September 19, 2012, Introduced by Senators HUNE and SMITH and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 2213b, 3705, 3712, 5008, 5104, 5209, 5800, and
5824 (MCL 500.2213b, 500.3705, 500.3712, 500.5008, 500.5104,
500.5209, 500.5800, and 500.5824), section 2213b as amended by 1998
PA 457, sections 3705 and 3712 as added by 2003 PA 88, section 5008
as amended by 1994 PA 226, section 5104 as amended by 1999 PA 211,
and section 5800 as amended by 2000 PA 8, and by adding sections
5801 and 5805.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2213b. (1) Except as otherwise provided in this section,
an insurer that delivers, issues for delivery, or renews in this
state an expense-incurred hospital, medical, or surgical individual
policy under chapter 34 shall renew or continue in force the policy
at the option of the individual.
(2) Except as otherwise provided in this section, an insurer
that delivers, issues for delivery, or renews in this state an
expense-incurred hospital, medical, or surgical group policy or
certificate under chapter 36 shall renew or continue in force the
policy or certificate at the option of the sponsor of the plan.
(3) Guaranteed renewal is not required in cases of fraud,
intentional misrepresentation of material fact, lack of payment, if
the insurer no longer offers that particular type of coverage in
the market, or if the individual or group moves outside the service
area.
(4) An insurer or health maintenance organization that offers
an expense-incurred hospital, medical, or surgical policy under
chapter 34 or 36 shall not discontinue offering a particular plan
or product in the nongroup or group market unless the insurer or
health maintenance organization does all of the following:
(a) Provides notice to the commissioner and to each covered
individual provided coverage under the plan or product of the
discontinuation at least 90 days before the date of the
discontinuation.
(b) Offers to each covered individual provided coverage under
the plan or product the option to purchase any other plan or
product currently being offered in the nongroup market by that
insurer or health maintenance organization without excluding or
limiting coverage for a preexisting condition or providing a
waiting period.
(c) Acts uniformly without regard to any health status factor
of enrolled individuals or individuals who may become eligible for
coverage in making the determination to discontinue coverage and in
offering other plans or products.
(5) An insurer or health maintenance organization shall not
discontinue offering all coverage in the nongroup or group market
unless the insurer or health maintenance organization does all of
the following:
(a) Provides notice to the commissioner and to each covered
individual of the discontinuation at least 180 days before the date
of the expiration of coverage.
(b) Discontinues all health benefit plans issued in the
nongroup or group market from which the insurer or health
maintenance organization withdrew and does not renew coverage under
those plans.
(6) If an insurer or health maintenance organization
discontinues coverage under subsection (5), the insurer or health
maintenance organization shall not provide for the issuance of any
health benefit plans in the nongroup or group market from which the
insurer or health maintenance organization withdrew during the 5-
year period beginning on the date of the discontinuation of the
last plan not renewed under that subsection.
(7) (4)
Subsections (1) ,
(2), and (3) to (6) do not apply to
a short-term or 1-time limited duration policy or certificate of no
longer than 6 months.
(8) (5)
For the purposes of this section
and section 3406f, a
short-term or 1-time limited duration policy or certificate of no
longer than 6 months is an individual health policy that meets all
of the following:
(a) Is issued to provide coverage for a period of 185 days or
less, except that the health policy may permit a limited extension
of benefits after the date the policy ended solely for expenses
attributable to a condition for which a covered person incurred
expenses during the term of the policy.
(b) Is nonrenewable, provided that the health insurer may
provide coverage for 1 or more subsequent periods that satisfy
subdivision (a), if the total of the periods of coverage do not
exceed a total of 185 days out of any 365-day period, plus any
additional days permitted by the policy for a condition for which a
covered person incurred expenses during the term of the policy.
(c) Does not cover any preexisting conditions.
(d) Is available with an immediate effective date, without
underwriting, upon receipt by the insurer of a completed
application indicating eligibility under the health insurer's
eligibility requirements, except that coverage that includes
optional benefits may be offered on a basis that does not meet this
requirement.
