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Indiana General Assembly > Session > 1997 Special Session 1 > Senate Bill 2 - Health insurance portability Senate Bill 2 - Health insurance portability

Introduced Version

SENATE BILL No. 2 (ss)

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DIGEST OF INTRODUCED BILL



Citations Affected: IC 2-5-23-8; IC 27-8.

Synopsis: Health insurance portability. Brings health related statutes into compliance with federal law. Adds provisions regarding guaranteed renewability. Allows for a 12 month preexisting condition clause in a group policy for which an employer has not paid or reimbursed the employee for any part of the premiums or benefits. Adds a provision to group accident and sickness policies requiring group portability and guaranteed renewability provisions. Authorizes the Indiana comprehensive health insurance association (ICHIA) to solicit bids for coverage from providers located outside Indiana. Provides that, in the assessment of a net loss to the members of ICHIA according to each member's share of premiums received in Indiana, ICHIA shall consider subscriber premiums received by health maintenance organizations. Provides that an applicant for an ICHIA policy other than a federally eligible individual must be a

(Continued next page)

Effective: June 30, 1997; July 1, 1997.

Miller, Simpson

    May 14, 1997, read first time and referred to Committee on Rules and Legislative Procedure.

Digest Continued

United States citizen and must have resided in Indiana for at least 180 consecutive days immediately preceding the date of application. Provides that a person who receives health care through Medicaid is not eligible to have all or a portion of the premium for an ICHIA policy paid by the state. Adds conforming provisions from federal law regarding late enrollees and reasons that a small employer insurer may cancel or refuse to renew a health insurance plan. Provides that provisions of the act apply to insurance policies that are in force after June 30, 1997. Makes conforming amendments.


Introduced

First Special Session 110th General Assembly (1997)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts between statutes enacted by the 1996 General Assembly.

SENATE BILL No. 2 (ss)



    A BILL FOR AN ACT to amend the Indiana Code concerning insurance.

Be it enacted by the General Assembly of the State of Indiana:


SOURCE: IC 2-5-23-8; (97)LS8010.1. -->

    SECTION 1. IC 2-5-23-8, AS ADDED BY P.L.11-1995, SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 1997]: Sec. 8. Beginning May 1, 1997, the health policy advisory committee is established. At the request of the chairman, the health policy advisory committee shall provide information and otherwise assist the commission to perform the duties of the commission under this chapter. The health policy advisory committee members are ex officio and may not vote. The health policy advisory committee members shall be appointed from the general public, and must include one (1) individual who represents each of the following:
        (1) The interests of public hospitals.
        (2) The interests of community mental health centers.
        (3) The interests of community health centers.
        (4) The interests of the long term care industry.         (5) The interests of health care professionals licensed under IC 25, but not licensed under IC 25-22.5.
        (6) The interests of rural hospitals. An individual appointed under this subdivision must be licensed under IC 25-22.5.
        (7) The interests of health maintenance organizations (as defined in IC 27-13-1-19).
        (8) The interests of for-profit health care facilities (as defined in IC 27-8-10-1(g)). IC 27-8-10-1(l)).
        (9) A statewide consumer organization.
        (10) A statewide senior citizen organization.
        (11) A statewide organization representing people with disabilities.
        (12) Organized labor.
        (13) The interests of businesses that purchase health insurance policies.
        (14) The interests of businesses that provide employee welfare benefit plans (as defined in 29 U.S.C. 1002) that are self-funded.
        (15) A minority community.
        (16) The uninsured. An individual appointed under this subdivision must be and must have been chronically uninsured.
        (17) An individual who is not associated with any organization, business, or profession represented in this subsection other than as a consumer.
SOURCE: IC 27-8-5-3; (97)LS8010.2. -->

