§ 514E.2 — Iowa comprehensive health insurance association

Iowa § 514E.2

• Jurisdiction: Iowa
• Title XIII: COMMERCE
• Ch. 514E: IOWA COMPREHENSIVE HEALTH INSURANCE ASSOCIATION

Text

1. The Iowa comprehensive health insurance association is established as a nonprofit
corporation. The association shall assure that benefit plans as authorized in section 514E.1,
subsection 2, for an association policy, are made available to each eligible Iowa resident and
each federally eligible individual applying to the association for coverage. The association
shall also be responsible for administering the Iowa individual health benefit reinsurance
association pursuant to all of the terms and conditions contained in chapter 513C.
a. All carriers providing health insurance or health care services in Iowa, whether on
an individual or group basis, and all other insurers designated by the association’s board of
directors and approved by the commissioner shall be members of the association.
b. Theassociationshalloperateunderaplanofoperationestablishedandapprovedunder
§514E.2, IOWA COMPREHENSIVE HEALTH INSURANCE ASSOCIATION 4
subsection 3 and shall exercise its powers through a board of directors established under this
section.
2. a. The board of directors of the association shall consist of all of the following:
(1) Two members who shall be representatives of the two largest domestic carriers of
individual health insurance in the state as of the calendar year ending December 31, 2000,
based on earned premium standards.
(2) Three members who shall be representatives of the three largest carriers of health
insurance in the state, based on earned premium standards, excluding Medicare supplement
coverage premiums, that are not otherwise represented.
(3) Two members selected by the members of the association, one of whom shall be a
representative from a corporation operating pursuant to chapter 514 on July 1, 1989, or any
successor in interest, and one of whom shall be a representative of an insurer providing
coverage pursuant to chapter 509 or 514A.
(4) Four public members selected by the governor.
(5) The commissioner or the commissioner’s designee from the division of insurance.
(6) Fourmembersofthegeneralassembly, oneofwhomshallbeappointedbythespeaker
of the house of representatives, one of whom shall be appointed by the minority leader of the
house of representatives, one of whom shall be appointed by the president of the senate after
consultation with the majority leader, and one of whom shall be appointed by the minority
leader of the senate, who shall be ex officio, nonvoting members.
b. The composition of the board of directors shall be in compliance with section 4A.12.
The governor’s appointees shall be chosen from a broad cross section of the residents of this
state.
c. Members of the board may be reimbursed from the moneys of the association for
expenses incurred by them as members, but shall not be otherwise compensated by the
association for their services.
3. The association shall submit to the commissioner a plan of operation for the
association and any amendments necessary or suitable to assure the fair, reasonable, and
equitable administration of the association. The plan of operation becomes effective upon
approval in writing by the commissioner prior to the date on which the coverage under this
chapter must be made available. After notice and hearing, the commissioner shall approve
the plan of operation if the plan is determined to be suitable to assure the fair, reasonable,
and equitable administration of the association, and provides for the sharing of association
losses, if any, on an equitable and proportionate basis among the member carriers. If the
association fails to submit a suitable plan of operation within one hundred eighty days
after the appointment of the board of directors, or if at any later time the association fails
to submit suitable amendments to the plan, the commissioner shall adopt, pursuant to
chapter 17A, rules necessary to implement this section. The rules shall continue in force
until modified by the commissioner or superseded by a plan submitted by the association
and approved by the commissioner. In addition to other requirements, the plan of operation
shall provide for all of the following:
a. The handling and accounting of assets and moneys of the association.
b. The amount and method of reimbursing members of the board.
c. Regular times and places for meeting of the board of directors.
d. Records to be kept of all financial transactions, and the annual fiscal reporting to the
commissioner.
e. Procedures for selecting the board of directors and submitting the selections to the
commissioner for approval.
f. The periodic advertising of the general availability of health insurance coverage from
the association.
g. Additional provisions necessary or proper for the execution of the powers and duties
of the association.
4. The plan of operation may provide that the powers and duties of the association may
be delegated to a person who will perform functions similar to those of the association.
A delegation under this section takes effect only upon the approval of both the board of
directors and the commissioner. The commissioner shall not approve a delegation unless
5 IOWA COMPREHENSIVE HEALTH INSURANCE ASSOCIATION, §514E.2
the protections afforded to the insured are substantially equivalent to or greater than those
provided under this chapter.
5. The association has the general powers and authority enumerated by this subsection
and executed in accordance with the plan of operation approved by the commissioner under
subsection 3. The association has the general powers and authority granted under the laws
of this state to carriers licensed to issue health insurance. In addition, the association may
do any of the following:
a. Enter into contracts as necessary or proper to carry out this chapter.
b. Sue or be sued, including taking any legal action necessary or proper for recovery of
any assessments for, on behalf of, or against participating carriers.
c. Take legal action necessary to avoid the payment of improper claims against the
association or the coverage provided by or through the association.
d. Establish or utilize a medical review committee to determine the reasonably