(9) (6)
An By March 31 each year, an insurer that delivers,
issues for delivery, or renews in this state a short-term or 1-time
limited duration policy or certificate of no longer than 6 months
shall
provide the following to the commissioner :
(a)
By no later than February 1, 1999, a written report that
discloses
both of the following:
(i) The gross written premium for short-term or 1-time
limited
duration
policies or certificates of no longer than 6 months issued
in
this state during the 1996 calendar year.
(ii) The gross written premium for all individual
expense-
incurred
hospital, medical, or surgical policies or certificates
issued
or delivered in this state during the 1996 calendar year
other
than policies or certificates described in subparagraph (i).
(b)
By no later than March 31, 1999 and annually thereafter, a
written annual report that discloses both of the following:
(a) (i) The
gross written premium for short-term or 1-time
limited duration policies or certificates issued in this state
during the preceding calendar year.
(b) (ii) The
gross written premium for all individual expense-
incurred hospital, medical, or surgical policies or certificates
issued or delivered in this state during the preceding calendar
year
other than policies or certificates described in subparagraph
(i).subdivision
(a).
(10) (7)
The commissioner shall maintain
copies of reports
prepared
pursuant to subsection (6) (9)
on file with the annual
statement of each reporting insurer. The commissioner shall
annually
compile the reports received under subsection (6) (9).
The
commissioner shall provide this annual compilation to the senate
and house of representatives standing committees on insurance
issues
no later than the June 1 immediately following the February
1
or March 31 date for which the
reports under subsection (6) (9)
are provided.
(11) (8)
In each calendar year, a health
insurer shall not
continue to issue short-term or 1-time limited duration policies or
certificates if to do so the collective gross written premiums on
those policies or certificates would total more than 10% of the
collective gross written premiums for all individual expense-
incurred hospital, medical, or surgical policies or certificates
issued or delivered in this state either directly by that insurer
or through a corporation that owns or is owned by that insurer.
Sec. 3705. (1) For adjusting premiums for health benefit plans
subject to this chapter, a carrier may establish up to 10
geographic areas in this state. A nonprofit health care corporation
shall establish geographic areas that cover all counties in this
state.
(2) Premiums for a health benefit plan under this chapter are
subject to the following:
(a) For a nonprofit health care corporation, only industry,
smoking, and age may be used for determining the premiums within a
geographic area for a small employer or sole proprietor located in
that geographic area. For a health maintenance organization, only
industry, age, smoking, and group size may be used for determining
the premiums within a geographic area for a small employer or sole
proprietor located in that geographic area. For a commercial
carrier, only industry, age, smoking, group size, and health status
may be used for determining the premiums within a geographic area
for a small employer or sole proprietor located in that geographic
area.
(b)
The premiums charged during a rating period by a nonprofit
health
care corporation or a health maintenance organization for a
health
benefit plan in a geographic area to small employers or sole
proprietors
located in that geographic area shall not vary from the
index
rate for that health benefit plan by more than 35% of the
index
rate. However, for a health benefit plan issued before the
effective
date of this chapter by a nonprofit health care
corporation
or health maintenance organization, the premiums for
the
plan are subject to the following:
(i) For a renewal occurring on or after the effective
date of
this
chapter and through December 31, 2004, the premiums charged
for
a health benefit plan in a geographic area to small employers
or
sole proprietors located in that geographic area shall not be
higher
than 15% above the index rate or lower than 35% below the
index
rate.
(ii) For a renewal occurring on or after January 1,
2005, the
premiums
charged for a health benefit plan in a geographic area to
small
employers or sole proprietors located in that geographic area
shall
not vary from the index rate for that health benefit plan by
more
than 35% of the index rate.
