An Act To Reduce the Cost of Health Insurance
Maine Legislature, Session 124, LD 1091
Committee: Insurance and Financial Services
Sponsors: McKANE
Amends: 24-A MRSA §423-E, 24-A MRSA §2736-C, 24-A MRSA §2, 24-A MRSA §2849-B

Legislative Document 
No. 1091 
H.P.753 
House of Represeritatives, March 19. 2009 
An Act To Reduce the Cost of Health Insurance 
Reference to the Committee on Insurance and Financial Services suggested and ordered. 
printed. 
Presented by Representative McKANE of Newcastle. 
Cosponson;:d by Senator SMITH of Piscataquis and 
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1?1~m!LC~{ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: BEAUDETTE of Biddeford, CURTIS of Madison, D.OSTIE of Sabattus, 
PILON of Sa co, RICHARDSON of Wan' en, SCHATZ of Blue Hill, Senators: PERRY of 
Penobscot, TRAHAN of Lincoln. 
~ Primeu on rt:cycled pnper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 5 .MRSA §12004-G, sub-§14-F, as.enacted byPL2007, c. 629, Pt. A, §1, 
is repealed. 
Sec. 2. 24-A MRSA §423-E, as enacted by PL 2007, c. 629, Pt. A, §2, is amended 
to read: 
§423-E. Report to Legislature 
The .' superintendent shall report each year by March 1 st to the joint standing 
committee of the Legislature having jurisdiction over insurance matters on the'impact of 
any changes to the rating provisions in section 2736-C, the status of the Maine Individual 
Reinsurance Association established pursuant to' chapter 54 and the impact on rates 
related to reimbursemerits paid by the Maine Individual Reinsurance Association, the 
total number of individuals enrolled in any health insurance product regulated by the 
bureau and the number of previously uninsured or underinsured individuals who have 
enrolled during that year in any health insurance product regulated by the bureau, which 
information is collected pursuant to rules adopted under this section. Along with the 
annual report, the superintendant may submit any proposed legislation for .consideration 
by the joint standing committee. 
Sec. 3. 24-A MRSA §2736-C, sub;'§2, CUB, as amended by PL 2007, c. 629, Pt. 
A, §3, is further amended to read: 
B. 
A carrier may not vary the premium rate due to the gender, health status, 
occupation or industry, claims experience or policy duration of the individual. A 
carrier may vary the premium rate based on health status, age and geographic area 
only as permitted in paragraph D. 
Sec. 4. 24-A MRS A §2736-C, sub':'§2, ~C, as amended by PL 2001, c. 410, PL 
A, § 1 and affected by § 1 0, is further ame'nded to read: 
C. 
A carrier may vary the' premium rate due to smoking status and family 
membership. 
The superintendent may . adopt rules setting furth appropriate 
methodologies regarding rate discounts based on smoking status. Rules adopted 
pursuant to this paragraph are routine technical rules as. defined in Title 5, chapter 
375, subchapter II A. 
Sec. 5. 24-A MRSA §2736-C, suh-§2, ~, as amended by PL 2007, c. 629, Pt. 
A, §4, is further amended to read: 
D. A carrier may vary the premium rate due to age, health status and geographic area 
in accordance with the limitations set out in this paragraph. 
(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%. 
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(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 premiurp rate may not deviate above or below the community rate 
filed by the carrier by more than 33%. 
(3) For all policies, contracts.or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State between July 15, 1995 and Affie 
30, 2009 March 31, 2010, 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 rene\ved in this State on or after JulY'1,2009, for each 
health benefit plan offered by a carrier, the highest premium rate for each rating 
tier may not e)CGeed 2.5 times the premium rate that could be charged to an, 
eligible individual with the lovlestpremium rate for that rating tier in a given 
rating period. For purposes of tIlls. subparagraph, "rating tier" means each 
category of individual or family composition for which a carrier charges separate 
rates;. 
(a) In determining the rating factor for geographic area pursuant to this 
subparagraph, the ra.tio betv/een the highest and lmvest rating factor used by a 
carrier for geographic area may not exceed 1.5 and the ratio behveen highest 
and lowest combined rating factors for age and geographic area may not 
. e)CGeed 2.5. 
