An Act To Reduce Individual Health Insurance Premiums
Maine Legislature, Session 122, LD 1168
Committee: Insurance and Financial Services
Sponsors: LINDELL, DAVIS, CURLEY, KAELIN, TARDY, VAUGHAN
Amends: 24-A MRSA §2736, 24-A MRSA §2736-C, 24-A MRSA §2848, 24-A MRSA §2849-B

Legislative Document 
No. 1168 
H.P.811 
House of Representatives, March 8,2005 
An Act To Reduce Individual Health Insurance Premiums 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Representative LINDELL of Frankfort. 
Cosponsored by Senator DAVIS of Piscataquis and 
Ir/~ 
/J7.7!bc~ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: CURLEY of Scarborough, KAELIN of Winterport, McKANE of Newcastle, 
TARDY of Newport, VAUGHAN of Durham. 
Printed on recycled paper 
Be it enacted by the People of tie State of Maine as follows: 
Sec. 1. 24-A MRSA §2736·C, sub-§2, 1[B, as enacted by PL 1993, 
c. 477, Pt. C, §1 and affected by Pt. F, §1, is amended to read: 
B. 
A carrier may not vary the premium rate due to the 
gender, 
heal&h-~~a~QST claims experience or policy duration 
of the individual. 
A carrier may vary the premium rate 
based 
on 
health 
status, 
age 
and 
tobacco 
use 
only 
as 
permitted in paragraph D. 
Sec. 2. 24-A MRSA §2736-C, sub-§2, 1[C, as amended by PL 2001, 
c. 410, Pt. A, §1 and affected by §10, is further amended to read: 
C. 
A carrier may vary the premium rate due to 
smakiB~ 
s&a&~&-aBe family membership. 
~he-~~~~~-~-aeaF& 
FQleS-6e~~in~-~~~~~~~~~~~~~-F~aFGi~-Fate 
eiSeaQB&S-~-eR-~~~~~~~r--R~Je~-~~-FQFSQaBt 
&a-~ai~-~~~~~-Fe~&iRe-~eehB4eal-~~~~~~iaeG-iB 
~i&*e-9T-ehaF&eF-6+9T-s~BehaFteF-~~-AT 
Sec. 3. 24·A MRS A §2736-C, sub-§2, 1[D, as amended by PL 2001, 
c. 410, Pt. A, §2 and affected by §10, is further amended to read: 
D. 
A carrier may vary the premium rate due to age, health 
status, occupation or industry aBeL geographic area aBly 
~ReeF--~~--~elJewin~---~~--~--wi&hiR--~~--listee 
FeFeeB~a~e--BaBes and tobacco use in accordance with the 
following limitations. 
(1) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State between December 1, 1993 and 
July 14, 1994, the premium rate may not deviate above 
or below the community rate filed by the carrier by 
more than 50%. 
(2) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State between July 15, 1994 and July 
14, 1995, the premium rate may not deviate above or 
below the community rate filed by the carrier by more 
than 33'lt.. 
(3) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State after July 15, 
1995, 
the 
premium 
rate 
may 
not 
deviate 
above 
or 
below 
the 
community rate filed by the carrier by more than 20%. 
(4) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State after February 1. 2006, the 
maximum rate differential from the community rate filed 
by the carrier for age as determined by ratio is 4 to 
one. 
The limitation does not apply for determining 
rates for an attained age of less than 19 or more than 
years. 
(5) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State after February 1. 2006, the 
maximum rate differential from the community rate filed 
by the carrier for health status as determined by ratio 
is 1.5 to one and the maximum rate differential for 
tobacco use as determined by ratio is 1.5 to one. 
Rate 
variations based on health status do not apply to rate 
variations based on an insured' s status as a tobacco 
~ 
(6) 
A variation in rate is not permitted on the basis 
of changes in health status after a policy, contract or 
certificate is issued or renewed. 
Sec. 4. 24-A MRSA §2736-C. sub-§2.,G is enacted to read: 
G. 
A carrier that offered individual health plans prior to 
February 1. 2006 may close its individual book of business 
sold prior to February 1, 2006 and may establish a separate 
community rate for individuals applying for coverage under 
an individual health plan after February 1, 2006. 
Sec. 5. 24-A MRSA §2736-C, sub-§3, ,A, as corrected by 
RR 
2001, c. 1, §30, is repealed. 
Sec. 6. 24-A MRSA §2736-C, sub-§3, ,C, as enacted by PL 1993, 
c. 477, Pt. C, §l and affected by Pt. F, §l, is repealed. 
Sec. 7. 24-A MRSA §2736-C. sub-§3. ,D, as enacted by PL 1999, 
c. 256, Pt. D, §1, is amended to read: 
D. 
WetwitRstaRQiR~-~~~~r-eaFFieFs Carriers offering 
supplemental coverage for the Civilian Health and Medical 
Program 
for 
the 
Uniformed 
Services, 
CHAMPUS, 
are 
not 
required 
to 
issue 
this 
coverage 
if 
the 
applicant 
for 
insurance does not have CHAMPUS coverage. 
Sec. 8. 24-A MRSA §2736-C, sub-§3"E is enacted to read: 
E. 
An individual may not be denied health insurance due to 
age or gender. 
This paragraph may not be construed to 
require a carrier to actively market health insurance to an 
individual 65 years of age or older. 
