MURIELBOWSER
MAYOR
February8,2023
TheHonorablePhilMendelson,Chairman
CounciloftheDistrictofColumbia
JohnA.WilsonBuilding
1350PennsylvaniaAvenue,NW,Suite504
Washington,DC20004
DearChairmanMendelson:
EnclosedforconsiderationandenactmentbytheCounciloftheDistrictofColumbiaisabill
entitled“LifeandHealthInsuranceGuarantyAssociationAmendmentActof2023”(“Bill”).
ThepurposeoftheBilltoamendtheLifeandHealthInsuranceGuarantyAssociationActof
1992(“Act”)toaddhealthmaintenanceorganizations(“HMOs”)asmembersoftheDistrictof
ColumbiaLifeandHealthGuarantyAssociation(“Association”),tomakelifeinsurerssubjectto
assessmentsrelatingtolong-termcareinsurance,andtorepealtheinsolvencyprovisioninthe
HealthMaintenanceOrganizationActof1996.
TheBillalsoexcludeMedicaidbenefits,whicharecoveredbythefederalgovernment,and
certainstructuredsettlementannuities,clarifiescoverageforlong-termcarepolicyandcertificate
holders,increasestheBoardsizefromnolessthan5tonolessthan7membersandfromno
morethan9tonomorethan11members,authorizestheAssociationtofileactuarilyjustified
rateorpremiumincreaseswhennecessaryandauthorizedbylaw,clarifiestheBoard's
assessmentauthoritytomakelifeandhealthinsurerssubjectto50%eachoftheassessment
needstocovertheinsolvencyofalong-termcareinsurer,andrepealsthenowunnecessary
insolvencyprotectionprovisionsundertheHealthMaintenanceOrganizationActof1996.
Theseamendments,particularlytheamendmentstoaddHMOsasmembersoftheAssociation
andtomakebothlifeandhealthinsurerssubjecttoassessmentsforinsolventlong-termcare
insurers,arecritical.First,HMOandfeeforserviceinsuranceplanshavebecomedirect
competitorsinthattheybothservetheDistrict’smarketforcomprehensivehealthbenefitplans.
Assuch,toensuretheDistrict’scapacityneeds,allhealthinsurersmarketinghealthbenefit
plans,includingHMOs,shouldbesubjecttoanassessmentbytheAssociationintheeventofan
insolventhealthinsurerratherthanonlythesmallhandfulofHMOsthataresubjecttoan
assessmentundertheHMOAct.
Second,atpresent,theActonlyimposesassessmentsonhealthinsurersintheeventofan
insolvencyofalong-termcareinsurer.However,sincetheDistrict’sadoptionofthatact,the
long-termcaremarkethasevolvedandnowlifeinsurerswriteasubstantialamountoflong-term
carecoverage.Thus,toequitablyallocateassessmentsinamannerthatreflectsthecurrent
marketconditions,theamendmentwillmakehealthandlifeinsurersassessablefor50%eachof
theexpensesassociatedwithaninsolventlong-termcareinsurer.
TurgetheCounciltotakepromptandfavorableactionontheBill.
Sincerely,
furig!Bowser
Encldgures
Seoaordsnaun—
Il
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YW!La
ChairmanPhilMendelson
attherequestoftheMayor
ABILL
INTHECOUNCILOFTHEDISTRICTOFCOLUMBIA
ToamendtheLifeandHealthInsuranceGuarantyAssociationActof1992toaddhealth
maintenanceorganizationsasmemberinsurers,tomakelifeinsurerssubjectto
assessmentsrelatingtolong-termcareinsurance,tomodifythesizeparameters
fortheBoardofDirectorsoftheLifeandHealthInsuranceGuaranty
Association,toauthorizetheLifeandHealthInsuranceGuarantyAssociationto
filecertainactuarilyjustifiedrateorpremiumincreases,andtoamendthe
HealthMaintenanceOrganizationActof1996byrepealingitsinsolvency
provision.
