=======

art.011/2/013/4/013/3/013/2/014/1

=======

     ARTICLE 11

RELATING TO HEALTHCARE MARKET STABILITY

     SECTION 1. Section 27-18.5-2 of the General Laws in Chapter 27-18.5 entitled

"Individual Health Insurance Coverage" is hereby amended to read as follows:

     27-18.5-2. Definitions.

     The following words and phrases as used in this chapter have the following meanings

unless a different meaning is required by the context:

     (1) "Bona fide association" means, with respect to health insurance coverage offered in this

state, an association which:

     (i) Has been actively in existence for at least five (5) years;

     (ii) Has been formed and maintained in good faith for purposes other than obtaining

insurance;

     (iii) Does not condition membership in the association on any health status-related factor

relating to an individual (including an employee of an employer or a dependent of an employee);

     (iv) Makes health insurance coverage offered through the association available to all

members regardless of any health status-related factor relating to the members (or individuals

eligible for coverage through a member);

     (v) Does not make health insurance coverage offered through the association available

other than in connection with a member of the association;

     (vi) Is composed of persons having a common interest or calling;

     (vii) Has a constitution and bylaws; and

     (viii) Meets any additional requirements that the director may prescribe by regulation;

     (2) "COBRA continuation provision" means any of the following:

     (i) Section 4980(B) of the Internal Revenue Code of 1986, 26 U.S.C. § 4980B, other than

subsection (f)(1) of that section insofar as it relates to pediatric vaccines;

     (ii) Part 6 of subtitle B of Title I of the Employee Retirement Income Security Act of 1974,

29 U.S.C. § 1161 et seq., other than Section 609 of that act, 29 U.S.C. § 1169; or

     (iii) Title XXII of the United States Public Health Service Act, 42 U.S.C. § 300bb-1 et seq.;

     (3) "Creditable coverage" has the same meaning as defined in the United States Public

Health Service Act, Section 2701(c), 42 U.S.C. § 300gg(c), as added by P.L. 104-191;

     (4) "Director" means the director of the department of business regulation;

     (5) "Eligible individual" means an individual:

     (i) For whom, as of the date on which the individual seeks coverage under this chapter, the

aggregate of the periods of creditable coverage is eighteen (18) or more months and whose most

recent prior creditable coverage was under a group health plan, a governmental plan established or

maintained for its employees by the government of the United States or by any of its agencies or

instrumentalities, or church plan (as defined by the Employee Retirement Income Security Act of

1974, 29 U.S.C. § 1001 et seq.);

     (ii) Who is not eligible for coverage under a group health plan, part A or part B of title

XVIII of the Social Security Act, 42 U.S.C. § 1395c et seq. or 42 U.S.C. § 1395j et seq., or any

state plan under title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq. (or any successor

program), and does not have other health insurance coverage;

     (iii) With respect to whom the most recent coverage within the coverage period was not

terminated based on a factor described in § 27-18.5-4(b)(relating to nonpayment of premiums or

fraud);

     (iv) If the individual had been offered the option of continuation coverage under a COBRA

continuation provision, or under chapter 19.1 of this title or under a similar state program of this

state or any other state, who elected the coverage; and

     (v) Who, if the individual elected COBRA continuation coverage, has exhausted the

continuation coverage under the provision or program;

     (6) "Group health plan" means an employee welfare benefit plan as defined in section 3(1)

of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002(1), to the extent that

the plan provides medical care and including items and services paid for as medical care to

employees or their dependents as defined under the terms of the plan directly or through insurance,

reimbursement or otherwise;

     (7) "Health insurance carrier" or "carrier" means any entity subject to the insurance laws

and regulations of this state, or subject to the jurisdiction of the director, that contracts or offers to

contract to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care

services, including, without limitation, an insurance company offering accident and sickness

insurance, a health maintenance organization, a nonprofit hospital, medical or dental service

corporation, or any other entity providing a plan of health insurance or health benefits by which

health care services are paid or financed for an eligible individual or his or her dependents by such

entity on the basis of a periodic premium, paid directly or through an association, trust, or other

intermediary, and issued, renewed, or delivered within or without Rhode Island to cover a natural

person who is a resident of this state, including a certificate issued to a natural person which

evidences coverage under a policy or contract issued to a trust or association;

     (8)(i) "Health insurance coverage" means a policy, contract, certificate, or agreement

offered by a health insurance carrier to provide, deliver, arrange for, pay for or reimburse any of

the costs of health care services. Health insurance coverage includes short-term limited duration

policies and any policy that pays on a cost-incurred basis, except as otherwise specifically exempted

by subsections (ii), (iii), (iv), or (v) of this section.