Sec. 9. 24-A MRSA §2736-C, sub-§9, as enacted by PL 1995, c. 
570, §7, is amended to read: 
9. 
Exemption for certain associations. 
The superintendent 
may exempt a group health insurance policy or group nonprofit 
hospital or medical service corporation contract issued to an 
association group, organized pursuant to section 2805-A, from the 
requirements 
of 
slisseet:iea--.J..,---pa-r-ag-r-aph---At 
subsection 
6, 
paragraph At and subsection 8 if: 
A. 
Issuance and renewal of coverage under the policy or 
contract is guaranteed to all members of the association who 
are residents of this State and to their dependents; 
B. 
Rates for the association comply with the premium rate 
requirements 
of 
subsection 
or 
are 
established 
on 
a 
nationwide basis and substantially comply with the purposes 
of this section, except that exempted associations may be 
rated separately from the carrier's other individual health 
plans, if any; 
c. 
The 
group's 
anticipated 
loss 
ratio, 
as 
defined 
in 
subsection 5, is at least 75%; 
D. 
The association's membership criteria do not include 
age, health status, medical utilization history or any other 
factor with a similar purpose or effect; 
E. 
The association's group health plan is not marketed to 
the general public; 
F. 
The 
association does 
not 
allow 
insurance 
agents 
or 
brokers 
to 
market 
association 
memberships, 
accept 
applications for memberships or enroll members, except ~hen 
the association is an association of insurance agents· or 
brokers organized under section 2805-A; 
G. 
Insurance 
is 
provided 
as 
an 
incidental benefit of 
association membership 
and 
the 
primary 
purposes 
of 
~he 
association do not include group buying or mass marketin~ of 
insurance or other goods and services; and 
c. 
H. 
Granting 
an 
exemption to 
the 
association does 
not 
conflict with the purposes of this section. 
Sec. 10. 24-A MRSA §2848, sub-§I-B, 1rA, as amended by PL 1999, 
256, Pt. L, §2, is further amended to read: 
A. 
"Federally creditable coverage" means health benefits or 
coverage provided under any of the following: 
(1) 
An employee welfare benefit plan as defined in 
Section 3(1) of the federal Employee Retirement Income 
Security Act of 1974, 29 United States Code, Section 
1001, 
or a 
plan that would be an employee welfare 
benefit 
plan 
but 
for 
the 
"governmental 
plan" 
or 
"nonelecting 
church 
plan" 
exceptions, 
if 
the 
plan 
provides medical care as defined in subsection 2-A, and 
includes items and services paid for as medical care 
directly 
or 
through 
insurance, 
reimbursement 
or 
otherwise; 
(2) 
Benefits 
consisting 
of 
medical 
care 
provided 
directly, 
through 
insurance 
or 
reimbursement 
and 
including items and services paid for as medical care 
under a policy, contract or certificate offered by a 
carrier; 
(3) 
Part A or Part B of Title XVIII of the Social 
Security Act, Medicare; 
(4) 
Title XIX of the Social Security Act, Medicaid, 
other than coverage consisting solely of benefits under 
Section 1928 of the Social Security Act or a state 
children's health insurance program under Title XXI of 
the Social Security Act; 
(5) 
The Civilian Health and Medical Program for the 
Uniformed Services, 
CHAMPUS, 
Unit.ed States 
Code, 
Chapter 55; 
(6) 
A medical 
care program of the federal 
Health Care 
Improvement Act, 
United States 
Section 1601 or of a tribal organization; 
(7) 
A state health benefits risk pool: 
Indian 
Code, 
(8) 
A health plan offered under the federal Employees 
Health Benefits Amendments Act, 
United States Code, 
Chapter 89; 
(9) 
A 
public 
health 
regulations authorized 
Service 
Act, 
Section 
Public Law 104-191; 9F 
plan 
as 
defined 
in 
federal 
by the federal 
Public Health 
2701(c)(1)(I), 
as 
amended 
by 
(10) 
A health benefit plan under Section 5(e) of the 
Peace 
Corps 
Act, 
United 
States 
Code, 
Section 
2504(e) ... L....QL 
(11) 
Insurance coverage offered by the Maine Health 
Insurance 
High-risk 
Pool 
Association 
pursuant 
to 
chapter 54. 
Sec. 11. 24-A MRSA §2849-B. sub-§2, ,A, as amended by PL 200l, 
c. 258, Pt. E, §7, is further amended to read: 
A. 
That person was covered under aR--i-nM-v-idua-1--9F 
.Q group 
contract or 
policy issued by 
any nonprofit hospital 
or 
medical service organization, insurerT Q£ health maintenance 
organization, or was covered under an uninsured employee 
benefit plan that provides 
payment 
for 
health 
services 
received by employees and their dependents or a governmental 
program, 
including, 
but not limited to, 
those listed in 
section 2848, subsection 1-B, paragraph A, subparagraphs (3) 
to (10). 
For purposes of this section, the iREH· .... i<i1*a-l--9F 
group policy under which the person is seeking coverage is 
the "succeeding policy." 
The group 
eF-~-fltl-i ..... -i€h:la± contract 
or policy, uninsured employee benefit plan or governmental 
program that previously covered the person is the "prior 
contract or policy"; and 
Sec. 12. 24-A MRSA c. 54 is enacted to read: 
CHAPTER 54 
MAIRE HEALTH IBS~~E HIGH-RISK 
pooL ASSOCIATION 
§390l. 
