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AN ACT Relating to cancellation and nonrenewal of individual health insurance policies; adding a new section to chapter 48.20 RCW; adding a new section to chapter 48.44 RCW; and adding a new section to chapter 48.46 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. A new section is added to chapter 48.20 RCW to read as follows:

With respect to individual disability policies issued or renewed on or after July 1, 1994, that provide coverage against loss arising from medical, surgical, hospital, or emergency care services:

(1) Policies shall guarantee continuity of coverage. Such provision, which shall be included in every policy shall provide that:

(a) The policy may be canceled or nonrenewed without the prior written approval of the commissioner only for nonpayment of premium or as permitted under RCW 48.18.090; and

(b) The policy may be canceled or nonrenewed because of a change in the physical or mental condition or health of a covered person only with the prior written approval of the commissioner. Such approval shall be granted only when the insurer has discharged its obligation to continue coverage for such person by obtaining coverage with another insurer, health care service contractor, or health maintenance organization, which coverage is comparable in terms of premiums and benefits as defined by rule of the commissioner.

(2) It is an unfair practice for a disability insurer to modify the coverage provided or rates applying to an in-force disability insurance policy and to fail to make such modification in all such issued and outstanding policies.

(3) Subject to rules adopted by the commissioner, it is an unfair practice for a disability insurer to:

(a) Cease the sale of a policy form unless it has received prior written authorization from the commissioner and has offered all policyholders covered under such discontinued policy the opportunity to purchase equivalent coverage without health screening; or

(b) Engage in a practice which subjects policyholders to rate increases on discontinued policy forms unless such policyholders are offered the opportunity to purchase equivalent coverage without health screening.

The insurer may limit an offer of equivalent coverage without health screening to a period not less than thirty days from the date the offer is first made.

NEW SECTION. Sec. 2. A new section is added to chapter 48.44 RCW to read as follows:

With respect to all individual health care service contracts issued or renewed on or after July 1, 1994, except limited health care service contracts as defined in RCW 48.44.035:

(1) Contracts shall guarantee continuity of coverage. Such provision, which shall be included in every contract shall provide that:

(a) The contract may be canceled or nonrenewed without the prior written approval of the commissioner only for nonpayment of premiums, for violation of published policies of the contractor which have been approved by the commissioner, for persons who are entitled to become eligible for medicare benefits and fail to subscribe to a medicare supplement plan offered by the contractor, for failure of such subscriber to pay any deductible or copayment amount owed to the contractor and not the provider of health care services, or for a material breach of the contract; and

(b) The contract may be canceled or nonrenewed because of a change in the physical or mental condition or health of a covered person only with the prior written approval of the commissioner. Such approval shall be granted only when the contractor has discharged its obligation to continue coverage for such person by obtaining coverage with another insurer, health care service contractor, or health maintenance organization, which coverage is comparable in terms of premiums and benefits as defined by rule of the commissioner.

(2) It is an unfair practice for a contractor to modify the coverage provided or rates applying to an in-force contract and to fail to make such modification in all such issued and outstanding contracts.

(3) Subject to rules adopted by the commissioner, it is an unfair practice for a health care service contractor to:

(a) Cease the sale of a contract form unless it has received prior written authorization from the commissioner and has offered all subscribers covered under such discontinued contract the opportunity to purchase equivalent coverage without health screening; or

(b) Engage in a practice which subjects subscribers to rate increases on discontinued contract forms unless such subscribers are offered the opportunity to purchase equivalent coverage without health screening.

The health care service contractor may limit an offer of equivalent coverage without health screening to a period not less than thirty days from the date the offer is first made.

NEW SECTION. Sec. 3. A new section is added to chapter 48.46 RCW to read as follows:

With respect to all individual health maintenance agreements issued or renewed on or after July 1, 1994, and in addition to the restrictions and limitations contained in RCW 48.46.060(4):

(1) Agreements shall guarantee continuity of coverage. Such provision, which shall be included in every agreement shall provide that the agreement may be canceled or nonrenewed because of a change in the physical or mental condition or health of a covered person only with the prior written approval of the commissioner. Such approval shall be granted only when the organization has discharged its obligation to continue coverage for such person by obtaining coverage with another insurer, health care service contractor, or health maintenance organization, which coverage is comparable in terms of premiums and benefits as defined by rule of the commissioner.

(2) It is an unfair practice for an organization to modify the coverage provided or rates applying to an in-force agreement and to fail to make such modification in all such issued and outstanding agreements.

(3) Subject to rules adopted by the commissioner, it is an unfair practice for a health maintenance organization to:

(a) Cease the sale of an agreement form unless it has received prior written authorization from the commissioner and has offered all enrollees covered under such discontinued agreement the opportunity to purchase equivalent coverage without health screening; or

(b) Engage in a practice which subjects enrollees to rate increases on discontinued agreement forms unless such enrollees are offered the opportunity to purchase equivalent coverage without health screening.

The health maintenance organization may limit an offer of equivalent coverage without health screening to a period not less than thirty days from the date the offer is first made.