Environmental Quality, Administration

Rule R305-5

Health Reform -- Health Insurance Coverage in DEQ State Contracts -- Implementation

Notice of Proposed Rule

(New Rule)

DAR File No.: 33102
Filed: 10/26/2009 01:45:28 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this amendment is to comply with H.B. 331 of the 2009 Utah Legislative Session which created Section 19-1-206. To the extent specified in this statute, it requires that contracts entered into on or after 07/01/2009, have provisions requiring health insurance for employees and requires DEQ to define the requirements, procedures, and penalties by administrative rule. (DAR NOTE: H.B. 331 (2009) is found at Chapter 13, Laws of Utah 2009, and was effective 05/12/2009.)

Summary of the rule or change:

This rule is required by H.B. 331. It implements the statute and defines requirements, procedures, and penalties for implementation of Section 19-1-206. To the extent provided by the statute, contractors and subcontractors entering into a state contract must provide health insurance coverage for their employees that work in the State of Utah.

State statutory or constitutional authorization for this rule:

• Section 19-1-206

Anticipated cost or savings to:

the state budget:

The state statute and implementing rule may indirectly increase the cost of the state contracts. The extent of the cost increase is unknown.

local governments:

This revision does not create new requirements; no change in costs is expected for local governments.

small businesses:

The state statute and rule may result in cost increases to contractors and subcontractors. The extent of the cost increase is unknown.

persons other than small businesses, businesses, or local governmental entities:

The state statute and rule may result in cost increases to contractors and subcontractors, but may benefit employees working for contractors. The extent of the cost increase is unknown.

Compliance costs for affected persons:

Cost increases to contractors and subcontractors will likely be passed on to the State as part of the costs of the contract.

Comments by the department head on the fiscal impact the rule may have on businesses:

The rule does not create new requirements that are not already created by the statute. Therefore, no additional costs are expected.

Amanda Smith, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Environmental Quality
Administration
168 N 1950 W
SALT LAKE CITY, UT 84116-3085

Direct questions regarding this rule to:

• Laura Lockhart at the above address, by phone at 801-366-0283, by FAX at 801-366-0292, or by Internet E-mail at llockhart@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

12/15/2009

This rule may become effective on:

12/23/2009

Authorized by:

Amanda Smith, Executive Director

R305. Environmental Quality, Administration.

R305-5. Health Reform -- Health Insurance Coverage in DEQ State Contracts -- Implementation.

R305-5-1. Purpose.

The purpose of this rule is to comply with the provisions of UCA Section 19-1-206.

 

R305-5-2. Authority.

This rule is established under UCA Section19-1-206(6) which authorizes the Department of Environmental Quality to make rules governing health insurance in certain design and construction contracts.

 

R305-5-3. Definitions.

"Employee" means an "employee," "worker," or "operative" as defined in UCA Section 34A-2-104 who works in the State at least 30 hours per calendar week, and meets employer eligibility waiting requirements for health care insurance which may not exceed 90 days from the date of hire.

(2) "Health benefit plan" has the same meaning as provided in UCA Section 31A-1-301.

(3) "Qualified health insurance coverage" means a health benefit plan that at the time the contract is entered into or renewed:

(a) provides coverage that is actuarially equivalent to the current benefit plan determined by the Children's Health Insurance Program under Section 26-40-106, and under which the employer pays at least 50% of the premium for the employee and the dependents of the employee;

(b) is a federally qualified high deductible health plan that has the lowest deductible permitted for a federally qualified high deductible health plan and an out of pocket maximum that does not exceed three times the amount of the annual deductible, and under which the employer pays 75% of the premium for the employee and the dependents of the employee; or

(c) provides coverage that is actuarially equivalent to 75% of the benefit plan determined under R305-5-3(3)(a), and under which the employer pays at least 75% of the premium of the employee and the dependents of the employee.

(4) "Subcontractor" has the same meaning provided for in UCA Section 63A-5-208.

 

R305-5-4. Applicability of Rule.

