage required under this subsection may be offered as a rider or in a 07 separate policy. 08 (b) The minimum coverage required under (a) of this section may 09 (1) be provided under contract with another health care insurer; and 10 (2) not be less than the dental, vision, and hearing coverage provided 11 on January 1, 1992, to an individual entitled to medical benefits under AS 39.35.535 12 (public employees' retirement system of Alaska). 13 (c) This section does not apply to a health care insurer that has written less 14 than $300,000 in premiums in the previous calendar year. A health care insurer 15 exempt under this subsection shall disclose the exemption when offering, issuing for 16 delivery, delivering, or renewing a health care insurance plan or an excepted benefits 17 contract, and shall advise the individual covered under the plan that health care 18 insurers that have written more than $300,000 in premiums in the previous calendar 19 year are required to offer coverage under (a) and (b) of this section. 20 (d) This section does not require an insurer who offers only group insurance 21 coverage under AS 21.54 to offer dental, vision, and hearing coverage to an individual. 22 * Sec. 55. AS 21.42.395(a) is repealed and reenacted to read: 23 (a) Except for a fraternal benefit society, a health care insurer that offers, 24 issues for delivery, delivers, or renews in this state a health care insurance plan shall 25 provide coverage for the costs of prostate cancer screening tests as required under the 26 schedule described in (b) of this section and shall provide coverage for the costs of 27 cervical cancer screening tests as required under (c) of this section. The coverage 28 required by this section is subject to standard policy provisions applicable to other 29 benefits, including deductible or copayment provisions. If a physician recommends 30 that a covered individual undergo prostate cancer screening by taking a prostate 31 antigen blood test, coverage may not be denied because the covered individual has
01 already had a digital rectal examination and the examination results were negative. 02 * Sec. 56. AS 21.42 is amended by adding a new section to read: 03 Sec. 21.42.500. Definitions. In AS 21.42.345 - 21.42.395, 04 (1) "copayment" means the portion of medical care expenses in excess 05 of the deductible to be paid by a covered individual; 06 (2) "deductible" means the portion of medical care expenses for which 07 a covered individual must pay before benefits become payable; 08 (3) "excepted benefits" has the meaning given in AS 21.54.160; 09 (4) "fraternal benefit society" has the meaning given in AS 21.84.900; 10 (5) "health care insurance plan" has the meaning given in 11 AS 21.54.500; 12 (6) "health care insurer" has the meaning given in AS 21.54.500; 13 (7) "placed for adoption" has the meaning given in AS 21.54.500. 14 * Sec. 57. AS 21.53.090 is amended to read: 15 Sec. 21.53.090. Required regulations. The director shall adopt regulations 16 regarding 17 (1) the sale of long-term care insurance that provide minimum 18 standards for 19 (A) [(1)] terms of renewability; 20 (B) [(2)] initial and subsequent conditions of eligibility; 21 (C) [(3)] nonduplication of coverage provisions; 22 (D) [(4)] coverage of dependents; 23 (E) benefit triggers; 24 (F) [(5)] preexisting conditions and recurrent conditions; 25 (G) [(6)] termination of insurance; 26 (H) [(7)] continuation or conversion; 27 (I) [(8)] probationary periods, limitations, exceptions, 28 reductions, and elimination periods; [,] and 29 (J) requirements for replacement; 30 (2) standard definitions of long-term care insurance terms; 31 (3) nonforfeiture or minimum value requirements; and
01 (4) consumer protection standards, including standards for full and 02 fair disclosure setting out the manner and content of required disclosures. 03 * Sec. 58. AS 21.54 is amended by adding a new section to read: 04 Sec. 21.54.015. Rate requirements. Rates charged for a group health 05 insurance policy may not be excessive, inadequate, or unfairly discriminatory. 06 * Sec. 59. AS 21.54 is amended by adding new sections to read: 07 Article 2. Health Care Insurance Provisions. 08 Sec. 21.54.100. Unfair discrimination. (a) A health care insurer that offers, 09 issues for delivery, delivers, or renews a health care insurance plan in the group market 10 may not establish rules for eligibility, including continued eligibility and waiting 11 periods under the plan, for an individual or dependent of an individual based on 12 (1) health status; 13 (2) medical condition, including physical and mental illnesses; 14 (3) claims experience; 15 (4) receipt of health care; 16 (5) medical history; 17 (6) genetic information; 18 (7) evidence of insurability, including conditions arising from acts of 19 domestic violence; or 20 (8) disability. 21 (b) A health care insurer may not require an individual, as a condition of 22 enrollment or continued enrollment under a health care insurance plan offered in the 23 group market, to pay a premium, contribution, or policy fee greater than a premium, 24 contribution, or policy fee for a similarly situated individual already enrolled in the 25 plan on the basis of a health status factor for the individual or a dependent of the 26 individual. 27 Sec. 21.54.110. Preexisting condition exclusion. (a) A health care insurance 28 plan offered, issued for delivery, delivered, or renewed in the group market may not 29 contain a preexisting condition exclusion that 30 (1) relates to a condition, regardless of cause, for which medical advice, 31 diagnosis, care, or treatment was recommended or received more than six months
01 before the enrollment date; 02 (2) considers genetic information as a condition for which a preexisting 03 condition exclusion may be imposed in absence of a diagnosis of the condition related 04 to the information; 05 (3) extends for more than 12 months after the enrollment date of a 06 covered individual; or 07 (4) excludes a condition relating to pregnancy. 08 (b) A period of a preexisting condition exclusion permissible under (a) of this 09 section must be reduced by the aggregate of periods of creditable coverage, if any, as 10 determined in AS 21.54.120, applicable to the participant or beneficiary as of the 11 enrollment date. The aggregate of periods of creditable coverage is determined by 12 adding together all periods of creditable coverage before the enrollment date, excluding 13 periods of creditable coverage before a continuous break in coverage of more than 90 14 days. A waiting period or affiliation period may not be considered in determining the 15 90-day period. This subsection does not apply if an individual's most recent period 16 of creditable coverage ended on a date more than 90 days before the enrollment date. 17 This subsection does not preclude application of a waiting period to all new enrollees 18 under a health care insurance plan. 19 (c) A health care insurance plan offered, issued for delivery, delivered, or 20 renewed in this state in the group market may not apply a preexisting condition 21 exclusion to an individual who is (1) a newborn covered under creditable coverage as 22 of the last day of the 30-day period beginning with the date of birth; or (2) adopted 23 or placed for adoption before attaining 18 years of age and who is covered under 24 creditable coverage as of the last day of the 30-day period beginning with the date of 25 adoption or placement for adoption. This subsection does not apply to an individual 26 after the end of the first continuous 90-day period during all of which the individual 27 was not covered under creditable coverage. 28 (d) A health care insurance plan offered, issued for delivery, delivered, or 29 renewed in this state in the group market may exclude coverage for late enrollees for 30 the greater of 18 months or an 18-month preexisting condition exclusion. If both a 31 waiting period and a preexisting condition exclusion under (a) of this section are
01 applicable to a late enrollee, the combined period may not exceed 18 months from the 02 date the individual enrolls for coverage under a health care insurance plan. 03 Sec. 21.54.120. Creditable coverage. (a) A health care insurer that offers, 04 issues for delivery, delivers, or renews in this state a health care insurance plan in the 05 group market shall count a period of creditable coverage based on 06 (1) the standard method authorized by 42 U.S.C. 300gg (Health 07 Insurance Portability and Accountability Act of 1996) for determining creditable 08 coverage without regard to the specific benefits covered during the period; or 09 (2) an alternative method based on coverage of benefits within each of 10 several classes or categories of benefits specified in federal regulation if 11 (A) made on a uniform basis for all participants and 12 beneficiaries; and 13 (B) the insurer counts a period of creditable coverage with 14 respect to any class or category of benefits if any level of benefits is covered 15 within the class or category. 16 (b) A health care insurer that offers, issues for delivery, delivers, or renews in 17 this state a health care insurance plan in the group market shall provide a certification 18 of coverage 19 (1) at the time an individual ceases to be covered under a health care 20 insurance plan or becomes covered under a federal continuation provision; 21 (2) at the time an individual ceases to be covered under a federal 22 continuation provision; and 23 (3) upon request by an individual or on behalf of an individual with 24 24 months after the date coverage under the health care insurance plan or a federal 25 continuation provision ceases. 26 (c) A health care insurer that offers, issues for delivery, delivers, or renews in 27 this state a health care insurance plan in the group market shall establish periods of 28 creditable coverage with respect to an individual through certification under (b) of this 29 section or as specified in federal regulation. 30 (d) A health care insurer that offers, issues for delivery, delivers, or renews in 31 this state a health care insurance plan in the group market shall prominently state and
01 describe the effect of the health care insurer's election to count a period of creditable 02 coverage using a permissible alternative method 03 (1) in any disclosure statement concerning the health care insurance 04 plan or coverage; 05 (2) to each enrollee at the time of enrollment; and 06 (3) to each employer at the time of offer or sale of coverage. 07 (e) A health care insurer issuing a certification under (b) of this section shall 08 disclose information regarding coverage of classes and categories of health benefits 09 available under the health care insurer's plan at the request of an entity that 10 (1) enrolls an individual who has provided the certification of coverage; 11 (2) elects to count a period of creditable coverage according to a 12 permissible alternative method under (a)(2) of this section; and 13 (3) pays the health care insurer for the reasonable cost, if any, of 14 disclosing the information described in this subsection. 15 Sec. 21.54.130. Renewability, termination, and modification of coverage. 16 (a) Except for a multiple employer welfare arrangement, a health care insurer that 17 offers, issues for delivery, delivers, or renews in this state a health care insurance plan 18 in the group market shall renew or continue in force the coverage under the plan at the 19 option of the plan sponsor unless 20 (1) the plan sponsor has failed to pay premiums or contributions in 21 accordance with the terms of the health care insurance plan or the health care insurer 22 has not received timely premium payments; 23 (2) the plan sponsor has performed an act or practice that constitutes 24 fraud or made an intentional misrepresentation of material fact under the terms of the 25 coverage; 26 (3) the plan sponsor has failed to comply with a material plan provision 27 relating to minimum participation or employer contribution requirements; 28 (4) the health care insurer ceases to offer coverage in accordance with 29 (b) and (c) of this section; 30 (5) the health care insurer offers the plan only through a network plan 31 and there is no longer an enrollee in connection with the plan who lives, resides, or