BEITENACTEDBYTHECOUNCILOFTHEDISTRICTOFCOLUMBIA,
Thatthisactmaybecitedasthe“LifeandHealthInsuranceGuarantyAssociation
AmendmentActof2023”
Sec.2.TheLifeandHealthInsuranceGuarantyAssociationActof1992,
effectiveJuly22,1992(D.C.Law9-129;D.C.OfficialCode§31-5401etseq.),is
amendedasfollows:
(a)Section2(D.C.OfficialCode§31-5401)isamendedasfollows:
(1)Anewparagraph(2A-i)isaddedtoreadasfollows:
“(2A-i)“Board”orBoardofDirectors”meanstheBoardofDirectorsof
theAssociation.”.
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(2)Anewparagraph(4B)isaddedtoreadasfollows:
“(4B)(A)“Healthbenefitplan”meansanyhospitalormedicalexpense
policyorcertificate,orhealthmaintenanceorganizationsubscribercontractoranyother
similarhealthcontract.
“(B)Theterm“healthbenefitplan”doesnotinclude:
“(i)Accidentonlyinsurance;
“(ii)Creditinsurance;
“(iii)Dentalonlyinsurance;
“(iv)Visiononlyinsurance;
“(v)Medicaresupplementinsurance;
(vi)Benefitsforlong-termcare,homehealthcare,
community-basedcare,oranycombinationthereof;
“(vii)Disabilityincomeinsurance;
““(vili)Coverageforon-sitemedicalclinics;or
“(ix)Specifieddisease,hospitalconfinementindemnity,or
limitedbenefithealthinsuranceifthetypesofcoveragedonotprovidecoordinationof
benefitsandareprovidedunderseparatepoliciesorcontracts.”.
(3)Paragraph(8)isamendedtoreadasfollows:
“(8)(A)“Memberinsurer”means
“(i)Anyinsurerorhealthmaintenanceorganization
licensedorholdingacertificateofauthorityintheDistrictofColumbiatosellanykind
ofinsuranceorhealthmaintenanceorganizationbusinessforwhichcoverageisprovided
undersection3oftheact; 61
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2B
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B
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“(ii)Anyinsurerorhealthmaintenanceorganizationwhose
licenseorcertificateofauthorityintheDistricthasbeensuspended,revoked,not
renewed,orvoluntarilywithdrawn;and
“(iii)GroupHospitalandMedicalServices,Inc.
“(B)Theterm“memberinsurer”doesnotinclude:
“(i)Afraternalbenefitsociety;
“(ii)Amandatorystatepoolingplan;
“(iii)Amutualassessmentcompanyoranyentitythat
operatesonanassessmentbasis;
“(iv)Ariskretentiongroup;
“(v)Aninsuranceexchange;
“(vi)Anorganizationthathasacertificateolicense
limitedtotheissuanceofcharitablegiftannuities;or
“(vii)Anyentitysimilartoanyoftheabove.”.
(b)Section3(D.C.OfficialCode§31-5402)isamendedasfollows:
(1)Subsection(a)(1)isamendedtoreadasfollows:
“(a)(1)Personswho,regardlessofwheretheyreside(exceptfornonresident
certificateholdersundergrouppoliciesorcontracts),arethebeneficiaries,assignees,or
payees,includinghealthcareprovidersrenderingservicescoveredunderhealthinsurance
policiesorcertificates,ofthepersonscoveredunderparagraph(2)ofthissubsection;”.
(2)Subsection(b)isamendedasfollows:
(A)Paragraph(1)isamendedtoreadasfollows:
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“(1)Coverageshallbeprovidedtothepersonsspecifiedinsubsection(a)
ofthissectionforpoliciesorcontractsofdirect,non-grouplifeinsurance,health
insurance(whichforpurposesofthisactshallincludehealthmaintenanceorganization
subscribercontractsandcertificates)issuedbyamemberinsurer,annuitiesfor
certificatesunderdirectgrouppoliciesorcontractsissuedbyamemberinsurer,andfor
supplementalcontractsissuedbyamemberinsurertoanyoftheforegoing,exceptas
limitedbythisact.Annuitycontractsandcertificatesundergroupannuitycontracts
includeallocatedfundingagreements,structuredsettlementannuities,lotterycontracts,
andanyimmediateordeferredannuitycontracts.”.