(b) In determining rating factors for age and gt;lographic area pursuant to. this 
subparagraph, no resulting' rates, taking into account the savings resulting 
from the reinsurance program created by chapter 54, may exceed the rates 
that 'Nould have resulted from using projected claims ande)cpenses and the 
rating factors applicable prior to July 1, 2009, as determined without taking 
into account. the saving$ resulting from the Maine Individual Reinsurance 
Association established in chapter 54. 
. (c) The superintendent shall adopt rules setting forth appropriate 
methodologies regarding determination of rating factors pursuant to this 
subparagraph. Rules adopted pursuant to this division are routine tech.'1ical 
rules as defined in Title 5, chapter 375, subchapter 2 A. 
(5) For all policies, contracts or certificates. that are executed, delivered, issued 
. for delivery, continued or renewed in this State on or after April 1, 2010, the 
premium rate may not deviate above or below the community rate filed by the. 
carrier by more than 40%. 
(6) A variation in rate is riot permitted on the basis of changes in health status 
after a policy, contract or certificate is issued or renewed. 
Sec. 6. 24-A MRSA §2736-C, sub-§2, ~G, as enacted by PL 2007, c. 629, Pt. A, 
§5, is repealed. 
. 
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Sec. 7. 24-A MRSA §2736-C, sub-§2, ~H, as enacted by PL 2007, c: 629, Pt. A, 
§6, is repealed. 
Sec. 8. 24-A MRSA §2736-C, sub-§2, <TIl is enacted to read: 
1. A carrier that offered individual health plans prior to April], 20 I 0 may close its 
iridividual book of busiiless sold prior to April ], 20 10 and may establish a separate 
tate for individuals applying for coverage ui1der an individual health plan on or after 
April], 2010. 
. Sec. 9. 24-A MRSA §2736-C, sub-§3, as COlTected byRR 2001, c. 1, §30, is 
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amended to read: 
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3. Guaranteed issuance and guaranteed renewal. Carriers providing individual 
health plans must offer all health plans approved by the Maine High-risk Reinsurance' 
Pool Association pursuant to section 3958, subsection 1 as a condition of offering 
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individual health plans in this State. Carriers must meet the following requirements on' 
issuance and renewal. 
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A. 
Coverage issued through the Maine High-risk Reinsurance Pool Association 
established pursuant to chapter 54-A must be guaranteed·to all residents of this State 
other than those eligible without paying a premium for Medicare Pmi A, On or after 
'January 1,1998, such coverage must be guaranteed to all legally domiciled federally 
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eligible individuals, as defined in section 2848, regardless of the length of time they 
have been legally domiciled in this State. Except for federally eligible individuals, 
such coverage need not be issued to an individual whose coverage was terminated for 
nonpayment of premiums during the previous 91 days 01: for fraud or intentional 
rmsrepresentation of matelial fact during the previous ·12 months. When a managed 
care plan, as defined by section 430 I-A, provides coverage a carrier may: . 
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(l) Deny coverage to individuals who neither live nor reside withiri the approved 
service area of the plan for at least 6 months of each year; and 
(2) 
Deny <;:overage to individuals. if the carrier has demonstrated to the 
superintendent's satisfaction that: 
(a) The carrier does not have the capacity to deliver services adequately to 
additional enrollees. within all or a designated part of its service area because 
of its obligations to existing enrollees; and 
(b) The carrier is applying this provision uniformly to individuals and groups 
without regard to any health-related factor. 
A carrier tluit denies coverage in accordance with this paragraph may not enroll 
individuals residing within the area subject to denial of coverage or groups' or 
subgroups within that area for a period of 180' days after the date of the first 
denial of coverage. 
B.' Renewal is guaranteed, pursuant to section 2850-B. 
C. 
A carrier is exempt from the guaranteed issuance requirements of paragraph A 
provided that the following requirements are met. 
(I) The carrier does not issue or deliver any new individual health plans on or 
after the effective date of tIns section; 
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(2) If any individual health plans that were not issued on a guaranteed renewable 
basis are renewed on or after December 1, 1993, all such policies -must be 
. renewed by the carrier and renewal must be guaranteed after the first such 
renewal date; and 
(3) The carrier complies with the.rating practices requirements of subsection 2. 
D. 
Notwithstanding' paragraph A, 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. 
£. 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. 10. 24-A MRSA §2S0S-B, sub-§2,,.s, as amended by PL 1993, c. 477, Pt. 
