Legislative Report

February 28, 2014 BOSE PUBLIC AFFAIRS GROUP INSURANCE BULLETIN XIV, NUMBER 8

In This Issue

GENERAL ASSEMBLY OVERVIEW

Business personal property tax remained the hot topic at the Statehouse this week. The House Ways and Means Committee and the Senate Tax and Fiscal Policy advanced two separate measures Tuesday that would cut the state's corporate income tax and the state's business equipment tax in certain cases. Neither plan will come close to the complete elimination of Indiana's business personal property tax that Republican Gov. Mike Pence originally sought when the 2014 session began. Both proposals include a so-called super abatement, which would allow county leaders to exempt companies from the tax for up to 20 years. Counties can currently exempt businesses from the tax for up to 10 years, and often do so as a means to lure development. The House and the Senate have not included any "replacement revenue" which local leaders have sought as a backfill from the state to cover losses they would take as a result. A bill to exempt the State of Indiana from common core educational standards passed the House this week. SB 91 would set a July 1 deadline for the State Board of Education to draft new standards outlining what students should be learning in each grade. The bill has support from many Republican lawmakers eager to have Indiana educators create standards specific to the state. Thursday of this week marked the House second reading deadline. The final day for Senate Bills to pass the House is scheduled for Monday. Old Man Winter is threatening to rear its head again as Indianapolis is set to receive a snow storm over the weekend. Due to this forecast, the Senate has announced they will move their third reading deadline to Wednesday of next week. It was previously scheduled for Tuesday; however, Senate leaders wanted to ensure an extra day was available to finish voting on House Bills in the Senate. The final day of session is Friday, March 14 when the legislature must adjourn Sine Die by midnight. There remains a possibility that legislative business might conclude before midnight on March 14. This will be dependent upon how conference committees proceed in the coming weeks.

General Assembly Overview Unclaimed Life Insurance Benefits IDOI Bill Tax Credits Electronic Delivery of Insurance Documents Motor Vehicle Financial Responsibility Pollution Exclusion Workers Comp Abortion Bill Health Finance to Study Hearing Aid Mandate High Cost Study Bill Dies Biosimilar Bill Passes House

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UNCLAIMED LIFE INSURANCE BENEFITS

SB 220, authored by Sen. Travis Holdman (R), requires insurers to use the SSAs Death Master File or a database as inclusive to help with the accurate administration of unclaimed death benefits. The bill was amended by Rep. Lehman on second reading in the House to remove the prospective language so that the bill applies to all in-force policies and contracts. As amended, the bill passed the House 94-0. It now goes back to the Senate for concurrence or dissent. We anticipate that the author and Senate will concur with the change made in the House.

IDOI BILL
HB 1206, authored by House Insurance Chairman Matt Lehman (R), does the following: (1) removes a requirement for life insurers to submit individual investments to the Department of Insurance; (2) removes a requirement that a foreign or alien insurer submit an application for admission to do business in Indiana in duplicate; (3) changes from March 15 to July 1 of each year the due date for certain insurance holding company filings; (4) adopts ORSA; (5) repeals a provision requiring the Commissioner to examine and publish a foreign or alien insurers annual condensed statement of assets and liabilities; (6) specifies requirements for motor vehicle service contracts; (7) removes IC 27-1-13-16(c) regarding the requirement to stamp envelope if residential policy coverage has been reduced, restricted or removed; and (8) requires a $2,500 registration fee for captive insurers doing business in Indiana. The bill was engrossed without amendment on second reading in the Senate yesterday. It will be on third reading on Monday.

TAX CREDITS LIKELY HEADED TO CONFERENCE COMMITTEE

SB 367, originally filed as a property tax bill, was amended late in the Senate committee process and included a sunset on numerous tax credits; including, a sunset of the following: Indiana Life and Health Guaranty Association Tax Credit (12/31/17), Indiana Insurance Guaranty Association Tax Credit (12/31/17) and the Indiana Comprehensive Health Insurance Association Tax Credit (1/1/17). The bill was amended in Ways and Means earlier this week and removed all the tax credit sunsets, including ours. However, HB 1020, which also contains a sunset of numerous tax credits (including the insurance guaranty fund tax credits with a sunset of 2020), continues to move through the process. Yesterday, HB 1020 passed the Senate by a vote of 41-8. Additionally, Sen.

Hershman also filed an amendment to add tax credit sunset language to HB 1266 with a sunset date of 2022. That bill remains on second reading in the Senate. We (and others affected by the tax credit sunset language) have been repeatedly told that the credits will not be sunset or repealed and that instead all of the credits will be studied over the next several years. However, we continue to convey the impact on the industry if these tax credits are repealed at any time.