     (ii) "Health insurance coverage" does not include one or more, or any combination of, the

following:

     (A) Coverage only for accident, or disability income insurance, or any combination of

those;

     (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; and

     (H) Other similar insurance coverage, specified in federal regulations issued pursuant to

P.L. 104-191, under which benefits for medical care are secondary or incidental to other insurance

benefits; and

     (I) Short term limited duration insurance;

     (iii) "Health insurance coverage" does not include the following benefits if they are

provided under a separate policy, certificate, or contract of insurance or are not an integral part of

the coverage:

     (A) Limited scope dental or vision benefits;

     (B) Benefits for long-term care, nursing home care, home health care, community-based

care, or any combination of these;

     (C) Any other similar, limited benefits that are specified in federal regulation issued

pursuant to P.L. 104-191;

     (iv) "Health insurance coverage" does not include the following benefits if the benefits are

provided under a separate policy, certificate, or contract of insurance, there is no coordination

between the provision of the benefits and any exclusion of benefits under any group health plan

maintained by the same plan sponsor, and the benefits are paid with respect to an event without

regard to whether benefits are provided with respect to the event under any group health plan

maintained by the same plan sponsor:

     (A) Coverage only for a specified disease or illness; or

     (B) Hospital indemnity or other fixed indemnity insurance; and

     (v) "Health insurance coverage" does not include the following if it is offered as a separate

policy, certificate, or contract of insurance:

     (A) Medicare supplemental health insurance as defined under section 1882(g)(1) of the

Social Security Act, 42 U.S.C. § 1395ss(g)(1);

     (B) Coverage supplemental to the coverage provided under 10 U.S.C. § 1071 et seq.; and

     (C) Similar supplemental coverage provided to coverage under a group health plan;

     (9) "Health status-related factor" means any of the following factors:

     (i) Health status;

     (ii) Medical condition, including both physical and mental illnesses;

     (iii) Claims experience;

     (iv) Receipt of health care;

     (v) Medical history;

     (vi) Genetic information;

     (vii) Evidence of insurability, including conditions arising out of acts of domestic violence;

and

     (viii) Disability;

     (10) "Individual market" means the market for health insurance coverage offered to

individuals other than in connection with a group health plan;

     (11) "Network plan" means health insurance coverage offered by a health insurance carrier

under which the financing and delivery of medical care including items and services paid for as

medical care are provided, in whole or in part, through a defined set of providers under contract

with the carrier;

     (12) "Preexisting condition" means, with respect to health insurance coverage, a condition

(whether physical or mental), regardless of the cause of the condition, that was present before the

date of enrollment for the coverage, for which medical advice, diagnosis, care, or treatment was

recommended or received within the six (6) month period ending on the enrollment date. Genetic

information shall not be treated as a preexisting condition in the absence of a diagnosis of the

condition related to that information; and

     (13) "High-risk individuals" means those individuals who do not pass medical underwriting

standards, due to high health care needs or risks;

     (14) "Wellness health benefit plan" means that health benefit plan offered in the individual

market pursuant to § 27-18.5-8; and

     (15) "Commissioner" means the health insurance commissioner.

     SECTION 2. Section 42-157-4 of the General Laws in Chapter 42-157 titled “Rhode Island

Health Benefit Exchange” is hereby amended to read as follows:

     42-157-4. Financing.

     (a) The department is authorized to assess insurers offering qualified health plans and

qualified dental plans. To support the functions of the exchange, insurers offering qualified health

plans and qualified dental plans must remit an assessment to the exchange each month, in a

timeframe and manner established by the exchange, equal to three and one-half percent (3.5%) of

the monthly premium charged by the insurer for each policy under the plan where enrollment is

through the exchange. The revenue raised in accordance with this subsection shall not exceed the

revenue able to be raised through the federal government assessment and shall be established in

accordance and conformity with the federal government assessment upon those insurers offering

products on the Federal Health Benefit exchange. Revenues from the assessment shall be deposited

in a restricted receipt account for the sole use of the exchange and shall be exempt from the indirect

cost recovery provisions of § 35-4-27 of the general laws.