B, § 1 and affected by Pt. F, § 1, is further amended to read: 
B. 
A carrier may not vary the premium rate due to the gender, health status, claims 
experience or policy duration of the eligible group or members of the group. . 
Sec. 11. 24-A MRSA §2S0S-B, sub-§2, c;rD, as amended by PL 2001, c. 410, Pt. 
A, §4 and affected by § 1 0, is further amended to read:· 
D. 
A can'ier may vary the premium rate due to age, health status, occupation or 
industry and geographic area only under the following schedule and within the Fsted 
percentage bands. 
(l) For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, coi1tinued or renewed in tIllS State between July 15, 1993 and July 
14, 1994, the premium rate may not deviate above or below the community rat<:: 
filed by the carrier by morethan 50%. 
(2) For all policies, contracts or certificates that are executed, delivered, issued 
for delivery,continued or renewed in tIllS 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%. 
(3) For ali policies, contracts or certificates that are ex~cuted, delivered~ issued 
fOl' delivery, continued or renewed in this State afref between July 15, 1995 and 
March 31, 2010, the premium rate may not deviate above or below the 
community rate filed by the carrier by more than 20%, except as provided in 
paragraph D-1. 
(4) For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State on or after April 1, 2010, the 
premium rate may not deviate above or below the community rate filed by the 
carrier by more than 40%. 
. 
.(5) A variation in rate is notperrnitted on the basis of changes in health status 
. after a policy, contract or certificate is issued or renewed . 
Sec. 12. 24-.-\ :\IRS.-\ §2808-B, sub-§2, IlflD-I, as amended by PL 2001, c. 410, 
PI. Al §5and affecled by SIO. is further amended to read: 
0-1. 
With respect to eligible groups that employed, on average, 25 to 50 eligible 
employees in the preceding calendar year, a carrier may vary the premium rate due to 
age, health status, occupation or industry and geographic area only under the 
following.schedule and within the listed percentage bands. 
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(1) For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State in 1998, the premium rate may 
not deviate above or below the corirrnunity rate filed by the carrier by more than 
40%. 
(2) For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State in 1999, the premium rate may 
not deviate above or below the community rate filed by the carrier by more than 
30%. 
(3) For all policies, contracts or certificates that are executed, delivered, issued 
for delivery, continued or renewed in this State afteF between January 1, 2000 
and March 31, 2010, 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 on or after April 1, 2010, the 
premium rate may not deviate above or below the community rate filed by the 
carrier by more than 40%. 
(5) 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. 13. 24-'A MRS A §2808-lB, sub~§4, IlflA, as corrected by RR 2001, c. 1,§32, 
is amended to read: 
A. 
Carders offering small group health plans rriust offer any health plans issued 
through the Maine High-risk Reinsurance Pool Association established pursuant to 
chapter 54-A. Any small group health plan offered to any eligible group or subgroup 
must be offered to all eligible groups that meet the carrier's minimum participation· 
requirements, which may not exceed 75%, to all eligible employees and their 
dependents iIi those groups. In determining compliance with minimuIl). participation 
requirements, eligible employees and their dependents who have existing health care 
coverage may not be considered in the calculation. If an employee declines coverage 
because the employee has other coverage, any dependents of that employee who are . 
not eligible under the employee's other coverage are eligible for coverage under. the 
small group health plan. A carrier may deny coverage under a managed care plan, as 
defined by section 4301~A: 
(1) To employers who have no employees who live, reside or work within the 
approved service area of the 'plan; and 
(2) 
To employers if the carrier has demonstrated to the superintendent's.· 
satisfaction that: 
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(a) The carrier does ~othave the capacity to deliver ·services adequately to 
additional enrollees withi~ all or a designated part of its service area because 
of its obligations to existing enrollees; and. 
(b) The carrier is applying this provision uniformly to individuals and groups 
without regard to any health-related factor. 
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A carrier that denies coverage in accordance with this subparagraph may not 
enroll individuals residing within the area subject to denial of coverage, or groups 
or subgroups within that area for a period of 180 days after the date of the first 
denial of coverage. 
Sec. 14. 24-A MRS A §2808-B, sub-§9, as enacted by PL 1993, c. 325, § 1, is 
repealed. 