(B)Paragraph(2)isamendedasfollows:
(i)Subparagraph(K)isamendedbystrikingthephrase“;
or”andinsertingasemicoloninitsplace.
(ii)Subparagraph(L)isamendedtoreadasfollows:
“(L)Apolicyorcontractprovidinganyhospital,medical,
prescriptiondrug,orotherhealthcarebenefitspursuanttoTitleIVoftheBalanced
BudgetActof1997,approvedAugust11,1997(111Stat.275;42U.S.C.§1395w-21et
seq.)andTitleIoftheMedicarePrescriptionDrug,Improvement,andModernizationAct
of2003,approvedDecember8,2003(117Stat.2066;42U.S.C.§1395w-L01etseq.)
(commonlyknownas“MedicarePartsCandD”),orTitleXIXoftheSocialSecurity
Act,approvedFebruary4,2009(123Stat.91;42U.S.C.§1396etseq.)(commonly
knownasMedicaid)oranyregulationsissuedpursuanttothosetitles.”
(iii)Anewsubparagraph(M)isaddedtoreadasfollows:
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“(M)Structuredsettlementannuitybenefitstowhichapayee(or
beneficiary)hastransferredhisorherrightsinastructuredsettlementfactoring
transactionasdefinedinsection115(a)oftheVictimsofTerrorismTaxReliefActof
2001,approvedJanuary23,2002(115Stat.2436;26U.S.C.5891(c)(3)(A))regardlessof
whetherthetransactionoccurredbeforeoraftersuchsectionbecameeffective.”.
(C)Anewparagraph(3)isaddedtoreadasfollows:
“(3)Theexclusionfromcoveragereferencedinparagraph(2)(C)ofthis,
subsectionshallnotapplytoanyportionofapolicyorcontract,includingarider,that
provideslong-termcareoranyotherhealthinsurancebenefits.”
(3)Subsection(c)(2)isamendedasfollows:
(A)Subparagraph(A)(ii)isamendedasfollows:
(i)Sub-sub-subparagraph(I)isamendedbystrikingthephrase
“basichospital,medical,andsurgicalinsuranceandmajormedicalinsurance”and
insertingthephrase“healthbenefitplan”initsplace.
(ii)Sub-sub-subparagraph(IV)isamendedbystrikingthephrase
“basichospital,medical,andsurgicalinsuranceandmajormedicalinsurance”and
insertingthephrase“healthbenefitplans”initsplace.
(B)Subparagraph(A-ii)(1)isamendedbystrikingthephrase“basic
hospital,medical,andsurgicalinsuranceandmajormedicalinsurance”andinsertingthe
phrase“healthbenefitplans”initsplace.
(C)Anewsubparagraph(C)isaddedtoreadasfollows:
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“(C)Forthepurposesofthisact,benefitsprovidedbyalong-termcare
ridertoalifeinsurancepolicyorannuitycontractshallbeconsideredthesametypeof
benefitsasthebaselifeinsurancepolicyorannuitycontracttowhichitrelates.”
(c)Section5(a)(1)(DCOfficialCode§31-5404(a)(1))isamendedtoreadas
follows:
“(a)(1)TheBoardshallconsistofnofewerthan7andnomorethan11member
insurersservingtermsasestablishedintheplanofoperations.”.
(d)Section6(r)(D.C.OfficialCode§31-5405(1))isamendedasfollows:
(1)Paragraph(6)isamendedbystrikingthephrase“;and”andinsertinga
semicoloninitsplace.