Short title 
This chapter may be known and cited as "the Maine Health 
Insurance High-risk Pool Association Act." 
§3902. 
Definitions 
As 
used 
in this 
chapter, 
unless 
the 
context 
otherwise 
indicates, the following terms have the following meanings. 
1. 
Association. 
"Association" 
means 
the 
Maine 
Health 
Insurance High risk Pool Association established in section 3904. 
2. 
Board. 
"Board" means the board of directors of the 
association. 
3. 
Covered person. 
"Covered person" means an individual 
resident of this State who: 
A. 
Is eligible to receive benefits from an insurer: 
B. 
Is eligible 
for 
benefits 
under 
the 
federal 
Health 
Insurance Portability and Accountability Act of 1996: or 
C. 
Ha~ 
Qeen 
certified 
a~ eligiQle 
fQr 
fegeral 
trage 
agjystment 
a~~i~tance or 
for 
pen~iQn Qenefit 
guarantee 
corpQration 
a~sistan!:a~. as provigeg by 
th~ 
f~geral 
Trad~ 
Adjustment A~~istan~~ Reform A~t of 2Q02. 
For the purpQses 
Qf this chapter, 
"cQvereg person" 
gQes 
nQt 
incluge a gepengent of a covered perSQn. 
4. 
Dependent. 
"Depengent" 
means 
a 
resigent 
spouse. 
a 
resigent ynmarrieg chi1g unger 19 years Qf age. a chilg unger 23 
years Qf age whQ is a student ang whQ is financially gepengent 
uPQn 
the parent or 
a 
child of any age 
whQ 
is disaQled and 
dependent upon the parent. 
5. 
He~.ltll_~ai~t_~_~c;m~~L---.2_!:'~aQ._i~jlti.on. 
"Health maintenance 
organization" means a health maintenance organization aythQrized 
under chapter 56. 
~~.!>.Y.rer. 
"Ins~rer" means an entity that is authQrized 
to write medical insurance or that provides medical insyrance in 
this State. For the purposes of this chapter. "insurer" includes 
an insurance company. 
a nonprofit hospital and megical service 
organization. a fraternal benefit society. a health maintenance 
organization. a self-insurance arrangement that prQviges health 
care benefits in this State to the extent a1lQwed unger the 
fegeral 
Employee 
Retirement 
Income 
Secyrity 
Act 
Qf 
1974. 
a 
3rd-party administrator. a multiple-emplQyer welfare arrangement. 
another entity prQviding medical 
insurance or health benefits 
subject 
to 
state insurance 
regulation 
ang 
a 
reinsurer 
that 
reinsures health insurance in this State. 
7. 
Medical insurance. 
"Medical insurance" means a hQspital 
and 
medical 
expense-incurred 
policy. 
nonprofit 
hQspital 
ang 
medical service plan, health maintenance organization subscriQer 
contract or other health care plan or arrangement that pays for 
or 
furnishes 
medical 
or 
health 
care 
services, 
whether 
by 
insurance or otherwise and whether sold as an individual or group 
policy. "Medical insurance" does not include accidental injury, 
specified disease, hospital indemnity, dental, vision, disability 
income, 
Medicare 
supplement, 
long term care or other limited 
benefit health insurance or credit insurance; coverage issued as 
a 
supplement to liability insurance; insurance 
ar~s~ng out of 
workers' compensation or similar law; automobile medical payment 
insurance; or insurance under which benefits are payable with or 
without regard to fault and that is statutorily required to be 
contained 
in 
any 
liability 
insurance 
policy 
or 
equivalent 
self-insurance. 
8. 
Medicare. 
"Medicare" means coverage under both Part A 
and Part B of Title XVIII of the federal Social Security Act, 42 
United States Code, Section 1395 et seq., as amended. 
9. 
Plan. 
"Plan" means the health insurance plan adopted by 
the board pursuant to this chapter. 
10. 
Producer. 
"Producer" means a person who is licensed to 
sell health insurance in this State. 
11. 
Reinsurer. 
"Reinsurer" means an insurer from whom 
a 
person 
providing 
health 
insurance 
for 
a 
resident 
procures 
insurance for itself with respect to all or part of the medical 
insurance risk of the person. 
"Reinsurer" includes an insurer 
that provides employee benefit excess insurance. 
12. 
Resident. 
"Resident" means an individual who: 
A. 
Is legally located in the United States and has been 
legally 
domiciled 
in 
this 
State 
for 
a 
period 
to 
be 
established by the board, not to exceed one year, subject to 
the approval of the superintendent; 
B. 
Is legally domiciled in this State on the date of 
application to the plan and is eligible for enrollment in 
the high-risk pool under this chapter as a result of the 
federal Health Insurance Portability and Accountability Act 
of 1996; or 
C. 
Is legally domiciled in this State on the date of 
application to the plan and has been certified as. eligible 
for 
federal 
trade 
adjustment 
assistance 
or 
for 
pension 
benefit guarantee corporation assistance, as provided by the 
federal Trade Adjustment Assistance Reform Act of 2002. 
13. 
Third-party administrator. 
"Third-party administrator" 
means any entity that is paying or processing medical insurance 
claims for any resident. 
§3903. 
Maine Health Insurance High-risk Pool Association 
1. 
Association 
establ~hed. 