    SECTION 2. IC 27-8-5-3, AS AMENDED BY P.L.93-1995, SECTION 8, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 1997]: Sec. 3. (a) Except as provided in subsection (c), each policy delivered or issued for delivery to any person in this state shall contain the provisions specified in this subsection in the words in which the same appear in this section. However, the insurer may, at its option, substitute for one (1) or more of the provisions corresponding provisions of different wording approved by the commissioner that are in each instance no less favorable in any respect to the insured or the beneficiary. The provisions shall be preceded individually by the caption appearing in this subsection or, at the option of the insurer, by appropriate individual or group captions or subcaptions as the commissioner may approve.
    (1) A provision as follows: ENTIRE CONTRACT; CHANGES: This policy, including the endorsements and the attached papers, if any, constitutes the entire contract of insurance. No change in this policy shall be valid until approved by an executive officer of the insurer and unless such approval be endorsed hereon or attached hereto. No agent has authority to change this policy or to waive any of its provisions.
    (2) A provision as follows: TIME LIMIT ON CERTAIN DEFENSES: (A) After two (2) years from the date of issue of this policy no misstatements, except fraudulent misstatements, made by the applicant in the application for such policy shall be used to void the policy or to deny a claim for loss incurred or disability (as defined in the policy) commencing after the expiration of such two (2) year period.
    The foregoing policy provision shall not be so construed as to affect any legal requirement for avoidance of a policy of denial of a claim during such initial two (2) year period, nor to limit the application of subsection (b), (1), (2), (3), (4), and (5) in the event of misstatement with respect to age or occupation or other insurance.
    A policy which the insured has the right to continue in force subject to its terms by the timely payment of premium:
        (1) until at least age fifty (50); or
        (2) in the case of a policy issued after forty-four (44) years of age, for at least five (5) years from its date of issue;
may contain in lieu of the foregoing the following provision (from which the clause in parentheses may be omitted at the insurer's option) under the caption "INCONTESTABLE": After this policy has been in force for a period of two (2) years during the lifetime of the insured (excluding any period during which the insured is disabled), it shall become incontestable as to the statements contained in the application.
    (B) No claim for loss incurred or disability (as defined in the policy) commencing after two (2) years from the date of issue of this policy shall be reduced or denied on the ground that a disease or physical condition, not excluded from coverage by name or specific description effective on the date of loss, had existed prior to the effective date of coverage of this policy.
    (3) A provision as follows: GRACE PERIOD: A grace period of (insert a number not less than "7" for weekly premium policies, "10" for monthly premium policies and "31" for all other policies) days will be granted for the payment of each premium falling due after the first premium, during which grace period the policy shall continue in force.
    A policy in which the insurer reserves the right to refuse renewal shall have, at the beginning of the above provision: "Unless not less than thirty (30) days prior to the premium due date the insurer has delivered to the insured or has mailed to the insured's last address as shown by the records of the insurer written notice of its intention not to renew this policy beyond the period for which the premium has been accepted."
    Each policy in which the insurer reserves the right to refuse renewal on an individual basis shall provide, in substance, in a provision of the policy, in an endorsement on the policy, or in a rider attached to the policy, that subject to the right to terminate the policy upon non-payment of premium when due, such right to refuse renewal shall not be exercised before the renewal date occurring on, or after and nearest, each anniversary, or in the case of lapse and reinstatement at the renewal date occurring on, or after and nearest, each anniversary of the last reinstatement, and that any refusal or renewal shall be without prejudice to any claim originating while the policy is in force. The preceding sentence shall not apply to accident insurance only policies.
    (4) A provision as follows: REINSTATEMENT: If any renewal premium is not paid within the time granted the insured for payment, a subsequent acceptance of premium by the insurer or by any agent authorized by the insurer to accept such premium, without requiring in connection therewith an application for reinstatement, shall reinstate the policy. Provided, that if the insurer or such agent requires an application for reinstatement and issues a conditional receipt for the premium tendered, the policy will be reinstated upon approval of such application by the insurer or, lacking such approval, upon the forty-fifth day following the date of such conditional receipt unless the insurer has previously notified the insured in writing of its disapproval of such application. The reinstated policy shall cover only loss resulting from such accidental injury as may be sustained after the date of reinstatement and loss due to such sickness as may begin more than ten (10) days after such date. In all other respects the insured and insurer shall have the same rights as they had under the policy immediately before the due date of the defaulted premium, subject to any provisions endorsed hereon or attached hereto in connection with the reinstatement. Any premium accepted in connection with a reinstatement shall be applied to a period for which premium has not been previously paid, but not to any period more than sixty (60) days prior to the date of reinstatement.
    The last sentence of the above provision may be omitted from any policy which the insured has the right to continue in force subject to its terms by the timely payment of premiums:         (1) until at least fifty (50) years of age; or
        (2) in the case of a policy issued after forty-four (44) years of age, for at least five (5) years from its date of issue.
    (5) A provision as follows: NOTICE OF CLAIM: Written notice of claim must be given to the insurer within twenty (20) days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible. Notice given by or on behalf of the insured or the beneficiary to the insurer at _______ (insert the location of such office as the insurer may designate for the purpose), or to any authorized agent of the insurer, with information sufficient to identify the insured, shall be deemed notice to the insurer.
    In a policy providing a loss-of-time benefit which may be payable for at least two (2) years, an insurer may insert the following between the first and second sentences of the above provision:
    Subject to the qualifications set forth below, if the insured suffers loss of time on account of disability for which indemnity may be payable for at least two (2) years, the insured shall, at least once in every six (6) months after having given notice of claim, give to the insurer notice of continuance of said disability, except in the event of legal incapacity. The period of six (6) months following any filing of proof by the insured or any payment by the insurer on account of such claim or any denial of liability in whole or in part by the insurer shall be excluded in applying this provision. Delay in the giving of such notice shall not impair the insurer's right to any indemnity which would otherwise have accrued during the period of six (6) months preceding the date on which such notice is actually given.
    (6) A provision as follows: CLAIM FORMS: The insurer, upon receipt of a notice of claim, will furnish to the claimant such forms as are usually furnished by it for filing proofs of loss. If such forms are not furnished within fifteen (15) days after the giving of such notice the claimant shall be deemed to have complied with the requirements of this policy as to proof of loss upon submitting, within the time fixed in the policy for filing proofs of loss, written proof covering the occurrence, the character, and the extent of the loss for which claim is made.
    (7) A provision as follows: PROOFS OF LOSS: Written proof of loss must be furnished to the insurer at its said office in case of claim for loss for which this policy provides any periodic payment contingent upon continuing loss within ninety (90) days after the termination of the period for which the insurer is liable and in case of claim for any other loss within ninety (90) days after the date of such loss. Failure to furnish such proof within the time required shall not invalidate nor reduce any claim if it was not reasonably possible to give proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than one (1) year from the time proof is otherwise required.
    (8) A provision as follows: TIME OF PAYMENT OF CLAIMS: Indemnities payable under this policy for any loss other than loss for which this policy provides any periodic payment will be paid immediately upon receipt of due written proof of such loss. Subject to due written proof of loss, all accrued indemnities for loss for which this policy provides periodic payment will be paid _______ (insert period for payment which must not be less frequently than monthly) and any balance remaining unpaid upon the termination of liability will be paid immediately upon receipt of due written proof.
    (9) A provision as follows: PAYMENT OF CLAIMS: Indemnity for loss of life will be payable in accordance with the beneficiary designation and the provisions respecting such payment which may be prescribed herein and effective at the time of payment. If no such designation or provision is then effective, such indemnity shall be payable to the estate of the insured. Any other accrued indemnities unpaid at the insured's death may, at the option of the insurer, be paid either to such beneficiary or to such estate. All other indemnities will be payable to the insured.
    The following provisions, or either of them, may be included with the foregoing provision at the option of the insurer:
    If any indemnity of this policy shall be payable to the estate of the insured, or to an insured or beneficiary who is a minor or otherwise not competent to give a valid release, the insurer may pay such indemnity, up to an amount not exceeding $ _______ (insert an amount which shall not exceed $1,000), to any relative by blood or connection by marriage of the insured or beneficiary who is deemed by the insurer to be equitably entitled thereto. Any payment made by the insurer in good faith pursuant to this provision shall fully discharge the insurer to the extent of such payment.
    Subject to any written direction of the insured in the application or otherwise all or a portion of any indemnities provided by this policy on account of hospital, nursing, medical, or surgical services may, at the insurer's option and unless the insured requests otherwise in writing not later than the time of filing proofs of such loss, be paid directly to the hospital or person rendering such services; but it is not required that the service be rendered by a particular hospital or person.
    For the purposes of this section a "minor" is a person under the age of eighteen (18) years. A person eighteen (18) years of age or over is competent, insofar as the person's age is concerned, to sign a valid release.
    (10) A provision as follows: PHYSICAL EXAMINATIONS AND AUTOPSY: The insurer at its own expense shall have the right and opportunity to examine the person of the insured when and as often as it may reasonably require during the pendency of a claim hereunder and to make an autopsy in case of death where it is not forbidden by law.
    (11) A provision as follows: LEGAL ACTIONS: No action at law or in equity shall be brought to recover on this policy prior to the expiration of sixty (60) days after written proof of loss has been furnished in accordance with the requirements of this policy. No such action shall be brought after the expiration of three (3) years after the time written proof of loss is required to be furnished.
    (12) A provision as follows: CHANGE OF BENEFICIARY: Unless the insured makes an irrevocable designation of beneficiary, the right to change of beneficiary is reserved to the insured and the consent of the beneficiary or beneficiaries shall not be requisite to surrender or assignment of this policy or to any change of beneficiary or beneficiaries, or to any other changes in this policy.
    The first clause of this provision, relating to the irrevocable designation of beneficiary, may be omitted at the insurer's option.
     (13) A provision as follows: GUARANTEED RENEWABILITY: To comply with the federal Health Insurance Portability and Accountability Act of 1996 (26 U.S.C. 9801 et seq.), renewability is guaranteed.
    (b) Except as provided in subsection (c), no policy delivered or issued for delivery to any person in Indiana shall contain provisions respecting the matters set forth below unless the provisions are in the words in which the provisions appear in this section. However, the insurer may use, instead of any provision, a corresponding provision of different wording approved by the commissioner which is not less favorable in any respect to the insured or the beneficiary. Any substitute provision contained in the policy shall be preceded individually by the appropriate caption appearing in this subsection or, at the option of the insurer, by appropriate individual or group captions or subcaptions as the commissioner may approve.
    (1) A provision as follows: CHANGE OF OCCUPATION: If the insured be injured or contract sickness after having changed the insured's occupation to one classified by the insurer as more hazardous than that stated in this policy or while doing for compensation anything pertaining to an occupation so classified, the insurer will pay only such portion of the indemnities provided in this policy as the premium paid would have purchased at the rates and within the limits fixed by the insurer for such more hazardous occupation. If the insured changes the insured's occupation to one classified by the insurer as less hazardous than that stated in this policy, the insurer, upon receipt of proof of such change of occupation, will reduce the premium rate accordingly, and will return the excess pro-rata unearned premium from the date of change of occupation or from the policy anniversary date immediately preceding receipt of such proof, whichever is the more recent. In applying this provision, the classification of occupational risk and the premium rates shall be such as have been last filed by the insurer prior to the occurrence of the loss for which the insurer is liable or prior to date of proof of change in occupation with the state official having supervision of insurance in the state where the insured resided at the time this policy was issued; but if such filing was not required, then the classification of occupational risk and the premium rates shall be those last made effective by the insurer in such state prior to the occurrence of the loss or prior to the date of proof of change in occupation.
    (2) A provision as follows: MISSTATEMENT OF AGE: If the age of the insured has been misstated, all amounts payable under this policy shall be such as the premium paid would have purchased at the correct age.
    (3) A provision as follows: OTHER INSURANCE IN THIS INSURER: If an accident or sickness or accident and sickness policy or policies previously issued by the insurer to the insured are in force concurrently herewith, making the aggregate indemnity for _______ (insert type of coverage or coverages) in excess of $ _______ (insert maximum limit of indemnity or indemnities) the excess insurance shall be void and all premiums paid for such excess shall be returned to the insured or to the insured's estate. Or, instead of that provision: Insurance effective at any one (1) time on the insured under a like policy or policies, in this insurer is limited to the one (1) such policy elected by the insured, the insured's beneficiary or the insured's estate, as the case may be, and the insurer will return all premiums paid for all other such policies.
    (4) A provision as follows: INSURANCE WITH OTHER INSURER: If there is other valid coverage, not with this insurer, providing benefits for the same loss on a provision of service basis or on an expense incurred basis and of which this insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability under any expense incurred coverage of this policy shall be for such proportion of the loss as the amount which would otherwise have been payable hereunder plus the total of the like amounts under all such other valid coverages for the same loss of which this insurer had notice bears to the total like amounts under all valid coverages for such loss, and for the return of such portion of the premiums paid as shall exceed the pro-rata portion of the amount so determined. For the purpose of applying this provision when other coverage is on a provision of service basis, the "like amount" of such other coverage shall be taken as the amount which the services rendered would have cost in the absence of such coverage.
    If the foregoing policy provision is included in a policy which also contains the next following policy provision there shall be added to the caption of the foregoing provision the phrase "EXPENSE INCURRED BENEFITS". The insurer may, at its option, include in this provision a definition of "other valid coverage," approved as to form by the commissioner, which definition shall be limited in subject matter to coverage provided by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, and by hospital or medical service organizations, and to any other coverage the inclusion of which may be approved by the commissioner. In the absence of such definition such term shall not include group insurance, automobile medical payments insurance, or coverage provided by hospital or medical service organizations or by union welfare plans or employer or employee benefit organizations. For the purpose of applying the foregoing policy provision with respect to any insured, any amount of benefit provided for such insured pursuant to any compulsory benefit statute (including any worker's compensation or employer's liability statute) whether provided by a governmental agency or otherwise shall in all cases be deemed to be "other valid coverage" of which the insurer has had notice. In applying the foregoing policy provision no third party liability coverage shall be included as "other valid coverage".
    (5) A provision as follows: INSURANCE WITH OTHER INSURERS: If there is other valid coverage, not with this insurer, providing benefits for the same loss on other than an expense incurred basis and of which this insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability for such benefits under this policy shall be for such proportion of the indemnities otherwise provided hereunder for such loss as the like indemnities of which the insurer had notice (including the indemnities under this policy) bear to the total amount of all like indemnities for such loss, and for the return of such portion of the premium paid as shall exceed the pro-rata portion for the indemnities thus determined. If the foregoing policy provision is included in a policy which also contains the next preceding policy provision there shall be added to the caption of the foregoing provision the phrase "-OTHER BENEFITS." The insurer may, at its option, include in this provision a definition of "other valid coverage," approved as to form by the commissioner, which definition shall be limited in subject matter to coverage provided by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, and to any other coverage to the inclusion of which may be approved by the commissioner. In the absence of such definition such term shall not include group insurance, or benefits provided by union welfare plans or by employer or employee benefit organizations. For the purpose of applying the foregoing policy provision with respect to any insured, any amount of benefit provided for such insured pursuant to any compulsory benefit statute (including any worker's compensation or employer's liability statute) whether provided by a governmental agency or otherwise shall in all cases be deemed to be "other valid coverage" of which the insurer has had notice. In applying the foregoing policy provision no third party liability coverage shall be included as "other valid coverage".
    (6) A provision as follows: RELATION OF EARNINGS TO INSURANCE: If the total monthly amount of loss of time benefits promised for the same loss under all valid loss of time coverage upon the insured, whether payable on a weekly or monthly basis, shall exceed the monthly earnings of the insured at the time disability commenced or the insured's average monthly earnings for the period of two (2) years immediately preceding a disability for which claim is made, whichever is the greater, the insurer will be liable only for such proportionate amount of such benefits under this policy as the amount of such monthly earnings or such average monthly earnings of the insured bears to the total amount of monthly benefits for the same loss under all such coverage upon the insured at the time such disability commences and for the return of such part of the premiums paid during such two (2) years as shall exceed the prorata amount of the premiums for the benefits actually paid; but this shall not operate to reduce the total monthly amount of benefits payable under all such coverage upon the insured below the sum of two hundred dollars ($200) or the sum of the monthly benefits specified in such coverages, whichever is the lesser, nor shall it operate to reduce benefits other than those payable for loss of time.
    The foregoing policy provision may be inserted only in a policy which the insured has the right to continue in force subject to its terms by the timely payment of premiums:
        (1) until at least fifty (50) years of age; or
        (2) in the case of a policy issued after forty-four (44) years of age, for at least five (5) years from its date of issue.
The insurer may, at its option, include in this provision a definition of "valid loss of time coverage," approved as to form by the commissioner, which definition shall be limited in subject matter to coverage provided by governmental agencies or by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, or to any other coverage the inclusion of which may be approved by the commissioner or any combination of such coverages. In the absence of such definition the term shall not include any coverage provided for the insured pursuant to any compulsory benefit statute (including any worker's compensation or employer's liability statute), or benefits provided by union welfare plans or by employer or employee benefit organizations.
    (7) A provision as follows: UNPAID PREMIUM: Upon the payment of a claim under this policy, any premium then due and unpaid or covered by any note or written order may be deducted therefrom.
    (8) A provision as follows: CONFORMITY WITH STATE STATUTES: Any provision of this policy which, on its effective date, is in conflict with the statutes of the state in which the insured resides on such date is hereby amended to conform to the minimum requirements of such statutes.
    (9) A provision as follows: ILLEGAL OCCUPATION: The insurer shall not be liable for any loss to which a contributing cause was the insured's commission of or attempt to commit a felony or to which a contributing cause was the insured's being engaged in an illegal occupation.     (10) A provision as follows: INTOXICANTS AND NARCOTICS: The insurer shall not be liable for any loss sustained or contracted in consequence of the insured's being intoxicated or under the influence of any narcotic unless administered on the advice of a physician.
    (c) If any provision of this section is in whole or in part inapplicable to or inconsistent with the coverage provided by a particular form of policy the insurer, with the approval of the commissioner, shall omit from such policy any inapplicable provision or part of a provision, and shall modify any inconsistent provision or part of the provision in such manner as to make the provision as contained in the policy consistent with the coverage provided by the policy.
    (d) The provisions which are the subject of subsections (a) and (b), or any corresponding provisions which are used in lieu thereof in accordance with such subsections, shall be printed in the consecutive order of the provisions in such subsections or, at the option of the insurer, any such provision may appear as a unit in any part of the policy, with other provisions to which it may be logically related, provided the resulting policy shall not be in whole or in part unintelligible, uncertain, ambiguous, abstruse, or likely to mislead a person to whom the policy is offered, delivered, or issued.
    (e) "Insured," as used in this chapter, shall not be construed as preventing a person other than the insured with a proper insurable interest from making application for and owning a policy covering the insured or from being entitled under such a policy to any indemnities, benefits, and rights provided therein.
    (f)(1) Any policy of a foreign or alien insurer, when delivered or issued for delivery to any person in this state, may contain any provision which is not less favorable to the insured or the beneficiary than is provided in this chapter and which is prescribed or required by the law of the state under which the insurer is organized.
    (f)(2) Any policy of a domestic insurer may, when issued for delivery in any other state or country, contain any provision permitted or required by the laws of such other state or country.
    (g) The commissioner may make reasonable rules under IC 4-22-2 concerning the procedure for the filing or submission of policies subject to this chapter as are necessary, proper, or advisable to the administration of this chapter. This provision shall not abridge any other authority granted the commissioner by law.
SOURCE: IC 27-8-5-19; (97)LS8010.3. -->