01 works in the service area of the insurer or in the area for which the insurer is 02 authorized to transact business; or 03 (6) in the case of a plan that is made available only through a bona fide 04 association, the employer's membership in the association ceases and coverage is 05 terminated uniformly without regard to a health status factor of a covered individual. 06 (b) A health care insurer may discontinue offering a particular type of health 07 care insurance plan in the group market as permitted by this title if the insurer 08 (1) provides written notice of the decision to discontinue coverage to 09 all affected plan sponsors, participants, and beneficiaries and to the insurance 10 regulatory official in each state in which an affected covered employee or dependent 11 is known to reside; notice required under this paragraph must be given at least 180 12 days before the insurer fails to renew the health care insurance plan; 13 (2) provides written notice of the decision to discontinue coverage to 14 the director and to the insurance regulatory official in each state in which the insurer 15 is licensed at least 30 days before notice is given to the affected plan sponsors, 16 participants, and beneficiaries as described under (1) of this subsection; 17 (3) offers to each plan sponsor who is provided the particular type of 18 health care insurance plan the option to purchase another health care insurance plan 19 currently being offered by the insurer to plan sponsors in the same market in the state; 20 and 21 (4) acts uniformly without regard to the claims experience of those plan 22 sponsors or to any health status factor of a covered participant or beneficiary or a new 23 participant or beneficiary who may become eligible for coverage. 24 (c) A health care insurer may discontinue offering and renewing all health care 25 insurance plans in the group market as permitted by this title if the insurer 26 (1) provides written notice of the decision to discontinue coverage to 27 all affected plan sponsors, participants, and beneficiaries and to the insurance 28 regulatory official in each state in which an affected covered employee or dependent 29 is known to reside; notice required under this paragraph must be given at least 180 30 days before discontinuation of the plans; 31 (2) provides written notice of the decision to discontinue coverage to
01 the director and to the insurance regulatory official in each state in which the insurer 02 is licensed at least 30 days before the notice is given to the affected plan sponsors, 03 participants, and beneficiaries as described under (1) of this subsection; and 04 (3) does not issue a health care insurance plan in the group market in 05 this state for five years from the date the last group health care insurance plan was 06 discontinued. 07 (d) A health care insurer may modify a large employer's health care insurance 08 plan at the time of plan renewal. 09 (e) Except for coverage available only through a bona fide association, a health 10 care insurer may modify a small employer's health care insurance plan consistent with 11 this title at the time of plan renewal only if the modification is uniform for all small 12 employers with the same health care insurance plan. 13 (f) If a covered employee or dependent has committed a fraudulent act or 14 made an intentional misrepresentation of a material fact in regard to a health care 15 insurance plan, a health care insurer may terminate the coverage of the employee or 16 the dependent under the plan. 17 (g) For purposes of this section, a plan sponsor includes an employer member 18 of a bona fide association for a health care insurance plan made available by the health 19 care insurer only through a bona fide association. 20 Sec. 21.54.140. Renewability of coverage for a multiple employer welfare 21 arrangement. A health benefit plan that is a multiple employer welfare arrangement 22 subject to this title may not deny an employer whose employees are covered under the 23 plan continued access to the same or a different plan according to the terms of the 24 plan, except 25 (1) for nonpayment of contributions; 26 (2) for fraud or other intentional misrepresentation of material fact by 27 the employer; 28 (3) for noncompliance with material plan provisions; 29 (4) where the plan is ceasing to offer any coverage in a geographic 30 area; 31 (5) for a health benefit plan that offers benefits through a network plan
01 if 02 (A) there is no longer an individual enrolled through the 03 employer who lives, resides, or works in the service area of the network plan; 04 and 05 (B) the multiple employer welfare arrangement applies this 06 paragraph without regard to the claims experience of the employer or a health 07 status factor in relation to an individual or an individual's dependent; and 08 (6) for failure to meet the terms of an applicable collective bargaining 09 agreement to renew a collective bargaining or other agreement requiring or authorizing 10 contributions to the plan or to employ employees covered by a collective bargaining 11 agreement. 12 Sec. 21.54.150. Mental health benefits. (a) Except as provided in (d) of this 13 section, a health care insurance plan sold in the large employer group market that 14 provides both medical and surgical benefits and mental health benefits shall meet the 15 following requirements: 16 (1) if the plan does not include an aggregate lifetime limit on 17 substantially all medical and surgical benefits, the plan may not provide for an 18 aggregate lifetime limit on mental health benefits; 19 (2) if the plan includes an aggregate lifetime limit on substantially all 20 medical and surgical benefits, the plan must 21 (A) include the mental health benefits within the aggregate 22 lifetime limit and may not distinguish in the application of the limit between 23 medical and surgical benefits and mental health benefits; or 24 (B) provide an aggregate lifetime limit for mental health 25 benefits that is not less than the aggregate lifetime limit for medical and 26 surgical benefits; 27 (3) if the plan includes different aggregate lifetime limits or none on 28 different categories of medical and surgical benefits, the plan must provide for 29 aggregate lifetime limits on mental health benefits consistent with federal law; 30 (4) if the plan does not include an annual limit on substantially all 31 medical and surgical benefits, the plan may not provide for an annual limit on mental
01 health benefits; 02 (5) if the plan includes an annual limit on substantially all medical and 03 surgical benefits, the plan must 04 (A) include the mental health benefits with the annual limit and 05 may not distinguish in the application of the limit between medical and surgical 06 benefits and mental health benefits; or 07 (B) provide an annual limit for mental health benefits that is not 08 less than the annual limit for medical and surgical benefits; and 09 (6) if the plan includes different annual limits or none on different 10 categories of medical and surgical benefits, the plan must provide for annual limits on 11 mental health benefits consistent with federal law. 12 (b) Except as provided otherwise in this title, a health care insurance plan is 13 not required to provide mental health benefits. 14 (c) Except as otherwise provided in this title, this section does not affect the 15 terms and conditions relating to the amount, duration, or scope of mental health 16 benefits under a health care insurance plan that provides mental health benefits, 17 including cost sharing, limits on number of visits or days of coverage, and 18 requirements relating to medical necessity. 19 (d) This section does not apply if application of this section would result in 20 an increase in the cost under the health care insurance plan of at least one percent. 21 Sec. 21.54.160. "Excepted benefits" defined. "Excepted benefits" means 22 benefits under one or more or any combination of the following: 23 (1) benefits under 24 (A) coverage only for accident, disability income insurance, or 25 both; 26 (B) coverage issued as a supplement to liability insurance; 27 (C) liability insurance, including general liability insurance and 28 automobile liability insurance; 29 (D) workers' compensation or substantially similar insurance; 30 (E) automobile medical payment insurance; 31 (F) credit-only insurance;
01 (G) coverage for on-site medical clinics; or 02 (H) other similar insurance coverage, as specified in federal law, 03 under which benefits for medical care are secondary or incidental to other 04 insurance benefits; 05 (2) if offered as a separate insurance policy and otherwise not an 06 integral part of a health care insurance plan, benefits under 07 (A) limited scope dental or vision coverage; 08 (B) coverage for long-term care, nursing home care, home 09 health care, community-based care, or any combination; or 10 (C) other similar limited benefits as specified in federal law; 11 (3) if offered as independent noncoordinated benefits, benefits under 12 coverage only for a specified disease or illness, or hospital indemnity or other fixed 13 indemnity insurance; as used in this paragraph, "independent, noncoordinated benefits" 14 means benefits that are provided under a separate policy if 15 (A) there is no coordination between the provision of the 16 benefits and an exclusion of benefits under a health care insurance plan 17 maintained by the same plan sponsor; and 18 (B) the benefits are paid with respect to an event without regard 19 to whether benefits are provided for the event under a health care insurance 20 plan maintained by the same plan sponsor; 21 (4) if offered as a separate insurance policy, benefits under 22 (A) Medicare supplement health insurance as defined in 42 23 U.S.C. 1345ss(g)(1) (Social Security Act); 24 (B) coverage supplemental to the coverage provided under 10 25 U.S.C. 1071 - 1090; or 26 (C) similar supplemental coverage provided to coverage under 27 a health benefit plan. 28 Sec. 21.54.170. Determination of size of employer. The determination of 29 whether an employer is a large or small employer is subject to the following: 30 (1) the size of an employer that was not in existence throughout the 31 preceding calendar year must be based on the average number of employees that the
01 employer is reasonably expected to employ on the business days in the current 02 calendar year; 03 (2) all persons treated as a single employer under 26 U.S.C. 414(b), (c), 04 (m), or (o) must be treated as one employer; and 05 (3) a reference to a large or small employer includes by reference any 06 predecessor of that employer. 07 Article 3. Definitions. 08 Sec. 21.54.500. Definitions. In this chapter, 09 (1) "aggregate lifetime limit" means a dollar limit on the total amount 10 that may be paid for benefits under a health care insurance plan offered in the group 11 market with respect to an individual or unit of coverage; 12 (2) "annual limit" means a dollar limit on the total amount that may be 13 paid for benefits in a 12-month period under the plan with respect to an individual or 14 unit of coverage; 15 (3) "beneficiary" has the meaning given under 29 U.S.C. 1002(8) 16 (Employee Retirement Income Security Act of 1974); 17 (4) "bona fide association" means an association that 18 (A) has been actively in existence for five years; 19 (B) has been formed and maintained in good faith for purposes 20 other than obtaining insurance; 21 (C) does not condition membership in the association on a 22 health status factor relating to an individual; 23 (D) makes health care insurance available to all members and 24 dependents of members regardless of a health status factor in relation to the 25 member or dependent; 26 (E) does not offer a health care insurance plan to an individual 27 other than in connection with a member of the association; and 28 (F) meets any other requirement established by the director in 29 regulations; 30 (5) "certification of coverage" means a written certification of 31 (A) the period of creditable coverage of an individual under a
