Report Title:

Relating to health insurance.

Description:

Reduces the maximum reserves that a managed care plan may hold from 50% of annual expenses to 30% of annual expenses. Allows the commissioner to waive the requirement of a refund if subscribers of a managed care plan would be jeopardized by it, if the managed care plan would need the reserve to increase its enrollment or make capital investments, or if the excess to be refunded is the result of temporary fluctuations in investments.

THE SENATE

S.B. NO.

760

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO HEALTH INSURANCE.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Section 431:14F-106, Hawaii Revised Statutes, is amended to read as follows:

"[[431:14F-106[]] Reserves. (a) If a managed care plan's net worth exceeds [fifty] thirty per cent of its annual [health care expenditures and operating] expenses as reported on the most recent annual financial statement filed with the commissioner, the excess moneys shall [either:

(1) Be returned to enrollees of the managed care plan; or

(2) Be applied to stabilize or reduce rates, charges, assessments, subscriptions, receipts, contributions, fees, or dues payable by the enrollees of the managed care plan.

(b) Excess moneys applied in accordance with subsection (a)(2) shall be reallocated among all lines of health insurance business sold by the managed care plan. Reallocation of moneys pursuant to this section may be delayed until the amount of moneys available to be reallocated exceeds $10,000,000.] be returned to the subscribers of the managed care plan who were enrolled in the plan on December 31st of the calendar year preceding the refund. The refund shall be made in equal amounts to each such subscriber. The commissioner may establish a reasonable deadline for implementation of the refund. If the refund would be less than ten dollars per subscriber, the excess shall be retained by the managed care plan for distribution when the per subscriber refund would be ten dollars or more. As used in this section, "annual expenses" means the sum of the managed care plan's hospital and medical expense, non-health claims expense, claims adjustment expense, general administrative expense, and increases in reserves for life and accident and health contracts, or similar terms, as reported on the annual financial statement filed with the commissioner in accordance with the National Association of Insurance Commissioners' annual statement instructions.

(b) Nothing in this section shall prohibit a managed care plan from maintaining reserves above minimum requirements but below the maximum limit or from returning moneys to, or reducing moneys payable by, [enrollees] subscribers of the managed care plan prior to reaching the maximum limit.

(c) The commissioner may waive the requirements of subsection (a) if, in the commissioner's sole discretion, the commissioner determines that:

(1) The distribution of excess reserves would be hazardous to the subscribers of the managed care plan;

(2) The managed care plan may reasonably be expected to be unable to meet its obligations to subscribers or prospective subscribers as a result of the distribution of excess reserves;

(3) The managed care plan has demonstrated that the excess reserves are needed because the managed care plan is planning to increase its enrollment or make new capital investments; or

(4) The managed care plan has demonstrated that the excess reserves are the result of temporary fluctuations in investments and will not persist.

[(c)] (d) Nothing in this section shall be construed to alter or eliminate the minimum reserve requirements applicable to the managed care plan. In the event of a conflict, the minimum reserve requirements shall control.

[(d)] (e) Eighty per cent of all investment income on the reserves net of investment manager fees shall be applied to the rate determination and filing of the managed care plan. This requirement may be waived or adjusted by the commissioner if the commissioner determines that it would impair the minimum reserve requirements or solvency of the managed care plan.″

SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 3. This Act shall take effect on July 1, 2005.

INTRODUCED BY:

_____________________________

BY REQUEST