    SECTION 3. IC 27-8-5-19, AS AMENDED BY P.L.185-1996, SECTION 14, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 1997]: Sec. 19. (a) As used in this chapter, "late enrollee" has the meaning set forth in 42 U.S.C. 300gg(b)(3).
     (b) A policy of group accident and sickness insurance may not be issued to a group that has a legal situs in Indiana unless it contains in substance:
        (1) the provisions described in subsection (b) (c); or
        (2) provisions that, in the opinion of the commissioner, are:
            (A) more favorable to the persons insured; or
            (B) at least as favorable to the persons insured and more favorable to the policyholder;
        than the provisions set forth in subsection (b) (c).
    (b) (c) The provisions referred to in subsection (a)(1) (b)(1) are as follows:
        (1) A provision that the policyholder is entitled to a grace period of thirty-one (31) days for the payment of any premium due except the first, during which grace period the policy will continue in force, unless the policyholder has given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy. The policy may provide that the policyholder is liable to the insurer for the payment of a pro rata premium for the time the policy was in force during the grace period. A provision under this subdivision may provide that the insurer is not obligated to pay claims incurred during the grace period until the premium due is received.
        (2) A provision that the validity of the policy may not be contested, except for nonpayment of premiums, after the policy has been in force for two (2) years after its date of issue, and that no statement made by a person covered under the policy relating to the person's insurability may be used in contesting the validity of the insurance with respect to which the statement was made, unless:
            (A) the insurance has not been in force for a period of two (2) years or longer during the person's lifetime; or
            (B) the statement is contained in a written instrument signed by the insured person.
        However, a provision under this subdivision may not preclude the assertion at any time of defenses based upon a person's ineligibility for coverage under the policy or based upon other provisions in the policy.
        (3) A provision that a copy of the application, if there is one, of the policyholder must be attached to the policy when issued, that all statements made by the policyholder or by the persons insured are to be deemed representations and not warranties, and that no statement made by any person insured may be used in any contest unless a copy of the instrument containing the statement is or has been furnished to the insured person or, in the event of death or incapacity of the insured person, to the insured person's beneficiary or personal representative.
        (4) A provision setting forth the conditions, if any, under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of the person's coverage.
        (5) A provision specifying any additional exclusions or limitations applicable under the policy with respect to a disease or physical condition of a person that existed before the effective date of the person's coverage under the policy and that is not otherwise excluded from the person's coverage by name or specific description effective on the date of the person's loss. An exclusion or limitation that must be specified in a provision under this subdivision:
            (A) may apply only to a disease or physical condition for which medical advice , diagnosis, care, or treatment was received by the person, recommended to the person, or would have been sought by a prudent person, during the: three hundred sixty-five (365) days
                 (i) six (6) months before the effective enrollment date of the person's coverage; or
                 (ii) twelve (12) months for a group policy for which an employer has not paid or reimbursed any part of the premium or benefits; and
            (B) may not apply to a loss incurred or disability beginning after the earlier of:
                (i) the end of a continuous period of three hundred sixty-five (365) days, twelve (12) months beginning on or after the effective enrollment date of the person's coverage; during all of which the person received no medical advice or treatment in connection with the disease or physical condition; or
                (ii) the end of the two (2) year a continuous period of eighteen (18) months beginning on the effective enrollment date of the person's coverage if the person is a late enrollee.
        (6) If premiums or benefits under the policy vary according to a person's age, a provision specifying an equitable adjustment of:
            (A) premiums;
            (B) benefits; or
            (C) both premiums and benefits;
        to be made if the age of a covered person has been misstated. A provision under this subdivision must contain a clear statement of the method of adjustment to be used.
        (7) A provision that the insurer will issue to the policyholder, for delivery to each person insured, a certificate setting forth a statement that:
            (A) explains the insurance protection to which the person insured is entitled;
            (B) indicates to whom the insurance benefits are payable; and
            (C) explains any family member's or dependent's coverage under the policy.
        (8) A provision stating that written notice of a claim must be given to the insurer within twenty (20) days after the occurrence or commencement of any loss covered by the policy, but that a failure to give notice within the twenty (20) day period does not invalidate or reduce any claim if it can be shown that it was not reasonably possible to give notice within that period and that notice was given as soon as was reasonably possible.
        (9) A provision stating that:
            (A) the insurer will furnish to the person making a claim, or to the policyholder for delivery to the person making a claim, forms usually furnished by the insurer for filing proof of loss; and
            (B) if the forms are not furnished within fifteen (15) days after the insurer received notice of a claim, the person making the claim will be deemed to have complied with the requirements of the policy as to proof of loss upon submitting, within the time fixed in the policy for filing proof of loss, written proof covering the occurrence, character, and extent of the loss for which the claim is made.
        (10) A provision stating that:
            (A) in the case of a claim for loss of time for disability, written proof of the loss must be furnished to the insurer within ninety (90) days after the commencement of the period for which the insurer is liable, and that subsequent written proofs of the continuance of the disability must be furnished to the insurer at reasonable intervals as may be required by the insurer;
            (B) in the case of a claim for any other loss, written proof of the loss must be furnished to the insurer within ninety (90) days after the date of the loss; and
            (C) the failure to furnish proof within the time required under clause (A) or (B) does not invalidate or reduce any claim if it was not reasonably possible to furnish proof within that time, and if proof is furnished as soon as reasonably possible but (except in case of the absence of legal capacity of the claimant) no later than one (1) year from the time proof is otherwise required under the policy.
        (11) A provision that:
            (A) all benefits payable under the policy (other than benefits for loss of time) will be paid within forty-five (45) days after the insurer receives all information required to determine liability under the terms of the policy; and
            (B) subject to due proof of loss, all accrued benefits under the policy for loss of time will be paid not less frequently than monthly during the continuance of the period for which the insurer is liable, and any balance remaining unpaid at the termination of the period for which the insurer is liable will be paid as soon as possible after receipt of the proof of loss.
        (12) A provision that benefits for loss of life of the person insured are payable to the beneficiary designated by the person insured. However, if the policy contains conditions pertaining to family status, the beneficiary may be the family member specified by the policy terms. In either case, payment of benefits for loss of life is subject to the provisions of the policy if no designated or specified beneficiary is living at the death of the person insured. All other benefits of the policy are payable to the person insured. The policy may also provide that if any benefit is payable to the estate of a person, or to a person who is a minor or otherwise not competent to give a valid release, the insurer may pay the benefit, up to an amount of five thousand dollars ($5,000), to any relative by blood or connection by marriage of the person who is deemed by the insurer to be equitably entitled to the benefit.
        (13) A provision that the insurer has the right and must be allowed the opportunity to:
            (A) examine the person of the individual for whom a claim is made under the policy when and as often as the insurer reasonably requires during the pendency of the claim; and
            (B) conduct an autopsy in case of death if it is not prohibited by law.
        (14) A provision that no action at law or in equity may be brought to recover on the policy less than sixty (60) days after proof of loss is filed in accordance with the requirements of the policy, and that no action may be brought at all more than three (3) years after the expiration of the time within which proof of loss is required by the policy.
        (15) In the case of a policy insuring debtors, a provision that the insurer will furnish to the policyholder, for delivery to each debtor insured under the policy, a certificate of insurance describing the coverage and specifying that the benefits payable will first be applied to reduce or extinguish the indebtedness.
        (16) If the policy provides that hospital or medical expense coverage of a dependent child of a group member terminates upon the child's attainment of the limiting age for dependent children set forth in the policy, a provision that the child's attainment of the limiting age does not terminate the hospital and medical coverage of the child while the child is:
            (A) incapable of self-sustaining employment because of mental retardation or a physical disability; and
            (B) chiefly dependent upon the group member for support and maintenance.
        A provision under this subdivision may require that proof of the child's incapacity and dependency be furnished to the insurer by the group member within one hundred twenty (120) days of the child's attainment of the limiting age and, subsequently, at reasonable intervals during the two (2) years following the child's attainment of the limiting age. The policy may not require proof more than once per year in the time more than two (2) years after the child's attainment of the limiting age. This subdivision does not require an insurer to provide coverage to a mentally retarded or physically disabled child who does not satisfy the requirements of the group policy as to evidence of insurability or other requirements for coverage under the policy to take effect. In any case, the terms of the policy apply with regard to the coverage or exclusion from coverage of the child.
         (17) A provision that complies with the group portability and guaranteed renewability provisions of the federal Health Insurance Portability and Accountability Act of 1996 (26 U.S.C. 9801 et seq.).
    (c) (d) Subsection (b)(5), (b)(7), (c)(5), (c)(7), and (b)(12) (c)(12) do not apply to policies insuring the lives of debtors. The standard provisions required under section 3(a) of this chapter for individual accident and sickness insurance policies do not apply to group accident and sickness insurance policies.
    (d) (e) If any policy provision required under subsection (b) (c) is in whole or in part inapplicable to or inconsistent with the coverage provided by an insurer under a particular form of policy, the insurer, with the approval of the commissioner, shall delete the provision from the policy or modify the provision in such a manner as to make it consistent with the coverage provided by the policy.
SOURCE: IC 27-8-10-1; (97)LS8010.4. -->