(2)Anewparagraph(6A)isaddedtoreadasfollows
“(6A)Unlessprohibitedbylaw,inaccordancewiththetermsand
conditionsofthepolicyorcontract,fileforactuarilyjustifiedrateorpremiumincreases
foranypolicyorcontractforwhichitprovidescoverageunderthisact;and”
(c)Section7(c)(D.C.OfficialCode§31-5406(c))isamendedasfollows:
(1)Paragraph(1)isamendedtoreadasfollows:
“(1)TheamountofanyClassAassessmentshallbedeterminedbythe
Boardandmaybeauthorizedandcalledonaprorataornon-proratabasis.IftheClass
Aassessmentiscalledonaproratabasis,theBoardmayprovidethatitbecredited
againstfutureClassBassessments.TheamountofanyClassBassessment,exceptfor
assessmentsrelatedtolong-termcareinsurance,shallbeallocatedforassessment
purposesbetweentheaccountsandamongthesubaccountsofthelifeinsuranceand
annuityaccountpursuanttoanallocationformulawhichmaybebasedonthepremiums 149
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orreservesoftheimpairedorinsolventinsurer,oranyotherstandarddeemedbythe
Boardinitssolediscretiontobefairandreasonable.”.
(2)Paragraph(2)isamendedtoreadasfollows:
“(2)TheamountoftheClassBassessmentforlong-termcareinsurance
writtenbytheimpairedorinsolventinsurershallbeallocatedaccordingtoa
methodologyincludedintheplanofoperationsandapprovedbytheCommissioner.The
methodologyshallprovidefor50%oftheassessmenttobeallocatedtoaccidentand
healthmemberinsurersand50%tobeallocatedtolifeandannuitymemberinsurers.”.
Sec.3.Section32(D.C.OfficialCode§31-3430)oftheHealthMaintenance
OrganizationActof1996,effectiveApril9,1997(D.C.Law11-235;D.C.OfficialCode
§31-3430),isrepealed.
Sec.4.Fiscalimpactstatement.
TheCounciladoptsthefiscalimpactstatementoftheChiefFinancialOfficeras
thefiscalimpactstatementrequiredbysection4aoftheGeneralLegislativeProcedures
Actof1975,approvedOctober16,2006(120Stat.2038;D.C.OfficialCode§1-
301.47a),
Sec.5.Effectivedate.
ThisactshalltakeeffectfollowingapprovalbytheMayor(orintheeventofveto
bytheMayor,actionbytheCounciltooverridetheveto),anda30-dayperiodof
Congressionalreviewasprovidedinsection602(c)(1)oftheDistrictofColumbiaHome
RuleAct,approvedDecember24,1973(87Stat.813;D.C.Code§1-206(c)(1)),and
publicationintheDistrictofColumbiaRegister.
GOVERNMENTOFTHEDISTRICTOFCOLUMBIA
OfficeoftheAttorneyGeneral
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[sinksef
LegalCounselDivision
MEMORANDUM
TO: TommyWells
Director
OfficeofPolicyandLegislativeAffairs
FROM: MeganD.Browder
DeputyAttorneyGeneral
LegalCounselDivision
DATE: January23,2023
RE: LegalSufficiencyCertificationofDraftLegislation,the“LifeandHealthInsurance
GuarantyAssociationAmendmentActof2023”andTransmittalLetter
(AE-22-165-B)
ThisistoCertifythatthisoricenasreviewedtheabove-referenceddraft
legislationandfoundittobelegallysufficient.Ifyouhaveanyquestions,pleasedonothesitateto
callmeat(202)724-5524.
Meganinh
MeganD.Browder
1350PennsylvaniaAvenue,N.W.,Suite409,Washington,D.C,20004Phone(202)724-5524Email:megan.browder@de.gov GovernmentoftheDistrictofColumbia
OfficeoftheChiefFinancialOfficer
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GlenLee
ChiefFinancialOfficer
MEI
TO: TheHonorablePhilMendelson
Chairman,CounciloftheDistrictofColumbia
FROM: GlenLee 2
ChiefFinancialOfficerJb
DATE: February6,2023
SUBJECT: FiscalImpactStatement-LifeandHealthInsuranceGuaranty
AssociationAmendmentActof2023
REFERENCE: DraftBillasprovidedtotheOfficeofRevenueAnalysisonJanuary20,
2023
Conclusion
Fundsaresufficientinthefiscalyear2023throughfiscalyear2026budgetandfinancialplanto
implementthebill.
