SB371: relative to certain technical changes in the insurance laws.

CHAPTER 187

SB 371 – FINAL VERSION

03/11/04 0632s

29Apr2004… 1242h

05/06/04 1557eba

2004 SESSION

04-3077

01/09

SENATE BILL 371

AN ACT relative to certain technical changes in the insurance laws.

SPONSORS: Sen. Flanders, Dist 7; Rep. Hunt, Ches 28

COMMITTEE: Insurance

AMENDED ANALYSIS

This bill makes certain technical changes in the insurance laws, including but not limited to:

I. Extending the denial of coverage, with certain minimum financial exceptions, to any insured motor vehicle operator whose driver’s license has been suspended or revoked.

II. Reducing the pre-existing condition exemption from 12 months to 9 months in accordance with federal law.

III. Changing the name of the assistant commissioner of insurance to the director of operations.

IV. Allowing group health carriers to use standardized health statements.

V. Requiring health carriers to provide a secure means of conveying information for persons seeking coverage through small employer groups.

VI. Clarifying prescription drug benefits under the managed care law.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03/11/04 0632s

29Apr2004… 1242h

05/06/04 1557eba

04-3077

01/09

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Four

AN ACT relative to certain technical changes in the insurance laws.

Be it Enacted by the Senate and House of Representatives in General Court convened:

187:1 Motor Vehicle Liability Policy. Amend RSA 259:61, III to read a follows:

III. The coverages described in paragraphs I and II, except as to the minimum financial responsibility limits, shall not apply to [a named insured or members of the named insured’s household] any insured operator whose driver’s license has been suspended or revoked. Coverage under RSA 264:15 or RSA 264:16 shall not apply to any insured operator whose driver’s license has been suspended or revoked.

187:2 Individual Health Insurance; Eligibility. Amend RSA 404-G:5-e, I(a) and (b) to read as follows:

(a) The individual has applied to a carrier of individual health insurance for coverage that is substantially similar to the coverage that is available through the pool, and the carrier has refused to write or issue that coverage to that individual [because of his or her health or medical condition];

(b) The individual has applied to a carrier of individual health insurance for coverage that is substantially similar to the coverage that is available through the pool, and such application has been accepted, but at a premium rate exceeding the eligibility rate [available through the pool] set by the association from time to time and submitted to the commissioner for approval with the premium rates, which eligibility rate shall not be less than 125 percent and shall not exceed 150 percent of the standard risk rate calculated pursuant to RSA 404-G:5-d, II;

187:3 Annuities; Minimum Nonforfeiture Amounts. RSA 409-A:4 is repealed and reenacted to read as follows:

409-A:4 Minimum Nonforfeiture Amounts. The minimum values as specified in RSA 409-A:5, 409-A:6, 409-A:7, 409-A:8 and 409-A:9, I of any paid-up annuity, cash surrender, or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this section.

I. The minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time at rates of interest as indicated in paragraph III of the net considerations, paid prior to such time, decreased by the sum of subparagraphs (a) through (d):

(a) Any prior withdrawals from or partial surrenders of the contract accumulated at rates of interest as indicated in paragraph III;

(b) An annual contract charge of $50, accumulated at rates of interest as indicated in paragraph III;

(c) Any premium tax paid by the company for the contract, accumulated at rates of interest as indicated in paragraph III; and

(d) The amount of any indebtedness to the company on the contract, including interest due and accrued.

II. The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount equal to 87 percent of the gross considerations credited to the contract during that contract year.

III. The interest rate used in determining minimum nonforfeiture amounts shall be an annual rate of interest determined as the lesser of 3 percent per annum and the following, which shall be specified in the contract if the interest rate will be reset:

(a) The 5-year Constant Maturity Treasury Rate reported by the Federal Reserve as of a date, or average over a period, rounded to the nearest 1/20th of one percent, specified in the contract no longer than 15 months prior to the contract issue date or redetermination date under subparagraph III(d);

(b) Reduced by 125 basis points;

(c) Where the resulting interest rate is not less than one percent; and

(d) The interest rate shall apply for an initial period and may be redetermined for additional periods. The redetermination date, basis, and period, if any, shall be stated in the contract. The basis is the date or average over a specified period that produces the value of the 5-year Constant Maturity Treasury Rate to be used at each redetermination date.