01 health benefit plan or health care insurance plan offered in the group market, 02 including coverage under a federal continuation provision; and 03 (B) the waiting period imposed with respect to the individual 04 for coverage under the health benefit plan or health care insurance plan offered 05 in the group market; 06 (6) "church plan" has the meaning given under 29 U.S.C. 1002(33) 07 (Employee Retirement Income Security Act of 1974); 08 (7) "creditable coverage" means, with respect to an individual, 09 coverage, excluding excepted benefits, calculated as required under AS 21.54.120 and 10 applicable under 11 (A) a health care insurance plan offered in the group market; 12 (B) a health benefit plan; 13 (C) 42 U.S.C. 1395c or 1395j (Part A or Part B of Title XVIII 14 of the Social Security Act): 15 (D) 42 U.S.C. 1396 (Title XIX of the Social Security Act), 16 other than coverage consisting solely of benefits under 42 U.S.C. 1396s; 17 (E) 10 U.S.C. 1071 - 1090; 18 (F) a medical care program of the Indian Health Service or of 19 a tribal organization; 20 (G) AS 21.55; 21 (H) 5 U.S.C. 8901 - 8914; 22 (I) a public health plan as defined under federal law; or 23 (J) a health benefit plan under 22 U.S.C. 2504(e) (Peace Corps 24 Act); 25 (8) "employee" has the meaning given under 29 U.S.C. 1002(6) 26 (Employee Retirement Income Security Act of 1974); 27 (9) "employer" has the meaning given under 29 U.S.C. 1002(5) 28 (Employee Retirement Income Security Act of 1974); for purposes of this chapter, 29 "employer" includes a large or small employer, including a person, firm, corporation, 30 partnership, association, or political subdivision, that is actively engaged in business; 31 (10) "enrollment date" means the date of enrollment of an individual
01 in a health benefit plan or health care insurance plan offered in the group market or 02 the first day of the waiting period for enrollment, whichever occurs first; 03 (11) "federal continuation provision" means a "COBRA continuation 04 provision" as defined in 42 U.S.C. 300gg-91(d) (Health Insurance Portability and 05 Accountability Act of 1996); 06 (12) "federal governmental plan" means a governmental plan 07 established or maintained for employees of the United States government or by an 08 agency or instrumentality of the United States government; 09 (13) "governmental plan" has the meaning given under 29 U.S.C. 10 1002(32) Employee Retirement Income Security Act of 1974); 11 (14) "group market" means the health care insurance market in which 12 individuals obtain health care insurance coverage on behalf of themselves and their 13 dependents through a health benefit plan maintained by a large or small employer; 14 "group market" includes a health benefit plan for a small employer in the group market 15 that includes an arrangement under which 16 (A) a portion of the premium or benefits is paid by a small 17 employer; 18 (B) a covered individual or dependent is reimbursed, through 19 wage adjustments or otherwise, by or on behalf of a small employer for all or 20 a portion of the premium; or 21 (C) the health benefit plan is treated by the employer or any of 22 the eligible employees or dependents as part of a plan or program for the 23 purposes of 26 U.S.C. 106 or 26 U.S.C. 162 (Internal Revenue Code); 24 (15) "health benefit plan" means an employee welfare benefit plan as 25 defined in 29 U.S.C. 1002(1) (Employee Retirement Income Security Act of 1974), 26 and includes a plan, fund, or program established or maintained by a partnership, to 27 the extent that the plan, fund, or program provides medical care, including items and 28 services paid for as medical care to employees, present or former partners, or their 29 dependents, as defined under the terms of the plan, fund, or program, directly or 30 through insurance, reimbursement, or other method; 31 (16) "health care insurance plan" means a health care insurance policy
01 or contract provided by a health care insurer but does not include an excepted benefits 02 policy or contract; 03 (17) "health care insurer" means a person transacting the business of 04 health care insurance, including an insurance company licensed under AS 21.09, a 05 hospital or medical service corporation licensed under AS 21.87, a fraternal benefit 06 society licensed under AS 21.84, a health maintenance organization licensed under 07 AS 21.86, a multiple employer welfare arrangement, a church plan, and a 08 governmental plan, except for a nonfederal governmental plan that elects to be 09 excluded under 40 U.S.C. 300gg-21(b)(2) (Health Insurance Portability and 10 Accountability Act of 1996); 11 (18) "health status factor" means any of the factors described in 12 AS 21.54.100(a); 13 (19) "large employer" means an employer that employed an average of 14 at least 51 employees on the business days during the preceding calendar year and that 15 employs at least two employees on the first day of a health benefit plan year; 16 (20) "late enrollee" means a participant or beneficiary who requests 17 enrollment in an employer's health care insurance plan following the initial enrollment 18 period for which the participant or beneficiary was eligible to enroll under the terms 19 of a health care insurance plan, except that a participant or beneficiary may not be 20 considered a late enrollee if 21 (A) the individual requests enrollment within 30 days after the 22 termination of the creditable coverage or the exhaustion of coverage and 23 (i) was covered under creditable coverage at the time of 24 the initial enrollment; 25 (ii) has lost creditable coverage as a result of the 26 termination of employer contributions toward coverage or the 27 termination of eligibility, including death, divorce, dissolution of 28 marriage, legal separation, or a reduction in number of hours of 29 employment; or 30 (iii) had coverage under a federal continuation provision 31 and the coverage under that provision was exhausted;
01 (B) the individual is employed by an employer who offers 02 multiple health care insurance plans and the individual elects a different health 03 care insurance plan during an open enrollment period; or 04 (C) a court has ordered coverage to be provided for a spouse 05 or minor child under a covered employee's plan and request for enrollment is 06 made within 30 days after issuance of the court order; 07 (21) "medical and surgical benefits" means benefits provided for 08 medical or surgical services, but does not include mental health benefits; 09 (22) "mental health benefits" means benefits provided for mental health 10 services as defined under the terms of the health care insurance plan, but does not 11 include benefits for treatment of substance abuse or chemical dependency; 12 (23) "network plan" means a health care insurance plan offered in the 13 group market or by an insurer under which the financing and delivery of medical care, 14 including items and services paid for as medical care, are provided in whole or in part 15 through a defined set of providers under contract with the insurer; 16 (24) "participant" has the meaning given under 29 U.S.C. 1002(7) 17 (Employee Retirement Income Security Act of 1974); "participant" includes a 18 (A) partner in relation to a partnership; or 19 (B) self-employed individual if the individual or the individual's 20 beneficiaries are or may become eligible to receive benefits under a health 21 benefit plan maintained by the self-employed individual; 22 (25) "placed for adoption" means the assumption and retention by an 23 individual of a legal obligation for total or partial support of a child in anticipation of 24 adopting the child; 25 (26) "plan sponsor" has the meaning given under 29 U.S.C. 26 1002(16)(B) (Employee Retirement Income Security Act of 1974); 27 (27) "preexisting condition exclusion" means a limitation or exclusion 28 of benefits relating to a physical or mental condition that was present before the 29 enrollment date, regardless of whether medical advice, diagnosis, care, or treatment 30 was recommended or received before the enrollment date; 31 (28) "small employer" means an employer that employed an average
01 of at least two but not more than 50 employees on the business days during the 02 preceding calendar year and that employs at least two employees on the first day of 03 a health benefit plan year; 04 (29) "waiting period" means the period that must pass before an 05 individual who is a potential participant or beneficiary in a health care insurance plan 06 offered in the group market is eligible to be covered for benefits under the terms of 07 the plan. 08 * Sec. 60. AS 21.55.100(a) is amended to read: 09 (a) The association shall make available to residents who are high risks or to 10 federally defined eligible individuals an individual state plan of health insurance. 11 The association shall offer three alternatives related to deductibles as described in 12 AS 21.55.120 and may offer additional deductible alternatives. 13 * Sec. 61. AS 21.55.100(c) is amended to read: 14 (c) The association may not refuse to offer coverage under a state plan to 15 residents who are high risks, or to federally defined eligible individuals, [AND] who 16 are eligible under this chapter. The association may not refuse coverage under a state 17 plan to residents who are high risks, or to federally defined eligible individuals, who 18 [,] are eligible under this chapter, apply for coverage, and pay the required premium. 19 * Sec. 62. AS 21.55.100(d) is amended to read: 20 (d) The association may make available to residents who are high risks and 21 to federally defined eligible individuals coverage through a health maintenance 22 organization or other managed care arrangement as approved by the director. 23 * Sec. 63. AS 21.55.130 is amended by adding a new subsection to read: 24 (d) A state plan issued to a federally defined eligible individual may not 25 impose a preexisting condition exclusion. 26 * Sec. 64. AS 21.55.300(a) is amended to read: 27 (a) Except as provided in this section, a state resident who is a high risk or 28 a federally defined eligible individual is eligible to enroll in a state plan described 29 in AS 21.55.100. 30 * Sec. 65. AS 21.55.300(b) is amended to read: 31 (b) Except for a federally defined eligible individual, a [A] person may not
01 be covered by the state plan 02 (1) while covered by another health insurance policy or subscriber 03 contract; or 04 (2) if the person is eligible to be covered by a plan subject to the 05 requirements of AS 21.56.110 - 21.56.250. 06 * Sec. 66. AS 21.55.310 is amended to read: 07 Sec. 21.55.310. Enrollment by an eligible person. A person may enroll in 08 a state plan by applying to the writing carrier. The application must include the 09 following: 10 (1) name, address, age, and length of residency of the applicant; 11 (2) a designation of the plan desired, including deductible option 12 chosen; 13 (3) information relevant to whether the person is a high risk or a 14 federally defined eligible individual; and 15 (4) payment of the first premium. 16 * Sec. 67. AS 21.55.500(9) is repealed and reenacted to read: 17 (9) "resident" means 18 (A) except for a federally defined eligible individual and an 19 individual who is absent from the state for more than 90 consecutive days for 20 reasons other than for medical treatment or education, an individual who 21 (i) is physically present in the state, has lived in the 22 state for at least the 12 consecutive months immediately preceding the 23 application for a state plan, and intends to remain permanently in the 24 state; or 25 (ii) is not physically present in the state if the person 26 lived in the state for at least nine of the 12 months immediately 27 preceding application for a state plan and the person's absence from the 28 state is for medical treatment or education; 29 (B) for a federally defined eligible individual, an individual who 30 is legally domiciled in this state. 31 * Sec. 68. AS 21.55.500 is amended by adding new paragraphs to read:
