Notice of Changes to Alaska Statutes Pertaining to Insurance Law

BULLETIN B 00-06

To: All Licensees, Insurance Companies, Hospital or Medical Service Corporations,

Fraternal Benefit Societies, Multiple Employee Welfare Arrangements, and Health

Maintenance Organizations Transacting Insurance in the State of Alaska and Other

Interested Parties

Re: Notice of Changes to Alaska Statutes Pertaining to Insurance Law

This bulletin outlines the major changes made to Alaska insurance laws resulting from the 2000

session of the Alaska Legislature. Nine bills affecting the insurance market were passed by the

legislature and signed into law by the Governor. This bulletin is informational in nature and does

not supersede or even constitute an official interpretation of the statutory provisions in each of

the bills. Please review each of the bills carefully to assure your compliance with Alaska

insurance law. Contract changes necessary to comply with any statutory changes must be filed

with and approved by the division before the effective date of the changes.

Legislation Containing Statutory Changes That May Require

Amendments to Insurance Contracts

SB 177 – Insurance Trade Practices: Effective January 1, 2001

SB 177 expands consumer protection to insurance policyholders by amending the Unfair Trade

Practices Act in AS 21.36. It makes two significant changes to existing law:

1. It gives the division authority to take corrective action against a single unfair act

under the Unfair Claims Settlement Practices Act (AS 21.36.125). Before the

effective date of the SB 177 amendments, the division could not take corrective

action under the Act unless the insurer had engaged in an act or practice with such

frequency as to indicate a general business practice.

2. It adds a provision making it a violation for an insurer to deny an insurance claim

simply because a particular cause excluded from insurance coverage is in the

chain of events leading to a loss, if the excluded cause is secondary to a covered

dominant cause of the loss

Act unless the insurer had engaged in an act or practice with such

frequency as to indicate a general business practice.

2. It adds a provision making it a violation for an insurer to deny an insurance claim

simply because a particular cause excluded from insurance coverage is in the

chain of events leading to a loss, if the excluded cause is secondary to a covered

dominant cause of the loss.

HB 298 – Required Health Insurance Coverage for Diabetes: Effective July 27, 2000

HB 298 amends AS 21.42 to require health care insurers that offer health care insurance plans in

the state to provide coverage for outpatient medical nutrition therapy and self-management

training or education for diabetes, if prescribed by a health care provider. The bill also requires

that health care insurers provide coverage for the cost of treating diabetes, including medication,

equipment, and supplies, if the health care insurance plan includes coverage for pharmacy

services. Definitions, restrictions, limitations, and modifications pertaining to coverage of

diabetes are also included.

HB 416 – Prostate Cancer Screening: Effective August 29, 2000

HB 416 amends the existing prostate cancer screening coverage requirement in AS 21.42.395 to

reduce the ages at which annual prostate cancer screening tests must be covered under a health

care insurance plan.

HB 303 – Miscellaneous Insurance Provisions: Effective May 22, 2000, Except As Indicated

HB 303 amends Alaska law to

1. allow the director to collect fees electronically.

2. allow the director to adopt risk based capital instructions by order after an open

meeting.

3. clarify and update current statutes to reflect the adoption of revised national

accounting standards that become effective January 1, 2001; the changes to these

statutes are also effective January 1, 2001.

4. correct drafting errors relating to this state’s 1997 adoption of the Health

Insurance Portability and Accountability Act of 1996.

5

tal instructions by order after an open

meeting.

3. clarify and update current statutes to reflect the adoption of revised national

accounting standards that become effective January 1, 2001; the changes to these

statutes are also effective January 1, 2001.

4. correct drafting errors relating to this state’s 1997 adoption of the Health

Insurance Portability and Accountability Act of 1996.

5. add the following federal health care insurance mandates:

o Mandated coverage for reconstructive surgery following a mastectomy as

required under the Women’s Health and Cancer Rights Act of 1998. This mandate

is added in AS 21.42.400. The federal requirement became effective October 21,

1998.

o Guaranteed renewability of individual health care insurance policies as required

under the Health Insurance Portability and Accountability Act of 1996. This

mandate is added in AS 21.51.400. The federal requirement became effective on

July 1, 1997.

6. clarify certain coverage and marketing provisions in AS 21.56 relating to small employer

health insurance coverage, as follows:

o An insurer may not include employees or dependents who have similar existing

coverage in determining whether a defined minimum employee participation level

is met.

o An insurer must offer a plan to a small employer that covers all eligible

employees. But after this initial offer, the insurer may issue a health care

insurance plan that covers only those employees the employer selects to be

covered under the plan.

o An insurer may not directly or indirectly encourage or instruct a small employer

to not file an application for coverage with it or to seek coverage from another

insurer because of group size.

o An insurer may not directly or indirectly enter into a contract, agreement, or

arrangement with a licensee that provides for or results in compensation that

varies based on group size

der the plan.

o An insurer may not directly or indirectly encourage or instruct a small employer

to not file an application for coverage with it or to seek coverage from another

insurer because of group size.

o An insurer may not directly or indirectly enter into a contract, agreement, or

arrangement with a licensee that provides for or results in compensation that

varies based on group size.

