No. 29420: R590-240. Exemption of Student Health Programs From Insurance Code

DAR File No.: 29420
Filed: 04/13/2007, 03:09
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this change in proposed rule is to respond to comments provided during the comment period and hearing.

Summary of the rule or change:

The title is changed to more accurately reflect what the rule does. In Subsection R590-240-4(1), certificate is added, as well as degrees. Subsection R590-240-5(3) provides more flexibility to secure assets needed to pay claims due under the student health program. Subsection R590-240-5(9) removes the requirement that materials used in the sale or advertising of the student health program be given to the department before they are used and requires they be given to the department on an annual basis. Subsection R590-240-7(5) provides that any inconsistencies between the provisions of this rule and previous orders exempting student health plans are resolved in this rule. (DAR NOTE: This change in proposed rule has been filed to make additional changes to a proposed new rule that was published in the February 1, 2007, issue of the Utah State Bulletin, on page 15. Underlining in the rule below indicates text that has been added since the publication of the proposed rule mentioned above; strike out indicates text that has been deleted. You must view the change in proposed rule and the proposed new rule together to understand all of the changes that will be enforceable should the agency make this rule effective.)

State statutory or constitutional authorization for this rule:

Sections 31A-1-103 and 31A-2-201

Anticipated cost or savings to:

the state budget:

Whatever small change in the department's work flow this may create with the change in filing requirements will not be enough of an impact on the department to require temporary or full time help.

local governments:

This rule will not impact local governments. It deals solely with the relationship between the department and schools providing insurance for their students.

other persons:

The changes to this rule allow for the reduction of liability on the sponsor of the student health program by allowing affiliates of the sponsor to use their assets to secure payment of incurred costs of the student health program. Consumers of the student health programs will not be affected financially by these changes.

Compliance costs for affected persons:

The changes to this rule allow for the reduction of liability on the sponsor of the student health program by allowing affiliates of the sponsor to use their assets to secure payment of incurred costs of the student health program. Consumers of the student health programs will not be affected financially by these changes.

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

The changes to this rule should result in no fiscal impact on private businesses. Higher education institutions will benefit from the exemption. D. Kent Michie, Commissioner

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

Insurance
Administration
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY UT 84114-1201

Direct questions regarding this rule to:

Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

05/31/2007

This rule may become effective on:

06/07/2007

Authorized by:

Jilene Whitby, Information Specialist

RULE TEXT

R590. Insurance, Administration.

R590-240. Procedure to Obtain Exemption of Student Health Programs From Insurance Code.

 

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R590-240-4. Supporting Facts.

(1) Student health programs are offered only to eligible members at institutions. These institutions have an interest in providing affordable health care coverage to their students in order to enable the students to receive limited health care to ensure that progress toward a degree or certificate is not impeded by unattended medical needs. In some instances, student health programs may also be offered to the spouses of students and other dependents of students, as well.

(2) Student health programs are not established to enable the institutions to make a profit from providing health care coverage. Providing or arranging for health care services for students is not the primary purpose of institutions; it is only incidental to the institutions' primary purpose, which is to educate those that matriculate with the institution. In addition, the economic impact on health care providers directly, and the public indirectly, from students receiving medical services and then not being able to pay for those services, is mitigated by providing students at institutions with access to affordable health care coverage through student health programs.

(3) An institution is either a state institution under the direct control of, and supervised by, the Board, or it must be accredited by the Northwest Commission on Colleges and Universities. In order to be accredited, an institution must meet strict accounting standards, and be able to demonstrate it is financially solid. An institution must therefore comply with the strict accounting and financial requirements of the Board or the Northwest Commission on Colleges and Universities, which would include the need to reflect on the financial statements of the institution any liability for risks the institution assumes, or costs the institutions may incur, for its student health program. Any shortfall in providing health care services at the student health center would become the obligation of the institution.

 

R590-240-5. Exemption Requirements.

A student health program may be exempted from the provisions of the Utah Insurance Code if it meets all of the requirements of this Section 5, applies for exemption under Section 6, and the exemption is granted.

(1) A student health program must be:

(a) established by an institution;

(b)(i) owned by an institution; or

(ii) owned by the trustees of a trust established by an institution; and

(c) operated by:

(i) an institution; or

(ii) the institution's authorized agent or affiliate.

(2) The primary purpose of the institution must be higher education, and not the providing of a student health program.

