Individual State Agency Fiscal Note - 6144 SB, Insurance implement. credits
Summary
An Individual State Agency Fiscal Note for Bill Number 6144 SB, titled Insurance implement. credits, from the Office of Insurance Commissioner. The estimates list total operating expenditures of 142,206 for 2019-21 and 107,499 for each of 2021-23 and 2023-25. The narrative states that Section 3(2) bases the dollar amount of implementation credits on the size of the group plan, with up to one million dollars for a group covering more than one thousand covered lives and up to $50,000 for a group covering fifty or fewer covered lives. Part V states that simple rule making is required in FY2021 to support revisions to current filing regulations.
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“Individual State Agency Fiscal Note - 6144 SB, Insurance implement. credits.”
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Individual State Agency Fiscal Note
Bill Number: 6144 SB Title: Insurance implement. credits Agency: 160-Office of Insurance
Commissioner
Part I: Estimates
No Fiscal Impact
Estimated Cash Receipts to:
NONE
Estimated Operating Expenditures from:
FY 2020 FY 2021 2019-21 2021-23 2023-25
FTE Staff Years 0.0 1.0 0.5 0.4 0.4
Account
Insurance Commissioners Regulatory 0 142,206 142,206 107,499 107,499
Account-State 138-1
Total $ 0 142,206 142,206 107,499 107,499
Estimated Capital Budget Impact:
NONE
The cash receipts and expenditure estimates on this page represent the most likely fiscal impact. Factors impacting the precision of these estimates,
and alternate ranges (if appropriate), are explained in Part II.
Check applicable boxes and follow corresponding instructions:
If fiscal impact is greater than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete entire fiscal note
X
form Parts I-V.
If fiscal impact is less than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete this page only (Part I).
Capital budget impact, complete Part IV.
X Requires new rule making, complete Part V.
Legislative Contact: Clinton McCarthy Phone: 360-786-7319 Date: 01/14/2020
Agency Preparation: Scott Bird Phone: (360) 725-7169 Date: 01/27/2020
Agency Approval: AnnaLisa Gellermann Phone: 360-725-7106 Date: 01/27/2020
OFM Review: Jason Brown Phone: (360) 902-0539 Date: 02/03/2020
Form FN (Rev 1/00) 154,586.00 Request # 20-26-1
FNS063 Individual State Agency Fiscal Note 1 Bill # 6144 SB
Part II: Narrative Explanation
II. A - Brief Description Of What The Measure Does That Has Fiscal Impact
Briefly describe by section number, the significant provisions of the bill, and any related workload or policy assumptions, that have revenue or
expenditure impact on the responding agency.
Sections 1(7)&(8) and 2(4)&(5) exempts implementation credits in compliance with section 3 of this act, and
performance standards in compliance with section 4 of this act, from the prohibition on inducements to
insurance.
Section 3(1) requires insurers to describe any implementation credits provided to a policyholder, along with the
process that the policyholder must follow to document an expense in order for it to be paid, in the group
insurance policy and file the policy with the Office of Insurance Commissioner (OIC).
Section 3(2) requires that the dollar amount of implementation credits offered to a policyholder be based on the
size of the group plan being implemented. A group covering more than one thousand covered lives may offer
implementation credits of up to one million dollars, a group covering fifty-one to one thousand covered lives may
be offered implementation credits of up to $500,000 and a group covering fifty or fewer covered lives may be
offered implementation credits of up to $50,000.
Section 3(3) allows for an implementation credit not to be actuarially justified but requires that the premium rate
filing must include a certification by a member of the American Academy of Actuaries, or other person approved
by the OIC, that the implementation credit is considered in the premium development and the benefits provided
are reasonable in relation to the premium charged.
Section 4(3) requires that if an insurance contract contains any performance standards, the insurer must describe
the performance standards in the insurance contract and file the contract with the OIC.
Section 4(5) authorizes the OIC to adopt rules to implement this section.
II. B - Cash receipts Impact
Briefly describe and quantify the cash receipts impact of the legislation on the responding agency, identifying the cash receipts provisions by section
number and when appropriate the detail of the revenue sources. Briefly describe the factual basis of the assumptions and the method by which the
cash receipts impact is derived. Explain how workload assumptions translate into estimates. Distinguish between one time and ongoing functions.
II. C - Expenditures
Briefly describe the agency expenditures necessary to implement this legislation (or savings resulting from this legislation), identifying by section
number the provisions of the legislation that result in the expenditures (or savings). Briefly describe the factual basis of the assumptions and the
method by which the expenditure impact is derived. Explain how workload assumptions translate into cost estimates. Distinguish between one time
and ongoing functions.
In FY 2021 and thereafter, the OIC makes the following assumptions:
• 1,310 annual health plan filings from 18 carriers will be received each year based on CY2019 filing
volumes. OIC expects that it will be required to review 315 of the health plan filings in the first year and 63
health plan filings each year thereafter.
• 8,260 annual health plan rate filings will be received each year based on CY2019 filing volumes. OIC
expects that each year 5% of the rate filings will require actuarial review.