(b) (c)
The premiums charged during a
rating period by a
nonprofit health care corporation, health maintenance organization,
or commercial carrier for a health benefit plan in a geographic
area to small employers or sole proprietors located in that
geographic area shall not vary from the index rate for that health
benefit
plan by more than 45% of the index rate. However, for a
health
benefit plan issued before the effective date of this
chapter
by a commercial carrier, the premiums for the plan are
subject
to the following:
(i) For a renewal occurring on or after the effective
date of
this
chapter and through December 31, 2004, the premiums charged
for
a health benefit plan in a geographic area to small employers
or
sole proprietors located in that geographic area shall not vary
from
the index rate for that health benefit plan by more than 70%
of
the index rate.
(ii) For a renewal occurring on or after January 1,
2005 and
through
December 31, 2005, the premiums charged for a health
benefit
plan in a geographic area to small employers or sole
proprietors
located in that geographic area shall not vary from the
index
rate for that health benefit plan by more than 55% of the
index
rate.
(iii) For a renewal occurring on or after January 1,
2006, the
premiums
charged for a health benefit plan in a geographic area to
small
employers or sole proprietors located in that geographic area
shall
not vary from the index rate for that health benefit plan by
more
than 45% of the index rate.
(c) (d)
For a sole proprietor, a small
employer carrier may
charge an additional premium of up to 25% above the premiums in
subdivision
(b). or (c).
(d) (e)
Except as otherwise provided in
this section, the
percentage increase in the premiums charged to a small employer or
sole proprietor in a geographic area for a new rating period shall
not exceed the sum of the annual percentage adjustment in the
geographic area's index rate for the health benefit plan and an
adjustment pursuant to subdivision (a). The adjustment pursuant to
subdivision (a) shall not exceed 15% annually and shall be adjusted
pro rata for rating periods of less than 1 year. This subdivision
does not prohibit an adjustment due to change in coverage.
(3)
Beginning 1 year after the effective date of this chapter
January 23, 2005, if a small employer had been covered by a self-
insured health benefit plan immediately preceding application for a
health benefit plan subject to this chapter, a carrier may charge
an additional premium of up to 33% above the premium in subsection
(2)(b)
or (c) for no more than 2 years.
(4) Health benefit plan options, number of family members
covered, and medicare eligibility may be used in establishing a
small employer's or sole proprietor's premium.
(5) A small employer carrier shall apply all rating factors
consistently with respect to all small employers and sole
proprietors in a geographic area. Except as otherwise provided in
subsection (4), a small employer carrier shall bill a small
employer group only with a composite rate and shall not bill so
that 1 or more employees in a small employer group are charged a
higher premium than another employee in that small employer group.
Sec. 3712. (1) If a small employer carrier decides to
discontinue offering all small employer health benefit plans in a
geographic area, all of the following apply:
(a) The small employer carrier shall provide notice to the
commissioner and to each small employer covered by the small
employer carrier in the geographic area of the discontinuation at
least 180 days prior to the date of the discontinuation of the
coverage.
(b) All small employer health benefit plans issued or
delivered for issuance in the geographic area are discontinued and
all current health benefit plans in the geographic area are not
renewed.
(c) The small employer carrier shall not issue or deliver for
issuance any small employer health benefit plans in the geographic
area for 5 years beginning on the date the last small employer
health benefit plan in the geographic area is not renewed under
subdivision (b).
(d) The small employer carrier shall not issue or deliver for
issuance for 5 years any small employer health benefit plans in an
area that was not a geographic area where the small employer
carrier was issuing or delivering for issuance small employer
health benefit plans on the date notice was given under subdivision
(a). The 5-year period under this subdivision begins on the date
notice was given under subdivision (a).
(2)
A nonprofit health care corporation shall not cease to
renew
all health benefit plans in a geographic area.A small
employer carrier shall not discontinue offering a particular plan
or product in the small employer group market unless the small
employer carrier does all of the following:
(a) Provides notice to the commissioner and to each covered
individual provided coverage under the plan or product of the
discontinuation at least 90 days before the date of the
discontinuation.