    SECTION 4. IC 27-8-10-1, AS AMENDED BY P.L.188-1995, SECTION 8, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 1997]: Sec. 1. (a) The definitions in this section apply throughout this chapter.
    (b) "Association" means the Indiana comprehensive health insurance association established under section 2.1 of this chapter.
    (c) "Association policy" means a policy issued by the association that provides coverage specified in section 3 of this chapter. The term does not include a Medicare supplement policy that is issued under section 9 of this chapter.
    (d) "Carrier" means an insurer providing medical, hospital, or surgical expense incurred health insurance policies.
     (e) "Church plan" has the meaning set forth in 26 U.S.C. 414(e).
    (e) (f) "Commissioner" refers to the insurance commissioner.
     (g) "Creditable coverage" has the meaning set forth in 42 U.S.C. 300gg(c)(1).
    (f) (h) "Eligible expenses" means those charges for health care services and articles provided for in section 3 of this chapter.
     (i) "Federally eligible individual" means an individual:
        (1) for whom, as of the date on which the individual seeks coverage under this chapter, the aggregate period of creditable coverage is at least eighteen (18) months and whose most recent prior creditable coverage was under a:
            (A) group health plan;
            (B) governmental plan; or
            (C) church plan;
        or health insurance coverage in connection with any of these plans;
        (2) who is not eligible for coverage under:
            (A) a group health plan;
            (B) Part A or Part B of Title XVIII of the federal Social Security Act; or
            (C) a state plan under Title XIX of the federal Social Security Act (or any successor program); and
        does not have other health insurance coverage;
        (3) with respect to whom the individual's most recent coverage was not terminated for factors relating to nonpayment of premiums or fraud;
        (4) who, if after being offered the option of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) (29 U.S.C. 1191b(d)(1)), or under a similar state program, elected the coverage; and