01 (14) "creditable coverage" has the meaning given in AS 21.54.500; 02 (15) "federal continuation provision" has the meaning given in 03 AS 21.54.500; 04 (16) "federally defined eligible individual" means an individual 05 (A) with an aggregate of all periods of creditable coverage as 06 provided under AS 21.54.110(b) that is greater than 18 months as of the date 07 that the individual seeks coverage under this chapter; 08 (B) whose most recent prior creditable coverage was under a 09 health benefit plan or health care insurance plan offered in the group market; 10 (C) who is not eligible for coverage under a health benefit plan, 11 42 U.S.C. 1395c or 42 U.S.C. 1395j (Part A or Part B of Title XVIII of the 12 Social Security Act), or a state plan under 42 U.S.C. 1396 (Title XIX of the 13 Social Security Act), and who does not have other health care insurance 14 coverage; 15 (D) whose most recent coverage within the period of aggregate 16 creditable coverage as provided under AS 21.54.110(b) was not terminated 17 based on a factor relating to nonpayment of premiums or fraud; 18 (E) who, having been offered and having elected continuation 19 coverage under a federal continuation provision or a similar state program, has 20 exhausted coverage under the continuation provision or program; 21 (17) "group market" has the meaning given in AS 21.54.500; 22 (18) "health benefit plan" has the meaning given in AS 21.54.500; 23 (19) "health care insurance plan" has the meaning given in 24 AS 21.54.500; 25 (20) "health care insurer" has the meaning given in AS 21.54.500; 26 (21) "preexisting condition exclusion" has the meaning given in 27 AS 21.54.500. 28 * Sec. 69. AS 21.56.010 is amended to read: 29 Sec. 21.56.010. Creation; membership. A nonprofit incorporated legal entity 30 to be known as the Small Employer Health Reinsurance Association is established. 31 Membership consists of all health care insurers [LICENSED TO TRANSACT
01 HEALTH INSURANCE IN THE STATE THAT OFFER A HEALTH BENEFIT 02 PLAN]. All members shall maintain membership in the reinsurance association as 03 a condition of transacting [DOING] health care insurance business [, OR BEING 04 ABLE TO OFFER SUBSCRIBER CONTRACTS,] in the state. 05 * Sec. 70. AS 21.56.020(a) is amended to read: 06 (a) The board of directors of the reinsurance association consists of nine 07 individuals selected by participating members, subject to approval by the director. The 08 director shall endeavor to appoint at least six board members who are also small 09 employer insurers. If the director is unable to appoint six board members who are also 10 small employer insurers, the director may fill the remaining seats with any insurer. In 11 selecting members of the board, the director shall consider, among other things, 12 whether all types of participating members are fairly represented. 13 * Sec. 71. AS 21.56.020(b) is amended to read: 14 (b) To the extent possible, one board member shall represent a health 15 maintenance organization, one board member shall represent a hospital or medical 16 service corporation, one board member's principal health insurance business shall be 17 in the small employer group market, and one board member's principal health 18 insurance business shall be in the large employer group market. Members of the 19 board may be reimbursed from the reinsurance association for expenses incurred by 20 them as members, but may not otherwise be compensated by the reinsurance 21 association for their services. The costs of conducting meetings of the reinsurance 22 association and its board of directors shall be borne by the reinsurance association. 23 * Sec. 72. AS 21.56.030 is amended to read: 24 Sec. 21.56.030. General powers. The reinsurance association may 25 (1) exercise the powers granted to insurers under the laws of the state, 26 except that the reinsurance association may not issue insurance; 27 (2) sue or be sued; 28 (3) enter into contracts with insurers, similar reinsurance associations 29 in other states, or with other persons for the performance of administrative functions; 30 (4) establish administrative and accounting procedures for the operation 31 of the reinsurance association;
01 (5) take legal action as necessary to avoid the payment of improper 02 claims against the reinsurance association; 03 (6) define the array of health coverage products for which reinsurance 04 will be provided and issue reinsurance policies; 05 (7) establish rules, conditions, and procedures pertaining to the 06 reinsurance of members' risks by the reinsurance association; 07 (8) establish actuarial functions appropriate to the operation of the 08 reinsurance association; 09 (9) assess members under the provisions of this chapter and make 10 advance interim assessments as may be reasonable and necessary for organizational 11 and interim operating expenses; interim assessments shall be credited as offsets against 12 regular assessments due following the close of the calendar year; 13 (10) appoint appropriate legal, actuarial, and other committees as are 14 necessary to provide technical assistance in the operation of the reinsurance 15 association, design of a policy or contract, or to assist in other functions of the 16 reinsurance association; 17 (11) borrow money to accomplish the purposes of the reinsurance 18 association; notes or other evidence of indebtedness of the reinsurance association that 19 are not in default are investments for insurers and may be carried as admitted assets. 20 * Sec. 73. AS 21.56.040 is amended to read: 21 Sec. 21.56.040. Plan of operation. (a) The reinsurance association shall 22 submit to the director a plan of operation and amendments necessary or suitable to 23 assure the fair, reasonable, and equitable administration of the reinsurance association. 24 The director may, after notice and hearing, approve the plan of operation if the director 25 determines it to be suitable to assure the fair, reasonable, and equitable administration 26 of the program on a proportionate basis under the provisions of this section and it does 27 not shift program costs to other insured persons or the state. The plan of operation 28 and amendments become effective upon approval in writing by the director. 29 (b) All members of the reinsurance association shall comply with the plan of 30 operation. 31 (c) The plan of operation must establish procedures for
01 (1) handling and accounting of program assets and money of the 02 reinsurance association and for an annual fiscal report to the director; 03 (2) reinsuring risks under the provisions of this section; 04 (3) collecting assessments from all members to provide for claims 05 reinsured by the reinsurance association and for administrative expenses incurred or 06 estimated to be incurred by the reinsurance association; 07 (4) selection of an administering insurer and establishing the 08 administering insurer's powers and duties; 09 (5) effectuating a methodology for applying the dollar thresholds 10 contained in this section for insurers that pay or reimburse health care providers by 11 capitation or salary; and 12 (6) provisions necessary or proper for the execution of the powers and 13 duties of the reinsurance association. 14 * Sec. 74. AS 21.56.050 is amended to read: 15 Sec. 21.56.050. Health care reinsurance. (a) A member may reinsure health 16 care coverage of an eligible employee of a small employer or a dependent of an 17 eligible employee of a small employer with the reinsurance association only under the 18 following provisions: 19 (1) regarding a small employer basic or standard health care insurance 20 [BENEFIT] plan, the reinsurance association shall reinsure the level of coverage 21 provided; 22 (2) regarding a health care plan other than a small employer health care 23 insurance [BENEFIT] plan, the reinsurance association shall reinsure the level of 24 coverage provided up to, but not exceeding, the level of coverage provided in a small 25 employer basic or standard health benefit plan; 26 (3) a small employer insurer may reinsure an entire employer group 27 within 60 days of the commencement of the group's coverage under a health care 28 insurance [BENEFIT] plan; 29 (4) a small employer insurer may reinsure an eligible employee or 30 dependent within a period of 60 days following the commencement of the coverage 31 with the small employer; a newly eligible employee or dependent of a reinsured small
01 employer may be reinsured within 60 days of the commencement of coverage; 02 (5) the reinsurance association may not reimburse a reinsuring insurer 03 regarding the claims of a reinsured employee or dependent until the insurer has paid 04 an initial level of claims for the employee or dependent of $5,000 in a calendar year 05 for benefits covered by the reinsurance association; 06 (6) a small employer insurer may terminate reinsurance for one or more 07 of the reinsured employees or dependents of a small employer on any plan anniversary. 08 (b) Premium rates charged for coverage reinsured by the reinsurance 09 association shall be established as required under (e) of this section and adjusted as 10 follows: 11 (1) for whole group small employer reinsurance coverage, 1.5 12 multiplied by the base premium rate established by the reinsurance association for 13 eligible employees, and dependents of eligible employees, of a small employer all of 14 whose health insurance coverage is reinsured with the reinsurance association; 15 (2) for eligible employee or dependent health reinsurance coverage, 5.0 16 multiplied by the base premium rate established by the reinsurance association. 17 (c) If a health care insurance [BENEFIT] plan coverage for a small employer 18 is entirely or partially reinsured with the reinsurance association, the premium charged 19 to the small employer for a rating period for the coverage issued under this section 20 shall meet the premium rate requirements established under AS 21.56.120. 21 (d) On or before March 1 of each year, the board shall determine and report 22 to the director the reinsurance association's net loss for the previous calendar year, 23 including administrative expenses and incurred losses for the year, taking into account 24 investment income and other appropriate gains and losses. A net loss for the year 25 shall be recovered by assessments collected from reinsuring insurers. The board shall 26 establish, as part of the plan of operation, a formula by which to make assessments 27 against reinsuring insurers. The assessment formula must be based on each reinsuring 28 insurer's share of the total premiums earned in the preceding calendar year from health 29 care insurance [BENEFIT] plans delivered or issued for delivery to small employers 30 in this state by reinsuring carriers and each reinsuring insurer's share of the premiums 31 earned in the preceding calendar year from newly issued health care insurance