Sec. 15. 24-A. MRS A §2848, sub-§I-B, ~A, as amended by PL 1999, c. 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 "non electing 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 ~r 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 
slate 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, 10 United States Code, Chapter 55; 
(6) A medical care program of the federal Indian Health Care Improvement Act, 
. 25 United States Code, Section 1601 or of a tribal organization; 
(7) A state health benefits risk pool; 
(8) 
A health plan offered under the federal Employees Health Benefits 
Amendments Act,S United States Code, Chapter 89; 
(9) 
A public health plan as defined in federal regulations authorized by the 
federal Public Health Service Act, Section 2701(c)(1)(I), as amended by Public 
Law 104-191; ef 
(10) A health benefit plan under Section 5(e) of the Peace Corps Act, 22 United 
States Code, Section 2504(e)~: or .. 
(11) . Insurance coverage offered· by the Maine High-risk Reinsurance Pool 
Association pursuant to chapter 54-A. 
Sec. 16. 24-A MRSA §2849-B, sub-§2, ~A, as amended by PL 2007, c. 199, Pt. 
D, §4, is further amended to read: 
A. 
That person was covered under an individual, ~ group or blanket contract or 
policy issued by a nonprofit hospital or medical service organization, insurer, or 
health maintenance organization or was covered under an uninsured employee benefit 
plan that provides payment for health services received by employees and their 
dependents ora governmental program, including, but not limited to, those listed in 
section 2848, subsection l':'B, paragraph A, subparagraphs (3) to fl-Gj Ul}' 
For 
purposes of tlus section, the individual, group or blanket policy under which the 
person is seeking coverage is the "succeeding policy." The group-; or blanket er 
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individual contract or policy, uninsured employee benefit plan or governmental 
program that previously covered the person is the "prior contraCt or policy"; and 
Sec. 17. 24-A MRSA c. 54, as amended, is repealed. 
Sec. 18. 24-A MRSAc. 54-A is enacted to read: 
CHAPTER. 54-A 
MAINE HIGH-RISK REINSURANCE ]POOL ASSOCIATION 
§3951. Short title 
This .chapter may be known and cited as "the Maine High~risk Reinsurance Pool 
Association Act." 
§3952. Definitions 
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As used in thls chapter, unless the oontext otherwise indicates, the following terms 
have the following meanings. 
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1. 
Association. 
"Association" means the Maine High-risk Rein·surance Pool 
Association established in section 3953. 
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 ai1d 
Accountability Act of 1996; or . 
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C. 
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. 
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4. Dependent. "Dependent" means a resident spouse, a domestic partner as defined 
in section 2832-A, subsection 1, a resident unmarried child under 19 years of age, a child 
who is a student under 23 years of age and who is financially dependent upon the parent 
or a child of any age who is disabled and d'ependent upon the parent. 
5. Health maintenance organization. "Health maintenance organization" means an 
organization authorized under chapter 56 to .operate a health maintenance organization in 
this State. 
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6. Insurer. "Insurer" means an entity that is authorized to write medical insurance 
or that provides medical insurance in this State. For the purposes of this chapter, "insurer" 
includes an insurance company, a nonprofit hospital and medical service organization, a 
fratemal benefit society, a health maintenance organization, a self-insurance arrangement 
.' that provides health care benefits in this State to the extent allowed under the federal 
. Employee Retirement Income Security Act of 1974, a 3rd-party administrator, a multiple-
employer welfare arrangement, a reinsurer that reinsures health insurance in this State or 
the Dirigo Health Program established in chapter 87 or ·any other state~sponsored health 
benefit program whether fully insured orself-funded. 
. ....... . 
7. Medical insurance. "Medicalinsurance"means a hospital and medical expens~­
incurred policy, nonprofit hospital and medical service plan, health maintenance 
organization subscriber contract or other health care plan or arrangement that pays for or 
furnishes medical or health care services whether by insurance or otherwise, 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 arising 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 Parts A and 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. 
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10. Producer. "Producer" means a person who is licensed to sell health insurance in 
this State. 
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11. 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; 
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B. 
Is lega]Jv domiciled in this Slate on the date of application to the plan and is 
eligible tor enrollment in the risk pool under this chapter as a result of the federal 
Health Insurance P0l1ability and Accountability Act of 1996; or 
C. Is legally domiciled in this State on the date of application to the plan and has 
been ce11ified as eligibleJor federal trade adjustrnent assistance or for pension benefit 
guarantee corporation assistance, as provided by the federal T~ade Adjustment 
Assistance Reforin Act of 2002. 
