H 3412 Session 112 (1997-1998)
H 3412 General Bill, By Seithel, Cato and Mason
Similar(S 259, S 287)
A BILL 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.
02/06/97 House Introduced and read first time HJ-22
02/06/97 House Referred to Committee on Labor, Commerce and
Industry HJ-22
A BILL
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:
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.
SECTION 2. Section 38-74-10(4) and (5) of the 1976 Code are
amended to read:
"(4) 'Insurer' means any insurance company authorized to
transact health insurance business in this State including a health
maintenance organization 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' means any hospital, surgical, or medical
expense incurred policy, hospital service corporation plan contract,
or health maintenance organization contract. Health insurance does
not include accident only, disability income, hospital confinement
indemnity, dental, or credit insurance, coverage issued as a
supplement to liability insurance, insurance arising from workers'
compensation provisions, automobile medical payment insurance, or
any other specific limited coverage, or insurance under which
benefits are payable with to without regard to fault and which is
statutorily required to be contained in any liability insurance
policy 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."
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 play year unless the State elects
participants as current employees on the first day of the play 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."
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) Any A person who is a
resident of this State for six months 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:
(1)(a) a refusal to issue the insurance for
health reasons;
(2)(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;
(3)(c) a refusal to issue insurance coverage
comparable to that provided by the pool except at a rate exceeding
one hundred and 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. 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.
(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.
(D)(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)(2) or 38-74-30(A)(3) 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 two
hundred fifty thousand 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;
(8) a person who has been diagnosed as being infected with
acquired immunodeficiency syndrome (AIDS).
(E)(F) Any A person who ceases
to meet the eligibility requirements of this section may be terminated
at the end of the policy period."
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
commissioner 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 three 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 which
assures 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.
(D)(E) Except as provided in Section
38-74-30(B) and, (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.
(E)(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."
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.
SECTION 7. This act takes approval upon approval by the
Governor.
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