Senate Bill 6144 - State of Washington, 2020 Regular Session

Summary

Senate Bill 6144 of the State of Washington, 66th Legislature, 2020 Regular Session, by Senators Hasegawa and Das, by request of Insurance Commissioner, prefiled January 7, 2020. The title states that the bill relates to implementation credits and performance standards, amends RCW 48.30.140 and 48.30.150, and adds new sections to chapter 48.30 RCW. A new section provides that if an insurance contract includes any performance standards, the insurer must describe the performance standards in the insurance contract and file the contract with the commissioner. It also provides that the commissioner may adopt rules to implement the section. The act takes effect July 1, 2020.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

     Z-0696.2

                               SENATE BILL 6144


     State of Washington       66th Legislature       2020 Regular Session

     By Senators Hasegawa and Das; by request of Insurance Commissioner

     Prefiled 01/07/20.




1        AN ACT Relating to implementation credits and performance
2    standards; amending RCW 48.30.140 and 48.30.150; adding new sections
3    to chapter 48.30 RCW; and providing an effective date.


4    BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:


 5       Sec. 1.   RCW 48.30.140 and 2019 c 253 s 1 are each amended to
 6   read as follows:
 7       (1) Except to the extent provided for in an applicable filing
 8   with the commissioner then in effect, no insurer, insurance producer,
 9   or title insurance agent shall, as an inducement to insurance, or
10   after insurance has been effected, directly or indirectly, offer,
11   promise, allow, give, set off, or pay to the insured or to any
12   employee of the insured, any rebate, discount, abatement, or
13   reduction of premium or any part thereof named in any insurance
14   contract, or any commission thereon, or earnings, profits, dividends,
15   or other benefit, or any other valuable consideration or inducement
16   whatsoever which is not expressly provided for in the policy.
17       (2) Subsection (1) of this section shall not apply as to
18   commissions paid to a licensed insurance producer, or title insurance
19   agent for insurance placed on that person's own property or risks.
20       (3) This section shall not apply to the allowance by any marine
21   insurer, or marine insurance producer, to any insured, in connection
                                     p. 1                           SB 6144
 1   with marine insurance, of such discount as is sanctioned by custom
 2   among marine insurers as being additional to the insurance producer's
 3   commission.
 4       (4) This section shall not apply to advertising or promotional
 5   programs conducted by insurers or insurance producers whereby prizes,
 6   goods, wares, gift cards, gift certificates, or merchandise, not
 7   exceeding one hundred dollars in value per person in the aggregate in
 8   any twelve-month period, are given to all insureds or prospective
 9   insureds under similar qualifying circumstances. This subsection does
10   not apply to title insurers or title insurance agents.
11       (5) This section does not apply to an offset or reimbursement of
12   all or part of a fee paid to an insurance producer as provided in RCW
13   48.17.270.
14       (6)(a) Subsection (1) of this section shall not be construed to
15   prohibit a health carrier or disability insurer from including as
16   part of a group or individual health benefit plan or contract
17   containing health benefits, a wellness program which meets the
18   requirements   for  an   exception   from  the   prohibition  against
19   discrimination based on a health factor under the health insurance
20   portability and accountability act (P.L. 104-191; 110 Stat. 1936) and
21   regulations adopted pursuant to that act.
22       (b) For purposes of this subsection: (i) "Health carrier" and
23   "health benefit plan" have the same meaning as provided in RCW
24   48.43.005; and (ii) "wellness program" has the same meaning as
25   provided in 45 C.F.R. 146.121(f).
26       (7) ((Subsection (1) of this section does not apply to a payment
27   by an insurer to offset documented expenses incurred by a group
28   policyholder in changing coverages from one insurer to another.
29   Insurers shall describe any such payment in the group insurance
30   policy or in an applicable filing with the commissioner. If an
31   implementation credit is given to a group, the implementation credit
32   is part of the premium for the purposes of RCW 48.14.020 and
33   48.14.0201.)) This section does not apply to an implementation credit
34   offered or provided in compliance with section 3 of this act. This
35   exception ((to subsection (1) of this section)) does not apply to
36   "medicare supplemental insurance" or "medicare supplemental insurance
37   policies" as defined in chapter 48.66 RCW, nor does this exception
38   apply to small groups as defined in RCW 48.43.005.
39       (8) ((Subsection (7) of this section does not apply to small
40   groups as defined in RCW 48.43.005.)) This section does not apply to
                                     p. 2                          SB 6144
1    a performance standard offered or provided in compliance with section
2    4 of this act.