         (5) who, if after electing continuation coverage described in subdivision (4), has exhausted continuation coverage under the provision or program.
    (j) "Governmental plan" has the meaning set forth in 26 U.S.C. 414(d) and includes a plan established or maintained for its employees by the United States government or by an agency or instrumentality of the United States government.
    (k) "Group health plan" means an employee welfare benefit plan (as defined in 29 U.S.C. 1167(1)) to the extent that the plan provides medical care payments to or on behalf of employees or their dependents, as defined under the terms of the plan, directly or through insurance, reimbursement, or otherwise.

    (g) (l) "Health care facility" means any institution providing health care services that is licensed in this state, including institutions engaged principally in providing services for health maintenance organizations or for the diagnosis or treatment of human disease, pain, injury, deformity, or physical condition, including a general hospital, special hospital, mental hospital, public health center, diagnostic center, treatment center, rehabilitation center, extended care facility, skilled nursing home, nursing home, intermediate care facility, tuberculosis hospital, chronic disease hospital, maternity hospital, outpatient clinic, home health care agency, bioanalytical laboratory, or central services facility servicing one (1) or more such institutions.
    (h) (m) "Health care institutions" means skilled nursing facilities, home health agencies, and hospitals.
    (i) (n) "Health care provider" means any physician, hospital, pharmacist, or other person who is licensed in Indiana to furnish health care services.
    (j) (o) "Health care services" means any services or products included in the furnishing to any individual of medical care, dental care, or hospitalization, or incident to the furnishing of such care or hospitalization, as well as the furnishing to any person of any other services or products for the purpose of preventing, alleviating, curing, or healing human illness or injury.
    (k) (p) "Health insurance" means hospital, surgical, and medical expense incurred policies, nonprofit service plan contracts, health maintenance organizations, limited service health maintenance organizations, and self-insured plans. However, the term "health insurance" does not include short term travel accident policies, accident only policies, fixed indemnity policies, automobile medical payment, or incidental coverage issued with or as a supplement to liability insurance.
    (l) (q) "Insured" means all individuals who are provided qualified comprehensive health insurance coverage under an individual policy, including all dependents and other insured persons, if any.
    (m) (r) "Medicaid" means medical assistance provided by the state under the Medicaid program under IC 12-15.
     (s) "Medical care payment" means amounts paid for:
        (1) the diagnosis, care, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body;
        (2) transportation primarily for and essential to medical services referred to in subdivision (1); and
        (3) insurance covering medical care referred to in subdivisions (1) and (2).

    (n) (t) "Medically necessary" means health care services that the association has determined:
        (1) are recommended by a legally qualified physician;
        (2) are commonly and customarily recognized throughout the physician's profession as appropriate in the treatment of the patient's diagnosed illness; and
        (3) are not primarily for the scholastic education or vocational training of the provider or patient.
    (o) (u) "Medicare" means Title XVIII of the federal Social Security Act (42 U.S.C. 1395 et seq.).
    (p) (v) "Policy" means a contract, policy, or plan of health insurance.
    (q) (w) "Policy year" means a twelve (12) month period during which a policy provides coverage or obligates the carrier to provide health care services.
    (r) (x) "Health maintenance organization" has the meaning set out in IC 27-13-1-19.
    (s) (y) "Self-insurer" means an employer who provides services, payment for, or reimbursement of any part of the cost of health care services other than payment of insurance premiums or subscriber charges to a carrier. However, the term "self-insurer" does not include an employer who is exempt from state insurance regulation by federal law, or an employer who is a political subdivision of the state of Indiana.
    (t) (z) "Services of a skilled nursing facility" means services that must commence within fourteen (14) days following a confinement of at least three (3) consecutive days in a hospital for the same condition.
    (u) (aa) "Skilled nursing facility", "home health agency", "hospital", and "home health services" have the meanings assigned to them in 42 U.S.C. 1395x.
    (v) (bb) "Medicare supplement policy" means an individual policy of accident and sickness insurance that is designed primarily as a supplement to reimbursements under Medicare for the hospital, medical, and surgical expenses of individuals who are eligible for Medicare benefits.
    (w) (cc) "Limited service health maintenance organization" has the meaning set forth in IC 27-13-34-4.
SOURCE: IC 27-8-10-2.1; (97)LS8010.5. -->

