SENATE BILL NO. 561 April 29, 1999, Introduced by Senator SHUGARS and referred to the Committee on Health Policy. A bill to amend 1984 PA 64, entitled "The coordination of benefits act," by amending section 3 (MCL 550.253), as amended by 1996 PA 325. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 3. (1) Any policy or certificate delivered or issued 2 for delivery in this state in connection with a group disability 3 benefit plan may contain provisions coordinating the benefits or 4 services that would otherwise be provided to a covered person. 5 Any such policy or certificate that contains a coordination of 6 benefits provision shall provide that benefits will be payable as 7 follows when coordinating with another policy or certificate that 8 also has a coordination of benefits provision: 9 (a)TheEXCEPT AS OTHERWISE PROVIDED IN SUBDIVISION (F), 10 THE benefits of a policy or certificate that covers the person on 11 whose expenses the claim is based other than as a dependent shall 02555'99 DKH 2 1 be determined before the benefits of a policy or certificate that 2 covers the person as a dependent. However, if the person is a 3 medicare beneficiary and as a result of the provisions of title 4 XVIII of the social security act, chapter 531, 49 Stat. 620, 42 5 U.S.C. 1395 to 1395b, 1395b-2,1395c to 1395i, 1395i-2 to61395i-4, 1395j to 1395t, 1395u to 1395w-2, 1395w-4 to 1395yy, and71395bbb to 1395ccc1395b-6 TO 1395b-7, 1395c TO 1395i, 1395i-2 8 TO 1395i-5, 1395j TO 1395t, 1395u TO 1395w, 1395w-2 TO 1395w-4, 9 1395w-21 TO 1395w-28, 1395x TO 1395yy, AND 1395bbb TO 1395ggg, 10 medicare is secondary to the policy or certificate covering the 11 person as a dependent and primary to the policy or certificate 12 covering the person as other than a dependent, then the order of 13 benefits is reversed and the policy or certificate covering the 14 person as other than a dependent is secondary and the policy or 15 certificate covering the person as a dependent is primary. 16 (b) Except as otherwise provided in subdivision (c), if 2 17 policies or certificates cover a person on whose expenses the 18 claim is based as a dependent, the benefits of the policy or cer- 19 tificate of the person whose birthday anniversary occurs earlier 20 in the calendar year shall be determined before the benefits of 21 the policy or certificate of the person whose birthday anniver- 22 sary occurs later in the calendar year. If the birthday anniver- 23 saries are identical, the benefits of a policy or certificate 24 that has covered the person on whose expenses the claim is based 25 for the longer period of time shall be determined before the ben- 26 efits of a policy or certificate that has covered the person for 27 the shorter period of time. However, if either policy or 02555'99 3 1 certificate is lawfully issued in another state and does not have 2 the coordination of benefits procedure regarding dependents based 3 on birthday anniversaries as provided in this subdivision, and as 4 a result each policy or certificate determines its benefits after 5 the other, the coordination of benefits procedure set forth in 6 the policy or certificate that does not have the coordination of 7 benefits procedure based on birthday anniversaries shall deter- 8 mine the order of benefits. 9 (c) For a person for whom claim is made as a dependent minor 10 child, benefits shall be determined according to the following: 11 (i) Except as provided in subparagraph (iii), if the parents 12 of the minor child are legally separated or divorced, and the 13 parent with custody of the minor child has not remarried, the 14 benefits of a policy or certificate that covers the minor child 15 as a dependent of the custodial parent shall be determined before 16 the benefits of a policy or certificate that covers the minor 17 child as a dependent of the noncustodial parent. 18 (ii) Except as provided in subparagraph (iii), if the par- 19 ents of the minor child are divorced, and the parent with custody 20 of the child has remarried, the benefits of a policy or certifi- 21 cate that covers the minor child as a dependent of the custodial 22 parent shall be determined before the benefits of a policy or 23 certificate that covers the minor child as a dependent of the 24 spouse of the custodial parent, and the benefits of a policy or 25 certificate that covers the minor child as a dependent of the 26 spouse of the custodial parent shall be determined before the 02555'99 4 1 benefits of a policy or certificate that covers the minor child 2 as a dependent of the noncustodial parent. 3 (iii) If the parents of the minor child are divorced, and 4 the decree of divorce places financial responsibility for the 5 medical, dental, or other health care expenses of the minor child 6 upon either the custodial or the noncustodial parent, the bene- 7 fits of a policy or certificate that covers the minor child as a 8 dependent of the parent with such financial responsibility shall 9 be determined before the benefits of any other policy or certifi- 10 cate that covers the minor child as a dependent. 11 (d) If subdivisions (a), (b), and (c) do not establish an 12 order of benefit determination, the benefits of a policy or cer- 13 tificate in connection with a group disability benefit plan that 14 has covered the person on whose expenses the claim is based for 15 the longer period of time shall be determined before the benefits 16 of a policy or certificate that has covered the person for the 17 shorter period of time, subject to the following: 18 (i) The benefits of a policy or certificate covering the 19 person on whose expenses the claim is based as a laid-off or 20 retired employee or as a dependent of a laid-off or retired 21 employee shall be determined after the benefits of any other 22 policy or certificate covering the person other than as a 23 laid-off or retired employee or a dependent of a laid-off or 24 retired employee. 25 (ii) Subparagraph (i) does not apply if either policy or 26 certificate is lawfully issued in another state and does not have 27 a provision regarding laid-off or retired employees and, as a 02555'99 5 1 result, each policy or certificate determines its benefits after 2 the other. 3 (e) If a person whose coverage is provided under a right of 4 continuation pursuant to federal or state law is also covered 5 under another policy or certificate, the policy or certificate 6 covering the person as an employee, member, subscriber, enrollee, 7 or retiree, or as that person's dependent, is primary and the 8 continuation coverage is secondary. 9 (F) THE BENEFITS OF A POLICY OR CERTIFICATE THAT COVERS A 10 STUDENT ON WHOSE EXPENSES THE CLAIM IS BASED SHALL BE DETERMINED 11 BEFORE THE BENEFITS OF SCHOOL ACCIDENT-TYPE COVERAGE. AS USED IN 12 THIS SUBDIVISION, "SCHOOL ACCIDENT-TYPE COVERAGE" MEANS A CON- 13 TRACT COVERING A COLLEGE STUDENT OR A STUDENT IN GRADES 14 KINDERGARTEN THROUGH 12 FOR ACCIDENTS ONLY, INCLUDING ATHLETIC 15 INJURIES, ON A 24-HOUR BASIS OR ON A TO AND FROM SCHOOL BASIS. 16 (2) A policy or certificate that contains a coordination of 17 benefits provision shall provide that benefits under the policy 18 or certificate shall not be reduced or otherwise limited because 19 of the existence of another nongroup contract that is issued as a 20 hospital indemnity, surgical indemnity, specified disease, or 21 other policy of disability insurance as defined in section 3400 22 of the insurance code of 1956,Act No. 218 of the Public Acts of231956, being section 500.3400 of the Michigan Compiled Laws1956 24 PA 218, MCL 500.3400. 25 (3) A health maintenance organization is not required to pay 26 claims or coordinate benefits for services that are not provided 02555'99 6 1 or authorized by the health maintenance organization and that are 2 not benefits under the health maintenance contract. 02555'99 Final page. 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