ELECTRONIC DELIVERY OF INSURANCE NOTICES AND DOCUMENTS

HB 1058 (Rep. Peggy Mayfield) provides for the electronic delivery of insurance notices and documents instead of other modes of delivery otherwise required for such notices and documents. The bill requires a recipient's consent to electronic delivery and a method to withdraw consent. It also includes provisions regarding electronic posting of documents on an insurers website. The bill was engrossed on second reading in the Senate yesterday. It will be eligible for third reading on Monday.

MOTOR VEHICLE FINANCIAL RESPONSIBILITY

HEA 1059 (Rep. Matt Lehman) makes various changes to the motor vehicle financial responsibility law, including the: (1) definition of "registration" to include the license plate issued in connection with the registration of a vehicle; (2) requirement of proof of financial responsibility and reinstatement fees; (3) suspension of a registration as a consequence of operation of the vehicle without financial responsibility in effect; and (4) requirement of proof of future financial responsibility for five years related to operating a vehicle without financial responsibility in effect. The introduced version of this bill was prepared by the interim study committee on insurance. The bill passed the Senate by a vote of 44-3 and is now on its way to the Governors office for consideration.

POLLUTION EXCLUSION
HB 1241, authored by Rep. Martin Carbaugh (R), is a resurrection of HB 1269 from the 2013 session, which clarifies when environmental coverage is excluded from a commercial general liability insurance policy. Amendments were adopted on second reading in the House which include additional consumer notification provisions as well as language that would apply the bill prospectively. The bill received a hearing yesterday in the Senate Insurance Committee and, although receiving support from the Chair and Vice-Chair of the Committee, the bill was defeated 6-3. Several committee members expressed concern over how to define

pollutant and that it would interfere with insurers and policyholders right to contract.

WORKERS COMP
SB 294 (an encore to HEA 1320 from last year) contains more restrictive language relative to repackaged drugs, clarification with respect to the definition of a medical service provider, and prohibition of double billing for implants. The bill passed out of the House Employment and Labor committee this week. It was then amended on the House floor by Rep. Lehman to remove language requiring company officers to be covered by workers comp. As amended, the bill passed the House by a vote of 65-1 and returns to the Senate for concurrence or dissent.

ABORTION BILL READY FOR SENATE PASSAGE

A bill requiring that abortion coverage is offered only as a separate rider to a major medical policy will be voted on by the full Senate next week. HB 1123 mandates that abortion coverage be offered as an election to a health plan and not a part of essential coverage. The law will apply to policies that are executed or renewed on or after January 1, 2015. Because the bill was amended in the Senate Health and Provider Services Committee, the House can vote to approve those changes or send it to conference committee. We expect the bill will be voted on again in the House without further changes and go to the Governors desk.

HEALTH FINANCE WILL STUDY HEARING AID MANDATE

HB 1139 directs the Health Finance Commission to study issues impacting hearing impaired children. Under the bill, the Indiana State Department of Health is required to report data to the HFC regarding the prevalence of hearing impairments. The HFC is also required to study the feasibility of a health insurance mandate to cover hearing aids for kids. The bill is up for passage on the floor of the Senate and will be returned to the House with amendments for final action.

HIGH COST STUDY BILL DIES

A bill intended to study the implementation of a high cost health insurance program died in the Senate due to lack of a hearing, but that might not be the end of it. Debate continues around how best to care for high cost patients; specifically those who incur more than $1.5 million in annual costs.

The states high risk pool, ICHIA, is being phased out and patients are being transitioned to the federal exchange. But with limited networks on the exchange and small populations that can t absorb the cost of this population there was discussion this session over whether an alternative program should be developed to manage high cost patients. Even though HB 1335 is dead, the topic could be assigned to the Health Finance Commission through a resolution in either chamber.

BIOSIMILAR BILL PASSES HOUSE

A biosimilar substitution bill that has been historically controversial easily passed the House 92-5 this week. Senate Enrolled Act 262 establishes a process by which a pharmacist could substitute a brand name drug for a biosimilar. The substitution is limited to drugs the FDA has determined are interchangeable and can only occur if a prescriber permits substitution on the prescription. The pharmacist must also notify the physician of the substitution within five days. The bill will be on the House floor for amendment and final vote next week. No changes were made in the House committee so if none are made on the floor the bill will go straight to the Governor.

For more information

Trent Hahn tfhahn@bosepublicaffairs.com Mike OBrien mobrien@bosepublicaffairs.com Telephone: 317/684-5400 Fax: 317/684-5432