Current Status Bill Number:287 Ratification Number:6 Act Number:4 Type of Legislation:General Bill GB Introducing Body:Senate Introduced Date:19970130 Primary Sponsor:Banking and Insurance Committee SBI 02 All Sponsors:Banking and Insurance Committee Drafted Document Number:res1262.ees Companion Bill Number:3412 Date Bill Passed both Bodies:19970311 Governor's Action:S Date of Governor's Action:19970331 Subject:Health Insurance Pool, Medical; Federal Health Insurance Portability and Accountability Act of 1996
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
------ 19970423 Act No. A4
------ 19970331 Signed by Governor
------ 19970325 Ratified R6
House 19970311 Read third time, enrolled for
ratification
House 19970303 Read second time
House 19970226 Committee report: Favorable 26 HLCI
House 19970205 Introduced, read first time, 26 HLCI
referred to Committee
Senate 19970205 Read third time, sent to House
Senate 19970204 Read second time
Senate 19970130 Introduced, read first time,
placed on Calendar without reference
View additional legislative information at the LPITS web site.
(A4, R6, S287)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 38-74-90; TO AMEND SECTION 38-74-10, AS AMENDED, RELATING TO DEFINITIONS USED IN CONNECTION WITH THE HEALTH INSURANCE POOL; TO AMEND SECTION 38-74-30, AS AMENDED, RELATING TO ELIGIBILITY FOR POOL COVERAGE; AND SECTION 38-74-60, AS AMENDED, RELATING TO MAJOR MEDICAL EXPENSE COVERAGE, ALL SO AS TO MAKE THE POOL AN ACCEPTABLE ALTERNATIVE MECHANISM UNDER THE FEDERAL HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996 AND TO INCREASE THE AGGREGATE BENEFIT LIMIT, DELETE THE EXCLUSION OF INDIVIDUALS DIAGNOSED AS BEING INFECTED WITH AIDS, REDUCE THE PREMIUM CAP ON CERTAIN ASSESSMENTS, ALLOW FEDERALLY DEFINED ELIGIBLE INDIVIDUALS TO ENTER THE POOL WITHOUT SATISFYING CURRENT ELIGIBILITY REQUIREMENTS, REDUCE THE RESIDENCY REQUIREMENT, REQUIRE FEDERALLY DEFINED ELIGIBLE INDIVIDUALS TO BE RESIDENTS, ENSURE THAT THE PREEXISTING CONDITION EXCLUSION IS NOT APPLIED TO FEDERALLY DEFINED ELIGIBLE INDIVIDUALS, REMOVE THE PROVISIONS ALLOWING EXTRA CHARGES WHERE A PREEXISTING CONDITION EXCLUSION IS WAIVED, AND ENSURE THAT FEDERALLY DEFINED ELIGIBLE INDIVIDUALS ARE PROVIDED A CHOICE OF COVERAGE.
Be it enacted by the General Assembly of the State of South Carolina:
Authorizes Director of Department of Insurance to make regulations
SECTION 1. The 1976 Code is amended by adding:
"Section 38-74-90. The Director of the Department of Insurance may promulgate regulations necessary or appropriate to carry out the provisions of this chapter."
Expands definitions of "insurer" and "health insurance"
SECTION 2. Section 38-74-10(4) and (5) of the 1976 Code is amended to read:
"(4) 'Insurer' means any entity that provides health insurance in this State. For purposes of this section, insurer includes an insurance company, a health maintenance organization, and any other entity providing health insurance which is licensed to engage in the business of insurance in this State and which is subject to state insurance regulation.
(5) 'Health insurance' or 'health insurance coverage' means benefits consisting of medical care provided directly, through insurance or reimbursement, or otherwise and including items and services paid for as medical care under a hospital or medical service policy or certificate, hospital, or medical service plan contract, or health maintenance organization contract offered by an insurer, except:
(a) coverage only for accident, or disability income insurance, or any combination thereof;
(b) coverage issued as a supplement to liability insurance;
(c) liability insurance, including general liability insurance and automobile liability insurance;
(d) workers' compensation or similar insurance;
(e) automobile medical payment insurance;
(f) credit-only insurance;
(g) coverage for on-site medical clinics;
(h) other similar insurance coverage, specified in regulations, under which benefits for medical care are secondary or incidental to other insurance benefits;
(i) if offered separately:
(i) limited scope dental or vision benefits;
(ii) benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof;
(iii) such other similar, limited benefits as are specified in regulations;
(j) if offered as independent, noncoordinated benefits:
(i) coverage only for a specified disease or illness;
(ii) hospital indemnity or other fixed indemnity insurance;
(k) if offered as a separate insurance policy:
(i) Medicare supplemental health insurance (as defined under Section 1882(g)(1) of the Social Security Act);
(ii) coverage supplement to the coverage provided under Chapter 55, Title 10 of the United States Code; and
(iii) similar supplemental coverage under a group health plan."
