Insurance, Administration

Rule R590-199

Plan of Orderly Withdrawal Rule Relating to Health Benefit Plans

Notice of Proposed Rule

(Amendment)

DAR File No.: 36615
Filed: 08/01/2012 04:25:22 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is being amended as a result of past legislative changes; H.B. 207, Health Insurance Amendments passed in the 2004 General Session, and S.B. 122, Insurance Law Amendments, passed in the 2002 General Session.

Summary of the rule or change:

The following are changes made as a result of legislation: updated references from Section 31A-22-703 to 31A-22-723. During the 2004 General Session, under H.B. 207, the legislature repealed Section 31A-22-703 and replaced it with Section 31A-22-723. Policies, procedures, and requirements remained the same with these changes. Updated reference from Subsection 31A-30-107(1)(f)(ii) to Subsections 31A-30-107(3)(e) and 31A-30-107.1(3)(e). Prior to 2002, Section 31A-30-107 applied to both individual and small employer health benefit plans. During the 2002 General Session, the legislature created two similar sections, one applying to small employer plans, Section 31a-30-107, and another section applying to individual plans, Section 31A-30-107.1. There was no fiscal impact. Policies, procedures, and requirements remained the same. Updated Subsection 31A-30-104(2) to 31A-30-104(4), they were renumbered due to S.B. 122, 2002 General Session. Updated applicable sections of Title 31A, Chapter 30. Since this rule was put into effect in 2003, numerous sections have been added to Title 31A, Chapter 30. None of these have created a fiscal impact on the state, businesses or consumers.

State statutory or constitutional authorization for this rule:

• Section 31A-2-201
• Section 31A-4-115

Anticipated cost or savings to:

the state budget:

The above noted changes have had no fiscal impact on the department's workload, revenues, or expenses. The changes simply move and re-arrange code text without changing policies, procedures, or requirements.

local governments:

The changes to this rule have had no impact on local governments since the changes deal solely with the relationship between the department and its licensees.

small businesses:

The changes to this rule have had no fiscal impact on the insurance industry or their clients. The changes simply move and re-arrange code text without changing policies, procedures, or requirements.

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

The changes to this rule have had no fiscal impact on the insurance industry or their clients. The changes simply move and re-arrange code text without changing policies, procedures, or requirements.

Compliance costs for affected persons:

The changes to this rule have had no fiscal impact on the insurance industry or their clients. The changes simply move and re-arrange code text without changing policies, procedures, or requirements.

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

These changes have had not fiscal impact on industry.

Neal T. Gooch, Commissioner

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

Insurance
Administration
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [email protected]

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:

09/14/2012

This rule may become effective on:

09/21/2012

Authorized by:

Jilene Whitby, Information Specialist

R590. Insurance, Administration.

R590-199. Plan of Orderly Withdrawal Rule Relating to Health Benefit Plans.

R590-199-5. Plan of Orderly Withdrawal.

(1) A covered carrier and each affiliate of a covered carrier that elects to nonrenew coverage under a health benefit plan in Utah must file a plan of orderly withdrawal with the Utah insurance commissioner explaining the process of nonrenewal. The plan must be filed with the Utah insurance commissioner at the time advance notice is given under Subsection 31A-30-107(3)(e) and 31A-30-107.1.(3)(e) and must be accompanied by a $50,000 withdrawal fee or proof of placement or assumption of all business to another carrier. This fee is to be made out to the Utah Comprehensive Health Insurance Pool. The plan of orderly withdrawal is to include the following information:

(a) name and telephone number of company representative to contact regarding the nonrenewal;

(b) list of all policy forms affected by the withdrawal;

(c) number of group or individual policies, or both, that are currently in force;

(d) number of covered lives, include insured, spouse and dependents, under individual health benefit plan policies;

(e) number of covered lives, include insured, spouse and dependents, under small employer health benefit plans;

(f) number of COBRA or state extension policies and the number of covered lives for each;

(g) copy of conversion plan and rates that will be offered in accordance with Section [31A-22-703]31A-22-723;

(h) copy of notice required by [Subsection 31A-30-107(1)(f)(ii)]Subsections 31A-30-107(3)(e) or 31A-30-107.1(3)(e). Such notice must inform the insured of their portability rights and responsibilities;

(i) service or coverage areas within the state, which indicates withdrawal areas;

(j) list of all types of all insurance coverages offered in Utah by line of business and the premium volume generated in the prior year;

(k) any reinsurance ceding arrangements relating to the health benefit plans being nonrenewed;

(l) information relating to any waiver provided under [Subsection 31A-30-104(3)(a)]Section 31A-30-104(5);

(m) list of all affiliated carriers as described in [Subsection 31A-30-104(2)]Section 31A-30-104(4);

(n) certification of compliance executed by the president of the company stating that the withdrawing company is in compliance with [Sections 31A-30-101 through 31A-30-112]31A-30, as applicable, at the time the election to withdraw is filed;

(o) certification executed by the president of the company that its individual enrollment cap has been exceeded, if applicable;

(p) loss ratios for each form issued in Utah and the methodology by which the loss ratio was calculated, including a description of all assumptions made;

(q) certified actuarial analysis from a qualified actuary of the impact that the withdrawal or nonrenewal will have on the individual and small employer market in Utah;

(r) certified actuarial analysis from a qualified actuary of the impact that withdrawal or nonrenewal will have on the Utah Comprehensive Health Insurance Pool;

(s) actuarial certification from a qualified actuary certifying to the level of liability related to the policies;

(t) detailed explanation of all efforts made to place business that is to be nonrenewed with other carriers;

(u) any plans to nonrenew any other line of business in Utah in the future;

(v) copy of the certificate of authority of the company and all affiliates involved in the withdrawal; and

(w) demonstrate that all liabilities relating to the policies that will be nonrenewed are fully satisfied or adequately reserved.

(2) Submit two copies of the plan of orderly withdrawal, one copy to be filed and a second set to be returned to you, and a self addressed return envelope.

(3) If both the written notice and a complete plan of orderly withdrawal are not received, the partial submission will be returned and not considered to have been received by the department.

 

R590-199-6. Implementation of Withdrawal.

(1) A covered carrier and all its affiliates that elect to withdraw from the market or to nonrenew a health benefit plan issued to covered insureds must provide written notice of the decision to do so to all affected insureds and to the insurance commissioner in each state in which an affected insured resides.

(2) Each insured must be given at least 180-days notice prior to the nonrenewal date.

(3) The Utah insurance commissioner is to receive written notice of the decision to withdraw or nonrenew any health benefit plan at least three working days prior to the mailing of the notice to affected covered insureds.

(4) The carrier must include with the notice to the Utah insurance commissioner its certificate of authority which will be modified to prohibit the writing of business which the carrier has elected to nonrenew or withdraw from the market.

(5) The carrier is prohibited from writing new business in the individual and small employer health benefit plan market for a period of five-years from the date of notice to the Utah insurance commissioner.

(6) The covered carriers affiliates, as defined in Subsection [31A-30-104(2)]31A-30-104(4), may also be required to withdraw as determined by the commissioner.

(7) Each plan submitted to the commissioner must provide that the nonrenewal of any coverage under a health benefit plan will occur on the annual renewal date of each policy or plan. Nonrenewal can only occur on the annual renewal date.

 

KEY: health insurance

Date of Enactment or Last Substantive Amendment: [March 14, 2003]2012

Notice of Continuation: May 20, 2010

Authorizing, and Implemented or Interpreted Law: 31A-2-201; 31A-4-115; 31A-30-106; 31A-30-107