The Maine 
Health Insurance 
High risk Pool Association is established as a nonprofit legal 
entity. 
As a condition of doing business, an insurer that has 
sold medical 
insurance within the previous 
months 
or is 
actively marketing a medical insurance policy in this State must 
participate in the association. 
2. 
Board of directors. 
The association is governed by a 
board of directors in accordance with the following. 
A. 
The board consists of 10 members as follows: 
(1) 
Four members appointed by the superintendent: 
one 
member 
chosen 
from 
the 
general 
public 
who 
is 
not 
associated with the medical profession, a hospital or 
an 
insurer; 
one 
member 
who 
represents health 
care 
providers; 
one 
member 
who 
represents 
a 
statewide 
organization that represents small businesses and that 
receives 
a 
majority 
of 
its 
funding 
from 
small 
businesses located in this State; and one member who 
represents producers. 
A board member appointed by the 
superintendent may be removed at any time without cause; 
(2) 
Five members appointed by the member insurers, at 
least 
of 
whom 
provide 
coverage 
to at least 
covered lives; and 
(3) 
The superintendent. who serves as an ex officio 
member of the board. 
B. 
Members of the board serve for 3-year terms, except that 
of those members initially appointed by the superintendent, 
one member serves for a term of one year, 2 members for a 
term of 2 years and one member for a term of 3 years, and of 
those members initially appointed by the member insurers, 
one member serves for a term of one year, 2 members serve 
for a term of 2 years and 2 members serve for a term of 3 
years. 
The appointing authori ty shall designate the period 
of 
service 
of 
each 
initial 
appointee 
at 
the 
time 
of 
appointment. 
C. 
The board shall elect one of its members as chair. 
D. 
Board members 
may 
be 
reimbursed 
from 
funds 
of 
the 
association for actual and necessary expenses incurred by 
them as members but may not otherwise be compensated for 
their services. 
3. 
Plan of operation. 
The board shall adopt a plan of 
operation in accordance with the reguirements of this chapter and 
submi t 
its 
articles, 
bylaws 
and 
operating 
rules 
to 
the 
superintendent for approval. 
If the board fails to adopt the 
plan of operation and suitable articles and bylaws within 90 days 
after the appointment of the board, 
the superintendent shall 
adopt rules to effectuate the reguirements of this chapter, and 
those rules 
remain in effect until superseded by 
a 
plan of 
operation and articles and bylaws submitted by the board and 
approved 
by 
the 
superintendent. 
Rules 
adopted 
by 
the 
superintendent pursuant to this subsection are routine technical 
rules as defined in Title 5, chapter 375, subchapter 2-A. 
4. 
Iumunity. 
A board member is not liable and is immune 
from suit at law or eguity for any conduct performed in good 
faith that is within the scope of the board's jurisdiction. 
§3904. 
Liability and indemnification 
1. 
Liability. 
The board and its employees may not be held 
liable for any obligations of the association. 
A cause of action 
may not arise against the association; the board, its agents or 
employees; 
a 
member 
insurer 
or 
its 
agents, 
employees 
or 
producers; or the superintendent for any action or omission in 
the performance of powers and duties pursuant to this chapter. 
2. 
Indemnification. 
In its bylaws or rules the board may 
provide for indemnification of and legal representation for its 
members and employees. 
§3905. 
Duties and powers of association 
1. 
Duties. 
The association shall: 
A. 
Establish administrative and accounting procedures for 
the operation of the association; 
B. 
Establish 
procedures 
under 
which 
applicants 
and 
participants in the plan may have grievances reviewed by an 
impartial body and reported to the board; 
C. 
Select a plan administrator in accordance with section 
llQfu. 
D. 
Collect the assessments provided in section 3907. 
The 
... 
'-i4 
level 
of 
payments 
must 
be 
established 
by 
the 
board. 
Assessments 
must 
be 
collected pursuant 
to 
the 
plan of 
operation approved by the board and adopted pursuant to 
section 3903, subsection 3. 
In addition to the collection 
of 
such 
assessments, 
the 
association 
shall 
collect 
an 
organizational assessment or assessments from all insurers 
as necessary to provide for expenses that have been incurred 
or are estimated to be incurred prior to receipt of the 
first calendar year assessments. Organizational assessments 
must be equal in amount for all insurers but may not exceed 
a 
total of 
$500 
per insurer for all such assessments. 
Assessments are due and payable within 30 days of receipt of 
an assessment notice by the insurer; 
E. 
Require that all policy forms issued by the association 
conform to standard forms developed by the association. 
The 
forms must be approved by the superintendent and must comply 
with this Title; and 
F. 
Develop 
and 
implement 
a 
program 
to 
publicize 
the 
existence of the plan, the eligibility requirements for the 
plan and the procedures for enrollment in the plan and to 
maintain public awareness of the plan. 
2. 
Powers. 
The association may: 
A. 
Exercise powers granted to insurers under the laws of 
this State; 
B. 
Enter into contracts as necessary or proper to carry out 
the prOVl.Sl.ons and purposes of this chapter and may, with 
the approval of the superintendent, enter into contracts 
with similar organizations in other states for the joint 
performance 
of 
common 
administrative 
functions 
or 
with 
persons or other organizations for the joint performance of 
administrative functions; 
C. 
Sue or be sued and may take legal actions necessary or 
proper to recover or collect assessments due the association; 
D. 