Adds number of new terms to definitions section
SECTION 3. Section 38-74-10 of the 1976 Code, as last amended by Act 181 of 1993, is further amended by adding at the end:
"(16) 'Affiliation period' means a period which, under the terms of the health insurance coverage offered by a health maintenance organization, must expire before the health insurance coverage becomes effective. The organization is not required to provide health care services or benefits during this period and no premium shall be charged to the participant or beneficiary for any coverage during the period. The period begins on the enrollment date and runs concurrently with any waiting period under the plan.
(17) 'Beneficiary' has the meaning given under Section 3(8) of the Employee Retirement Income Security Act of 1974.
(18) 'COBRA continuation provision' means:
(a) Part 6 of subtitle B of Title I of the Employee Retirement Income Security Act of 1974, other than Section 609 of the act;
(b) Section 4908B of the Internal Revenue Code of 1986, other than subsection (f)(1) of the section insofar as it relates to pediatric vaccines; or
(c) Title XXII of the Public Health Service Act.
(19) 'Church plan' has the meaning given the term under Section 3(33) of the Employee Retirement Income Security Act of 1974.
(20) 'Creditable coverage' means, with respect to an individual, coverage of the individual under any of the following:
(a) a group health plan;
(b) health insurance;
(c) Part A or B of Title XVIII of the Social Security Act;
(d) Title XIX of the Social Security Act, other than coverage consisting solely of benefits under Section 1928;
(e) Chapter 55, Title 10 of the United States Code;
(f) a medical care program of the Indian Health Service or of a tribal organization;
(g) a state health benefits risk pool, including the South Carolina Health Insurance Pool;
(h) a health plan offered under Chapter 89, Title 5 of the United States Code;
(i) a public health plan, as defined in regulations;
(j) a health benefit plan under Section 5(e) of the Peace Corps Act (22 U.S.C. 2504(e)).
The term does not include coverage consisting solely of those benefits excepted from the definition of health insurance.
A period of creditable coverage shall not be counted if, after such period and before the enrollment date, there was a sixty-three day period during all of which the individual was not covered under any creditable coverage. However, in determining whether there has been continuous coverage, no period shall be taken into account during which the individual is in a waiting period for any coverage under a group health plan or for group health insurance coverage or is in an affiliation period.
Periods of creditable coverage with respect to an individual shall be established through presentation of certifications as described in Section 38-71-850(D) or in a manner specified in regulations.
(21) 'Employee' has the meaning given the term under Section 3(6) of the Employee Retirement Income Security Act of 1974.
(22) 'Enrollment date' means, with respect to an individual covered under a group health plan or health insurance coverage, the date of enrollment of the individual in the plan or coverage or, if earlier, the first day of the waiting period for the enrollment.
(23) 'Federally defined eligible individual' means an individual:
(a) for whom, as of the date on which the individual seeks coverage under this chapter, the aggregate of the periods of creditable coverage is eighteen or more months;
(b) whose most recent prior creditable coverage was under a group health plan, governmental plan, or church plan or health insurance coverage offered in connection with one of these plans;
(c) who is not eligible for coverage under a group health plan, part A or part B of Title XVIII of the Social Security Act, or a state plan under Title XIX of the Social Security Act or any successor program and who does not have other health insurance coverage;
(d) with respect to whom the most recent coverage within the period of aggregate creditable coverage was not terminated based on a factor relating to nonpayment of premiums or fraud;
(e) who, if offered the option of continuation coverage under a COBRA continuation provision or under a similar state program, elected the coverage; and
(f) who, if the individual elected the continuation coverage, has exhausted the continuation coverage under the provision or program.
(24) 'Governmental plan' has the meaning given the term under Section 3(32) of the Employee Retirement Income Security Act of 1974 and any governmental plan established or maintained for its employees by the government of the United States or by an agency or instrumentality of the government.
