First Regular Session
Sixty-first General Assembly
LLS NO. 970603.01 DHG
SENATE BILL 97127
STATE OF COLORADO
BY SENATOR Rizzuto;
also REPRESENTATIVE Owen.
BUSINESS AFFAIRS & LABOR
A BILL FOR AN ACT
CONCERNING HEALTH INSURANCE.
Bill Summary
(Note: This summary applies to this bill as introduced
and does not necessarily reflect any amendments which may be subsequently
adopted.)
Repeals an existing prohibition on interruptions in coverage and changes in plan design or benefits since January 1, 1996, for insurers that issued individual health insurance policies for selfemployed individuals or other "business groups of one" before January 1, 1996, and do not wish to be regulated under provisions applicable to small group carriers. Eliminates the current distinction between household employees and other business groups of one, and permits insurers to ask for the same information in connection with policy applications from all business groups of one.
Exempts shortterm limited duration health insurance from the definition of a "health benefit plan" subject to generally applicable health insurance laws.
Repeals existing rate bands applicable to small group health insurance while retaining rating requirements.
Grants individuals a tax deduction for health insurance
premiums and copayments.
Be it enacted by the General Assembly of the State of Colorado:
SECTION 1. 108601.5 (1) (c) (I), Colorado Revised Statutes, 1994 Repl. Vol., as amended, is amended to read:
108601.5. Applicability
and scope. (1) (c) (I) The
provisions of this article and article 16 of this title concerning
small employer carriers and small group plans shall not apply
to an individual health benefit plan issued to a business group
of one. on or before December 31,
1995, and in force on and after January 1, 1996, as long as the
business group of one maintains continuous coverage on that individual
health benefit plan with no changes in plan design or benefits
and continues to meet the definition of a business group of one.
Such a plan shall be regulated as an individual health benefit
plan.
SECTION 2. The introductory portion to 108602 (6) (b), Colorado Revised Statutes, 1994 Repl. Vol., is amended to read:
108602. Definitions. As used in this part 6, unless the context otherwise requires:
(6) (b) "Health benefit plan" does not include accident only, SHORTTERM LIMITED DURATION, credit, dental, vision, medicare supplement, longterm care, or disability income insurance, coverage issued as a supplement to liability insurance, workers' compensation or similar insurance, automobile medical payment insurance, specified diseases, hospital confinement indemnity, or limited benefit health insurance if:
SECTION 3. 1016102 (6) and the introductory portion to (21) (b), Colorado Revised Statutes, 1994 Repl. Vol., as amended, are amended to read:
1016102. Definitions. As used in this article, unless the context otherwise requires:
(6) (a) "Business group of one"
means, for purposes of initial qualification, an individual, a
sole proprietor, or a single fulltime employee of a subchapter
S corporation, C corporation, nonprofit corporation, limited liability
company, or partnership who has carried on significant business
activity for a period of at least one year prior to application
for coverage, has taxable income as indicated on federal internal
revenue service forms 1040, schedule C, F, or SE, or other forms
recognized by the federal internal revenue service for income
reporting purposes which generated taxable income in one of the
two previous years or from which that individual, sole proprietor,
or single fulltime employee has derived at least a substantial
part of such individual's income for one year out of any consecutive
threeyear period. This definition
shall be met by an individual certifying in an individual affidavit
signed under oath that such individual meets the definition set
forth in this paragraph (a). CARRIERS
MAY REQUIRE WHATEVER INFORMATION IS REASONABLY NECESSARY TO DETERMINE
WHETHER OR NOT AN INDIVIDUAL MEETS THE REQUIREMENTS OF THIS PARAGRAPH
(a), INCLUDING EMPLOYMENTRELATED OR SELFEMPLOYMENTRELATED
TAX AND WITHHOLDING INFORMATION.
(b) "Business group of one" includes a fulltime household employee who works twentyfour hours or more a week on a permanent basis as a household employee, if that employee has derived at least a substantial part of such employee's earned income for one year out of the preceding threeyear period from household employment, and if the employee's employer, on at least fifty percent of the days in a normal work week during the preceding calendar quarter, employed at least one household employee. Carriers may require whatever information is reasonably necessary to determine whether or not a household employee meets the requirements of this paragraph (b), including employmentrelated tax and withholding information.
(21) (b) "Health benefit plan" does not include accident only, SHORTTERM LIMITED DURATION, credit, dental, vision, medicare supplement, longterm care, or disability income insurance, coverage issued as a supplement to liability insurance, workers' compensation or similar insurance, automobile medical payment insurance, specified disease, hospital confinement indemnity, or limited benefit health insurance if:
SECTION 4. 1016105 (8) (a), Colorado Revised Statutes, 1994 Repl. Vol., is amended to read:
1016105. Small group sickness
and accident insurance guaranteed issue mandated
provisions for basic and standard health benefit plans.