Take legal actions necessary to avoid the payment of 
improper 
claims against the association or the coverage 
provided by or 
through 
the association, 
to 
recover 
any 
amounts erroneously or improperly paid by the association, 
to recover amounts paid by the association as a result of a 
mistake of fact or law or to recover other amounts due the 
association; 
E. 
Establish, and modify from time to time as appropriate, 
rates, rate schedules, rate adjustments, expense allowances, 
producers' referral fees, 
claim reserve formulas and any 
other actuarial function appropriate to the operation of the 
association in accordance with section 3909; 
F. 
Issue policies of insurance in accordance with the 
requirements of this chapter; 
G. 
Appoint 
ap~opriate 
l~al, 
actuarial 
and 
other 
committees as necessary to provide technical assistance in 
the operation of the plan,-p-plicy and other contract desi~~ 
and 
any 
other 
function 
within 
the 
authority 
of 
the 
association; 
H. 
Borrow money to _effect t~rposes of the association. 
Notes or other evidence of indebtedness of the association 
not in default must be legal investments for insurers and 
may be carried as admitted assets; 
I. 
Establish 
rules, 
condi~lpn~s~~a=n~d __ ~p~r~o~c~e~d=u~r=e~s~~f~o~r 
reinsuring risks of member insurers desiring to issue in 
~t~h~e~i~r~~o~w~n~~n~am~=e~s __ ~p~lan _coverage 
to 
individuals 
otherwise 
eligible for plan coverage; 
J. 
Prepare and distribute application forms and enrollment 
instruction forms to producers and to the general public; 
K. 
Provide 
for 
reinsurance 
of 
risks 
incurred 
by 
the 
association. The provision of reinsurance may 
not subject 
the 
association 
to 
any 
of 
the 
capital 
or 
surplus 
requirements, if any, otherwise applicable to reinsurers; 
L. 
Provide for 
and~loy cost containment measures and 
requirements, including, but not limited to, preadmission 
screening, 
2nd 
surgical 
opinion, 
concurrent 
utilization 
review and individual case management for the purpose of 
making the benefit plan more cost-effective; and 
M. 
Design, 
use, 
contract or otherwise arrange 
delivery of cost-effective health care services, 
establishing 
or 
contracting 
with 
preferred 
~o~r~g~a~n~i~z~a~t~i~o~n~s~,~~h~e~alth maintenance organizations 
limited network provider arrangements. 
for 
the 
including 
provider 
and other 
-
3. 
Additional dut~s and powers. 
The superintendent may, 
by rule, establish addition~Qwers and duties of the board and 
may adopt rules as necessary to implement this chapter. 
Rules 
adopted pursuant to this subsection are routine technical rules 
as defined in Title 5, chapter 375, subchapter 2-A. 
Page ll-LR0790(1) 
4. 
Review for solvency. 
The superintendent shall review 
the 
association 
at 
least 
every 
years 
to 
determine 
its 
solvency. 
If the superintendent determines that the funds of the 
association are insufficient to support enrollment of additional 
persons, the superintendent may order the association to increase 
its 
assessments 
or 
increase 
its 
premium 
rates. 
If 
the 
superintendent determines that the funds of the association are 
insufficient to support the enrollment of additional persons and 
that the assessments required pursuant to section 3907 are too 
low 
to 
support 
the 
enrollment 
of 
additional 
persons, 
the 
superintendent 
may 
order 
the 
association 
to 
charge 
special 
assessments for a period not to exceed 12 months. 
5. 
Annual report. 
The association shall report annually to 
the 
joint 
standing 
committee 
of 
the 
Legislature 
haying 
jurisdiction over health insurance matters by March 15th. 
The 
report 
must 
include 
information 
on 
the 
benefits 
and 
rate 
structure of coverage offered by the association, the financial 
solvency of the association and the administrative expenses of 
the plan. 
6. 
Audit. 
The association must be audited at least every 3 
years. A copy of the audit must be provided to the superintendent 
and to the joint standing committee of the Legislature having 
jurisdiction over health insurance matters. 
§3906. 
Selection of plan administrator 
3U 
1. 
Selection of plan administrator. 
The board shall select 
an insurer or 
3rd-party administrator, 
through 
a 
competitive 
bidding 
process, 
to 
administer 
the 
plan. 
The 
board 
shall 
evaluate bids submitted under this subsection based on criteria 
established by the board, including: 
A. 
The 
insurer's proven ability to handle 
large group 
accident and health insurance; 
B. 
The 
efficiency 
and 
timeliness 
of 
the 
insurer's 
Claims-payment procedures; 
C. 
An estimate of total charges for administering the plan; 
D. 
The ability of the insurer to apply effective cost 
containment programs and procedures to administer the plan 
in a cost-efficient manner; and 
E. 
The financial condition and stability of the insurer. 
The association may select more than one administrator for the 
plan. 
2. 
Contract 
1fi~ 
plan 
a.m...inistrator. 
The 
plan 
administrator selected pursuant to subsection 1 
serves for 
a 
per iod of 3 years pursuant to a contract with the association. 
At least one year prior to the expiration of that 3-year period 
of seryice, the board shall invite all insurers, including the 
current plan administrator, to submit bids to serve as the plan 
administrator for the succeeding 3-year period. 
The board shall 
select the plan administrator for the succeeding period at least 
months prior to the end of the 3-year period. 