(25) 'Group health insurance coverage' means, in connection with a group health plan, health insurance offered by an insurer in connection with the plan.
(26) 'Group health plan' means an employee welfare benefit plan, as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, to the extent that the plan provides medical care, including items and services paid for as medical care, to employees or their dependents, as defined under the terms of the plan, directly or through insurance, reimbursement, or otherwise.
(27) 'Individual market' means the market for health insurance coverage offered to individuals other than in connection with a group health plan. The term includes coverage offered in connection with a group health plan that has fewer than two participants as current employees on the first day of the plan year unless the State elects participants as current employees on the first day of the plan year unless the State elects to regulate the coverage as coverage issued to small employers as defined in Section 38-71-1330.
(28) 'Medical care' means amounts paid for:
(a) the diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body;
(b) amounts paid for transportation primarily for and essential to medical care referred to in subitem (a); and
(c) amounts paid for insurance covering medical care referred to in subitems (a) and (b).
(29) 'Participant' has the meaning given the term under Section 3(7) of the Employee Retirement Income Security Act of 1974.
(30) 'Preexisting condition exclusion' means, with respect to coverage, a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for the coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before the date. Genetic information may not be treated as a preexisting condition in the absence of a diagnosis of the condition related to the information.
(31) 'Waiting period' means, with respect to a group health plan and an individual who is a potential participant or beneficiary in the plan, the period that must pass with respect to the individual before the individual is eligible to be covered for benefits under the terms of the plan."
Exempts federally eligible persons from certain exclusions and increases aggregate benefit limit
SECTION 4. Section 38-74-30 of the 1976 Code, as last amended by Sections 2 and 3 of Act 74 of 1991, is further amended to read:
"Section 38-74-30. (A) A person who is a resident of this State for thirty days, except that for a federally defined eligible individual, there shall not be a thirty-day requirement, and his newborn child is eligible for pool coverage:
(1) upon providing evidence of any of the following actions by an insurer on an application for health insurance comparable to that provided by the pool submitted on behalf of the person:
(a) a refusal to issue the insurance for health reasons;
(b) a refusal to issue the insurance except with a reduction or exclusion of coverage for a preexisting health condition for a period exceeding twelve months, unless it is determined that the person voluntarily terminated his or did not seek any health insurance coverage before being refused issuance except with a reduction or exclusion for a preexisting health condition, and then seeks to be eligible for pool coverage after the health condition develops. This determination must be made by the board;
(c) a refusal to issue insurance coverage comparable to that provided by the pool except at a rate exceeding one hundred fifty percent of the pool rate; or
(2) if the individual is a federally defined eligible individual, as defined in Section 38-74-10, who is and continues to be a resident of this State.
(B) A person whose health insurance coverage is terminated involuntarily for any reason other than nonpayment of premium may apply for coverage under the plan but shall submit proof of eligibility according to subsection (A) of this section. If proof is supplied and if coverage is applied for within sixty days after the involuntary termination and if premiums are paid for the entire coverage period, the effective date of the coverage is the date of termination of the previous coverage. Waiting period and preexisting condition exclusions are waived to the extent to which similar exclusions, if any, have been satisfied under the prior health insurance coverage. The waiver does not apply to a person whose policy has been terminated or rescinded involuntarily because of a material misrepresentation.
(C) A person who is paying a premium for health insurance comparable to the pool plan in excess of one hundred fifty percent of the pool rate or who has received notice that the premium for a policy would be in excess of one hundred fifty percent of the pool rate may make application for coverage under the pool. The effective date of coverage is the date of the application, or the date that the premium is paid if later, and any waiting period or preexisting condition exclusion is waived to the extent to which similar exclusions, if any, were satisfied under the prior health insurance plan. Benefits payable under the pool plan are secondary to benefits payable by the previous plan. The board shall require an additional premium for coverage effected under the plan in this manner notwithstanding the premium limitation stated in Section 38-74-60.
(D) The waiting period and preexisting condition exclusions are waived for a federally defined eligible individual.
