AN ACT Relating to health insurance coverage access; amending RCW 48.41.090, 48.14.022, and 82.04.4329; and adding a new section to chapter 48.41 RCW.

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

NEW SECTION. Sec. 1. A new section is added to chapter 48.41 RCW to read as follows:

(1) Beginning July 1, 1990, the board shall provide for the assessment of employers based on the number of full time equivalent employees and for the assessment of health insurers, health care service contractors, and health maintenance organizations based on the number of individual health insurance policies issued.

(2) The board shall adopt rules defining a full time equivalent employee and establishing a procedure for determining the number of employees for each employer.

(3) The board shall determine annually the assessment for each employer in the state and each health insurer, health care service contractor, and health maintenance organization. Assessments shall be paid by the employer and by the health insurer, health care service contractor, and health maintenance organization.

(4) Assessments shall be based on:

(a) The experience of the pool for the previous year;

(b) The pool expenses of administration and incurred losses for the previous year, taking into account investment income and other appropriate gains and losses; and

(5) As used in this section, "employer" means any public or private entity, including the state and its political subdivisions, which employs one or more employees, and includes sole proprietors.

Sec. 2. Section 9, chapter 431, Laws of 1987 and RCW 48.41.090 are each amended to read as follows:

(1) Following the close of each calendar year, the pool administrator shall determine the net premium (premiums less administrative expense allowances), the pool expenses of administration, and incurred losses for the year, taking into account investment income and other appropriate gains and losses.

(2)(a) Each member's proportion of participation in the pool shall be determined annually by the board based on annual statements and other reports deemed necessary by the board and filed by the member with the commissioner; and shall be determined by multiplying the total cost of pool operation by a fraction, the numerator of which equals that member's total number of resident insured persons, including spouse and dependents under the member's health plan in the state during the preceding calendar year, and the denominator of which equals the total number of resident insured persons including spouses and dependents insured under all health plans in the state by pool members.

(b) Any deficit incurred by the pool shall be recouped by assessments among members apportioned under this subsection pursuant to the formula set forth by the board among members.

(3) The board may abate or defer, in whole or in part, the assessment of a member if, in the opinion of the board, payment of the assessment would endanger the ability of the member to fulfill its contractual obligations. If an assessment against a member is abated or deferred in whole or in part, the amount by which such assessment is abated or deferred may be assessed against the other members in a manner consistent with the basis for assessments set forth in subsection (2) of this section. The member receiving such abatement or deferment shall remain liable to the pool for the deficiency for four years.

(4) If assessments exceed actual losses and administrative expenses of the pool, the excess shall be held at interest and used by the board to offset future losses or to reduce pool premiums. As used in this subsection, "future losses" includes reserves for incurred but not reported claims.

(5) No assessments may be made under this section on or after July 1, 1990.

Sec. 3. Section 23, chapter 431, Laws of 1987 and RCW 48.14.022 are each amended to read as follows:

(1) The taxes imposed in RCW 48.14.020 do not apply to premiums collected or received for policies of insurance issued under RCW 48.41.010 through 48.41.210.

(2) In computing tax due under RCW 48.14.020, there may be deducted from taxable premiums the amount of any assessment against the taxpayer under RCW 48.41.010 through 48.41.210 and section 1 of this 1988 act. Any portion of the deduction allowed in this section which cannot be deducted in a tax year without reducing taxable premiums below zero may be carried forward and deducted in successive years until the deduction is exhausted.

Sec. 4. Section 24, chapter 431, Laws of 1987 and RCW 82.04.4329 are each amended to read as follows:

In computing tax there may be deducted from the measure of tax the amount of any assessment against the taxpayer under RCW 48.41.010 through 48.41.210 and section 1 of this 1988 act. Any portion of the deduction allowed in this section which cannot be deducted in a tax year without reducing taxable premiums below zero may be carried forward and deducted in successive years until the deduction is exhausted. Amounts deducted under RCW 48.14.022 may not be deducted under this section.