    SECTION 5. IC 27-8-10-2.1, AS AMENDED BY P.L.255-1995, SECTION 9, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 1997]: Sec. 2.1. (a) There is established a nonprofit legal entity to be referred to as the Indiana comprehensive health insurance association, which must assure that health insurance is made available throughout the year to each eligible Indiana resident applying to the association for coverage. All carriers, health maintenance organizations, limited service health maintenance organizations, and self-insurers providing health insurance or health care services in Indiana must be members of the association. The association shall operate under a plan of operation established and approved under subsection (c) and shall exercise its powers through a board of directors established under this section.
    (b) The board of directors of the association consists of five (5) to nine (9) members selected by the members of the association, subject to approval by the commissioner. To select the initial board of directors and to initially organize the association, the commissioner shall give notice to all members in Indiana of the time and place of the organizational meeting. In determining voting rights at the organizational meeting, each member is entitled to one (1) vote in person or by proxy. If the board of directors is not selected within sixty (60) days after the organizational meeting, the commissioner shall appoint the initial board. In approving or selecting members of the board, the commissioner shall consider whether all members are fairly represented. Members of the board may be reimbursed from the money of the association for expenses incurred by them as members but shall not be otherwise compensated by the association for their services.
    (c) The association shall submit to the commissioner a plan of operation for the association and any amendments to the plan necessary or suitable to assure the fair, reasonable, and equitable administration of the association. The plan of operation becomes effective upon approval in writing by the commissioner consistent with the date on which the coverage under this chapter must be made available. The commissioner shall, after notice and hearing, approve the plan of operation if the plan is determined to be suitable to assure the fair, reasonable, and equitable administration of the association and provides for the sharing of association losses on an equitable, proportionate basis among the member carriers, health maintenance organizations, limited service health maintenance organizations, and self-insurers. If the association fails to submit a suitable plan of operation within one hundred eighty (180) days after the appointment of the board of directors, or at any time thereafter the association fails to submit suitable amendments to the plan, the commissioner shall adopt rules under IC 4-22-2 necessary or advisable to implement this section. These rules are effective until modified by the commissioner or superseded by a plan submitted by the association and approved by the commissioner. The plan of operation must:
        (1) establish procedures for the handling and accounting of assets and money of the association;
        (2) establish the amount and method of reimbursing members of the board;
        (3) establish regular times and places for meetings of the board of directors;
        (4) establish procedures for records to be kept of all financial transactions, and for the annual fiscal reporting to the commissioner;
        (5) establish procedures whereby selections for the board of directors will be made and submitted to the commissioner for approval;
        (6) contain additional provisions necessary or proper for the execution of the powers and duties of the association; and
        (7) establish procedures for the periodic advertising of the general availability of the health insurance coverages from the association.
    (d) The plan of operation may provide that any of the powers and duties of the association be delegated to a person who will perform functions similar to those of this association. A delegation under this section takes effect only with the approval of both the board of directors and the commissioner. The commissioner may not approve a delegation unless the protections afforded to the insured are substantially equivalent to or greater than those provided under this chapter.
    (e) The association has the general powers and authority enumerated by this subsection in accordance with the plan of operation approved by the commissioner under subsection (c). The association has the general powers and authority granted under the laws of Indiana to carriers licensed to transact the kinds of health care services or health insurance described in section 1 of this chapter and also has the specific authority to do the following:
        (1) Enter into contracts as are necessary or proper to carry out this chapter.
        (2) Sue or be sued, including taking any legal actions necessary or proper for recovery of any assessments for, on behalf of, or against participating carriers.
        (3) Take legal action necessary to avoid the payment of improper claims against the association or the coverage provided by or through the association.
        (4) Establish a medical review committee to determine the reasonably appropriate level and extent of health care services in each instance.         (5) Establish appropriate rates, scales of rates, rate classifications and rating adjustments, such rates not to be unreasonable in relation to the coverage provided and the reasonable operational expenses of the association.
        (6) Pool risks among members.
        (7) Issue policies of insurance on an indemnity or provision of service basis providing the coverage required by this chapter.
        (8) Administer separate pools, separate accounts, or other plans or arrangements considered appropriate for separate members or groups of members.
        (9) Operate and administer any combination of plans, pools, or other mechanisms considered appropriate to best accomplish the fair and equitable operation of the association.
        (10) Appoint from among members appropriate legal, actuarial, and other committees as necessary to provide technical assistance in the operation of the association, policy and other contract design, and any other function within the authority of the association.
        (11) Hire an independent consultant.
        (12) Develop a method of advising applicants of the availability of other coverages outside the association and may promulgate a list of health conditions the existence of which would deem an applicant eligible without demonstrating a rejection of coverage by one (1) carrier.
        (13) Provide for the use of managed care plans for insureds, including the use of:
            (A) health maintenance organizations; and
            (B) preferred provider plans.
        (14) Solicit bids directly from providers for coverage under this chapter from providers located within or outside Indiana.
    (f) Rates for coverages issued by the association may not be unreasonable in relation to the benefits provided, the risk experience, and the reasonable expenses of providing the coverage. Separate scales of premium rates based on age apply for individual risks. Premium rates must take into consideration the extra morbidity and administration expenses, if any, for risks insured in the association. The rates for a given classification may not be more than one hundred fifty percent (150%) of the average premium rate for that class charged by the five (5) carriers with the largest premium volume in the state during the preceding calendar year. In determining the average rate of the five (5) largest carriers, the rates charged by the carriers shall be actuarially adjusted to determine the rate that would have been charged for benefits identical to those issued by the association. All rates adopted by the association must be submitted to the commissioner for approval.
    (g) Following the close of the association's fiscal year, the association shall determine the net premiums, the expenses of administration, and the incurred losses for the year. Any net loss shall be assessed by the association to all members in proportion to their respective shares of total health insurance premiums and subscriber premiums (as defined in IC 27-13-1-33), excluding premiums for Medicaid contracts with the state of Indiana and Medicare full-risk premiums through the Health Care Financing Administration (HCFA) of the United States Department of Health and Human Services, received in Indiana during the calendar year (or with paid losses in the year) coinciding with or ending during the fiscal year of the association. or any other equitable basis as may be provided in the plan of operation. For self-insurers health maintenance organizations, and limited service health maintenance organizations that are members of the association, that are not exempt under federal law, the proportionate share of losses must be determined through the application of an equitable formula based upon claims paid, as determined from annual reports submitted to the commissioner, excluding claims for Medicaid contracts with the state of Indiana or the value of services provided. and Medicare full-risk claims. In sharing losses, the association may abate or defer in any part the assessment of a member, if, in the opinion of the board, payment of the assessment would endanger the ability of the member to fulfill its contractual obligations. The association may also provide for interim assessments against members of the association if necessary to assure the financial capability of the association to meet the incurred or estimated claims expenses or operating expenses of the association until the association's next fiscal year is completed. Net gains, if any, must be held at interest to offset future losses or allocated to reduce future premiums.
    (h) The association shall conduct periodic audits to assure the general accuracy of the financial data submitted to the association, and the association shall have an annual audit of its operations by an independent certified public accountant.
    (i) The association is subject to examination by the department of insurance under IC 27-1-3.1. The board of directors shall submit, not later than March 30 of each year, a financial report for the preceding calendar year in a form approved by the commissioner.
    (j) All policy forms issued by the association must conform in substance to prototype forms developed by the association, must in all other respects conform to the requirements of this chapter, and must be filed with and approved by the commissioner before their use.
    (k) The association may not issue an association policy to any individual who, on the effective date of the coverage applied for, does not meet the eligibility requirements of section 5.1 of this chapter.
    (l) The association shall pay an agent's referral fee of twenty-five dollars ($25) to each insurance agent who refers an applicant to the association if that applicant is accepted.
    (m) The association and the premium collected by the association shall be exempt from the premium tax, the gross income tax, the adjusted gross income tax, supplemental corporate net income, or any combination of these, or similar taxes upon revenues or income that may be imposed by the state.
    (n) Members who after July 1, 1983, during any calendar year, have paid one (1) or more assessments levied under this chapter may either:
        (1) take a credit against premium taxes, gross income taxes, adjusted gross income taxes, supplemental corporate net income taxes, or any combination of these, or similar taxes upon revenues or income of member insurers that may be imposed by the state, up to the amount of the taxes due for each calendar year in which the assessments were paid and for succeeding years until the aggregate of those assessments have been offset by either credits against those taxes or refunds from the association; or
        (2) any member insurer may include in the rates for premiums charged for insurance policies to which this chapter applies amounts sufficient to recoup a sum equal to the amounts paid to the association by the member less any amounts returned to the member insurer by the association, and the rates shall not be deemed excessive by virtue of including an amount reasonably calculated to recoup assessments paid by the member.
    (o) The association shall provide for the option of monthly collection of premiums.
SOURCE: IC 27-8-10-4; (97)LS8010.6. -->