01 [BENEFIT] plans delivered or issued for delivery during the calendar year to small 02 employers in this state by reinsuring insurers. In determining an assessment, if any, 03 that is collected from a member, the following provisions apply: 04 (1) the formula established under this subsection may not result in a 05 reinsuring insurer having an assessment share that is less than 50 percent or more than 06 150 percent of an amount that is based on the proportion of the reinsuring insurer's 07 total premiums earned in the preceding calendar year from health care insurance 08 [BENEFIT] plans delivered or issued for delivery to small employers in this state by 09 reinsuring insurers to total premiums earned in the preceding calendar year from health 10 care insurance [BENEFIT] plans delivered or issued for delivery to small employers 11 in this state by all reinsuring carriers; 12 (2) the board may, with approval of the director, change the assessment 13 formula established under this section from time to time, as appropriate; the board may 14 provide for the shares of the assessment base attributable to premiums from all health 15 care insurance [BENEFIT] plans and to premiums from newly issued health care 16 insurance [BENEFIT] plans to vary during a transition period; 17 (3) subject to the approval of the director, the board shall make an 18 adjustment to the assessment formula for reinsuring carriers that are approved health 19 maintenance organizations that are federally qualified under 42 U.S.C. 300, to the 20 extent, if any, that restrictions are imposed on those organizations that are not imposed 21 on other small employer insurers [CARRIERS]; 22 (4) annually before March 1, the board shall determine and file with 23 the director an estimate of the assessments needed to fund losses incurred by the 24 reinsurance association in the previous calendar year; 25 (5) if the board determines that the assessments needed to fund the 26 losses incurred by the reinsurance association in the previous calendar year will 27 exceed five percent of total premiums earned in the previous year from health care 28 insurance [BENEFIT] plans delivered or issued for delivery to small employers in this 29 state by reinsuring insurers, the board shall evaluate the operation of the program and 30 report its findings, including any recommendations for changes to the plan of 31 operation, to the director within 90 days following the end of the calendar year in
01 which the losses were incurred; the evaluation must include an estimate of future 02 assessments, the administrative costs of the program, the appropriateness of the 03 premiums charged, and the level of insurer retention under the program and the costs 04 of coverage for small employers; if the board fails to file a report with the director 05 within 90 days following the end of the applicable calendar year, the director may 06 evaluate the operations of the program and implement amendments to the plan of 07 operation the director determines necessary to reduce future losses and assessments; 08 (6) if assessments exceed net losses of the reinsurance association, the 09 excess shall be held in an interest bearing account and used by the board to offset 10 future losses or to reduce reinsurance association premiums; in this paragraph, "future 11 losses" include a reserve for incurred but not reported claims; 12 (7) the board shall annually determine a member's proportion of 13 participation in the reinsurance association based on annual statements and other 14 reports determined necessary by the board and filed by the member with the board; an 15 insurer shall report to the board a claim payment made and administrative expense 16 incurred in this state on a semi-annual basis on a form prescribed by the director; 17 (8) the plan of operation must include a provision for the imposition 18 of an interest penalty for late payment of assessments; 19 (9) a member may request a deferment from the director, in whole or 20 in part, from an assessment issued by the board; the director may defer, in whole or 21 in part, the assessment of a member if, in the opinion of the director payment of the 22 assessment would endanger the ability of the member to fulfill the member's 23 contractual obligations; 24 (10) in the event an assessment against a member is deferred in whole 25 or in part, the amount by which the assessment is deferred may be assessed against the 26 other members in a manner consistent with the basis for assessments set out in this 27 subsection; the member receiving a deferment shall remain liable to the reinsurance 28 association for the amount deferred; the director may attach conditions to a deferment; 29 a member receiving a deferment may not reinsure an individual or group as provided 30 under this section until the assessment is paid. 31 (e) The board, as part of the plan of operation, shall establish a methodology
01 for determining premium rates to be charged by the program for reinsuring small 02 employers and individuals under this section. The methodology must include a system 03 for classification of small employers that reflects the types of case characteristics 04 commonly used by small employer insurers in the state. The methodology must 05 provide for the development of base reinsurance premium rates that shall be multiplied 06 by the factors set out in (b) of this section to determine the premium rates for the 07 reinsurance association. The base reinsurance premium rates shall be established by 08 the board, subject to the approval of the director, and shall be set at levels that 09 reasonably approximate gross premiums charged to small employers by small employer 10 insurers for health care insurance [BENEFIT] plans with benefits similar to the 11 standard health care insurance [BENEFIT] plan. The board shall review the 12 methodology established under this subsection to ensure that the methodology 13 reasonably reflects the claims experience of the program. Changes to the methodology 14 may be proposed by the board [,] and are subject to approval by the director. In this 15 subsection, "gross premiums" means the premium charged for insurance before 16 reducing the premium for a dividend or rate credit. 17 * Sec. 75. AS 21.56.060 is amended to read: 18 Sec. 21.56.060. Health care insurance [BENEFIT] plan committee. (a) 19 The health care insurance [BENEFIT] plan committee is established in the 20 reinsurance association. The committee is composed of seven members selected by 21 the director as follows: 22 (1) three members who are representatives of participating insurers; 23 (2) one member who represents small employers; 24 (3) one member who represents employees of small employers; 25 (4) one member who represents health care providers; and 26 (5) one member who represents agents or brokers. 27 (b) The committee shall recommend benefit levels, cost sharing levels, 28 exclusions and limitations for the basic and standard health care insurance 29 [BENEFIT] plan offered under AS 21.56.140. The committee shall also design a basic 30 health care insurance [BENEFIT] plan and a standard health care insurance 31 [BENEFIT] plan that contain benefit and cost sharing levels that are consistent with
01 the basic method of operation and the benefit plans of health maintenance 02 organizations, including restrictions imposed by federal law. The plans recommended 03 by the committee may include the following cost containment features: 04 (1) utilization review of health care services, including review of the 05 medical necessity of hospital and physician services; 06 (2) case management; 07 (3) selective contracting with hospitals, physicians, and other health 08 care providers; 09 (4) reasonable benefit differentials applicable to providers that 10 participate or do not participate in arrangements using restricted network provisions; 11 and 12 (5) other managed care provisions. 13 * Sec. 76. AS 21.56.070 is amended to read: 14 Sec. 21.56.070. Required report. The board shall study and report at least 15 once every two years to the director on the effectiveness of this chapter. The report 16 must analyze the effectiveness of the chapter in promoting rate stability, product 17 availability, and coverage affordability. The report may contain recommendations for 18 actions to improve the overall effectiveness, efficiency, and fairness of the small group 19 health care insurance marketplace. The report must address whether insurers, agents, 20 brokers, managing general agents, and third-party administrators are fairly and actively 21 marketing or issuing health care insurance [BENEFIT] plans to small employers in 22 fulfillment of the purposes of the chapter. The report may contain recommendations 23 for market conduct or other regulatory standards or action. The board shall notify the 24 legislature that the report is available. 25 * Sec. 77. AS 21.56 is amended by adding a new section to read: 26 Sec. 21.56.075. Premium report. A member shall file not later than 27 March 15 of each year in a form prescribed by the director a report of total premiums 28 earned in the preceding calendar year and other information required by the director 29 for health care insurance plans delivered or issued for delivery to small employers in 30 this state. 31 * Sec. 78. AS 21.56.080 is amended to read:
01 Sec. 21.56.080. Administrative Procedure Act. The reinsurance association 02 is exempt from AS 44.62 (Administrative Procedure Act). 03 * Sec. 79. AS 21.56.090 is amended to read: 04 Sec. 21.56.090. Tax exemption. The reinsurance association is exempt from 05 the payment of fees and taxes levied by the state or any of its political subdivisions 06 except taxes levied on real or personal property. 07 * Sec. 80. AS 21.56.100 is amended to read: 08 Sec. 21.56.100. Limitation of liability. A member of the reinsurance 09 association is not liable for civil damages resulting from an act or omission of the 10 member on behalf of the reinsurance association unless the member acts with gross 11 negligence or intentional misconduct. 12 * Sec. 81. AS 21.56.110(a) is repealed and reenacted to read: 13 (a) A health care insurance plan offered, issued for delivery, delivered, or 14 renewed to small employers in this state is subject to the provisions of this chapter. 15 * Sec. 82. AS 21.56.110(c) is amended to read: 16 (c) Except as provided in this subsection, for purposes of this chapter, insurers 17 that are affiliated companies or that are eligible to file a consolidated tax return shall 18 be treated as one insurer and a restriction or limitation imposed under this chapter shall 19 apply as if all health care insurance [BENEFIT] plans delivered or issued for delivery 20 to a small employer in this state by an affiliated insurer were issued by one insurer. 21 An affiliated insurer that is a health maintenance organization having a certificate of 22 authority under AS 21.86 may be considered to be a separate insurer for the purposes 23 of this chapter. 24 * Sec. 83. AS 21.56.120(a) is amended to read: 25 (a) A premium rate for a health care insurance [BENEFIT] plan subject to 26 this chapter is subject to the following provisions: 27 (1) the premium rate charged or offered during a rating period to small 28 employers with similar case characteristics as determined by the insurer for the same 29 or similar coverage may not vary from the applicable index rate by more than 35 30 percent of the applicable index rate; 31 (2) regarding a health care insurance [BENEFIT] plan issued before