3. 
Duties of plan administrator. 
The plan administrator 
selected pursuant to subsection 1 shall: 
A. 
Perform 
all 
eligibility 
and 
administrative 
claims-payment functions relating to the plan; 
B. 
Pay a producer's referral fee as established by the 
board to each producer that refers an applicant to the plan, 
if the applicant's application is accepted. 
The sell ing or 
marketing 
of 
the 
plan 
is 
not 
limited 
to 
the 
plan 
administrator 
or its producers. 
The 
plan 
administrator 
shall pay the referral fees from funds received as premiums 
for the plan; 
C. 
Establish a premium billing procedure for collection of 
premiums 
from 
insured 
persons. 
Billings 
must 
be 
made 
periodically as determined by the board; 
D. 
Perform all necessary functions to ensure timely payment 
of benefits to covered persons under the plan, including: 
(1) 
Making 
available 
information 
relating 
to 
the 
proper manner of SUbmitting a claim for benefits under 
the plan and distributing forms upon which submissions 
must be made; 
(2) 
Evaluating 
the eligibility of 
each 
claim 
for 
payment under the plan; and 
(3) 
Notifying 
each 
claimant 
within 
days 
after 
receiving a 
prQJ;?erly completed and executed proof of 
loss as to wheth€1r the claim is accepted, rejected or 
subject 
to 
compromise. 
The 
board 
shall 
establish 
reasonable 
reimbursement 
amounts 
for 
any 
services 
covered under the plan; 
1I.l 
• 
'±2 
E. 
Submit 
regular 
reports 
to 
the 
board 
regarding 
the 
operation of the plan. 
The frequency, content and form of 
the reports must be as determined by the board: 
F. 
Following the clo~~_~ach calendar year, determine net 
premiums, 
reinsurance 
premiums 
less 
an 
administrative 
expense allowance, the expense of administration pertaining 
to the reinsurance operations of the association and the 
incurred losses of the year and report this information to 
the superintendent: and 
G. 
Pay claims expenses from the premium payments received 
from or on behalf of covered persons under the plan. 
If the 
payments 
by 
the 
plan administrator 
for 
claims 
expenses 
exceed the portion of premiums allocated by the board for 
payment of claims expenses, the board shall provide the plan 
administrator with additional funds for payment of claims 
expenses. 
4. 
Payment to plan administrator. 
A plan administrator 
selected pursuant to subsection 1 must be paid, as provided in 
the contract of the association, 
for its direct and indirect 
expenses incurred in the performance of its services. As used in 
this SUbsection, 
"direct and indirect expenses" includes that 
p-ortion of the audited administrative costs, printing expenses, 
claims 
administration expenses, 
management 
expenses, 
building 
overhead expenses and other actual operating and administrative 
expenses of the plan administrator that are approved by the board 
as allocable to the administration of the plan and included in 
the bid specifications. 
§3907. 
Assessments against insurers 
1. 
Assessments. 
For the purpose of providing the funds 
necessary to carry out the powers and duties of the association, 
the board shall assess member insurers on a calendar-year basis 
and establish the assessment no later than November 1st in the 
year 
preceding 
the 
calendar 
year 
for 
which 
the 
insurer's 
experience 
will 
be 
used 
to 
calculate 
the 
assessment. 
The 
assessment must be anticipated to be sufficient to meet the 
funding needs of the association. 
2. 
Regular assessment: initial assessment. 
The association 
must establish 
a 
regular 
assessment based on 
the 
number 
of 
covered persons times a specified assessment rate. 
The board 
shall submit the regular assessment rate to the superintendent 
for 
approval 
and 
specify 
the 
basis 
for 
the 
rate. 
The 
superintendent shall approve the rate if the superintendent finds 
that the 
amount is required to fulfill the purposes of the 
association. 
The initial assessment on each insurer is 60¢ per 
covered person insured or reinsured by each insurer per month for 
medical insurance. 
3. 
Special assessment. 
The association may establish a 
special assessment rate if necessary to cover a deficiency in the 
expenses 
and 
losses 
of 
the 
association 
not 
funded 
through 
premiums. 
The special assessment rate is subject to the approval 
of the superintendent. 
4. 
Determination of assessment. 
The 
board 
shall 
make 
reasonable efforts to ensure that each covered person is counted 
only once with respect to an assessment. 
For that purpose, the 
board 
shall 
adopt 
procedures 
by 
which 
affiliated 
insurers 
calculate their assessment on an aggregate basis and procedures 
to ensure that each covered person is counted only once. 
The 
board 
may 
verify each insurer's 
assessment 
based 
on 
annual 
statements and other reports determined necessary by the board. 
The board may use any reasonable method of estimating the number 
of covered persons of an insurer if the specific number is 
unknown. 
5. 
Excess funds. 
If assessments and other receipts by the 
association, board or plan administrator exceed the actual losses 
and administrative expenses of the plan, the board shall hold the 
excess as interest and may use those excess funds 
to offset 
future 
losses or to 
reduce 
plan 
premiums. 
As 
used in this 
subsection, "future losses" includes reserves for claims incurred 
but not reported. 
6. 
Failure to 
p~ assessment. 
The 
superintendent 
may 
suspend or revoke, after notice and hearing, the certificate of 
authority to transact insurance in this State of any member 
insurer that fails to pay an assessment. 