(3) [The student health program or the institution or both must provide adequate assets to secure payment of all risks of the student health program by:

(a) placing, into a trust account dedicated for the payment of eligible member health care service claims, assets in an amount and type that would be required under Chapter 17 of the Utah Insurance Code;

(b) under such terms and conditions as the commissioner determines by written order, pledging, or obtaining a pledge of, assets dedicated for the payment of eligible member health care service claims in an amount and type that would be required under Chapter 17 of the Utah Insurance Code;

(c) under such terms and conditions as the commissioner determines by written order, obtaining performance guarantees or payment guarantees or both from third parties, in an amount and type that would be required under Chapter 17 of the Utah Insurance Code; or

(d) using a combination of Subsections 5(3)(a), 5(3)(b) and 5(3)(c).]Payment of covered claims of the student health program must be secured by adequate assets:

(a) that are:

(i) secured by being:

(A) pledged;

(B) guaranteed;

(C) contributed;

(D) placed in trust; or

(E) using a combination of Subsections 5(3)(a)(i)(A), 5(3)(a)(i)(B), 5(3)(a)(i)(C), and 5(3)(a)(i)(D); and

(ii) secured under Subsection 5(3)(a)(i) by:

(A) the student health program;

(B) the institution that organizes, adopts, or establishes the student health program;

(C) the owner of the institution described in Subsection 5(3)(a)(ii)(B);

(D) an affiliate of the entity described in Subsection 5(3)(a)(ii)(C); or

(E) a combination of the entities described in Subsections 5(3)(a)(ii)(A), 5(3)(a)(ii)(B), 5(3)(a)(ii)(C), and 5(3)(a)(ii)(D); and

(b) in an amount and type that would be required under Chapter 17 of the Utah Insurance Code; and

(c) under such terms and conditions as the commissioner determines by written order.

(4) The student health program may not be offered to or enroll anyone other than an eligible member.

(5) The student health program must have a comprehensive legal structure that demonstrates that:

(a) the assets described in Subsection 5(3) will be administered in a fiduciary manner to assure that assets are available to provide eligible health care services and to provide payments to health care providers, as outlined in any contracts between the student health program and health care providers;

(b) the student health program will be administered by an experienced administrator; and

(c) the student health program shall be administered according to contracts between:

(i)(A)(I) the student health program; or

(II) the institution; or

(III) both the student health program and the institution; and

(B) the enrollees; and

(ii)(A)(I) the student health program; or

(II) the institution; or

(III) both the student health program and the institution; and

(B) health care providers.

(6) Except for emergency health care services, or out-of-area or out-of-country health care providers, health care services for those enrolled in the student health program must be provided:

(a) at a student health center; or

(b) pursuant to a contract with health care service providers, by which those health care providers will provide health care services upon a referral from the student health center.

(7) Any supplemental health care services provided by the student health program must:

(a) be obtained from an insurer authorized to provide health insurance;

(b) be backed by assets under the conditions set forth in Subsection 5(3); or

(c) use a combination of Subsections 5(7)(a) and 5(7)(b).

(8) The student health program must provide review procedures substantially similar, and materially equal, to those presently in effect for insurers, health maintenance organizations, and limited health programs.

(9) The student health program or the institution or both [must submit all policies, contracts, booklets, advertising, and any presentations relating to the solicitation of the student health program to the department before they are placed into use]shall annually provide the department an informational copy of all current policies, booklets, and advertising.

(10) The student health program or the institution or both must state in a prominent and appropriate place in all policies, contracts, booklets, explanatory material, advertising or other promotional material, and any presentations relating to solicitations of the student health program, that the student health program is not insurance, and the student health program has been exempted from regulation under the Utah Insurance Code, and must cite the date, docket number, and title of the docket by which the exemption was granted.

(11) The student health program must reduce any applicable preexisting condition provisions for any individual covered by the student health program by the amount of previous creditable coverage.

(12) The student health program must provide a certificate of creditable coverage upon request by an individual who was covered by the student health program.

 

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R590-240-7. Rule and Findings.

(1) A student health program is an insurer as defined in Section 31A-1-301, and must comply with the requirements of the Utah Insurance Code unless it is exempted from regulation by statute or by this rule.

(2) Pursuant to Subsection 31A-1-103(3)(d)(i), the commissioner finds that a student health program which operates in accordance with the provisions of Section 5, and obtains an order of exemption under Section 6, does not require regulation for the protection of the interests of the residents of this state, and that such student health program is exempt from regulation under the Utah Insurance Code.

(3) If the institution assumes any risk of the student health program, the institution must:

(i) apply for authority to conduct the business of an insurer, or

(ii) apply to the commissioner for an exemption under this rule.

(4) Health insurance from an insurer made available by an institution to its eligible members is not exempt from the Utah Insurance Code under this rule, even if the health insurance from a health insurer is integrated into the overall student health program offered by the institution, or use of the institution's student health center is an integral or required part of the health care coverage under the insurer's policy.

(5) Any inconsistencies between the provisions of this rule and any order previously issued exempting a student health program from regulation under the Utah Insurance Code are resolved by incorporating the provisions of this rule.

 

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KEY: health insurance exemption

Date of Enactment or Last Substantive Amendment: 2007

Authorizing, and Implemented or Interpreted Law: 31A-1-103; 31A-2-201