IV. During the period or term that a contract provides substantive participation in an equity indexed benefit, it may increase the reduction described in subparagraph III(b) by up to an additional 100 basis points to reflect the value of the equity index benefit. The present value at the contract issue date, and at each redetermination date thereafter, of the additional reduction shall not exceed the market value of the benefit. The commissioner may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. Lacking such a demonstration that is acceptable to the commissioner, the commissioner may disallow or limit the additional reduction.

V. The commissioner may adopt rules, pursuant to RSA 541-A, as necessary to implement the provisions of paragraph IV and to provide for further adjustments to the calculation of minimum nonforfeiture amounts for contracts that provide substantive participation in an equity index benefit and for other contracts that the commissioner determines adjustments are justified.

187:4 Accident and Health Insurance; Preexisting Conditions. Amend RSA 415-A:5, I to read as follows:

I. If an insurer or a nonprofit hospital or medical service association elects to use a simplified application form for a policy other than a Medicare supplement policy, with or without a question as to the applicant’s health at the time of application, but without any questions concerning the insured’s health history or medical treatment history, the policy, [12] 9 months after date of issuance, must cover any loss occurring from any preexisting condition not specifically excluded from coverage by terms of the policy and, except as so provided, the policy shall not include wording that would permit a defense based upon preexisting conditions.

187:5 Medical Utilization Review Entities; Medical Director. Amend RSA 420-E:2-a to read as follows:

420-E:2-a Medical Director. Every medical utilization review entity licensed by the department under this chapter shall employ a medical director licensed under RSA 329 or, in the case of a dental utilization review entity, a dentist licensed under RSA 317-A.

187:6 Insurance Department Positions; Director of Operations. Amend RSA 400-A:6, III-a to read as follows:

III-a. There shall be [an assistant commissioner of insurance] a director of operations who shall be appointed by the commissioner of insurance. He or she shall serve at the pleasure of the commissioner during good behavior. When the offices of the commissioner and deputy commissioner are vacant, or when the commissioner or deputy commissioner is unable to perform his or her duties because of mental or physical disability, the [assistant commissioner of insurance] director of operations shall be acting commissioner. The [assistant commissioner] director of operations shall perform such duties and exercise such powers of the commissioner pursuant to RSA Title XXXVII as the commissioner from time to time may authorize.

187:7 Insurance Department; Compensation; Expenses. Amend RSA 400-A:8, I and II to read as follows:

I. COMPENSATION. The salary of the commissioner, deputy commissioner, [assistant commissioner] director of operations, director of examinations, actuary, life, accident and health actuary, and assistants to the commissioner shall be as prescribed in RSA 94:1-a.

II. EXPENSES. The commissioner, deputy commissioner, [assistant commissioner] director of operations, director of examinations, actuary, life, accident and health actuary, and the assistants to the commissioner shall be allowed their traveling expenses while engaged in the performance of their duties.

187:8 Soliciting Application. Amend RSA 408:7 to read as follows:

408:7 Soliciting Agent; Altering Application.

I. Any person who shall solicit an application for insurance upon the life of another shall, in any controversy between the [assured] insured, or his or her beneficiary, and the company issuing any policy upon such application, be regarded as the agent of the company and not the agent of the [assured] insured.

II. No alteration of any written application for any life insurance policy or annuity contract shall be made by any person other than the applicant without his or her written consent, except that insertions may be made by the insurer, for administrative purposes only in such manner as to indicate clearly that such insertions are not to be ascribed to the applicant.

187:9 Salary; Insurance Department; Director of Operations.

I. Amend RSA 94:1-a, I(b) by deleting in grade EE the following:

EE Insurance department assistant commissioner

II. Amend RSA 94:1-a, I(b) by inserting in grade EE the following:

EE Insurance department director of operations

187:10 Group Life Insurance; Policy Requirement. Amend RSA 408:15, I(b) to read as follows:

(b) The premium for the policy shall be paid by the policyholder, either [wholly] from the employer’s funds or funds contributed by him, or [partly from such funds and partly] from funds contributed by the insured employees. [No policy may be issued on which the entire premium is to be derived from funds contributed by the insured employees. A policy on which part of the premium is to be derived from funds contributed by the insured employees may be placed in force only if at least 75 percent of the then eligible employees, excluding any as to whom evidence of individual insurability is not satisfactory to the insurer, elect to make the required contributions.] A policy on which no part of the premium is to be derived from funds contributed by the insured employees, must insure all eligible employees, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.