(E) A person not eligible for pool coverage is one who meets any one of the following criteria:
(1) a person who has coverage under health insurance comparable to that offered by the pool from an insurer or any other source except a person who would be eligible under subsection (C) of this section;
(2) a person who is eligible for health insurance comparable to that offered by the pool from an insurer or any other source except a person who would be eligible for pool coverage under Section 38-74-30(A)(1)(b), 38-74-30(A)(1)(c), or 38-74-30(A)(2);
(3) a person who at the time of pool application is eligible for health care benefits under state Medicaid or Medicare;
(4) a person having terminated coverage in the pool unless twelve months have lapsed since termination unless termination was because of ineligibility, except that this item shall not apply with respect to an applicant who is a federally defined eligible individual;
(5) a person on whose behalf the pool has paid out one million dollars in benefits;
(6) inmates of public institutions and persons eligible for public programs, except that this item shall not apply with respect to an applicant who is a federally defined eligible individual;
(7) a person who fails to maintain South Carolina residency.
(F) A person who ceases to meet the eligibility requirements of this section may be terminated at the end of the policy period."
Reduces premium cap and requires choice of coverage
SECTION 5. Section 38-74-60 of the 1976 Code, as last amended by Section 790, Act 181 of 1993, is further amended to read:
"Section 38-74-60. (A) The pool shall offer major medical expense coverage to every eligible person. The coverage to be issued by the pool, its schedule of benefits, exclusions, and other limitations must be established by the board and approved by the director taking into consideration the advice and recommendations of the pool members.
(B) In establishing and reviewing the pool coverage, the board shall take into consideration the levels of health insurance provided in the State and medical and economic factors considered appropriate and promulgate benefit levels, deductibles, coinsurance factors, exclusions, and limitations determined to be generally reflective of and commensurate with health insurance provided through a representative number of large employers in the State. At least one policy form of coverage must be comparable to comprehensive health insurance coverage offered in the individual market in this State or to the standard health insurance plan as defined in Section 38-71-1330.
(C) The pool shall provide a choice of health insurance coverage to all eligible individuals.
(D)(1) Premium rates charged for pool coverage may not be unreasonable in relation to the benefits provided, the risk experience, and the reasonable expenses of providing the coverage. Separate schedules of premium rates based on age, sex, and geographical location may apply for individual risks.
(2) The board shall determine the standard risk rate by taking into account the individual standard rate charged by the five largest insurers offering individual coverages in the State comparable to the pool coverage. If five insurers do not offer comparable coverage, the standard risk rate must be established using reasonable actuarial techniques and must reflect anticipated experience and expenses for coverage. Rates initially established for pool coverage are two hundred percent of rates established as applicable for individual standard risks. Rates subsequently established must provide fully for the expected costs of claims and expenses of operation taking into account investment income and any other cost factors, but may not exceed two hundred percent of rates established as applicable for individual standard risks subject to the limitations described in this section. If the total tax credit provided in Section 38-74-80 exceeds five million dollars in any one year for all members of the pool, the board shall establish a rate for all policies that may exceed, if necessary, the two hundred percent limitation as provided in this subsection so as to assure that the tax credit does not exceed five million dollars in the following year of operation. All rates and rate schedules must be submitted to the director or his designee for approval.
(E) Except as provided in Section 38-74-30(B), (C), and (D), pool coverage excludes charges or expenses incurred during the first six months following the effective date of coverage as to any condition which during the six-month period immediately preceding the effective date of coverage:
(1) had manifested itself in a manner so as to cause an ordinarily prudent person to seek diagnosis, care, or treatment; or
(2) for which medical advice, care, or treatment was recommended or received as to the condition.
(F)(1) A benefit otherwise payable under pool coverage for covered expenses must be reduced by all amounts paid or payable for the same expenses through any other health insurance or health coverage and by all hospital and medical expense benefits paid or payable under any workers' compensation coverage, automobile medical payment, or liability insurance whether provided on the basis of fault or nonfault, and by any hospital or medical benefits paid or payable under or provided pursuant to any state or federal law or program.
(2) The insurer or the pool has a cause of action against an eligible person for the recovery of the amount of benefits paid which are not for covered expenses. Benefits due from the pool may be reduced or refused as a setoff against any amount recoverable under this paragraph."
Savings clause
SECTION 6. If a provision of this act or the application of the provision to any person or circumstance is held to be unconstitutional, the remainder of this act and the application of the provisions of the act to any person or circumstance may not be affected.
Time effective
SECTION 7. This act takes effect upon approval by the Governor.
Approved the 31st day of March, 1997.