As an alternative, the 
superintendent may levy a penalty on any member insurer that 
fails 
to 
pay 
an 
assessment 
when 
due. 
In 
addition, 
the 
superintendent may use any power granted to the superintendent by 
this Title to collect any unpaid assessment. 
§3908. 
Availability of coverage 
The association shall offer a choice of 2 or more coverage 
options through the plan as set out in section 3909, subsections 
and 
2. 
The plan takes effect October 1. 
2005. 
Policies 
offered 
through 
the 
association must 
be 
available 
for 
sale 
february 1, 
2006. 
The association shall directly insure the 
coverage provided by the plan, and the policies must be issued 
through the plan administrator. 
.. 
§3909. 
Requirements for coverage 
1. 
Coverage offered. 
The plan lllust offer in an annually 
renewable policy the coverage specified in this section for each 
eligible person. 
If 
a 
covered 
person is also eligible 
for 
Medicare coverage, the plan may not payor reimburse any person 
for expenses paid by Medicare. 
A person whose health insurance 
coverage is involuntarily terminated for any reason other than 
nonpayment of premium may apply for coverage under the plan. 
If 
such coverage is applied for within 90 days after the involuntary 
termination and if premiums are paid for the period starting at 
the date of the involuntary termination, the effective date of 
the coverage is the date of termination of the previous coverage. 
2. 
Major 
~ical el[pen~overage. 
The plan must offer 
major medical expense coverage to every covered person who is not 
eligible for Medicare. 
The board shall establish the coverage to 
be issued by the plan, its schedule of benefits and exclusions 
and other limitations, which the board may amend from time to 
time 
subject 
to 
the 
approval 
of 
the 
superintendent. 
In 
establishing 
the 
plan 
coverage, 
the 
board 
shall 
take 
into 
consideration the levels of health insurance provided in the 
State and medical economic factors as determined appropriate. 
As 
an optional rider, the plan must offer coverage for mental health 
benefits as provi_Qe..9. 
iILJ:iectjo~749-C_~IlLCQYerage for maternity 
benefits as provided in section 2741 and 2743-A. 
3. 
Rates. 
Rates for coverage issued by the association 
must meet the requirements of this subsection. 
A. 
Rates 
may 
not 
be 
unreasonable 
in relation 
to 
the 
benefits provided, the risk experience and the reasonable 
expenses of providing the coverage. 
B. 
Rate schedules must comply with section 2736-C and are 
subject to approval by the superintendent. 
C. 
Subject to aQQKoval by the sUQerintendent, standard risk 
rates 
for 
coverage 
issued 
by 
the 
association 
must 
be 
established by the association using reasonable actuarial 
techniques 
and 
must 
reflect anticipated experiences 
and 
expenses of such coverage for standard risks. The premium 
for the standard risk rates must range from a minimum of 
12S
Qb to a maximum of lS0 Qb of the weighted average of rates 
charged 
by 
those 
insurers 
and 
health 
maintenance 
organizations with individuals enrolled in similar medical 
insurance plans. 
' 
4. 
Compliance with state law. 
Products offered by the 
association m.ust comply with all relevant requirements of this 
Title 
applicable 
to 
individual 
health 
insurance, 
including 
requirements 
for 
mandated 
coverage 
for 
specific health care 
services 
and specific diseases 
and 
for certain providers of 
health care services. 
5. 
Other sources WL~ary. The association must be payor of 
last resort of benefits whenever any other benefit or source of 
3rd-party payment is available. 
The coverage provided by the 
~iation must 
be 
considered 
exces~verage, and benefits 
otherwise payable under association coverage must be reduced by 
all amounts paid or payable through any other health insurance 
and by all hospital and medical expense benefits paid or payable 
under any short-term, accident, dental-only, vision-only, fixed 
indemnity, lim_ited benefit or credit insurance; coverage issued 
as 
a 
supplement to liability insurance; workers' 
compensation 
coverage; 
automobile 
medical 
payment; 
liability 
insurance, 
whether or not provided on the basis of fault; 
and by 
any 
hospital or medical benefits paid or payable by any insurer or 
insurance arrangement or any hospital or medical benefits paid or 
payable under or provided pursuant to any state or federal law or 
program. 
6. 
Recovery Qf 
clalro~p~i~. 
An amount paid or payable by 
Medicare or any other governmental program or any other insurance 
or self-insurance maintained in lieu of otherwise statutorily 
required insurance may not be made or recognized as a claim under 
such a policY--Q..r be recognized as or towards satisfaction of an 
applicable deductible or out-of-pocket maximum or be used to 
~duce the limits of benefits 
avaU~hle under the plan. 
The 
association has a cause of action against a covered person for 
the recovery of the amount of any benefits paid to the covered 
person that should not have been claimed or recognized as claims 
because of the provisions of this subsection or because the 
benefits 
are 
otherwise 
not 
covered. 
Benefits 
due 
from 
the 
association may be reduced or refused as a setoff against any 
amount recoverable under this subsection. 
§39l0. 
Eligibility for coverage 
1. 
Eligibi:tjJ;yL-----M»pJ.ic~t.j.on for GQverage. 