appropriate level and extent of health care services in each instance.
e. Establish appropriate rates, scales of rates, rate classifications, and rating adjustments,
which rates shall not be unreasonable in relation to the coverage provided and the reasonable
operations expenses of the association.
f. Pool risks among members.
g. Issue association policies on an indemnity or provision of service basis providing the
coverage required by this chapter.
h. Administer separate pools, separate accounts, or other plans or arrangements
considered appropriate for separate members or groups of members.
i. Operate and administer any combination of plans, pools, or other mechanisms
considered appropriate to best accomplish the fair and equitable operation of the association.
j. Appoint from among members appropriate legal, actuarial, and other committees as
necessary to provide technical assistance in the operation of the association, policy and other
contract design, and any other functions within the authority of the association.
k. Hire independent consultants as necessary.
l. Develop a method of advising applicants of the availability of other coverages outside
the association.
m. Include in its policies a provision providing for subrogation rights by the association
in a case in which the association pays expenses on behalf of an individual who is injured or
suffersadiseaseundercircumstancescreatingaliabilityuponanotherpersontopaydamages
to the extent of the expenses paid by the association but only to the extent the damages
exceed the policy deductible and coinsurance amounts paid by the insured. The association
may waive its subrogation rights if it determines that the exercise of the rights would be
impractical, uneconomical, or would work a hardship on the insured.
6. Rates for coverages issued by the association shall reflect rating characteristics used
in the individual insurance market. The rates for a given classification shall not be more
than one hundred fifty percent of the average premium or payment rate for the classification
charged by the five carriers with the largest health insurance premium or payment volume
in the state during the preceding calendar year. In determining the average rate of the five
largest carriers, the rates or payments charged by the carriers shall be actuarially adjusted
to determine the rate or payment that would have been charged for benefits similar to those
issued by the association.
7. a. Following the close of each calendar year, the association shall determine the net
premiums and payments, the expenses of administration, and the incurred losses of the
association for the year. The association shall certify the amount of any net loss for the
preceding calendar year to the commissioner of insurance and director of revenue. Any loss
shall be assessed by the association to all members in proportion to their respective shares
of total health insurance premiums or payments for subscriber contracts received in Iowa
during the second preceding calendar year, or with paid losses in the year, coinciding with
or ending during the calendar year or on any other equitable basis as provided in the plan of
operation. In sharing losses, the association may abate or defer in any part the assessment
of a member, if, in the opinion of the board, payment of the assessment would endanger the
ability of the member to fulfill its contractual obligations. The association may also provide
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for an initial or interim assessment against members of the association if necessary to assure
the financial capability of the association to meet the incurred or estimated claims expenses
or operating expenses of the association until the next calendar year is completed. Net gains,
if any, must be held at interest to offset future losses or allocated to reduce future premiums.
b. For purposes of this subsection, “total health insurance premiums” and “payments
for subscriber contracts” include, without limitation, premiums or other amounts paid to or
received by a member for individual and group health plan care coverage provided under
any chapter of the Code or Acts, and “paid losses” includes, without limitation, claims paid
by a member operating on a self-funded basis for individual and group health plan care
coverage provided under any chapter of the Code or Acts. For purposes of calculating
and conducting the assessment, the association shall have the express authority to require
members to report on an annual basis each member’s total health insurance premiums and
payments for subscriber contracts and paid losses. A member is liable for its share of the
assessment calculated in accordance with this section regardless of whether it participates
in the individual insurance market.
8. The association shall conduct periodic audits to assure the general accuracy of the
financial data submitted to the association, and the association shall have an annual audit
of its operations, made by an independent certified public accountant.
9. The association is subject to examination by the commissioner of insurance. Not later
than April 30 of each year, the board of directors shall submit to the commissioner a financial
report for the preceding calendar year in a form approved by the commissioner.
10. The association is subject to oversight by the legislative fiscal committee of the
legislative council. Not later than April 30 of each year, the board of directors shall submit to
the legislative fiscal committee a financial report for the preceding year in a form approved
by the committee.
11. All policy forms issued by the association must be filed with and approved by the
commissioner before their use.
12. The association is exempt from payment of all fees and all taxes levied by this state
or any of its political subdivisions.
13. An insurer may offset an assessment made pursuant to this chapter against its
premium tax liability pursuant to chapter 432 to the extent of twenty percent of the amount
of the assessment for each of the five calendar years following the year in which the
assessment was paid. If an insurer ceases doing business, all uncredited assessments may
be credited against its premium tax liability for the year it ceases doing business.