    SECTION 6. IC 27-8-10-4 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 1997]: Sec. 4. (a) Subject to the limitation provided in subsection (c), an association policy offered in accordance with this chapter must impose a five hundred dollar ($500) deductible on a per person per policy year basis. The deductible must be applied to the first five hundred dollars ($500) of eligible expenses incurred by the covered person.
    (b) Subject to the limitation provided in subsection (c), a mandatory coinsurance requirement shall be imposed at the rate of twenty percent (20%) of eligible expenses in excess of the mandatory deductible.
    (c) The maximum aggregate out-of-pocket payments for eligible expenses by the insured in the form of deductibles and coinsurance may not exceed one thousand five hundred dollars ($1,500) per individual or two thousand five hundred dollars ($2,500) per family, per policy year for the statutory association plan described in this chapter.
SOURCE: IC 27-8-10-5.1; (97)LS8010.7. -->

    SECTION 7. IC 27-8-10-5.1, AS AMENDED BY P.L.2-1995, SECTION 109, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 1997]: Sec. 5.1. (a) Except as provided in subsections (b) and (c), (c) and (d), a person is not eligible for an association policy who, if, at the effective date of coverage, the person has or is eligible for coverage under any insurance plan that equals or exceeds the minimum requirements for accident and sickness insurance policies issued in Indiana as set forth in IC 27. Coverage under any association policy is in excess of, and may not duplicate, coverage under any other form of health insurance.
     (b) An applicant other than a federally eligible individual must be:
        (1) a United States citizen; and
        (2) a resident of Indiana for at least one hundred eighty (180) consecutive days immediately preceding the date of application.
For the purposes of this subsection, residency may be substantiated through rent or mortgage payment receipts or other evidence determined by the board.

    (b) (c) Except as provided in IC 27-13-16-4, a person is eligible for an association policy upon a showing that:
         (1) the person has been rejected by one (1) carrier for coverage under any insurance plan that equals or exceeds the minimum requirements for accident and sickness insurance policies issued in Indiana, as set forth in IC 27, without material underwriting restriction at a rate equal to or less than the association plan rate. restrictions;         (2) an insurer has refused to issue insurance except at a rate exceeding the association plan rate; or
        (3) the person is a federally eligible individual.
For the purposes of this subsection, eligibility for Medicare coverage does not disqualify a person who is less than sixty-five (65) years of age from eligibility for an association policy.
    (c) (d) The board of directors may establish procedures that would permit:
        (1) an association policy to be issued to persons who are covered by a group insurance arrangement when that person or a dependent's health condition is such that the group's coverage is in jeopardy of termination or material rate increases because of that person's or dependent's medical claims experience; and
        (2) an association policy to be issued without any limitation on preexisting conditions to a person who is covered by a health insurance arrangement when that person's coverage is scheduled to terminate for any reason beyond the person's control.
    (d) (e) An association policy must provide that coverage of a dependent unmarried child terminates when the child becomes nineteen (19) years of age (or twenty-five (25) years of age if the child is enrolled full-time in an accredited educational institution). The policy must also provide in substance that attainment of the limiting age does not operate to terminate a dependent unmarried child's coverage while the dependent is and continues to be both:
        (1) incapable of self-sustaining employment by reason of mental retardation or physical disability; and
        (2) chiefly dependent upon the person in whose name the contract is issued for support and maintenance.
However, proof of such incapacity and dependency must be furnished to the carrier within one hundred twenty (120) days of the child's attainment of the limiting age, and subsequently as may be required by the carrier, but not more frequently than annually after the two (2) year period following the child's attainment of the limiting age.
    (e) (f) An association policy that provides coverage for a family member of the person in whose name the contract is issued must, as to the family member's coverage, also provide that the health insurance benefits applicable for children are payable with respect to a newly born child of the person in whose name the contract is issued from the moment of birth. The coverage for newly born children must consist of coverage of injury or illness, including the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities. If payment of a specific premium is required to provide coverage for the child, the contract may require that notification of the birth of a child and payment of the required premium must be furnished to the carrier within thirty-one (31) days after the date of birth in order to have the coverage continued beyond the thirty-one (31) day period.
    (f) (g) Except as provided in subsection (g), (h), an association policy may contain provisions under which coverage is excluded during a period of six (6) months following the effective date of coverage as to a given covered individual for preexisting conditions, as long as:
        (1) the condition manifested itself within a period of six (6) months before the effective date of coverage in such a manner as would cause an ordinarily prudent person to seek diagnosis, care, or treatment; or
        (2) medical advice or treatment was recommended or received within a period of six (6) months before the effective date of coverage.
This subsection may not be construed to prohibit preexisting condition provisions in an insurance policy that are more favorable to the insured.
    (g) (h) If a person applies for an association policy within six (6) months after termination of the person's coverage under a health insurance arrangement and the person meets the eligibility requirements of subsection (b), (c), then an association policy may not contain provisions under which:
        (1) coverage as to a given individual is delayed to a date after the effective date or excluded from the policy; or
        (2) coverage as to a given condition is denied;
on the basis of a preexisting health condition. This subsection may not be construed to prohibit preexisting condition provisions in an insurance policy that are more favorable to the insured.
    (h) (i) For purposes of this section, coverage under a health insurance arrangement includes, but is not limited to, coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985.
     (j) For the purposes of this section, coverage under Medicaid health care through the office of Medicaid policy and planning is coverage under a health insurance arrangement.
    (k) A person who receives health care through Medicaid is not eligible to have all or a portion of the premium for an association policy paid by the state.

SOURCE: IC 27-8-15-10.5; (97)LS8010.8. -->

    SECTION 8. IC 27-8-15-10.5, AS AMENDED BY P.L.190-1996, SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 1997]: Sec. 10.5. (a) As used in this chapter, "late enrollee" means an eligible employee or a dependent of an eligible employee who did not request enrollment in a health insurance plan of a small employer during the initial enrollment period during which the individual was entitled to enroll under the health insurance plan.
    (b) The term does not include an eligible employee or the dependent of an eligible employee who meets any of the following conditions:
        (1) The:
             (A) eligible employee or the dependent of the eligible employee
            (A) was covered under a health insurance plan at the time of the initial enrollment;
            (B) lost coverage under a health insurance plan as a result of:
                (i) the termination of employment or eligibility;
                (ii) the involuntary termination of the health insurance plan;
                (iii) the death of a spouse; or
                (iv) the dissolution of marriage; and
            (C) requests enrollment not later than thirty (30) days after losing coverage under a health insurance plan.
             or had health insurance coverage at the time coverage was previously offered to the employee or to the dependent of the employee and the employee stated in writing at the time coverage was offered that coverage under another health insurance plan was the reason for declining the enrollment, but only if the insurer required a statement at the time and provided the employee with notice of the requirement at the time;
            (B) employee's or dependent's coverage under this subdivision:
                (i) was under a COBRA continuation provision and the coverage under the provision was exhausted; or
                (ii) was not under a COBRA continuation provision and either the coverage was terminated as a result of loss of eligibility for the coverage (including as a result of legal separation, divorce, death, termination of employment, or reduction in the number of hours of employment) or employer contributions towards the coverage were terminated;
            and
            (C) employee requests enrollment under the terms of the plan not later than thirty (30) days after the date of exhaustion of coverage as described under clause (B).

