No. 33844 (Emergency Rule): Rule R131-13. Health Reform -- Health Insurance Coverage in State Contracts -- Implementation

DAR File No.: 33844
Filed: 07/19/2010 06:19:53 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is being amended to comply with H.B. 20 of the 2010 Utah Legislative Session which clarified and amended Section 63C-9-403. H.B. 20 amends provisions related to the requirement that contractors with certain state entities must provide qualified health insurance to their employees and the dependents of the employees who work or reside in the state. H.B. 20 clarified the waiting period; clarified that health insurance coverage must be offered to employees and dependents who work or reside in the state; clarified that the coverage that must be offered is a minimum standard and an employer may offer greater coverage; amended the definition of qualified health insurance coverage to clarify the standards; amended the enforcement provisions to provide protections for good faith compliance and clarified how an employer offering a defined contribution arrangement may comply with state contract requirements. Therefore, this rule change is being done to be consistent with state statute. (DAR NOTE: H.B. 20 (2010) is found at Chapter 229, Laws of Utah 2010, and was effective 05/11/2010.)

Summary of the rule or change:

The proposed changes clarify the applicability of the rule, add that an underwriter may determine actuarial equivalency, and include various grammatical and stylistic changes.

Emergency rule reason and justification:

Regular rulemaking procedures would place the agency in violation of federal or state law.

Justification: H.B. 20 of the 2010 Utah State Legislative Session clarified and amended Section 63C-9-403. The statute went into effect on 05/11/2010. This emergency rule is being filed to comply with H.B. 20 and the statute, Section 63C-9-403, as soon as practicable because the Capitol Preservation Board did not meet to make a motion to approve Rule R131-13 before the statute went into effect.

State statutory or constitutional authorization for this rule:

• Subsection 63C-9-301(3)(a)
• Section 63C-9-403

Anticipated cost or savings to:

the state budget:

There is no anticipated cost or savings to the state budget because compliance is already required and the changes only clarify the obligations of contractors, subcontractors, consultants, and subconsultants.

local governments:

There is no anticipated cost or savings to local government because compliance is only required in state construction contracts and the changes only clarify the obligations of contractors, subcontractors, consultants, and subconsultants.

small businesses:

There is no anticipated cost or savings to small businesses because compliance is already required and the changes only clarify the obligations of contractors, subcontractors, consultants, and subconsultants.

persons other than small businesses, businesses, or local governmental entities:

There is no anticipated cost or savings to persons other than small businesses, businesses, or local government entities because compliance is already required and the changes only clarify the obligations of contractors, subcontractors, consultants, and subconsultants.

Compliance costs for affected persons:

There is no anticipated cost or savings to affected persons because compliance is already required and the changes only clarify the obligations of contractors, subcontractors, consultants, and subconsultants and make it easier to obtain a determination of actuarial equivalency.

Comments by the department head on the fiscal impact the rule may have on businesses:

There is no anticipated fiscal impact on businesses because compliance is already required and the changes only clarify the obligations of contractors, subcontractors, consultants, and subconsultants.

Allyson Gamble, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Capitol Preservation Board (State)
Administration
420 N STATE ST
SALT LAKE CITY, UT 84114-2110

Direct questions regarding this rule to:

• Alan Bachman at the above address, by phone at 801-538-3105, by FAX at 801-538-3313, or by Internet E-mail at [e-mail]
• La Priel Dye at the above address, by phone at 801-538-3240, by FAX at 801-538-3313, or by Internet E-mail at [e-mail]
• Allyson Gamble at the above address, by phone at 801-537-9156, by FAX at 801-538-3221, or by Internet E-mail at [e-mail]

This rule is effective on:

07/19/2010

Authorized by:

Allyson Gamble, Executive Director

RULE TEXT

R131. Capitol Preservation Board (State), Administration.

R131-13. Health Reform -- Health Insurance Coverage in State Contracts -- Implementation.

R131-13-1. Purpose.

The purpose of this rule is to comply with the provisions of Section 63C-9-403.

 

R131-13-2. Authority.

This rule is authorized under Subsection 63C-9-301(3)(a) whereby the Capitol Preservation Board may make rules to govern, administer, and regulate the capitol hill complex, capitol hill facilities, and capitol hill grounds by following the procedures and requirements of Title 63G, Chapter 3, Utah Administrative Rulemaking Act, as well as Section 63C-9-403 that requires this rule related to health insurance provisions in certain design and construction contracts.

 

R131-13-3. Definitions.

(1) Except as otherwise stated in this rule, terms used in this rule are defined in Section 63C-9-403.

(2) In addition:

(a) "Board" means the Capitol Preservation Board established pursuant to Section 63C-9-201.