12. Reinsurer. "Reinsurer" means an insurer from whom a person providing health 
insurance for a resident procures insurance for itselfwith the insurer with respect to all or 
part of the medical insurance risk of the person. "Reinsurer" includes an insurer that 
provides employee benefits excess insurance. 
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13. Third-party administrator. "Third-party administrator" means any. entity that 
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is paying or processing medical insurance claims for any resident. 
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§3953. Maine High-risk Reinsurance Pool Association 
1. Risk pool established. The Maine High:'Risk reinsurance 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 12 months or is actively marketing .a 
medical. insurance policy in this State must participate in'the association. The Dirigo 
Health Program established in chapter 87 and any other state-sponsored health benefit 
program shall also participate in the association. 
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2. Board of directors. The association is governed by a board of directors . 
. A. The board consists of 11 members appointed as described in this paragraph: 
(1 Y Six members appointed by the superintendent: 2 members chosen from the 
general public and who are not associated with the medical profession, a hospital 
or an insurer; 2 members who represent medical 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; and 
(2) Five members appointed by the member insurers, at least, 2 of whom are 
domestic irisurers and at least one of whom is a 3rd-party administrator. 
B. Members ofthe board serve for 3-year terms. 
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 requirements of this chapter and submit its articles, bylaws and operating. rules to the 
superintendent for 'approval. If the board fails to adopt the plan of operation arid suitable 
articles and bylaws within 90 days after the appointment of the board, the superintendent 
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shall adopt rules to effectuate the fequirementsof this chalJter and those rules remain in 
effect until superseded b\' a plan of operation and aliicles and bylaws submitted by the 
board and apptovedbv the superintendent. Rules adopted by the superintendent pursuant 
to this subsection are routine teclmical rules as defined in Title 5, chapter 375. subchapter 
2-A. 
4. Immunity. A board member is not liable and is immune from suit at law or 
equity for any conduct perfomled in good faith that is within the scope of the board's 
jurisdictiori. 
§3954. 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 its employees; a member insurer or its agents, employees or producers; or the 
superintendent for any action or omission in the perfonnarice of powers and duties 
pursuant to this chapter. 
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2. 
Indemnification. 
The board may provide in its bylaws' or rules for 
indenmification of, and legal representation for, its members and employees. 
§3955. Duties and powers of association 
1. Duties. The association shall: 
A. 
Establish administrative and accounting procedures for the operation of the 
. association; 
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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 3956; 
D. Collect the assessments provided in section 3957. The 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 3953, subsection 3.-. 
In addition to the collection of such assessments, the association shaH 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 $500' per insurer for all such assessments. 
Assessments are due and payable within 30 days of receipt of the assessment notice 
by the insurer;' 
E. Establish procedures for the handling and accounting of pool assets; 
F. Comply with all reserve requirements and solvency requirements applicable to 
insurers that offer fully insured products in the event that the association offers a self-
funded health plan; and 
G .. Develop and implement a program to publicize the existence of the plan, the 
eligibility requirements Jorthe 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 proVISIOns and 
purposes of this chapter and may, with the approval of the superintendent, enter into 
contracts with. similar· organizations of other states for the joint performance of 
common administrative functions or with persons or other organizations for the 
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 mistake of fact or law or to recover other amounts 
due the association; 
E. Define the health benefit plans for which reinsurance will be provided under this 
chapter; 
F. Appoint appropriate legal, actuarial and other coillrnittees as necessary to provide 
technical assistance in the operation of the plan, policy and other contract design and, 
any other function within the authority of the association; 
G. Borrow money to effect the purposes 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; 
H. Establish rules; conditions and procedures for reinsuring risks of member insurers 
desiring to issue in their own names plan coverage to individuals otherWise eligible 
for plan coverage; 
. 
I. 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; and 
J. Apply for funds or grants from public or private sources, including federal grants, ' 
provided to qualified high-risk pools. 
3. 
Additional duties and powers. 
The superintendent may, by rule, establish 
additional powers and duties of the board and may adopt. such rules as are necessary 'and 
proper to implement this chapter. Rules adopted pursuant to this subsection are routine 
technical rules as defined in Title 5, chapter 375, subchapter 2-A. 
