OAHU Summary of Final Version of State Budget
General Overview
After three one-week interim budgets were passed to keep state government running, on July 17, 2009 Governor Strickland signed the state’s biennial budget (H.B. 1) into law. H.B. 1 will fund state government from July 17, 2009 – June 30, 2011.
Below is OAHU’s summary of the health insurance related provisions included in the final version of the budget (H.B. 1):
Health Insurance related provisions
- Individual Market Open Enrollment for Uninsurable persons – applies to HICs, federally eligible (FEI) and non-federally eligible individuals (non-FEI) – ORC Sections 1751.15, 1751.16, 1751.18, 3923.122, 3923.58, 3923.581 and 3923.582
- Open enrollment rates for basic and standard plans for Health Insuring Corporations (HICs) and Sickness and Accident Insurers (health insurers) for individuals and non-employer groups are capped at 2 times the base rate for calendar years 2010 and 2011. The “base rate” is defined as the lowest premium rate for new or existing business prescribed by a HIC or health insurer for the same or similar coverage under a plan or arrangement covering any individual with similar case characteristics.
- For calendar year 2012 and every year thereafter, rates capped at 1 ½ times the base rate.
- However, if ODI determines that the 2010 cap has resulted in a market-wide average medical loss ratio for coverage sold to individual insureds and non-employer group insureds, including open enrollment insureds, of more than 5.25 percentage points, the 2010 and 2011 cap shall remain in effect.
- During 2010 and 2011, each carrier shall accept into open enrollment up to 4% FEIs and 4% non-FEIs of the carrier’s total number of individual or non-employer group insureds in this state; for 2012 each carrier shall accept up to 8% FEIs and 8% non-FEIs.
- HICs will no longer have to issue a public notice in the newspaper announcing their open enrollment period.
- A carrier may pay an agent a commission of not more than 5% of the premium charged for the initial placement and not more than 4% of the premium charged on renewal.
- These new open enrollment provisions become effective January 1, 2010.
- State Continuation of Coverage – ORC Sections 1751.53 and 3923.38
- Makes permanent the changes made in H.B. 2 (the Transportation Budget) that were set to expire January 1, 2010.
- External Review of Health Care Denials – ORC Sections 1751.831, 1751.84, 3923.66, 3923.67, 3923.68, 3923.75, 3923.76 and 3923.77
- Requires a HIC to cover a health care service if the Supt. of Insurance determines it is a covered service.
- Requires HICs and health insurers to initiate an external review automatically (without a request from insured) upon receiving such notification from Supt. of Insurance.
- Allows HICs and health insurers to deny an insured’s request for an external review if request is not made within 180 days.
- Effective date 90 days after July 17, 2009.
- Payment of Claims by Third Party Payers – ORC Section 3901.381
- Requires third party payers to pay claims electronically when claim was received electronically and prohibits providers from refusing to accept electronic payments.
- Effective date 15 months after July 17, 2009.
- Administrative Expenses of Health Plans/Premium Rate Filings – ORC Sections 3923.021, 3924.06 and 3923.022
- Changes the definition of “Administrative Expenses” to include premiums earned rather than received and includes the amount of losses recovered from reinsurance coverage, certain “incurred” state fees rather than “paid”, and the “incurred” costs related to payment of commissions.
- Administrative Expense Statements must itemize and separately detail eight different costs incurred for the insurer’s individual, small group and large group business.
- Requires filing of small employer premium rates (HICs and insurers).
- Requires filing of premium rates for any individual policy of sickness and accident insurance or individual policies sold through a group policy.
- Effective date 90 days after July 17, 2009.
- Coverage of Dependent Children – ORC Sections 1739.05, 1751.14, 3923.24, 3923.241, 5747.01
- Requires insurers to offer dependent coverage to an unmarried child until the child attains 28 years of age, (but does not require the employer to pay for any part of the dependent’s premium) if all of the following are true:
- The child is the natural child, stepchild, or adopted child of the subscriber;
- The child is a resident of Ohio or a full-time student at an accredited public or private institution of higher education;
- The child is not employed by an employer that offers any health benefit plan under which the child is eligible for coverage;
- The child is not eligible for coverage under Medicaid or Medicare.
- A dependent child qualifies to continue on the coverage when attaining 28 years of age if both of the following apply:
- The child is incapable of self-sustaining employment by reason of mental retardation or physical handicap, and
- The child is primarily dependent upon the subscriber for support and maintenance.
- This requirement applies to group health insurer and HIC contracts issued or renewed and plans established or modified on or after July 1, 2010.
- Section 125 Cafeteria Plans – ORC Section 4113.11
- Requires employers with 10 or more employees to adopt and maintain cafeteria plans that allow the employer’s employees (who work 25 hours or more per week) to pay for health insurance coverage by a salary reduction arrangement under the Internal Revenue Code.
- Employers shall comply based on the following timelines:
- More than 500 employees – not later than January 1, 2011, or 6 months after Supt. of Insurance adopts rules, whichever is later;
- 150 – 500 employees – not later than July 1, 2011, or 12 months after rules adopted, whichever is later.
- 10 – 149 employees – not later than January 1, 2012, or 18 months after rules adopted, whichever is later.
- Requires Supt. of Insurance to receive written confirmation from the federal government that the individual policies purchased under cafeteria plans do not need to comply with HIPAA requirements for group policies. If the confirmation is not received then the requirement that the employers provide cafeteria plans does not apply.
- The cafeteria plan requirement does not apply to employers that, through other means than provided under this section, offer health insurance coverage, reimburse for health insurance coverage, or provide employees with opportunities to pay for health insurance with pre-tax dollars through other salary reduction arrangements.
- Health Care Coverage and Quality Council – ORC Sections 3923.90, 3923.91, 5111.141, 5111.142, and 5111.165
- Codifies into law the Council which was created in March 2009 in an Executive Order by Governor Strickland to advise the Governor and General Assembly, public and private entities and consumers on strategies to expand affordable health insurance coverage to more individuals and improve the cost and quality of Ohio’s health care system.
- Autism mandate
- Removed provisions mandating coverage of Autism.
- Children Buy-In Program – Eligibility – ORC Sections 5101.5212 and 5101.5213
- Family income must exceed 300% of federal poverty level, meaning the child cannot qualify for CHIP.
- Revised eligibility requirements to this existing program as follows: Child has not had creditable coverage for 3 months, however, requirement is not applicable if both of the following apply: (1) the child’s parents are involuntarily unemployed; at least one parent is unable to work due to a disabling condition; at least one parent involuntarily lost creditable coverage for the child; or the child has creditable coverage under COBRA continuation coverage; and (2) the cost of the least expensive creditable coverage available to the child is greater than 10% of the child’s countable family income; the premium for the creditable coverage with the lowest premium available to the child is greater than 150% of the premium applicable to the child under the children’s buy-in program; the child is unable to obtain creditable coverage due to a pre-existing condition; the child lost the only creditable coverage available because the child has exhausted a lifetime benefit limitation; or the child participates in the program for medically handicapped children.
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