(b) Offers to each covered individual provided coverage under
the plan or product the option to purchase any other plan or
product currently being offered in the nongroup market by that
small employer carrier without excluding or limiting coverage for a
preexisting condition or providing a waiting period.
(c) Acts uniformly without regard to any health status factor
of enrolled individuals or individuals who may become eligible for
coverage in making the determination to discontinue coverage and in
offering other plans or products.
Sec. 5008. (1) The commissioner shall prepare and keep on hand
blank forms of articles of incorporation for insurers desiring to
incorporate under this act, which forms may be had on application.
(2) The incorporators shall subscribe articles of
incorporation in duplicate, which articles shall contain all of the
following:
(a) The names of the incorporators and their places of
residence respectively.
(b) The location of the principal office for the transaction
of business in this state.
(c) The name by which the incorporation shall be known, which
if it be upon the mutual plan shall contain the word "mutual".
However, a nonprofit mutual disability insurer into which a
nonprofit health care corporation that is organized under the
nonprofit health care corporation reform act, 1980 PA 350, MCL
550.1101 to 550.1704, is merged or consolidated may retain and use
trade names in use by the nonprofit health care corporation before
the merger or consolidation.
(d) The purposes of the incorporation and the reference to the
chapter of this act under which the purposes are enumerated and
under which the company intends to operate.
(e) The manner in which the corporate powers are to be
exercised; the number of directors and other officers; the manner
of electing the directors and other officers, and how many of the
directors
shall constitute a quorum, and the manner of filling all
vacancies; and, in the case of mutual life or life and disability
insurers, the names and mailing addresses of the directors who
shall serve until the first annual meeting of the corporation.
(f) The amount of capital stock, if any, what proportion is to
be paid in before the corporation commences business, and the value
of the stock, as provided in section 5014.
(g) The term of existence of the corporation, subject to
section 5010.
(h) The time for the holding of the annual meetings of the
corporation.
(i) Any terms and conditions of membership that the
incorporators have agreed upon and which they consider important to
have set forth in the articles.
(j) Any other terms and conditions prescribed by law for that
class of insurer.
(k) If a mutual company operating on the assessment plan, the
number of classes or divisions of members and the object or purpose
of the classification or division, all of which shall be definitely
and correctly stated; and in what manner assessments, premiums, or
payments are to be required from the members, the purpose and
objects for which the money so realized are to be appropriated, and
the names and objects of each fund into which any the money shall
be paid.
(3) The articles of any stock insurer formed or existing under
this act may contain, or may be amended to contain, a provision
that the shareholders shall have no preemptive rights to subscribe
for any additional shares of capital stock and authorizing the
board of directors to prescribe the terms and conditions upon which
additional shares of capital stock shall be offered for
subscription including the price of the stock, which shall not be
less than the par value of the stock; and to offer shares that have
not been subscribed by stockholders within the time duly fixed by
the board of directors for subscription to any other person or
persons at a price and upon terms not less favorable than those
offered to the stockholders.
(4) The articles of incorporation may contain a provision
providing that a director is not personally liable to the
corporation or its shareholders or policyholders for monetary
damages for a breach of the director's fiduciary duty. However, the
provision does not eliminate or limit the liability of a director
for any of the following:
(a) A breach of the director's duty of loyalty to the
corporation or its shareholders or policyholders.
(b) Acts or omissions not in good faith or that involve
intentional misconduct or knowing violation of law.
(c) A violation of section 5036, 5276, or 5280.
(d) A transaction from which the director derived an improper
personal benefit.
(e) An act or omission occurring before January 1, 1989.
(5) The articles shall be acknowledged by the person signing
the articles before some officer of this state authorized to take
acknowledgments of deeds, who shall attach his or her certificate
of acknowledgment.
