Original Notice.

     Preproposal statement of inquiry was filed as WSR 12-08-029.

     Title of Rule and Other Identifying Information: Reinsurance program.

     Hearing Location(s): Office of the Insurance Commissioner, Training Room T-120, 5000 Capitol Way South, Olympia, WA 98504, on January 22, 2013, at 10:00 a.m.

     Date of Intended Adoption: February 6, 2013.

     Submit Written Comments to: Meg Jones, P.O. Box 40258, Olympia, WA 98504, e-mail rulescoordinator@oic.wa.gov, fax (360) 586-3109, by January 21, 2013.

     Assistance for Persons with Disabilities: Contact Lori Villaflores by January 20, 2013, TTY (360) 586-0241 or (360) 725-7087.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: RCW 48.43.720 directs the commissioner to establish the state's reinsurance program by rule. This proposed rule accomplishes that directive.

     Reasons Supporting Proposal: The commissioner worked with an advisory group of carriers to review options for the reinsurance program prior to developing this proposed rule. The proposed rule represents a consensus of the advisor group, which used voluntarily data submitted from the carriers to develop the proposed rule.

     Statutory Authority for Adoption: RCW 48.02.060, 48.43.720.

     Statute Being Implemented: RCW 48.43.720.

     Rule is necessary because of federal law, Pub. L. 111-148, as amended (2010).

     Name of Proponent: Office of the insurance commissioner, governmental.

     Name of Agency Personnel Responsible for Drafting: Meg Jones, 302 Syd Snyder Boulevard, Olympia, WA, (360) 725-7170; Implementation: Barb Flye, 302 Syd Snyder Boulevard, Olympia, WA, (360) 725-7043; and Enforcement: Carol Sureau, 5000 Capitol Boulevard South, Olympia, WA, (360) 725-7050.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. None of the affected entities constitutes a small business.

     A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Meg Jones, P.O. Box 40258, Olympia, WA 98502, phone (360) 725-7170, fax (360) 586-3109, e-mail rulescoordinator@oic.wa.gov.

December 19, 2013 [2012]

Mike Watson

Chief Deputy

Insurance Commissioner

     (2) The U.S. Department of Health and Human Services (HHS) will operate the transitional health plan reinsurance program for the state of Washington. The program ceases operation on June 30, 2017 for payment of claims incurred through December 31, 2016.

     (3) Contributing entities are not required to remit reinsurance contributions for the following types of coverage:

     (a) Coverage only for accident, or disability income insurance, or any combination thereof;

     (b) Coverage issued as a supplement to liability insurance;

     (c) Liability insurance, including general liability insurance and automobile liability insurance;

     (d) Workers' compensation or similar insurance;

     (e) Automobile medical payment insurance;

     (f) Credit-only insurance;

     (g) Coverage for on-site medical clinics;

     (h) Limited scope dental or vision benefits;

     (i) Benefits for long-term care, nursing home care, home health care, community-based care or any combination thereof;

     (j) benefits provided under a health flexible spending arrangement as defined in Internal Revenue Code section 106 (c)(2) ("Health FSA") if other group health plan coverage, not limited to excepted benefits, is made available for the year to the class of participants by reason of their employment, and the Health FSA is structured so that the maximum benefit payable to any participant in the class for a year cannot exceed two times the participant's salary reduction election under the arrangement for the year (or, if greater, cannot exceed $500 plus the amount of the participant's salary reduction election). For this purpose, any amount that an employee can elect to receive as taxable income but elects to apply to the Health FSA is considered a salary reduction election (regardless of whether the amount is characterized as salary or as a credit under the Health FSA);

     (k) Coverage for a specified disease or illness, if offered as independent, noncoordinated benefits;

     (l) Hospital indemnity or other fixed indemnity insurance if offered as independent, noncoordinated benefits;

     (m) Medicare supplemental health insurance, and similar supplemental coverage provided to coverage under a group health plan, provided such coverage is offered as a separate insurance policy;

     (n) Other similar insurance coverage under which benefits for medical care are secondary or incidental to other insurance benefits, or that qualify as HIPAA-excepted benefits;

     (o) Medicare advantage/Medicaid, or any federal coverage program except multistate OPM plans;

     (p) Washington State Health Insurance Pool and the Preexisting Condition Insurance Plan - Washington.

     (4) A carrier must report to the commissioner the contribution payments made to HHS under the program, and identify as part of its rate filing for each product the estimated reinsurance payment amounts for each plan associated with the product for the prior plan or policy year.

     (5) A carrier must notify the commissioner of the method elected to count its covered lives for purposes of calculating its per capita contribution rate.

     (6) This rule expires September 1, 2017.

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