01 July 1, 1993, if premium rates charged or offered for the same or similar coverage 02 under a health care insurance [BENEFIT] plan covering a small employer with 03 similar case characteristics as determined by the insurer exceeds the applicable index 04 rate by more than 35 percent, an increase in premium rates for a new rating period 05 may not exceed the sum of 06 (A) a percentage change in the base premium rate measured 07 from the first day of the prior rating period to the first day of the new rating 08 period; plus 09 (B) adjustments due to changes in case characteristics or plan 10 design of the small employer, as determined by the insurer; 11 (3) the percentage increase in the premium rate charged to a small 12 employer for a new rating period may not exceed the sum of the following: 13 (A) the percentage change in the new business premium rate 14 measured from the first day of the prior rating period to the first day of the 15 new rating period; in the case of a health benefit plan into which the small 16 employer insurer is no longer enrolling new small employers, the small 17 employer insurer shall use the percentage change in the base premium rate, 18 provided that the change does not exceed, on a percentage basis, the change in 19 the new business premium rate for the most similar health care insurance 20 [BENEFIT] plan into which the small employer insurer is actively enrolling 21 new small employers; 22 (B) any adjustment, not to exceed 15 percent annually and 23 adjusted pro rata for rating periods of less than one year, due to the claim 24 experience, health status, or duration of coverage of the employees or 25 dependents of the small employer as determined from the small employer 26 insurer's rate manual; and 27 (C) any adjustment due to change in coverage or change in the 28 case characteristics of the small employer, as determined from the small 29 employer insurer's rate manual; 30 (4) adjustments in rates for claim experience, health status, and duration 31 of coverage may not be charged to individual employees or dependents; any
01 adjustment must be applied uniformly to the rates charged for all employees and 02 dependents of the small employer; 03 (5) a premium rate for a health care insurance [BENEFIT] plan shall 04 comply with the requirements of this section notwithstanding an assessment paid or 05 payable by small employer insurers under AS 21.56.050(d); 06 (6) a small employer insurer may use [UTILIZE] industry as a case 07 characteristic in establishing premium rates, provided that the rate factor associated 08 with an industry classification may not vary by more than 15 percent from the 09 arithmetic average of the highest and lowest rate factors associated with all industry 10 classifications; 11 (7) a small employer insurer shall 12 (A) apply rating factors, including case characteristics, 13 consistently with respect to all small employers; rating factors must produce 14 premiums for identical groups that differ only by amounts attributable to plan 15 design and do not reflect differences due to the nature of the groups assumed 16 to select particular health care insurance [BENEFIT] plans; and 17 (B) treat all health care insurance [BENEFIT] plans issued or 18 renewed in the same calendar month as having the same rating period; 19 (8) for the purposes of this subsection, a health care insurance 20 [BENEFIT] plan that contains a restricted provider network may not be considered 21 similar coverage to a health care insurance [BENEFIT] plan that does not use 22 [UTILIZE] a restricted provider network if the restriction of benefits to network 23 providers results in substantial differences in claim costs; 24 (9) a small employer insurer may not use case characteristics, other 25 than age, sex, industry, geographic area, family composition, and group size without 26 prior approval of the director. 27 * Sec. 84. AS 21.56.120(b) is amended to read: 28 (b) In connection with the offering for sale of a health care insurance 29 [BENEFIT] plan to a small employer, a small employer insurer shall [MAKE A 30 REASONABLE DISCLOSURE], as part of its solicitation and sales materials, disclose 31 in a manner understandable by the average small employer and sufficient to
01 reasonably inform small employers of their rights and obligations under the 02 health care insurance plan [OF THE FOLLOWING:] 03 (1) the extent that premium rates for a specified small employer are 04 established or adjusted based upon the actual or expected variation in claims costs or 05 actual or expected variation in health status of the employees of the small employer 06 and their dependents; and 07 (2) the provisions of the health care insurance [BENEFIT] plan 08 (A) concerning the small employer insurer's right to change 09 premium rates and factors [, OTHER THAN CLAIM EXPERIENCE] that 10 affect changes in premium rates; 11 (B) relating to renewability of policies and contracts; [AND] 12 (C) relating to any preexisting condition provision; and 13 (D) concerning the benefits and premiums available under 14 all health care insurance plans for which the small employer qualifies. 15 * Sec. 85. AS 21.56.120(d) is amended to read: 16 (d) The director may adopt regulations to implement the provisions of this 17 section and to ensure that rating practices used by small employer insurers are 18 consistent with the purposes of this chapter, including ensuring that differences in rates 19 charged for health care insurance [BENEFIT] plans by small employer insurers are 20 reasonable and reflect objective differences in plan design, not including differences 21 due to the nature of the groups assumed to select particular health care insurance 22 [BENEFIT] plans. 23 * Sec. 86. AS 21.56.140 is repealed and reenacted to read: 24 Sec. 21.56.140. Required offer of coverage. (a) Except as provided under 25 AS 21.56.160, a small employer insurer shall, as a condition of transacting business 26 in this state with small employers, offer to small employers all health care insurance 27 plans the small employer actively markets to small employers in this state, including 28 a basic health care insurance plan and a standard health care insurance plan. 29 (b) A small employer insurer shall issue a health care insurance plan to a small 30 employer that applies for a plan and shall accept for enrollment under the health care 31 insurer coverage all eligible employees and their dependents who apply for enrollment
01 during the period in which the employee first becomes eligible to enroll under the 02 terms of the plan. A small employer insurer may not place a restriction on an eligible 03 employee or dependent with respect to being a participant or beneficiary that is 04 inconsistent with AS 21.54.100. 05 (c) A small employer insurer may not increase a requirement for minimum 06 employee participation or for minimum employer contribution applicable to a small 07 employer at any time after the small employer has been accepted for coverage, except 08 that a small employer insurer may vary application of minimum participation and 09 employer contribution requirements by the size of the small employer group. 10 (d) If a small employer insurer offers coverage to a small employer, the small 11 employer insurer shall offer coverage to all of the eligible employees of the small 12 employer and their dependents. A small employer insurer may not offer coverage to 13 only certain individuals in a small employer group or to only part of the group, except 14 in the case of late enrollees as provided in AS 21.54.110(d). 15 (e) The small employer insurer shall apply this section uniformly to all small 16 employers without regard to the claims experience of the small employers and their 17 employees and dependents or a health status factor of an employee or dependent. 18 (f) A small employer insurer may not, directly or indirectly, encourage or 19 direct small employers to refrain from filing an application for coverage with a small 20 employer insurer or to seek coverage from another insurer because of a health status 21 factor, the claims experience, the industry, the occupation, or the geographic location 22 of the small employer. 23 (g) Except as provided in AS 21.54.110, a small employer insurer may not, by 24 a rider or amendment applicable to a specific individual, restrict or exclude coverage 25 or benefits by type of illness, treatment, medical condition, or service otherwise 26 covered by the plan. 27 (h) This section does not apply to health care insurance plans offered by a 28 small employer insurer if the insurer makes the health care insurance plans available 29 in the small employer market only through a bona fide association. 30 * Sec. 87. AS 21.56.160 is repealed and reenacted to read: 31 Sec. 21.56.160. Exemption from required offer of coverage. (a) A small
01 employer insurer offering health care insurance through a network plan is not required 02 to offer or renew coverage or accept applications under AS 21.56.140(a) if 03 (1) the small employer does not have eligible employees or dependents 04 who live, work, or reside in the service area for the network plan; or 05 (2) the small employer insurer demonstrates to the director that the 06 small employer insurer 07 (A) will not have the capacity to deliver services adequately to 08 eligible employees or dependents of additional groups because of the small 09 employer insurer's obligation to existing group contract holders and covered 10 employees or dependents; and 11 (B) applies this subsection uniformly without regard to the 12 claims experience of the employers and their employees and dependents or to 13 a health status factor relating to the employees and dependents. 14 (b) A small employer insurer offering health care insurance is not required to 15 offer or accept applications under AS 21.56.140(a) if 16 (1) the small employer insurer is only maintaining in-force business and 17 has ceased enrolling new employer groups on or before January 1, 1993; or 18 (2) the certificate of authority or bylaws of an insurer does not permit 19 the insurer to issue coverage on a marketwide basis; however, an insurer described in 20 this paragraph shall comply with AS 21.56.140 regarding small employers that meet 21 the requirements of the insurer's certificate of authority or bylaws. 22 (c) A small employer insurer who denies health care insurance coverage in a 23 service area under (a) of this section may not offer coverage in the small employer 24 market within that service area for a period of 180 days after the date the coverage is 25 denied. 26 (d) If a small employer insurer demonstrates or the director determines under 27 AS 21.09.175 that a small employer insurer does not have the financial reserves 28 necessary to underwrite additional coverage, the small employer insurer may not offer 29 or renew health care insurance coverage in the small employer group market. The 30 small employer insurer may not reenter the small employer group market until the 31 director has determined that the insurer has sufficient financial reserves to underwrite
01 additional coverage. 02 * Sec. 88. AS 21.56.180 is repealed and reenacted to read: 03 Sec. 21.56.180. Fair marketing standards. (a) A small employer insurer 04 may not, directly or indirectly, enter into a contract, agreement, or arrangement with 05 an insurance producer, a managing general agent, or a third-party administrator that 06 provides for or results in the compensation paid to an insurance producer for the sale 07 of a health care insurance plan to vary based on the health status, claims experience, 08 industry, occupation, or geographic location of the small employer. This subsection 09 does not apply to a compensation arrangement that provides compensation to an 10 insurance producer, a managing general agent, or a third-party administrator on the 11 basis of a percentage of premium that does not vary based on the health status, claims 12 experience, industry, occupation, or geographic area of the small employer. 13 (b) A small employer insurer shall provide reasonable compensation, as 14 provided under the plan of operation of the program, to an insurance producer, a 15 managing general agent, or a third-party administrator, if any, for the sale of a basic 16 or standard health care insurance plan. 17 (c) A small employer insurer, an insurance producer, a managing general 18 agent, or a third-party administrator may not induce or otherwise encourage a small 19 employer to separate or otherwise exclude an employee from health coverage or 20 benefits provided in connection with the employee's employment. 21 (d) A small employer insurer may only deny an application for coverage from 22 a small employer in writing, and the writing must state the reasons for the denial. 23 (e) The director may establish by regulation additional standards to provide for 24 the fair marketing of health care insurance plans to small employers in this state. 25 (f) A person who enters into a contract, agreement, or other arrangement with 26 a small employer insurer to provide administrative, marketing, or other services related 27 to the offering of health care insurance plans to small employers in this state is subject 28 to this section as if it were a small employer insurer. 29 (g) A violation of this section by a person is an unfair trade practice for 30 purposes of AS 21.36. 31 * Sec. 89. AS 21.56.190 is amended to read:
01 Sec. 21.56.190. Mandatory reissue of coverage. The director may adopt 02 regulations to require small employer insurers, as a condition of transacting business 03 with small employers in this state after July 1, 1993, to reissue a health care 04 insurance [BENEFIT] plan to a small employer who has had its health care insurance 05 [BENEFIT] plan terminated or not renewed by the insurer after January 1, 1993. The 06 director may prescribe the terms for the reissue of coverage that the director 07 determines are reasonable and necessary to provide continuity of coverage to small 08 employers. 09 * Sec. 90. AS 21.56.250 is repealed and reenacted to read: 10 Sec. 21.56.250. Definitions. In this chapter, 11 (1) "actuarial certification" means a written statement by a member of 12 the American Academy of Actuaries or another individual acceptable to the director 13 indicating that, based on the person's examination, including a review of the 14 appropriate records, actuarial assumptions, and methods used by the insurer in 15 establishing premium rates for applicable health insurance plans, a small employer 16 insurer is in compliance with the provisions of AS 21.56.120; 17 (2) "affiliated" means a person who directly or indirectly, through one 18 or more intermediaries, controls or is controlled by or is under common control with 19 a specified person; 20 (3) "base premium rate" means the lowest premium rate charged or that 21 could have been charged under the rating system by the small employer insurer to 22 small employers with similar case characteristics for health care insurance plans with 23 the same or similar coverage; 24 (4) "basic health care insurance plan" means a lower cost plan offered 25 under AS 21.56.140; 26 (5) "beneficiary" has the meaning given in AS 21.54.500; 27 (6) "board" means the board of directors of the Small Employer Health 28 Reinsurance Association; 29 (7) "bona fide association" has the meaning given in AS 21.54.500; 30 (8) "case characteristics" means demographic or other objective 31 characteristics of a small employer that are considered by the small employer insurer
01 in the determination of premium rates for the small employer, except that claim 02 experience, health status, and duration of coverage may not be case characteristics for 03 the purposes of this chapter; 04 (9) "committee" means the health benefit plan committee established 05 in AS 21.56.060; 06 (10) "eligible employee" means an employee who works on a full-time 07 basis, with a normal work week of 30 or more hours; "eligible employee" includes a 08 sole proprietor, a partner of a partnership, or an independent contractor if the sole 09 proprietor, partner, or contractor is included as an employee under a health care 10 insurance plan of a small employer, but does not include an employee who works on 11 a part-time, temporary, or substitute basis; 12 (11) "employee" has the meaning given in AS 21.54.500; 13 (12) "group market" has the meaning given in AS 21.54.500; 14 (13) "health care insurance plan" has the meaning given in 15 AS 21.54.500; 16 (14) "health care insurer" has the meaning given in AS 21.54.500; 17 (15) "health status factor" has the meaning given in AS 21.54.500; 18 (16) "index rate" means, for small employers with similar case 19 characteristics and plan designs as determined by the insurer for a rating period, the 20 arithmetic average of the applicable base premium rate and the corresponding highest 21 premium rate, 22 (17) "large employer" has the meaning given in AS 21.54.500; 23 (18) "late enrollee" has the meaning given in AS 21.54.500; 24 (19) "member" means a health care insurer; 25 (20) "network plan" has the meaning given in AS 21.54.500; 26 (21) "new business premium rate" means the lowest premium rate 27 charged or offered, or that could have been charged or offered, by the small employer 28 insurer to small employers with similar case characteristics for newly issued health 29 care insurance plans with the same or similar coverage; 30 (22) "plan of operation" means the plan of operation of the reinsurance 31 association adopted by the board under AS 21.56.040;
01 (23) "rating period" means the calendar period for which premium rates 02 established by a small employer insurer are assumed to be in effect; 03 (24) "reinsurance association" means the Small Employer Health 04 Reinsurance Association created in AS 21.56.010; 05 (25) "reinsuring insurer" means a small employer insurer participating 06 in the reinsurance association created in AS 21.56.010; 07 (26) "small employer" has the meaning given in AS 21.54.500; 08 (27) "small employer insurer" means a health care insurer offering, 09 issuing for delivery, delivering, or renewing health care insurance to small employers 10 in the state; 11 (28) "standard health care insurance plan" means a health care 12 insurance plan offered under AS 21.56.140 that includes more comprehensive benefits 13 than under a basic health care insurance plan. 14 * Sec. 91. AS 21.66.110(a) is amended to read: 15 (a) Each [ANNUALLY EACH] title insurance company shall pay [ON OR 16 BEFORE MARCH 1,] a tax of one percent of the amount of gross title insurance 17 premiums received by it, including as premium income received from guaranteed 18 certificates of title and other guarantees of title [DURING THE PRECEDING 19 CALENDAR YEAR] covering property in this state, as shown by its annual statement 20 to the director. The director shall specify the due dates and the method of 21 payment. 22 * Sec. 92. AS 21.66.390(a) is amended to read: 23 (a) A title insurance company shall make rates that are not excessive or 24 inadequate, [AND] that do not unfairly discriminate between risks in this state that 25 involve essentially the same exposure to loss and expense elements, and that give due 26 consideration to 27 (1) the desirability for stability of rate structures; 28 (2) the necessity of assuring the financial solvency of title insurance 29 companies in periods of economic depression by encouraging growth in assets of title 30 insurance companies in periods of high business activity; [AND] 31 (3) the necessity for assuring a reasonable margin of underwriting and
01 operating profit; and 02 (4) investment income. 03 * Sec. 93. AS 21.69.310(a) is amended to read: 04 (a) Meetings of stockholders or members of a domestic insurer shall be held 05 in the city or town of its principal office or place of business in this state. The 06 meetings may be held, for good cause, in another location within the state upon 07 approval of the director. 08 * Sec. 94. AS 21.69.520(a) is amended to read: 09 (a) Subject to the director's prior written approval, a [A] domestic stock 10 or mutual insurer may borrow money to defray the expenses of its organization or [,] 11 provide it with surplus funds [, OR FOR ANY PURPOSE OF ITS BUSINESS,] upon 12 a written agreement that the money is required to be repaid only out of the insurer's 13 surplus in excess of that stipulated in the agreement. The agreement may provide for 14 interest not exceeding six per cent a year, which interest may or may not constitute a 15 liability of the insurer as to its funds other than the excess of surplus, as stipulated in 16 the agreement. A commission or promotion expense may not be paid in connection 17 with the loan. 18 * Sec. 95. AS 21.75.045(a) is amended to read: 19 (a) A person may not act in the capacity of attorney-in-fact for a subscriber 20 regarding a subject that is resident, located, or to be performed in this state or for a 21 reciprocal insurer licensed to do business in this state unless the person is licensed 22 under this chapter. The director may adopt regulations that establish qualifications for 23 being licensed as an attorney-in-fact. The attorney-in-fact for a [DOMESTIC] 24 reciprocal insurer [TRANSACTING ALL OF ITS INSURANCE ACTIVITIES ON A 25 SUBJECT RESIDENT, LOCATED, AND TO BE PERFORMED IN THIS STATE] 26 is exempt from licensing under this title if the attorney-in-fact 27 (1) is a wholly-owned subsidiary of the reciprocal; and 28 (2) does not act as attorney-in-fact for another unaffiliated reciprocal 29 insurer. 30 * Sec. 96. AS 21.76.020(b) is amended to read: 31 (b) By October 1 of each year, the administrator of a joint insurance
01 arrangement shall prepare and deliver to the Legislative Budget and Audit Committee 02 and the director a report showing the true and correct financial condition of the joint 03 insurance arrangement. The report must 04 (1) be attested to by the administrator and the board of directors; 05 (2) include an analysis, certified by a member of the American 06 Academy of Actuaries, of the sufficiency of the loss reserves; and 07 (3) be certified by a certified public accountant. 08 * Sec. 97. AS 21.76.080(e) is amended to read: 09 (e) Within 150 [60] days of the end of the fiscal year, the administrator shall 10 furnish a detailed report of the operation and condition of the fund to the board of 11 directors and the director of the division of insurance. [THE REPORT FURNISHED 12 TO THE DIRECTOR OF INSURANCE SHALL BE 13 (1) FILED IN THE GENERAL FORM AND CONTEXT 14 ACCEPTABLE TO THE DIRECTOR; 15 (2) IN ACCORDANCE WITH ACCOUNTING PRINCIPLES 16 ESTABLISHED UNDER THIS TITLE; AND 17 (3) AVAILABLE FOR PUBLIC INSPECTION.] 18 * Sec. 98. AS 21.78.293(b) is amended to read: 19 (b) The court shall review and adopt [MAY APPROVE, DISAPPROVE, OR 20 MODIFY] the receiver's report on claims by approving those claims that are 21 supported by substantial evidence and disapproving allowed claims that are not 22 supported by substantial evidence. Claims in a report that are not disapproved 23 [MODIFIED] by the court within a period of 120 [60] days following submission by 24 the receiver shall be treated by the receiver as allowed claims. 25 * Sec. 99. AS 21.84.590 is amended to read: 26 Sec. 21.84.590. Other provisions applicable. In addition to the provisions 27 contained in this chapter, the following provisions of this title apply to fraternal benefit 28 societies to the extent applicable and not in conflict with the express provisions of this 29 chapter and the reasonable implications of this chapter: 30 (1) AS 21.03; 31 (2) AS 21.06;
01 (3) AS 21.09.050 and 21.09.100; 02 (4) AS 21.09.200 and 21.09.205; 03 (5) AS 21.18; 04 (6) AS 21.21; 05 (7) AS 21.27; 06 (8) AS 21.33; 07 (9) AS 21.36; 08 (10) AS 21.42.290, 21.42.347, and 21.42.355; 09 (11) AS 21.53; 10 (12) AS 21.54; 11 (13) AS 21.56; 12 (14) AS 21.69.370 and 21.69.640; 13 (15) [(13)] AS 21.78; 14 (16) [(14)] AS 21.89.060. 15 * Sec. 100. AS 21.86.150 is amended by adding new subsections to read: 16 (g) A health maintenance organization that offers, renews, issues for delivery, 17 or delivers in this state a health care insurance plan in the group market that does not 18 impose a preexisting condition exclusion with respect to a particular coverage option 19 under the plan may impose an affiliation period for that coverage option only if the 20 affiliation period 21 (1) is applied uniformly without regard to a health status factor; 22 (2) does not exceed two months for new enrollees and three months for 23 late enrollees; 24 (3) begins on the enrollment date; and 25 (4) runs concurrently with any waiting period under the plan. 26 (h) A health maintenance organization may use a method other than a 27 preexisting condition exclusion or an affiliation period to lessen the risk of adverse 28 selection only with prior written approval of the director. 29 * Sec. 101. AS 21.86.260(a) is amended to read: 30 (a) Except as provided in AS 21.36, AS 21.42, AS 21.54, AS 21.56 and in this 31 chapter, this title does not apply to a health maintenance organization that obtains a