(b) "Executive Director" means the executive director of the Capitol Preservation Board including, unless otherwise stated, the executive director's duly authorized designee.

(c) "Employee(s)" is as defined in Subsection 63C-9-403(1)(a) and includes only those employees that live and work in the state of Utah along with their dependents. "Employee" for purposes of this rule, shall not be construed as to be broader than the use of the term employee for purposes of state of Utah Workers' Compensation laws along with their dependents.

(d) "State" means the state of Utah.

 

R131-13-4. Applicability of Rule.

(1) Except as provided in Subsection R131-13-4(2) below, R131-13 applies to all design or construction contracts entered into by the Board or the executive director, or on behalf of the Board, on or after July 1, 2009, [if:]and

[(a) the contract is for design and/or construction; and

(b)(i) the prime contract is in the amount of $1,500,000 or greater; or

(ii) a subcontract, at any tier, is in the amount of $750,000 or greater.](a) applies to a prime contractor if the prime contract is in the amount of $1,500,000 or greater; and

(b) applies to a subcontractor if the subcontract, at any tier, is in the amount of $750,000 or greater.

(2) R131-13 does not apply if:

(a) the application of this Rule R131-13 jeopardizes the receipt of federal funds;

(b) the contract is a sole source contract; or

(c) the contract is an emergency procurement.

(3) This Rule R131-13 does not apply to a change order as defined in Section 63G-6-103, or a modification to a contract, when the contract does not meet the initial threshold required by Subsection R131-13-4(1).

(4) A person who intentionally uses change orders or contract modifications to circumvent the requirements of Subsection R131-13-4(1) is guilty of an infraction.

 

R131-13-5. Contractor to Comply with Section 63C-9-403.

All contractors and subcontractors that are subject to the requirements of Section 63C-9-403 shall comply with all the requirements, penalties and liabilities of Section 63C-9-403.

 

R131-13-6. Not Basis for Protest or Suspend, Disrupt, or Terminate Design or Construction.

(1) The failure of a contractor or subcontractor to provide qualified health insurance coverage as required by this[to comply with]Rule R131-13 or Section 63C-9-403:

(a) may not be the basis for a protest or other action from a prospective bidder, offeror, or contractor under Section 63G-6-801 or any other provision in Title 63G, Chapter 6, Part 8, Legal and Contractual Remedies; and

(b) may not be used by the procurement entity or a prospective bidder, offeror, or contractor as a basis for any action or suit that would suspend, disrupt or terminate the design or construction.

 

R131-13-7. Requirements and Procedures a Contractor Must Follow.

A contractor, including consultants and designers, must comply with the following requirements and procedures in order to demonstrate compliance with Section 63C-9-403.

(1) Demonstrating Compliance with Health Insurance Requirements. The following requirements must be met by a contractor, including consultants, designers and others under contract with the Board or the executive director that is subject to the requirements of Rule R131-13 no later than the time [of execution of the contract]the contract is entered into or renewed:

(a) demonstrate compliance by a written certification to the executive director that the contractor has and will maintain for the duration of the contract an offer of qualified health insurance coverage for the contractor's employees; and

(b) the contractor shall also provide such written certification prior to the execution of the contract, in regard to all subcontractors, including subconsultants, at any tier that are subject to the requirements of Rule R131-13.

(2) Recertification. The executive director shall have the right to request a recertification by the contractor by submitting a written request to the contractor, and the contractor shall so comply with the written request within ten working days of receipt of the written request; however, in no case may the contractor be required to demonstrate such compliance more than twice in any 12-month period.

(3) Demonstrating Compliance with Actuarially Equivalent Determination. The actuarially equivalent determination required by Subsections 63C-9-403(1)(c)(i) and (iii) is met by the contractor if the contractor provides the executive director with a written statement of actuarial equivalency from either the Utah Insurance Department ; [or] an actuary selected by the contractor ; or the contractor's insurer ; or an underwriter who is responsible for developing the employer group's premium rates.