4. Reviewfor solvency. The superintende~t shall review the association at least 
every 3 years to determine its solvency. If the superintendent determines that the funds of 
the association are insufficient to support the need f6r reinsurance; the superintendent 
may order the association to increase its assessments. If the' superintendent determines 
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that the funds of the assoCiation are insufficient. the superintendent may order the 
. association to charQe additional assessments. 
5. 
Annual report. 
The aSSOC18tlOn shall report annually to the joint standing 
committee of the Legislature having 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. 
§3956. Selection of plan administrator 
1. Selection of plan administrator. The board shall select an insurer or 3rd-party 
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administrator through a competitive bidding process to administer the plan. 
2. Contract with plan administrator. The plan administrator selected pursuant to 
subsection 1 serves for a period of 3 years pursuant to a contract with the association. At 
least one year prior to the expiration of that 3-year period of service, the board shall invite 
all insurers, including the current plan administrator, to subinit 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 6. months prior to the ending ·of the 3-year 
. period. 
. 
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3. 
Duties of plan administrator. 
The plan administrator selected pursuant to 
subsection 1 shall: 
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A. Perform all administrative 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 selling 
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. 
Submit regular· reports to the board regarding the operation of the plan. The 
frequency, content and foim of the reports must be as determined by the board; 
D. Following the close of each calendar year, determine net ·premiums, reinsurance 
. premiums less 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 
E .. Pay reinsurance amounts as provided for in the plan of operation. 
4. Payment to plan administrator. The 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 portion 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. 
. 
§3957. 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 at such a 
. 
time and for such amounts as the board finds necessary. Assessments· are due not less 
than 30 .days after written notice to the member insurers and accrue interest at 12% per. 
annum on and after the due date. 
2. Maximum assessment. Each .insurer must be assessed by the board an amount 
not to exceed $4 per covered person insured or reinsured by each insurer per month for 
medical insurance: An insurer may· not be assessed on· policies or contracts insuring 
federal or state employees.. 
. 
3. Determination of asse·ssment. 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 require each insurer that obtains excess or stop loss insurance to 
include in its count of covered persons all indIviduals whose coverage is insured, in 
whole or in part, through excess.or stop loss coverage. The board shall allow a reinsurer 
to exclude from its number of covered persons those who have been counted by the 
primary insurer or by the primary reinsurer or primary excess or stop loss insurer for the 
purpose of determining its assessment under this subsection. The board may verify each 
insurer's assessment based on annual statements· and other reports determined to be 
necessary by the board. The board may use any reasoriable method· of estimating the 
number of covered persons of an insurer if the specific nUlnber is unknown. 
4. Assessments to cover net losses. The board shall assess member insurers at such 
a time and for such amounts as the board finds necessary to cover any net loss in 
accordance with this subsection. 
A. Prior to April 1 st of each year, the association shall determine and report to the 
superintendent the association's net loss for the previous calendar year, including 
administrative expenses and· incurred losses for the year, taking into account 
investment income and other appropriate· gains and losses and an estimate of the 
assessments· needed to fund the loss incurred by the association in the previous 
.33 
calendar year.. 
B. Individual assessments of each insurer are. determined by multiplying net losses, if 
net earnings are negative, by a fraction, the numerator of which is the insurer's total 
premiums earned in the preceding calendar year from all health benefit plans, 
including excess or stop loss coverage, and the denominator of which is the total 
premiums earned in the preceding calendar year from all health 'benefit plans. 
C. The association shall impose a penalty of Interest for late payment of assessments. -
5. Deferral of assessment. An insurer may apply to the superintendent for a deferral 
of all or part of an assessment imposed by the association under this section. 
The 
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superintendent may defer all' or paJi of the assessment if the superintendent detem1ines 
that the payment of the assessment would place the insurer in a financially impaired 
condition. If all or part of the assessment is defened, the amount deferred must be 
assessed against other insurers in a propOliionate manner consistent with this section. 
The .insurer that receives a deferral remains liable to the association for the amount 
deferred and is prohibited from reinsuring any person through the association until such 
time as the insurer pays the assessments. 
6. 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 inter'est 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. 
7. Failure to pay 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 altemative, tJ1e superintendent may 
levy a penalty on any 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. 
§3958. Requirements for coverage 
1. 