A resident is 
eligible for coverage under the plan if the resident provides 
evidence of rejection, 
a 
requirement of restrictive riders, 
a 
rate 
increase 
or 
a 
preexisting 
conditions 
limitation 
on 
a 
qualified plan, the effect of which is to substantially reduce 
coverage from that received by a person considered a standard 
risk by at least one member insurer within 6 months of the date 
of the certificate, or if the resident meets other eligibility 
requirements adopted by rule by the superintendent that are not 
• 
inconsistent with this chapter and that evidence that a person is 
unable to obtain coverage substantially similar to coverage that 
may be obtained by a person who is considered a standard risk. 
Rules adopted pursuant to this subsection are routine technical 
rules as defined in Title 5, chapter 375, subchapter 2-A. 
2. 
Change of domicile. 
The board shall develop standards 
for eligibility for coverage by the association for a natural 
person who changes domicile to this State and who at the time 
domicile 
is 
established 
in 
this 
State 
is 
insured 
by 
an 
organization similar to the association. 
The eligible maximum 
lifetime benefits for that covered person may not exceed the 
lifetime benefits available through the association less 
any 
benefits already received from 
a 
similar orggnization in the 
former domiciliary state. 
3. 
Eligibility 
without 
application. 
The 
board 
shall 
develop a list of medical or health conditions that make a person 
eligible for plan coverage without applying for health insurance 
under subsection 1. 
A person who can demonstrate the existence 
or history of 
any medical or health conditions on the list 
developed by the board is not required to provide the evidence 
specified in subsection 1. The board may amend the list from time 
to time as appropriate. 
4. 
Exclusions from eligibility. 
A person is not eligible 
for coverage under the plan if: 
A. 
The person has or obtains health insurance coverage 
substantially similar to or more comprehensive than a plan 
policy or is eligible to have such coverage if the person 
elects to obtain it, except that: 
( 1) 
A covered person may maintain other coverage for 
the 
period 
of 
time 
the 
person 
is 
satisfying 
a 
preexisting 
condition 
waiting 
period 
under 
a 
plan 
policy; and 
(2) 
A covered person may maintain plan coverage for 
the 
period 
of 
time 
the 
person 
is 
satisfying 
a 
preexisting 
condition 
waiting 
period 
under 
another 
heal th insurance policy intended to replace the plan 
policy; 
B. 
The person is eligible for employer sponsored health 
coverage, including continuation of group coverage as either 
an employee or a dependent; 
C. 
The 
person is 
determined eligible for 
health care 
benefits under the MaineCare program pursuant to Title 22; 
D. 
The person previously terminated plan coverage, unless 
months have elapsed since the person's last termination; 
or 
E. 
The person's premiums are paid for or reimbursed under 
any government-sponsored program or by any government agency 
or health care provider, except as an otherwise gualifying 
full-time employee, 
or dependent thereof, of a 
government 
agency or health care provider. 
5. 
Termination of coverage. 
The coverage of any person 
ceases: 
A. 
On the date a person is no longer a resident; 
• 
B. 
Upon the death of the covered person; 
C. 
On the date the covered person reguests that coverage 
~ 
D. 
On 
the date state law reguires cancellation of the 
policy; or 
E. 
At the option of the association, after the 2nd of 2 
successive inguiries made by the association concerning the 
person's eligibility or place of residence when the person 
has not replied within 90 days of either inguiry. 
The coverage of any person who ceases to meet the eligibility 
reguirements of this section may be terminated immediately. 
6. 
Unfair trade practice. 
It constitutes an unfa.ir trade 
practice 
for 
any 
insurer, 
producer, 
employer 
or 
rd-party 
administrator to refer an individual employee or a dependent of 
an individual employee to the association or to arrange for an 
individual employee or a dependent of an individual employee to 
apply to the plan for the purpose of separating such an employee 
or 
dependent 
from 
a 
group health benefits 
plan provided in 
connection with the employee's employment. 
§39ll. 
Actions against association or member insurers based upon 
joint or collective actions 
Participation 
in 
the 
association, 
the 
establisrunent 
of 
rates, 
forms 
or procedures or 
any other joint or collective 
action reguired by this chapter may not be the basis of any legal 
action or criminal or civil liability or penalty against the 
association or a member insurer. 
.. 
• 
,~ 8 
Sec. 13. Effective date. 
Those sections of this Act that repeal 
the 
Maine 
Revised 
Statutes, 
Title 
24-A, 
section 
2736-C, 
subsection 3, 
paragraphs A and C and that 'amend Title 24-A, 
section 2736-C, subsection 3, paragraph D and subsection 9 take 
effect October 1, 2005. 
SUMMARY 
This bill creates the Maine Health Insurance High-risk Pool 
Association for the individual health insurance market. 
It is 
based on a similar high-risk pool established by the State of New 
Hampshire. 
The 
purpose of the association is to spread the 
health care costs of high-risk individuals 
among all health 
insurers. The bill funds the high-risk pool through an assessment 
on insurers. 
An individual insured through the high-risk pool 
may be charged a premium of up to 150°-0 of the average premium 
rates charged by carriers for similar health insurance plans. 
Eligibility for 
the high-risk pool 
does not extend to those 
covered under a group health insurance policy. 
The bill also broadens the community rating laws to allow 
carriers to vary premiums on the basis of age within a maximum 
rate differential on a ratio of 4 to one and on the basis of 
health status and tobacco use within a maximum rate differential 
on a ratio of 1.5 to one. The bill also removes the guaranteed 
issuance 
requirement 
for 
individual 
health 
plans, 
effective 
October 1, 2005.