01 certificate of authority under this chapter. This subsection does not apply to an insurer 02 licensed under AS 21.09 or a hospital or medical service corporation licensed under 03 AS 21.87 except with respect to its health maintenance organization activities 04 authorized by and regulated under this chapter. 05 * Sec. 102. AS 21.86.900 is amended by adding new paragraphs to read: 06 (10) "affiliation period" means a period of time under a contract with 07 a health maintenance organization 08 (A) that must expire before coverage becomes effective; 09 (B) during which the health maintenance organization is not 10 required to provide health care services or benefits; and 11 (C) for which no premium is charged to the participant or 12 beneficiary for coverage during the period; 13 (11) "beneficiary" has the meaning given in AS 21.54.500; 14 (12) "enrollment date" has the meaning given in AS 21.54.500; 15 (13) "group market" has the meaning given in AS 21.54.500; 16 (14) "health status factor" has the meaning given in AS 21.54.500; 17 (15) "participant" has the meaning given in AS 21.54.500; 18 (16) "preexisting condition exclusion" has the meaning given in 19 AS 21.54.500; 20 (17) "waiting period" has the meaning given in AS 21.54.500. 21 * Sec. 103. AS 21.87.140(c) is amended to read: 22 (c) Each service agreement shall further effectively provide in substance that 23 (1) the participant provider shall be compensated for services rendered 24 to a subscriber in accordance with terms [A SCHEDULE OF FEES] contained in the 25 agreement or attached to and made a part of the agreement [,] and that the participant 26 provider may not request or receive from the service corporation compensation for the 27 services that [WHICH] is not in accord with the terms [SCHEDULE]; 28 (2) compensation for services may be prorated and settled under the 29 circumstances and in the manner referred to in AS 21.87.300; 30 (3) if the participant provider withdraws from the agreement, the 31 withdrawal may not be effective as to a subscriber's contract in force on the date of
01 the withdrawal until the termination of the subscriber's contract or the next anniversary 02 of the subscriber's contract, whichever date is the earlier. 03 * Sec. 104. AS 21.87.150(c) is amended to read: 04 (c) Each service agreement must further effectively in substance provide that 05 (1) the participant hospitals shall be compensated for services rendered 06 to a subscriber in accordance with terms [A SCHEDULE OF CHARGES] contained 07 in the agreement or attached to and made a part of the agreement [,] and that the 08 hospital may not request or receive from the service corporation compensation for the 09 services that is not in accord with the terms [SCHEDULE]; 10 (2) compensation for services may be prorated and settled under the 11 circumstances and in the manner referred to in AS 21.87.300; 12 (3) if the participant hospital withdraws from the agreement, the 13 withdrawal may not be effective as to a subscriber's contract in force on the date of 14 the withdrawal until the termination of the subscriber's contract or the next anniversary 15 of the subscriber's contract, whichever date is the earlier. 16 * Sec. 105. AS 21.87.180(a) is amended to read: 17 (a) A service corporation may not issue or use a basic form of service 18 agreement or subscriber's contract, or application, identification, supplement, or 19 endorsement to be connected with the agreement or contract, until the form has been 20 filed with and approved by the director. This provision does not apply to riders 21 [AGREEMENTS, CONTRACTS, APPLICATIONS, IDENTIFICATION 22 SUPPLEMENTS], endorsements, or other forms of unique character designed for and 23 used with relation to a particular subject [SET OF CIRCUMSTANCES]. 24 * Sec. 106. AS 21.87.190(b) is amended to read: 25 (b) The service corporation shall, before use, file with the director (1) a 26 schedule of subscription rates, fees, or payments of any kind to be charged subscribers; 27 (2) every rating manual, schedule, plan, rule, or formula; and (3) [SHALL FILE] 28 before use, any modification to the rating manual, schedule, plan, rule, or formula. 29 Each filing must state the effective date and must provide a comprehensive 30 description of the coverage. The director may withhold the rating formula from 31 public inspection for as long as the director determines that withholding the
01 rating formula is necessary to protect the service corporation against unwarranted 02 injury or is in the public interest [EVERY PROPOSED CHANGE OR 03 MODIFICATION IN THE RATES, FEES, OR PAYMENTS]. 04 * Sec. 107. AS 21.87.200 is repealed and reenacted to read: 05 Sec. 21.87.200. Reserves. In addition to the surplus fund provided for in 06 AS 21.87.210, each service corporation shall establish and maintain unimpaired 07 reserves and liabilities required under AS 21.18.050. 08 * Sec. 108. AS 21.87.340 is amended to read: 09 Sec. 21.87.340. Other provisions applicable. In addition to the provisions 10 contained or referred to previously in this chapter, the following chapters and 11 provisions of this title also apply with respect to service corporations to the extent 12 applicable and not in conflict with the express provisions of this chapter and the 13 reasonable implications of the express provisions, and, for the purposes of the 14 application, the corporations shall be considered to be mutual "insurers": 15 (1) AS 21.03; 16 (2) AS 21.06; 17 (3) AS 21.09, except AS 21.09.090; 18 (4) AS 21.18.010; 19 (5) AS 21.18.030; 20 (6) AS 21.18.040; 21 (7) AS 21.18.120; 22 (8) AS 21.21.321; 23 (9) AS 21.36; 24 (10) AS 21.42.345 - 21.42.365 and 21.42.375 - 21.42.395 [, 21.42.375, 25 21.42.380, AND 21.42.385]; 26 (11) AS 21.51.120; 27 (12) AS 21.53; 28 (13) AS 21.54 [AS 21.54.020]; 29 (14) AS 21.56; 30 (15) AS 21.69.400; 31 (16) AS 21.69.520;
01 (17) AS 21.69.600, 21.69.620, and 21.69.630; 02 (18) AS 21.78; 03 (19) AS 21.89.040; 04 (20) AS 21.89.060; 05 (21) AS 21.90. 06 * Sec. 109. AS 21.89.020(f) is amended to read: 07 (f) An automobile liability insurance policy must provide 08 (1) that all expenses and fees, not including counsel fees or adjuster 09 fees, incurred because of arbitration or mediation shall be paid as determined by the 10 arbitrator; 11 (2) liability coverage in the amount set out in AS 28.22.101(d) for 12 motor vehicles rented in the United States or Canada by a person insured under the 13 policy; 14 (3) physical damage coverage for motor vehicles rented in the United 15 States or Canada, if the policy provides physical damage coverage; if the insured 16 declines physical damage coverage, the insurer shall offer physical damage coverage 17 for rented vehicles; 18 (4) that payments from applicable coverage provided under (2) and 19 (3) of this subsection will be made in the following order of priority: 20 (A) from a policy or coverage purchased by the operator 21 from the person who has the vehicle available for rent; 22 (B) from a policy or coverage covering the operator of a 23 rented vehicle but not purchased from the person who has the vehicle 24 available for rent; and 25 (C) from a policy or coverage of the person who has the 26 vehicle available for rent. 27 * Sec. 110. AS 21.89.020(g) is amended to read: 28 (g) An insurance company offering automobile liability insurance in this state 29 shall offer a short term policy valid for no more than seven days. The coverage 30 available for the short term policy must be comparable to coverage available for longer 31 term policies. The provisions of AS 21.36.210 - 21.36.310 do not apply to short
01 term policies issued under this subsection. 02 * Sec. 111. AS 21.90.900(29) is amended to read: 03 (29) "policy" means the written contract of or written agreement for or 04 effecting insurance, by whatever name called, and includes all clauses, riders, 05 endorsements, and papers attached to it and a part of it; for a group, trust, 06 association, or similar entity, "policy" also means a certificate or other evidence 07 of insurance that establishes the written contract of or written agreement for or 08 effecting insurance for an insured or other beneficiary of the entity; 09 * Sec. 112. AS 21.90.900 is amended by adding new paragraphs to read: 10 (41) "certified financial statement" means a financial statement upon 11 which an independent certified public accountant, or an accountant holding a 12 substantially equivalent designation as determined by the director, renders or disclaims 13 an opinion after performance of an audit; 14 (42) "medical care" means amounts paid for 15 (A) diagnosis, care, mitigation, treatment, or prevention of 16 disease, or amounts paid for the purpose of affecting any structure or function 17 of the body; 18 (B) transportation primarily for and essential to medical care 19 described in (A) of this paragraph; and 20 (C) insurance covering medical care described in (A) and (B) 21 of this paragraph. 22 * Sec. 113. AS 28.20.440 is amended by adding a new subsection to read: 23 (l) Notwithstanding any other provisions of law, a person who resides in the 24 same household as the person named as insured or a person who is a relative of the 25 person named as insured shall be excluded from coverage under a motor vehicle 26 liability policy if the person named as insured requests that that person be excluded 27 from coverage. 28 * Sec. 114. AS 28.22.201(a) is amended to read: 29 (a) The uninsured and underinsured motorists coverage required under this 30 chapter 31 (1) applies [DOES NOT APPLY] to bodily injury, sickness, disease,
01 or death of an insured or damage to or destruction of property of an insured even if 02 [UNTIL] the limits of liability bonds and policies that apply have not been used up 03 by payments or judgments or settlements; however, the insurer shall, in each 04 instance, receive a credit against the insured's total damages for amounts actually 05 received by the insured for covered claims from other sources, including liability 06 bonds, other insurance policies, judgments, or settlements; 07 (2) must be a single combined coverage; and 08 (3) may be rejected by the insured in writing; if the insured has rejected 09 uninsured or underinsured coverage, the coverage may not be included in a 10 supplemental, renewal, or replacement policy unless the insured subsequently requests 11 uninsured or underinsured coverage in writing. 12 * Sec. 115. AS 21.42.375(d), 21.42.395(d); AS 21.56.110(b), 21.56.110(d), 21.56.130, 13 21.56.150, 21.56.170; AS 21.81; AS 28.20.445(c), 28.20.445(h); AS 28.22.211; and 14 AS 28.40.100(a)(22) are repealed. 15 * Sec. 116. AS 21.54.150, enacted by sec. 59 of this Act, is repealed. 16 * Sec. 117. Sections 3, 4, and 5, ch. 101, SLA 1992, are repealed. 17 * Sec. 118. Sections 4, 7, 9, 12, and 13, ch. 39, SLA 1993, are repealed. 18 * Sec. 119. AS 21.54.150, enacted by sec. 59 of this Act, takes effect January 1, 1998. 19 * Sec. 120. Sections 6, 7, 27 - 30, and 91 of this Act take effect January 1, 1998. 20 * Sec. 121. Except as provided in secs. 119, 120, and 122 of this Act, this Act takes effect 21 July 1, 1997. 22 * Sec. 122. Section 116 of this Act takes effect September 20, 2001.