Approved coverage. 
The association shall approve a choice of 2 or more 
coverage options for which reinsurance is available through the plan. The requirements 
of this plan become effective January 1, 2010. Policies approved by the association must 
be available for sale beginning July 1, 2010. At least one coverage option must be a 
standardized health plan as defined in Bureau of Insurance Rule Chapter 750. 
Any 
person whose medical insurance coverage. under an individual or small group health plan 
'is involuntarily terminated for any reason other than nonpayment of premiums 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 entire period 'of coverage, the 
effective date of the coverage is the date of termination of the previous coverage. 
2. 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 section 2808-B and are 
subject to aimroval by the superintendent. 
C. Standard risk rates for coverage issued by the association must be established by 
the association, subject to approval by the superintendent, 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 125% to a maximum of 150% of the weighted average of rates charged 
by those insurers and health maintenance organizations with individuals enrolled in 
similar medical insurance plans. 
' 
.. Compliance with state' law. Products offered by the association must comply 
with all relevant requirements of this Title applicable to individual health insurance 
policies, including requirements for mandated coverage for specific health services, for 
specific diseases and for certain providers of health serVices. 
§3959. Reinsurance; premium rates 
1. Reinsurance amOunt. Any insurer offering the coverage options approved by the 
. 
association pursuant to section 3958, subsection 1 must be reinsured by the association to 
the level of coverage provided in this subsection and is liable to the association for the 
reinsurance premium rate established in accordance with subsection 2. 
A. The association may not reimburse a reinsuring insurer with respect to claims of a 
reinsured person until the insurer has incurred an initial' level of claims for that person 
of $5,000 for covered benefits in a calendar year. In addition, the reinsuring insurer 
is responsible for 10% of the next $25,000 of claims paid during a calendar year. The 
association shall reimburse reinsuring insurers for claims paid in excess of $25,000. 
The association may annually adjust the initialleveI of claims and the maximum limit 
to be retained by the reinsuring insurer to reflect increases in costs and utilization 
within the standard market for health plans within the State. The adjustments may 
not be less than the annual change in the medical component of the Consumer Price 
Index unless the superintendent approves a lower adjustment factor as requested by 
the association. 
B. 
A reinsuring insurer shall apply all managed care, utilization review, case 
management, preferred provider arrangements, claims processing and other methods 
of openition without regard to, whether claims paid for coverage are reinsured under 
this subsection. 
2. Premium rates. The. association, as part of the plan of operation, shall establish a 
methodology for determining premium rates to be charged reinsuring insurers to reinsure 
persons eligible for coverage under this chapter. The methodology must include a system 
for classification of persons eligible for coverage that reflects the 'types of case 
characteristics used by insurers for individual health plans pursuant to section 2736-C. 
The methodology must provide for the development of base reinsurance premium rates, 
subject to approval of the superintendent, set at levels that reasonably approximate gross 
.premiums charged for individual health plans with similar benefits tei the coverage 
options approved by the association pursuant to section 3958, subsection 1 and that are 
adjusted to reflect retention levels required under this Title.' The association shall 
periodically review the methodology established under this subsection and may make 
changes to the methodology as needed. with the approval of the superintendent. The 
association may consider adjustments to the premium rates charged for reinsurance to 
. reflect the use of effective cost containment and managed care arrangements, by a 
reinsuring insurer. 
§3960. Eligibility for coverage 
1. Eligibility; application for coverage. 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 
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which is to substantially reduce coverage from that received ·by a person considered a 
standard lisle 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 
supeiintendent that are not inconsistent with this chapter and that evidence that a person 
is unable to obtain covenige substantially' similar to that which' iTlay be obtained by a 
person who is considered a standard risk. Rules adopted pursuant to tills subsection are 
routine tedmical 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 tins 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 
received from a similar organization in the fonTler domiciliary state. 
3. Eligibility without application. The board shall develop a list of medical or 
11ealth conditions for which a person is 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 may not be 
required to provide the evidence specified in subseCtion 1. The board may amend the list 
from time to time as appropriate. 
if: 
4. Exclusions from eligibility. A person is not eligible for coverage under the plan 
A. The person has or obtains health insurance coverage substantially similar to or 
more comprehensive than a plan policy or would be eligible.to have coverage if the 
person elected 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 health 
insurance policy intended to replace the plan policy; 
, 
B. The person is determined eligible for health care benefits under the MaineCare 
program pursuant to Title 22; 
,C. The person previously terminated plan coverage, unless 12 months have elapsed 
, since the person's last termination; 
D. 