Sec. 5104. (1) Subject to the requirements of this act
applicable to domestic stock insurers, domestic mutual insurers,
reciprocals, or inter-insurance exchanges, and the further
requirements of this chapter, 13 or more persons may organize a
stock insurer or 20 or more persons may organize a mutual insurer
for the purpose of transacting any or all of the following kinds of
insurance: property, marine, inland navigation and transportation,
casualty, or fidelity and surety, all as defined in chapter 6. Once
organized and authorized, the acquiring insurer is subject to all
applicable provisions of this act.
(2)
If During the period that the acquiring insurer is a
domestic stock insurer owned by a nonprofit health care corporation
formed pursuant to the nonprofit health care corporation reform
act, 1980 PA 350, MCL 550.1101 to 550.1704, then for insurance
products and services the acquiring insurer under this chapter
whether directly or indirectly shall only transact worker's
compensation insurance and employer's liability insurance, transact
disability insurance limited to replacement of loss of earnings,
and act as an administrative services organization for an approved
self-insured worker's compensation plan or a disability insurance
plan limited to replacement of loss of earnings. This subsection
does not preclude the acquiring insurer from providing either
directly or indirectly noninsurance products and services as
otherwise provided by law.
Sec.
5209. An Except as
otherwise provided in this section, an
insurer
shall transact its business under its own name , and shall
not
adopt any assumed name. ; excepting that an An insurer,
by
amending its articles of incorporation, may change its name or take
a new name. A nonprofit mutual disability insurer into which a
nonprofit health care corporation that is organized under the
nonprofit health care corporation reform act, 1980 PA 350, MCL
550.1101 to 550.1704, is merged or consolidated may retain and use
trade names in use by the nonprofit health care corporation before
the merger or consolidation.
Sec. 5800. (1) This chapter applies only to domestic mutual
insurers transacting property, casualty, disability, and other
insurances, and
to mutual holding companies resulting from the
reorganization of those mutual insurers, and to nonprofit mutual
disability insurers.
(2) This chapter does not apply to any domestic insurer doing
business on August 10, 1917, unless the insurer fully complies with
this chapter and by resolution of its board of directors duly
certified to by the president and secretary and filed with and
approved by the commissioner elects to adopt the provisions of this
chapter, in which case the insurer may thereafter effect such kind
or kinds of insurance as specified in its articles of incorporation
as then or thereafter amended or as may be specified in the
resolution.
(3) A person incorporating under this chapter after January 1,
1984, is subject to the minimum financial requirements of sections
408 and 410. Any corporation incorporated under this chapter on or
before
January 1, 1984, shall continue continues
to be subject to
the provisions of section 5810(3).
(4) A domestic mutual insurer transacting property, casualty,
disability, and other insurances may be reorganized pursuant to
chapters 59 and 60.
Sec. 5801. (1) A domestic mutual insurer for the transaction
of disability insurance may be formed with nonprofit status.
(2) A nonprofit mutual disability insurer has all powers of a
mutual insurer organized under this chapter unless expressly
reserved. A nonprofit mutual disability insurer shall not convert
its status to a stock insurer under chapter 59 or reorganize under
chapter 60.
Sec. 5805. (1) As set forth in section 220 of the nonprofit
health care corporation reform act, 1980 PA 350, MCL 550.1220, a
nonprofit health care corporation may merge with a nonprofit mutual
disability insurer where the surviving entity is governed by this
chapter. A merger described in this section is exempt from the
application of sections 1311 to 1319.
(2) A nonprofit mutual disability insurer that has merged with
a nonprofit health care corporation as described in subsection (1)
may, at its option, continue to offer any product that was offered
to the subscribers of the nonprofit health care corporation.
Sec.
5824. Every member of the company shall be is entitled
to
1 vote, or to a number of votes based upon the insurance in force,
the number of policies held, or the amount of premiums paid, as may
be provided in the bylaws. A nonprofit mutual disability insurer
may permit entities holding administrative services agreements with
it to be members and may provide in its bylaws the basis for the
number of votes the entities will have as members.
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No. 1294
of the 96th Legislature is enacted into law.