(8) (a) (I) The premium rate charged during
a rating period to small employers shall be based on a single,
same index rate, applicable to all small employers, adjusted for
case characteristics and coverage. except
that the index rate may be multiplied by a rate adjustment factor
for each small employer group pursuant to subparagraphs (III)
to (VII) of this paragraph (a) to calculate a different premium.
The rate adjustment factor shall only be based on actual claims
experience on the small employer carrier's plan, industry, and
class of business; except that for health benefit plans issued
prior to July 1, 1994, the rate adjustment factor may also be
based on duration of coverage since the original issue date and
gender mix. Small employer carriers shall apply the rate adjustment
factors uniformly with respect to all small employers.
(II) The rate adjustment factor for a
particular small employer for a new rating period shall not be
more than the previous rating period's rate adjustment factor
plus ten percent annually, adjusted pro rata for rating periods
of less than one year. except that
in no case shall the rate adjustment factor be higher or lower
than the boundaries defined in subparagraphs (III) to (VII) of
this paragraph (a).
(III) For
health benefit plans newly issued on and after January 1, 1995,
and before January 1, 1997, the rate adjustment factor shall be:
(A) No lower than 0.8; and
(B) No higher than 1.20.
(IV) For health
benefit plans issued prior to January 1, 1995, the rate adjustment
factor for a particular small employer for new rating periods
beginning on and after January 1, 1995, and before January 1,
1996, shall not be more than the previous rating period's rate
adjustment factor plus ten percent annually, adjusted pro rata
for rating periods of less than one year.
(V) For health
benefit plans issued prior to January 1, 1995, and renewed on
and after January 1, 1996, and before January 1, 1997, the rate
adjustment factor shall be:
(A) No lower than 0.8; and
(B) No higher than 1.20.
(VI) For health
benefit plans newly issued and all health benefit plans renewed
on and after January 1, 1997, the rate adjustment factor shall
be:
(A) No lower than 0.90; and
(B) No higher than 1.10.
(VII) For
health benefit plans newly issued and all health benefit plans
renewed on and after January 1, 1998, no rate adjustment factor
shall be used.
(VIII) (A) The
commissioner, in consultation with the executive director of the
department of health care policy and financing, shall develop
a method for risk adjustment that will fairly compensate small
employer carriers for the risks assumed when issuing health insurance
to small employers as required in subsection (7.3) of this section.
In developing such methodology, the executive director shall actively
seek input from insurance carriers that would be affected by such
a risk adjustment method. By July 1, 1995, the commissioner shall
promulgate rules for risk adjustment based on this methodology.
(B) The requirements of subparagraphs
(VI) and (VII) of this paragraph (a) shall only apply to small
employer carriers when the regulations developed pursuant to this
subparagraph (VIII) are promulgated as rules. If such regulations
are not promulgated as rules, the restrictions contained in subparagraphs
(III) and (V) of this paragraph (a) shall continue to apply notwithstanding
the January 1, 1997, limitation contained in such provisions.
(IX) For new
rating periods beginning prior to January 1, 1997, for small employers
continuously insured under the same health benefit plan since
July 1, 1994, whose rates are below eighty percent of the index
rate, a small employer carrier may increase premiums by an amount
not to exceed the pro rata increase required to meet the requirements
of subparagraph (V) of this paragraph (a).
SECTION 5. 3922104 (4), Colorado Revised Statutes, 1994 Repl. Vol., is amended BY THE ADDITION OF A NEW PARAGRAPH to read:
3922104. Income tax imposed on individuals, estates, and trusts single rate. (4) There shall be subtracted from federal taxable income:
(i) AN AMOUNT EQUAL TO THE AMOUNT PAID DURING THE TAX YEAR BY THE TAXPAYER OR THE TAXPAYER'S SPOUSE FOR HEALTH INSURANCE PREMIUMS AND FOR REQUIRED COPAYMENTS UNDER A POLICY OF HEALTH INSURANCE OR HEALTH BENEFIT PLAN COVERING THE TAXPAYER AND THE TAXPAYER'S SPOUSE AND DEPENDENTS, IF ANY, CLAIMED ON THE TAXPAYER'S FEDERAL TAX RETURN, TO THE EXTENT SUCH AMOUNT IS NOT CLAIMED AS A DEDUCTION IN ARRIVING AT FEDERAL TAXABLE INCOME.
SECTION 6. Effective date applicability. This act shall take effect July 1, 1997, and section 5 shall apply to tax years 1997 and thereafter.
SECTION 7. Safety clause.
The general assembly hereby finds, determines, and declares that
this act is necessary for the immediate preservation of the public
peace, health, and safety.