        (2) The eligible employee is employed by a small employer that offers multiple health insurance plans and the eligible employee elects a different plan during an open enrollment period.
        (3) A court has ordered that health insurance coverage be provided for a spouse or a minor or dependent child of an eligible employee under the eligible employee's insurance plan and the request for enrollment is made not more than thirty (30) days after the issuance of the court order.
SOURCE: IC 27-8-15-14; (97)LS8010.9. -->

    SECTION 9. IC 27-8-15-14, AS AMENDED BY P.L.190-1996, SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 1997]: Sec. 14. As used in this chapter, "small employer" means any person, firm, corporation, limited liability company, partnership, or association actively engaged in business who, on at least fifty percent (50%) of the working days of the employer during the preceding calendar year, employed at least three (3) two (2) but not more than fifty (50) eligible employees, the majority of whom work in Indiana. In determining the number of eligible employees, companies that are affiliated companies or that are eligible to file a combined tax return for purposes of state taxation are considered one (1) employer.
SOURCE: IC 27-8-15-19; (97)LS8010.10. -->

    SECTION 10. IC 27-8-15-19, AS AMENDED BY P.L.93-1995, SECTION 14, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 1997]: Sec. 19. Except as provided in section 20 of this chapter, a small employer insurer may only cancel or refuse to renew a health insurance plan for the following reasons:
        (1) Nonpayment of required premiums.
        (2) Fraud or misrepresentation of the small employer, or with respect to coverage of an insured individual, fraud or misrepresentation by the insured individual or the individual's representative.
        (3) Noncompliance with the plan's provisions.
        (4) The number of individuals covered under the plan is less than the number of percentage of eligible individuals required by percentage requirements under the plan.
        (5) The small employer is no longer actively engaged in the business in which the small employer was engaged on the effective date of the plan.
         (3) The small employer has failed to comply with a material plan provision relating to employer contribution or group participation rules.
        (4) In the case of a small employer insurer that offers coverage in a market through a network plan, there is no longer any insured individual in connection with the plan who lives, resides, or works:
            (A) in the service area of the small employer insurer; or
            (B) in the area for which the issuer is authorized to do business.
        (5) In the case of coverage that is made available through one (1) or more bona fide associations, the membership of the small employer in the association ceases, but only if the coverage is terminated under this paragraph uniformly without regard to any health status related factor relating to an insured individual.
        (6) In a case in which an insurer decides to discontinue offering a particular type of group health insurance coverage offered in the small employer market, that coverage may be discontinued by the insurer only if:
            (A) the insurer provides notice of the insurer's intent to discontinue the coverage to each small employer provided with the coverage;
            (B) the insurer offers the option to purchase all other health insurance coverage currently being offered by the insurer to the small employer to each small employer that is provided with the coverage; and
            (C) in exercising the option to discontinue the coverage in offering the option of coverage under clause (B), the insurer acts uniformly without regard to:
                (i) the claims experience of the small employer groups; or
                (ii) any health status related factor relating to any eligible employee or dependent of an eligible employee who is covered or who may become eligible for the coverage.

SOURCE: IC 27-8-15-27; (97)LS8010.11. -->

    SECTION 11. IC 27-8-15-27, AS ADDED BY P.L.93-1995, SECTION 15, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 1997]: Sec. 27. A health insurance plan provided by a small employer insurer to a small employer must comply with the following:
        (1) The benefits provided by a plan to an eligible employee enrolled in the plan may not be excluded, limited, or denied for more than nine (9) months after the effective date of the coverage because of a preexisting condition of the eligible employee, the eligible employee's spouse, or the eligible employee's dependent.
        (2) The plan may not define a preexisting condition, rider, or endorsement more restrictively than as:
            (A) a condition that would have caused an ordinarily prudent person to seek medical advice, diagnosis, care, or treatment during the nine (9) six (6) months immediately preceding the effective date of enrollment in the plan; or
            (B) a condition for which medical advice, diagnosis, care, or treatment was recommended or received during the nine (9) six (6) months immediately preceding the effective date of enrollment in the plan. or
            (C) a pregnancy existing on the effective date of enrollment in the plan.
SOURCE: IC 27-8-15-28; (97)LS8010.12. -->

    SECTION 12. IC 27-8-15-28, AS AMENDED BY P.L.190-1996, SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 1997]: Sec. 28. (a) As used in this section, "health insurance plan" means coverage provided under any of the following:
        (1) A hospital or medical expense incurred policy or certificate.
        (2) A hospital or medical service plan contract.
        (3) A health maintenance organization subscriber contract.
        (4) Medicare or Medicaid.
        (5) An employer based health insurance arrangement.
        (6) An individual health insurance policy.
        (7) A policy issued by the Indiana comprehensive health insurance association under IC 27-8-10.
        (8) An employee welfare benefit plan (as defined in 29 U.S.C. 1002) that is self-funded.         (9) A conversion policy issued under section 31 or 31.1 of this chapter.
    (b) Except as provided in section 29 of this chapter, a small employer insurer shall waive the exclusion period described in section 27 of this chapter applicable to a preexisting condition or the limitation period with respect to a particular service in a health insurance plan for the time an eligible employee or a dependent of an eligible employee was previously covered by a health insurance plan if the following conditions are met:
        (1) The eligible employee or a dependent of the eligible employee was previously covered by a health insurance plan that provided benefits with respect to the particular service.
        (2) Coverage under the health insurance plan was continuous to a date not more than thirty (30) sixty-three (63) days before the effective date of enrollment by:
            (A) the eligible employee; or
            (B) a dependent of the eligible employee.
    (c) In determining whether an eligible employee or a dependent of the eligible employee meets the requirements of subsection (b)(2), a waiting period imposed by a small employer insurer or small employer before new coverage may become effective must be excluded from the calculation.
    (d) This section does not preclude the application of any waiting period applicable to all new enrollees under a plan.
SOURCE: IC 27-8-15-31; (97)LS8010.13. -->

    SECTION 13. IC 27-8-15-31, AS ADDED BY P.L.93-1995, SECTION 19, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 1997]: Sec. 31. (a) If an eligible employee or a dependent of an eligible employee who has been continuously covered under a health insurance plan for at least ninety (90) days:
        (1) loses coverage under the plan as the result of:
            (A) termination of employment;
            (B) reduction of hours;
            (C) marriage dissolution; or
            (D) attainment of any age specified in the plan; and
        (2) requests a conversion policy from the small employer insurer that insured the health insurance plan;
the individual is entitled to receive a conversion policy from the small employer insurer.
    (b) A request under subsection (a)(2) must be made within thirty (30) days after the individual loses coverage under the health insurance plan.
    (c) The premium for a conversion policy issued under this section shall not exceed one hundred fifty percent (150%) of the rate that would have been charged under the small employer health insurance plan with respect to the individual if the individual had been covered as an eligible employee under the plan during the same period. If the health insurance plan under which the individual was covered is canceled or is not renewed, the rates shall be based on the rate that would have been charged with respect to the individual if the plan had continued in force, as determined by the small employer insurer in accordance with standard actuarial principles.
    (d) A conversion policy issued under this section must be approved by the insurance commissioner as described in IC 27-8-5-1. The commissioner may not approve a conversion policy unless the policy and its benefits are:
        (1) comparable to those required under IC 27-13-1-4(a)(2) through IC 27-13-1-4(a)(5);
        (2) reasonable in relation to the premium charged; and
        (3) in compliance with IC 27-8-6-1.
If the benefit limits of the conversion policy are not more than the benefit limits of the small employer's health insurance plan, the small employer insurer shall credit the individual with any waiting period, deductible, or coinsurance credited to the individual under the small employer's health insurance plan.
    (e) This section expires on the effective date of a mechanism enacted by the general assembly to offset the potential fiscal impact on small employers and small employer insurers that results from the establishment of a continuation policy under section 31.1 of this chapter.
SOURCE: IC 27-8-15-34.1; (97)LS8010.14. -->

    SECTION 14. IC 27-8-15-34.1 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 1997]: Sec. 34.1. Except as provided in 29 U.S.C. 1191a and 42 U.S.C. 300gg, a small employer insurer that offers a health insurance plan in Indiana must insure any small employer in Indiana that applies for coverage.
SOURCE: IC 27-8-15-34; (97)LS8010.15. -->

    SECTION 15. IC 27-8-15-34 IS REPEALED [EFFECTIVE JULY 1, 1997].
SOURCE: ; (97)LS8010.16. -->

    SECTION 16. [EFFECTIVE JUNE 30, 1997] (a) IC 27-8-5-3, as amended by this act, applies to all individual accident and sickness policies in force after June 30, 1997.
    (b) IC 27-8-5-19, as amended by this act, applies to all group accident and sickness policies in force after June 30, 1997.
    (c) IC 27-8-15-10.5, IC 27-8-15-14, IC 27-8-15-19, IC 27-8-15-27, IC 27-8-15-28, IC 27-8-15-31, and IC 27-8-15-34.1, all as added or amended by this act, apply to all small employer health insurance plans in force under IC 27-8-15, as amended by this act, after June 30, 1997.

SOURCE: ; (97)LS8010.17. -->

    SECTION 17. An emergency is declared for this act.