(1) Except as provided in Subsection R305-5-4(2) below, this rule R305-5 applies to all contracts entered into by or delegated to the department or a division or board of the department on or after July 1, 2009, if:

(a) the contract is for design and construction; and

(b) the prime contract is in the amount of $1,500,000 or greater; or a subcontract is in the amount of $750,000 or greater.

(2) This rule R305-5 does not apply to contracts entered into by the department or a division or board of the department if:

(a) the application of this rule R305-5 jeopardizes the receipt of federal funds;

(b) the contract or agreement is between the department or a division or board of the department and another agency of the state, the federal government, another state, an interstate agency, a political subdivision of this state; or a political subdivision of another state;

(c) the executive director determines that applying the requirements of this section to a particular contract interferes with the effective response to an immediate health and safety threat from the environment; or

(d) the contract is a sole source contract or an emergency procurement.

(3) This rule R305-5 does not apply to a change order as defined in UCA Section 63G-6-102, or a modification to a contract, when the contract does not meet the initial threshold required by R305-5-4(1).

 

R305-5-5. Compliance Requirement.

A contractor or subcontractor that is subject to the requirements of R305-5 shall have and will maintain an offer of qualified health insurance coverage for the contractor's or subcontractor's employees and dependents during the duration of the contract.

 

R305-5-6. Demonstration of Compliance.

(1) A contractor or subcontractor subject to this rule R305-5 shall demonstrate compliance with R305-5-5 by submitting to the department a written certification of compliance initially no later than the time of the execution of the contract by the contractor and thereafter on an annual basis unless the department requests a biannual certification.

(2) The written certification of compliance shall include information demonstrating that qualified health insurance coverage as defined in R305-5-3(3) is being offered. The actuarially equivalent determination in R305-5-3(3) is met by the contractor or subcontractor if the contractor or subcontractor provides the department with a written statement of actuarial equivalency from either the Utah Insurance Department or an actuary selected by the contractor or subcontractor or their insurer.

 

R305-5-7. Effect of Failure to Comply.

The failure of a contractor or subcontractor to provide health insurance as required by R305-5-5 may not be the basis for a protest or other action from a prospective bidder, offeror, or contractor under UCA Section 63G-6-801 or any other provision in UCA 63G, Chapter 6, Part 8, Legal and Contractual Remedies, and may not be used by the procurement entity or a prospective bidder, offeror, or contractor as a basis for any action or suit that would suspend, disrupt or terminate the design or construction.

 

R305-5-8. Penalties, Sanctions, and Liabilities.

(1) Pursuant to UCA Section 19-1-206(4)(b), a person who intentionally uses change orders or contract modifications to circumvent the requirements of subsection R305-5-5 and R305-5-6 is guilty of an infraction.

(2) Pursuant to UCA Section 19-1-303 and UCA Section 19-1-206(6), a contractor or subcontractor who fails to comply with R305-5-5 and R305-5-6 is subject to an administrative civil penalty of up to $5000 per day, except that monetary penalties may not exceed 50% of the amount necessary to purchase qualified health insurance coverage for an employee and the dependents of an employee of the contractor or subcontractor who was not offered qualified health insurance coverage during the duration of the contract.

(3) If a contractor or subcontractor intentionally violates the provisions of R305-5-5, the contractor or subcontractor is subject to:

(a) a three-month suspension of the contractor or subcontractor from entering into future contracts with the state upon the first violation, regardless of which tier the contractor or subcontractor is involved with the future design and/or construction contract;

(b) a six-month suspension of the contractor or subcontractor from entering into future contracts with the state upon the second violation, regardless of which tier the contractor or subcontractor is involved with the future design and/or construction contract; and

(c) an action for debarment of the contractor or subcontractor in accordance with UCA Section 63G-6-804 upon the third or subsequent violation.

(4) In addition to the penalties imposed under R305-5-8 and the referenced statutes and rules, a contractor or subcontractor who violates the provisions of UCA Section 19-1-206 and R305-5, pursuant to UCA Section 19-1-206(7), shall be liable to the employee for health care costs not covered by insurance.

 

KEY: contract requirements, health insurance

Date of Enactment or Last Substantive Amendment: 2010

Authorizing, and Implemented or Interpreted Law: 19-1-206