 3       Sec. 2.   RCW 48.30.150 and 2019 c 253 s 2 are each amended to
 4   read as follows:
 5       (1) No insurer, insurance producer, title insurance agent, or
 6   other person shall, as an inducement to insurance, or in connection
 7   with any insurance transaction, provide in any policy for, or offer,
 8   or sell, buy, or offer or promise to buy or give, or promise, or
 9   allow to, or on behalf of, the insured or prospective insured in any
10   manner whatsoever:
11       (a) Any shares of stock or other securities issued or at any time
12   to be issued on any interest therein or rights thereto; or
13       (b) Any special advisory board contract, or other contract,
14   agreement, or understanding of any kind, offering, providing for, or
15   promising any profits or special returns or special dividends; or
16       (c) Any prizes, goods, wares, gift cards, gift certificates, or
17   merchandise of an aggregate value in excess of one hundred dollars
18   per person in the aggregate in any consecutive twelve-month period.
19   This subsection (1)(c) does not apply to title insurers or title
20   insurance agents.
21       (2) Subsection (1) of this section shall not be deemed to
22   prohibit the sale or purchase of securities as a condition to or in
23   connection with surety insurance insuring the performance of an
24   obligation as part of a plan of financing found by the commissioner
25   to be designed and operated in good faith primarily for the purpose
26   of such financing, nor shall it be deemed to prohibit the sale of
27   redeemable securities of a registered investment company in the same
28   transaction in which life insurance is sold.
29       (3)(a) Subsection (1) of this section shall not be deemed to
30   prohibit a health carrier or disability insurer from including as
31   part of a group or individual health benefit plan or contract
32   providing health benefits, a wellness program which meets the
33   requirements   for  an   exception   from  the   prohibition  against
34   discrimination based on a health factor under the health insurance
35   portability and accountability act (P.L. 104-191; 110 Stat. 1936) and
36   regulations adopted pursuant to that act.
37       (b) For purposes of this subsection: (i) "Health carrier" and
38   "health benefit plan" have the same meaning as provided in RCW


                                     p. 3                          SB 6144
 1   48.43.005; and (ii) "wellness program" has the same meaning as
 2   provided in 45 C.F.R. 146.121(f).
 3       (4) ((Subsection (1) of this section does not prohibit an insurer
 4   from issuing any payment to offset documented expenses incurred by a
 5   group policyholder in changing coverages from one insurer to another
 6   as provided in RCW 48.30.140. If an implementation credit is given to
 7   a group, the implementation credit is part of the premium for the
 8   purposes of RCW 48.14.020 and 48.14.0201.)) This section does not
 9   apply to an implementation credit offered or provided in compliance
10   with section 3 of this act. This exception ((to subsection (1) of
11   this section)) does not apply to "medicare supplemental insurance" or
12   "medicare supplemental insurance policies" as defined in chapter
13   48.66 RCW, nor does this exception apply to small groups as defined
14   in RCW 48.43.005.
15       (5) ((Subsection (4) of this section does not apply to small
16   groups as defined in RCW 48.43.005.)) This section does not apply to
17   a performance standard offered or provided in compliance with section
18   4 of this act.