For purposes of this Subsection R131-13-7(3), actuarially equivalency is achieved by meeting or exceeding any of the following:

[(a) In accordance with Section 26-40-106(2)(a), the largest insured commercial enrollment offered by a health maintenance organization in the State, which details of the plan are provided on the website of the Division at http://dfcm.utah.gov/downloads/Health%20Insurance%20Benchmark.pdf; or

(b) provides coverage that is actuarially equivalent to 75% of the benefit plan determined under R131-13-7(3)(a) above and employer premium contributions as required by statute.](a) As delineated on the DFCM website at http://dfcm.utah.gov/downloads/Health%20Insurance%20Benchmark.pdf, a health benefit plan and employer contribution level with a combined actuarial value at least actuarially equivalent to the combined actuarial value of the benchmark plan determined by the Children's Health Insurance Program under Subsection 26-40-106(2)(a), and a contribution level of 50% of the premium for the employee and the dependents of the employee who reside or work in the State, in which:

(i) The employer pays at least 50% of the premium for the employee and the dependents of the employee who reside or work in the State; and

(ii) for purposes of calculating actuarial equivalency under this Subsection R131-13-7(3)(a):

(A) rather than the benchmark plan's deductible, and the benchmark plan's out-of-pocket maximum based on income levels, the deductible is $750 per individual and $2,250 per family; and the out-of-pocket maximum is $3,000 per individual and $9,000 per family;

(B) dental coverage is not required; and

(C) other than Subsection 26-40-106(2)(a), the provisions of Section 26-40-106 do not apply; or

(b)(i) is a federally qualified high deductible health plan that, at a minimum, has a deductible that is either;

(A) the lowest deductible permitted for a federally qualified high deductible health plan; or

(B) a deductible that is higher than the lowest deductible permitted for a federally qualified high deductible health plan, but includes an employer contribution to a health savings account in a dollar amount at least equal to the dollar amount difference between the lowest deductible permitted for a federally qualified high deductible plan and the deductible for the employer offered federally qualified high deductible plan;

(ii) an out-of pocket maximum that does not exceed three times the amount of the annual deductible; and

(iii) under which the employer pays 75% of the premium for the employee and the dependents of the employee who work or reside in the State.

(4) The health insurance must be available upon the first day of the calendar month following the initial ninety days from the [beginning of employment]date of hire.

(5) Architect and Engineer Compliance Process. Architects and engineers that are subject to Rule R131-13 must demonstrate compliance with Rule R131-13 in any annual submittal. During the procurement process and no later than the execution of the contract with the architect or engineer, the architect or engineer shall confirm that their applicable subcontractors or subconsultants meet the requirements of Rule R131-13.

(6) General (Prime) Contractors Compliance Process. Contractors that are subject to Rule R131-13 must demonstrate compliance with Rule R131-13 for their own firm and any applicable subcontractors, in any pre-qualification process that may be used for the procurement. At the time of execution of the contract, the contractor shall confirm that their applicable subcontractors or subconsultants meet the requirements of Rule R131-13.

(7) Notwithstanding any prequalification process, any contract subject to Rule R131-13 shall contain a provision requiring compliance with Rule R131-13 from the time of execution and throughout the duration of the contract.

(8) Hearing and Penalties.

(a) Hearing. Any hearing for any penalty under Rule R131-13 conducted by the Board or executive director shall be conducted in the same manner as any hearing required for a suspension or debarment.

(b) Penalties that may be Imposed by the Board or Executive Director. The penalties that may be imposed by the Board or executive director if a contractor, consultant, subcontractor or subconsultant, at any tier, intentionally violates the provisions of Rule R131-13 may include:

(i) a three-month suspension of the contractor or subcontractor from entering into future contracts with the State upon the first violation, regardless of which tier the contractor or subcontractor is involved with the future design and/or construction contract;

(ii) a six-month suspension of the contractor or subcontractor from entering into future contracts with the State upon the second violation, regardless of which tier the contractor or subcontractor is involved with the future design and/or construction contract;

(iii) an action for debarment of the contractor or subcontractor in accordance with Section 63G-6-804 upon the third or subsequent violation; and

(iv) monetary penalties which may not exceed 50% of the amount necessary to purchase qualified health insurance coverage for an employee and dependents of an employee of the contractor or subcontractor who was not offered qualified health insurance coverage during the duration of the contract.

(c) (i) In addition to the penalties imposed above, a contractor, consultant, subcontractor or subconsultant who intentionally violates the provisions of this Rule R131-13 shall be liable to the employee for health care costs [not covered by insurance]that would have been covered by qualified health insurance coverage.

(ii) An employer has an affirmative defense to a cause of action under Subsection R131-13-7(8)(c)(i) as provided in Subsection 63C-9-403(7)(a)(ii).

 

R131-13-8. Not Create any Contractual Relationship with any Subcontractor or Subconsultant.

Nothing in Rule R131-13 shall be construed as to create any contractual relationship whatsoever between the State, the Board, or the executive director with any subcontractor or subconsultant at any tier.

 

KEY: health insurance, contractors, contracts

Date of Enactment or Last Substantive Amendment: July 19, 2010

Authorizing, and Implemented or Interpreted Law: 63C-9-403 , 63C-9-301(3)(a)

 

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