Background
‘TheLifeandHealthInsuranceGuarantyAssociationActof19921guaranteesmostlifeandhealth
insuranceproductsthataresoldtoresidentsoftheDistrictofColumbia.InsurerscoveredbytheDC
LifeandHealthInsuranceGuarantyAssociation(“Association”)payanassessmentwhenamember
insurerbecomesinsolventsothattheAssociationcanassumeresponsibilityfortheinsolventplan.
ThebillconformsAssociationcoverageandpoliciestothecurrentinsurancemarket.First,thebill
requiresallHealthMaintenanceOrganizations(HMOs)tobemembers.Second,thebillapplies
assessmentsforinsolventlong-termcarepoliciestobothhealthandlifeinsurers(dividedequally).
Bothhealthinsurersandlifeinsurerswritelong-termcarecoverage;however,undercurrentlaw
onlyhealthinsurerspaytheassessmentforaninsolventlong-termcareinsurer.Third,thebillmakes
technicalchangestotheoperationoftheAssociation.ThechangesincoverageofHMOproductsand
assessmentsforlong-termcarepoliciesisconsistentwiththemodellegislationapprovedbythe
1EffectiveJuly22,1992(D.C.Law9-129;D.C.OfficialCode§31-5401etseq).
1350PennsylvaniaAvenue,NW,Suite203,Washington,DC20004(202)727-2476
www.cfodegov
‘TheHonorablePhilMendelson
FIS:“LifeandHealthInsuranceGuarantyAssoci
ofRevenueAnalysisonJanuary20,2023
‘ionAmendmentActof2023,"DraftasprovidedtotheOffice
NationalAssociationofInsuranceCommissioners(NAIC)forlifeandhealthinsuranceguaranty
associationlaw.
Currentlaw3onlycoversasmallshareoftheDistrict'sHMOsandhassimilarprovisionsfor
assessmentstocoverinsolventHMOinsurers.ThebillrequiresallHMOsofferingcoveragetoDC
residentstobecoveredbytheAssociationandrepealsduplicativeHMOinsolvencyprovisions.The
billbroadensthescopeoftheAssociationtocovercurrenthealthinsuranceofferings,whereHMOs
competewithfee-for-serviceinsurerstooffercomprehensivemedicalinsurancecoveragetoDistrict
residents.
Finally,thebillmakesoperationalchangestotheAssociation,whichincludeallowingtheAssociation
tofileforactuariallyjustifiedrateandpremiumincreasesforpoliciesthattheymanage;clarifying
theproductscoveredbytheAssociation;andincreasingthenumberofAssociationboardmembers
(frombetween5and9memberstobetween7and11members).
FinancialPlanImpact
FundsaresufficientintheFY2023throughFY2026budgetandfinancialplantoimplementthebill.
ThebillexpandsthescopeofinsuranceproductscoveredbytheAssociation,changesthe
assessmentsforinsolventlong-termcareinsurers,andmakesadministrativechangestothe
operationoftheAssociation.ClaimsrelatedtoinsolvencyaremanagedbytheAssociation,whichis
fundedbyassessmentstomemberinsurancecarriers,sothebillwillhavenoimpactontheDistrict's
budgetorfinancialplan.
2LifeandHealthInsuranceGuarantyAssociationModelAct,NAICModelLaws,Regulations,Guidelines,and
OtherResources--1*Quarter2018.MDL-520(naic.org)
>TheHealthMaintenanceOrganizationActof1996,effectiveApril9,1997(D.C.Law11-235;D.C.Official
Code§31-3430).
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