19       NEW SECTION.   Sec. 3.   A new section is added to chapter 48.30
20   RCW to read as follows:
21       (1) An insurer must describe any implementation credits provided
22   to a policyholder, along with the process that the policyholder must
23   follow to document an expense in order for it to be paid, in the
24   group insurance policy. The insurer must file the policy with the
25   commissioner. An implementation credit is part of the premium for the
26   purposes of RCW 48.14.020 and 48.14.0201, and must be included in the
27   rate schedule for the policy.
28       (2) The dollar amount of implementation credits offered to a
29   policyholder must be based on the size of the group plan being
30   implemented, as described in this subsection:
31       (a) The policyholder for a group with more than one thousand
32   covered lives may be offered implementation credits of up to one
33   million dollars.
34       (b) The policyholder for a group covering fifty-one to one
35   thousand covered lives may be offered implementation credits of up to
36   five hundred thousand dollars.
37       (c) The policyholder for a group covering fifty or fewer covered
38   lives may be offered implementation credits of up to fifty thousand
39   dollars.
                                     p. 4                          SB 6144
 1       (3) An implementation credit does not need to be actuarially
 2   justified. However, the premium rate filing must include a
 3   certification by a member of the American academy of actuaries, or
 4   other person approved by the commissioner, that the implementation
 5   credit is considered in the premium development and the benefits
 6   provided are reasonable in relation to the premium charged for the
 7   contract.
 8       (4) An insurer that offers implementation credits must offer them
 9   to all group policyholders that are similarly situated with regard to
10   risk, exposure factors, and expense elements. Implementation credits
11   offered in compliance with this subsection (4) must not be considered
12   unfair discrimination under RCW 48.18.480.
13       (5) The commissioner may adopt rules to implement this section.
14       (6) The definitions in this subsection apply throughout this
15   section unless the context clearly requires otherwise.
16       (a) "Documented expenses" means expenses actually incurred by the
17   group policyholder and invoiced to the insurer. The expenses must be
18   reasonable given current industry practice and prevailing market
19   rates for such expenses. RCW 48.05.280 applies to all documentation
20   required under this section. The commissioner must develop a form
21   that insurers must use in order to comply with this documentation
22   requirement.
23       (b) "Implementation credit" means a payment by an insurer after
24   an executed contract is in place to offset documented expenses
25   incurred by a group policyholder in changing coverages from one
26   insurer to another. Some examples of expenses that may be documented
27   and reimbursed include but are not limited to:
28       (i) Transfer of historical experience data provided by the
29   previous insurer to the new insurer;
30       (ii)   Implementation    project   expenses,   including   project
31   management   and   staffing   expenses  for   complex  implementations
32   involving coordination with multiple systems, insurers, and entities;
33       (iii) Costs required for existing insurers and entities involved
34   in plan management to program and establish secure data sharing
35   systems and compliance processes with a new insurer;
36       (iv)   Design,   creation,   printing,  and   mailing  of   member
37   communications related to implementation or new insurer plans,
38   services, or goods; and
39       (v) Providing new identification cards to group members.


                                     p. 5                          SB 6144
 1       NEW SECTION.   Sec. 4.   A new section is added to chapter 48.30
 2   RCW to read as follows:
 3       (1) For purposes of this section, "performance standard" or
 4   "performance guarantee" means a contractual provision in an insurance
 5   contract that establishes a specific standard for the insurer's
 6   performance of an obligation in the contract, and under which the
 7   insurer is required to remit a penalty payment, based on a percentage
 8   of the premium or a set dollar amount, to the policyholder for the
 9   next policy term if the insurer fails to comply with the standard.
10   Policyholders and insurers may calculate the amount of penalty based
11   on a percentage of the overall premium owed to the insurer by the
12   policyholder.
13       (2) Remittance of payment to the policyholder in compliance with
14   this section does not constitute a premium under RCW 48.18.170 and
15   48.43.005. Nothing in this section prevents the health care authority
16   from including performance standards in contracts.
17       (3) If an insurance contract includes any performance standards,
18   the insurer must describe the performance standards in the insurance
19   contract and file the contract with the commissioner.
20       (4) Remittance of a premium or a credit to the policyholder in
21   compliance with this section must not be considered a return premium
22   for purposes of RCW 48.14.020 and 48.14.0201.
23       (5) The commissioner may adopt rules to implement this section.


24      NEW SECTION.   Sec. 5.   This act takes effect July 1, 2020.

                                   --- END ---




                                      p. 6                             SB 6144


File and source

File

2020-02-04_a26451_bill_6144.pdf

Size

81,771 bytes

SHA-256

8f2b53e44e6e75ed13bde79668414d4bd1c1ad1235422d3ae97353a64401214d

Our copy

2020-02-04_a26451_bill_6144.pdf

Original

No public link identified.