The person has met the lifetime maximum benefit amount under the plan of 
$3,000,000; 
E. The person is an inmate or resident of a public institution: or 
F. 
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, qualifying 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 perso~ is no longer a resident; 
B. Upon the death of the covered person; 
C. On the date state law requires cancellation of the policy; or 
D.· At the option of the association, 30 days after the association makes any inquiry 
concerning the personis eligibility or place of residence to which the person does not 
~. 
The coverage of any person who ceases to meet the eligibility requirements of this section 
may be terminated inunediately. 
6. Unfair trade practice. It constitutes· an unfair trade practice for any insurer, 
producer, employer or 3rd-party administrator to refer an mdividualemployee or a 
dependent of an individual employee to the association, or to arrange for an individual 
13· 
employee or a dependentof an individual employee fo apply to the plan, for the purpose 
14· 
of separating such an employee or dependent from a group health benefits plan provided 
in conneCtion with the employee's employment. 
§3961. 
Actions against association or member insurers based upon joint or· 
. collective actions 
Participation in the association, tile establishment of rates, forms or procedures or any 
other joint or collective action required 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. 
§3962. Reimbursement of member insurer 
. 
1. 
Reimbursement. 
A member insurer may seek reimbursement· from the 
. 23 
association and the association shall reimburse the member insurer to the extent claims 
made by a covered person after April 1, 2010 exceed premiums paid on a calendar-year 
basis by the covered person to the member insurer for a covered person who me~ts the 
criteria in this subsection: 
A. . The member insurer sold an individual health plan to the covered person between 
December 1, 1993 and April 1, 2010 and the policy that was sold has been 
continuously renewed by the covered person and the carrier has closed its book of 
business for individual health plans sold between December 1, 1993 and April 1, 
2010. 
B. The member insurer is able to determine through the use of individual health 
statements, claims history or any reasonable means that at the time the person applied 
for insurance coverage with the member insurer, the covered person was diagnosed 
with one of the following medical conditions: acquired inunune deficiency syndrome, 
angina pectoris, ascites, chemical dependency cirrhosis of the liver, coronary 
occlusion, cystic fibrosis, Friedreich's ataxia, hemophilia, Hodgkin's disease, 
Huntington's chorea, juvenile diabetes, leukemia, metastatic cancer, motor or sensory 
aphasia, mUltiple sclerosis, muscular dystrophy, myasthenia .gravis, myotonia, heart 
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disease causing: open hean SUHrerv. Parkinson's disease. polycystic kidney. psychotic 
"disorders. guadripleg:ia. stroke. syring:omvelia or Wilson's disease. 
2. 
Rules." The superintendent" may adopt rules to facilitate payment to a "carrier 
pursuant to this section." Rules adopted pursuant to this subsectiOli are routine technical. 
rules as defined in Title 5, chapter 375, subchapter 2-A. " 
Sec. 19. Maine High-risk Reinsurance Pool Association staggered terms. 
Pursuant to the Maine Revised Statutes, Title 24-A, section 3953, of the menibers initially 
appointed by the Superintendent of Insurance, 2 members serve for a term of one year, 2 
members for a tenn of 2 years and 2 members for a tenn of 3 years and of those members 
initially appointed by the member insurers, one member serves for a tenn of one 'year, 
one member serves for a tenn of 2 years and 2 members serve for a tenn of 3 years. The 
appointing authority shall designate the period of service of each initial appointee at the 
. " 
" 
time of appointment. 
SUMMARY 
This bill repeals the individual health insurance provisions relating to rating and 
reinsurance enacted as part of Public Law 2007, chapter 629 because the funding sources 
for those provisions were repealed by people's veto in November 2008. In their place, 
the bill makes the following changes to the individual and small group health insurance 
laws: 
1. It amends guaranteed issuance and conununity rating for individual and small 
group health plans; and 
2. It creates the Maine High-risk Reinsurance Pool Association. The purpose of the 
association is to provide reinsurance to spread the cost of higp-risk individuals and small 
groups among all health insurers. The bill funds the high:-risk reinsurance pool through an 
assessment on insurers.