187:11 New Paragraph; Insurance; High Risk Pool. Amend RSA 404-G:5-b by inserting after paragraph III the following new paragraph:

III-a. The association, subject to the approval of the commissioner, may from time to time offer such plans, in addition to the 4 plans required under paragraphs II and III, as its board of directors determines would be helpful to advance the purposes of this chapter.

187:12 Health Insurance; Medical Underwriting. Amend RSA 420-G:5, I to read as follows:

I. Health carriers providing health coverage for individuals or small employer groups may perform medical underwriting, including the use of health statements or screenings or the use of prior claims history, to the extent necessary to establish or modify premium rates as provided in RSA 420-G:4. [Such underwriting shall be limited to the use of a standardized health statement for use in adjustments to rating pursuant to RSA 420-G:4.] The commissioner [shall, by rule, require] may allow group carriers to use standardized health statements.

187:13 New Paragraph; Small Group Health Insurance; Medical Underwriting. Amend RSA 420-G:5 by inserting after paragraph VI the following new paragraph:

VII. Health carriers and health insurance producers shall ensure that persons seeking coverage through a small employer group who are required to complete a health statement have an option to convey the required information directly to the carrier or the producer through a secure means and bypassing the employer.

187:14 Group Health Insurance; Health Plan Loss Information. Amend RSA 420-G:12-a, I and II to read as follows:

I. To ensure maximum competition in the purchase of group health insurance, all [private and public] large employers [with at least 50 employees enrolled in their group health plan] shall be entitled to receive their specific health plan loss information upon request and without charge. No contract between any health carrier, third-party administrator, employer group, or pool of employers shall abridge this right in any manner.

II. Upon written request from any [private or public] large employer [with 50 or more employees enrolled in its group health plan], every health carrier, third-party administrator, pooled risk management program under RSA 5-B or any other type of multiple employer health plan shall provide that employer's loss information within 30 calendar days of receipt of the request. The loss information shall include all physician, hospital, prescription drug, and other covered medical claims specific to the employer's group plan incurred for the 12-month period paid through the 14 months which end within the 60-day period prior to the date of the request. An employer shall not be entitled by this section to more than 2 loss information requests in any 12-month period; however, nothing shall prohibit a carrier from fulfilling more frequent requests on a mutually agreed-upon basis.

187:15 Managed Care Law; Prescription Drugs. Amend RSA 420-J:7-b, I(a) to read as follows:

I.(a) Every health benefit plan that provides prescription drug benefits is required to provide prospective enrollees, and [annually to] covered persons, a description of the prescription drug benefit plan. Among the specific items that shall be included in the description are:

(1) The procedure a covered person must follow to obtain drugs and medications that are subject to a plan list or plan formulary.

(2) A description of the drug formulary and the plan's exception process.

(3) A description of the extent to which a covered person will be reimbursed for the cost of a drug that is not on a plan list or formulary.

187:16 Managed Care Law; Prescription Drugs. Amend RSA 420-J:7-b, III to read as follows:

III. Every health plan that provides prescription drug benefits shall notify covered persons [of changes] affected by deletions to the plan list or plan formulary, provide an explanation of the exception process by which a covered person can access nonformulary medically necessary prescription drugs, and provide a toll-free telephone number through which a covered person can request additional information. For purposes of this paragraph, covered persons affected by deletions to the plan list or plan formulary shall include those covered persons for whom the health plan has provided coverage for the deleted prescription drugs during the 12-month period immediately prior to the deletion. Upon notification to covered persons, the health benefit plan shall allow at least 45 days before implementation of any formulary [change] deletions; provided, however, that advance notice shall not be required if the federal Food and Drug Administration has determined that a prescription drug on the health benefit plan's formulary is unsafe.

187:17 New Paragraphs; Managed Care Law; Prescription Drugs. Amend RSA 420-J:7-b by inserting after paragraph IV the following new paragraphs:

IV-a. Every health benefit plan that provides prescription drug benefits shall provide notice of deletions to the plan list or plan formulary to all covered persons at least annually.

IV-b. Every health benefit plan that provides prescription drug coverage shall also provide notice of additions to the plan list or formulary to all covered persons at least annually. However, the requirements of this paragraph shall not apply to any health benefit plan that adds prescription drugs to its plan list or formulary upon approval by the federal Food and Drug Association.

187:18 Effective Date. This act shall take effect 60 days after its passage.

(Approved: June 1, 2004)

(Effective Date: July 31, 2004)