Section 3(1) requires insurers to describe any implementation credits provided to a policyholder, along with the
process that the policyholder must follow to document an expense in order for it to be paid, in the group
insurance policy and file the policy with the Office of Insurance Commissioner (OIC). An implementation credit
is part of the premium for insurance premium tax purposes and must be included in the rate schedule for the
Insurance implement. credits 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 154,586.00 Request # 20-26-1
FNS063 Individual State Agency Fiscal Note 2 Bill # 6144 SB
policy.
Section 3(3) requires that the premium rate filing must include a certification by a member of the American
Academy of Actuaries, or other person approved by the OIC, that the implementation credit is considered in the
premium development and the benefits provided are reasonable in relation to the premium charged.
Section 4(3) requires that if an insurance contract contains any performance standards, the insurer must describe
the performance standards in the insurance contract and file the contract with the OIC.
In FY2021, the OIC will require one-time costs of 16 hours of a Functional Program Analyst 4 to develop new
group policy and rate review standards, checklist documents, and train staff. In FY2021, OIC assumes 5% of the
8,260 health plan rate filings and 319 health plan filings will be required to be reviewed each year requiring 826
hours (8,260 filings x 5% x 2 hours) of an Actuarial Analyst 3 and 79 hours (319 health plan filings x 15 minutes)
of a FPA4 to review health plan filings. In FY2022 and each year thereafter, due to an assumed increase in
compliance by carriers, the OIC estimates a reduced review time for the health plan rate filings of 30 minutes per
filing requiring 207 hours (8,260 x 5% x 30 minutes) of an Actuarial Analyst 3. Also, OIC expects to review a
reduced number but unique set of 63 health plan filings that require ongoing scrutiny requiring 16 hours (63
filings x 15 minutes) of a FPA4.
Beginning in FY2021, the OIC estimates that there will be five enforcement cases each year to address
companies that are non-compliant with the new law. Each enforcement case will require 65 hours of an
Investigator 3, 5 hours of an Insurance Enforcement Specialist, and 8 hours of a Paralegal 2. Of the total cases,
OIC estimates that 10% or one case every other year will advance to administrative hearing requiring 40 hours of
an Insurance Enforcement Specialist, and 32 hours of a Paralegal 2
Section 4(5) authorizes the OIC to adopt rules. Simple rule making is required in FY2021 to amend WACs
284-43-6520 and 284-43-6560 to support necessary revisions to current filing regulations.
Ongoing costs:
Salary, benefits and associated costs for .01 FTE Functional Program Analyst 4; .02 FTE Insurance Enforcement
Specialist; .02 FTE Paralegal 2; and .20 FTE Investigator 3.
Part III: Expenditure Detail
III. A - Operating Budget Expenditures
Account Account Title Type FY 2020 FY 2021 2019-21 2021-23 2023-25
138-1 Insurance State 0 142,206 142,206 107,499 107,499
Commissioners
Regulatory Account
Total $ 0 142,206 142,206 107,499 107,499
Insurance implement. credits 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 154,586.00 Request # 20-26-1
FNS063 Individual State Agency Fiscal Note 3 Bill # 6144 SB
III. B - Expenditures by Object Or Purpose
FY 2020 FY 2021 2019-21 2021-23 2023-25
FTE Staff Years 1.0 0.5 0.4 0.4
A-Salaries and Wages 84,404 84,404 63,364 63,364
B-Employee Benefits 29,361 29,361 22,635 22,635
C-Professional Service Contracts
E-Goods and Other Services 28,441 28,441 21,500 21,500
G-Travel
J-Capital Outlays
M-Inter Agency/Fund Transfers
N-Grants, Benefits & Client Services
P-Debt Service
S-Interagency Reimbursements
T-Intra-Agency Reimbursements
9-
Total $ 0 142,206 142,206 107,499 107,499
III. C - Operating FTE Detail: List FTEs by classification and corresponding annual compensation. Totals need to agree with total FTEs in
Part I and Part IIIA
Job Classification Salary FY 2020 FY 2021 2019-21 2021-23 2023-25
Actuarial Analyst 3 90,420 0.5 0.3 0.1 0.1
Functional Program Analyst 4 76,128 0.1 0.1 0.0 0.0
Insurance Enforcement Specialist 87,108 0.0 0.0 0.0 0.0
Investigator 3 72,432 0.2 0.1 0.2 0.2
Paralegal 2 68,892 0.0 0.0 0.0 0.0
Senior Policy Analyst 91,896 0.1 0.1
Total FTEs 1.0 0.5 0.4 0.4
III. D - Expenditures By Program (optional)
NONE
Part IV: Capital Budget Impact
IV. A - Capital Budget Expenditures
NONE
IV. B - Expenditures by Object Or Purpose
NONE
IV. C - Capital Budget Breakout
Identify acquisition and construction costs not reflected elsewhere on the fiscal note and describe potential financing methods
NONE
Part V: New Rule Making Required
Identify provisions of the measure that require the agency to adopt new administrative rules or repeal/revise existing rules.
Section 4(5) authorizes the Office of Insurance Commissioner to adopt rules.. Simple rule making is required in FY2021 to
amend WACs 284-43-6520 and 284-43-6560 to support necessary revisions to current filing regulations.
Insurance implement. credits 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 154,586.00 Request # 20-26-1
FNS063 Individual State Agency Fiscal Note 4 Bill # 6144 SB
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