S*287 Session 112 (1997-1998)
S*0287(Rat #0006, Act #0004 of 1997) General Bill, By
Senate Banking and Insurance
Similar(S 259, H 3412)
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.
01/30/97 Senate Introduced, read first time, placed on calendar
without reference SJ-8
02/04/97 Senate Read second time SJ-21
02/05/97 Senate Read third time and sent to House SJ-12
02/05/97 House Introduced and read first time HJ-19
02/05/97 House Referred to Committee on Labor, Commerce and
Industry HJ-20
02/26/97 House Committee report: Favorable Labor, Commerce and
Industry HJ-4
03/03/97 House Read second time HJ-14
03/11/97 House Read third time and enrolled HJ-23
03/25/97 Ratified R 6
03/31/97 Signed By Governor
03/31/97 Effective date 03/31/97
04/10/97 Copies available
04/10/97 Act No. 4
(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. |