HB 211 – Health Care Insurance: Managed Care Plans: Effective January 1, 2001

HB 211 creates a new chapter (7) in Title 21 (Alaska Insurance Code) to regulate managed care

insurance plans. There are 6 major sections covering managed care insurance plans:

1. AS 21.07.010 requires certain provisions to be included in a contract between a

provider and a managed care entity, which is defined to include an insurer, and

specifically disallows certain provisions.

2. AS 21.07.020 requires certain provisions to be included in a contract between a

managed care entity and the group, including provisions establishing internal and

external appeal processes.

3. AS 21.07.030 requires that a managed care entity provide a non-network provider

option to enrollees with any additional cost for such a provider to be paid by the

enrollees.

4. AS 21.07.040 states that an individual’s medical and financial information is

confidential unless the individual gives written consent or the information is

disclosed for certain stated purposes.

5. AS 21.07.050-070 establish standards for an external health care appeal process

and the qualifications of an external appeal agency, and limit the liability of an

external appeal agency.

6. AS 21.07.080 states that the chapter does not restrict or limit the right of a

managed care entity to include coverage for services of a religious nonmedical

provider.

HB 121 – Dental Care Insurance: Effective August 20, 2000

HB121 adds a new section to AS 21.42 that

1

peal process

and the qualifications of an external appeal agency, and limit the liability of an

external appeal agency.

6. AS 21.07.080 states that the chapter does not restrict or limit the right of a

managed care entity to include coverage for services of a religious nonmedical

provider.

HB 121 – Dental Care Insurance: Effective August 20, 2000

HB121 adds a new section to AS 21.42 that

1. prevents an insurer from including in a health care contract a prohibition against

an insured’s free choice of a dentist or a restriction against an insured’s right to

receive full information from a dentist regarding care or treatment options.

2. requires that, in a health care contract that allows treatment plan or utilization

review by the insurer, the review must be conducted by a dentist if a dental claim

is denied.

3. allows an insurer to reimburse an insured at a different rate when the insured uses

a non-network dentist, but requires that the covered expense for a non-network

dentist may not be less than that for a network dentist.

4. prohibits a dentist from waiving uncovered dental expenses for which an insured

has liability because the insured chose a non-network dentist.

Other Adopted Legislation Affecting the Insurance Market but Does Not Contain

Provisions That Will Require Amendments to Insurance Contracts

HB 398 – Life and Health Guaranty Association: Effective September 4, 2000

HB 398 amends the Alaska Life and Health Guaranty Association (ALHGA) statutes in

AS 21.79. The amendments make Alaska law consistent with the most recent National

Association of Insurance Commissioners model law. The amendments update and clarify

numerous provisions, including provisions relating to the treatment of guaranteed investment

contracts, other new products, and liability limits. A provision has been added that allows the

director to appoint two public members to the ALHGA board of directors

Alaska law consistent with the most recent National

Association of Insurance Commissioners model law. The amendments update and clarify

numerous provisions, including provisions relating to the treatment of guaranteed investment

contracts, other new products, and liability limits. A provision has been added that allows the

director to appoint two public members to the ALHGA board of directors. In general, the

changes give greater flexibility to the association in handling an impaired or insolvent life or

health insurance company.

HB – 310 Alaska Insurance Guaranty Association: Effective August 9, 2000

HB 310 amends the Alaska Insurance Guaranty Association Act (AIGA) statutes in AS 21.80.

The amendments make Alaska law consistent with the most recent National Association of

Insurance Commissioners model law as supported by the National Conference of Insurance

Guaranty Funds (NCIGF). Numerous provisions of existing law have been updated and clarified

by these amendments. A provision has been added that allows the director to appoint two public

members to the board of directors. In general, the changes give greater flexibility to the

association in handling an impaired or insolvent property or casualty insurance company.

HB 190 – Viatical Settlements: Effective April 15, 2000

HB 190 gives the Division of Insurance the authority to regulate the transaction of viatical

settlement contracts for the protection of viators, insureds, and insurers and the Division of

Banking, Securities, and Corporations the authority to regulate the transaction of viatical

settlement contracts primarily for the protection of investors. The Division of Banking,

Securities, and Corporations has adopted regulations to implement this new law and the Division

of Insurance is in the process of developing regulations to implement the provisions of this law,

including licensing standards for viatical settlement providers, representative, and brokers

nsaction of viatical

settlement contracts primarily for the protection of investors. The Division of Banking,

Securities, and Corporations has adopted regulations to implement this new law and the Division

of Insurance is in the process of developing regulations to implement the provisions of this law,

including licensing standards for viatical settlement providers, representative, and brokers.

HB 380 – Insurer Tax Credit for Gifts to the Fire Standards Council: Effective July 1, 2000

HB 380 gives an insurer premium tax credit if the insurer makes contributions to the Alaska Fire

Standards Council for fire services programs. The premium tax credit is given on insurance

premiums collected for coverage that includes losses due to fire. The amount of credit given is

50 percent of contributions up to $100,000 plus 100% of the next $100,000 of contributions up to

50 percent of the insurers tax liability.

Copies of the bills outlined above are available through the State of Alaska website at

http://www.legis.state.ak.us/basis/start.asp. If you have questions regarding the information

provided in this bulletin, please contact Katie Campbell at:

Alaska Division of Insurance

P.O. Box 110805

Juneau AK 99811-0805

(907) 465-4607 (phone)

(907) 465-3422 (fax)

Katie_Campbell@dced.state.ak.us (e-mail)

DATE: August 25, 2000

Robert A. Lohr

Director of Insurance