     (b) The general assembly may appropriate general revenue to support the annual budget

for the exchange in lieu of or to supplement revenues raised from the assessment under § 42-157-

4(a).

     (c) If the director determines that the level of resources obtained pursuant to § 42-157-4(a)

will be in excess of the budget for the exchange, the department shall provide a report to the

governor, the speaker of the house and the senate president identifying the surplus and detailing

how the assessment established pursuant to § 42-157-4(a) may be offset in a future year to reconcile

with impacted insurers and how any future supplemental or annual budget submission to the general

assembly may be revised accordingly. 

     SECTION 3. Chapter 42-157 of the General Laws entitled "Rhode Island Health Benefit

Exchange" is hereby amended by adding thereto the following section:

     42-157-11. Exemptions from the shared responsibility payment penalty.

     (a) Establishment of program. The exchange shall establish a program for determining

whether to grant a certification that an individual is entitled to an exemption from the Shared

Responsibility Payment Penalty set forth in section 44-30-101(c) of the general laws by reason of

religious conscience or hardship.

     (b) Eligibility determinations. The exchange shall make determinations as to whether to

grant a certification described in subsection (a). The exchange shall notify the individual and the

tax administrator for the Rhode Island Department of Revenue of any such determination in such

a time and manner as the exchange, in consultation with the tax administrator, shall prescribe. In

notifying the tax administrator, the exchange shall adhere to the data privacy and data security

standards adopted in accordance with 45 C.F.R. 155.260. The exchange shall only be required to

notify the tax administrator to the extent that the exchange determines such disclosure is permitted

under 45 C.F.R. 155.260.

     (c) Appeals. Any person aggrieved by the exchange’s determination of eligibility for an

exemption under this section has the right to an appeal in accordance with the procedures contained

within chapter 35 of title 42.

     42-157-12. Special enrollment period for qualified individuals assessed a shared

responsibility payment penalty.

     (a) Definitions. The following definition shall apply for purposes of this section:

     (1) “Special enrollment period” means a period during which a qualified individual who is

assessed a penalty in accordance with section 44-30-101 may enroll in a qualified health plan

through the exchange outside of the annual open enrollment period.

     (b) In the case of a qualified individual who is assessed a shared responsibility payment in

accordance with section 44-30-101 of the general laws and who is not enrolled in a qualified health

plan, the exchange must provide a special enrollment period consistent with this section and the

Federal Patient Protection and Affordable Care Act (Public Law 111-148), as amended by the

Federal Care and Reconciliation Act of 2010 (Public Law 111-152), and any amendments to, or

regulations or guidance issued under, those acts.

     (c) Effective Date. The exchange must ensure that coverage is effective for a qualified

individual who is eligible for a special enrollment period under this section on the first day of the

month after the qualified individual completes enrollment in a qualified health plan through the

exchange.

     (d) Availability and length of special enrollment period. A qualified individual has sixty

(60) days from the date he or she is assessed a penalty in accordance with section 44-30-101 of the

general laws to complete enrollment in a qualified health plan through the exchange. The date of

assessment shall be determined in accordance with section 44-30-82 of the general laws.

     42-157-13. Outreach to Rhode Island residents and individuals assessed a shared

responsibility payment penalty.

     Outreach. The exchange, in consultation with the Office of the Health Insurance

Commissioner and the Division of Taxation, is authorized to engage in coordinated outreach efforts

to educate Rhode Island residents about the importance of health insurance coverage, their

responsibilities to maintain minimum essential coverage as defined in section 44-30-101 of the

general laws, the penalties for failure to maintain such coverage, and information on the services

available through the exchange.

     42-157-14. Regulatory authority.

     (a) Regulatory Authority. The exchange may promulgate regulations as necessary to carry

out the purposes of this chapter.

     SECTION 4. Sections 42-157.1-1 and 42-157.1-5 of the General Laws in Chapter 42-157.1

entitled "Rhode Island Market Stability and Reinsurance Act" are hereby amended to read as

follows:

     42-157.1-1. Short title and purpose.

     (a) This chapter shall be known and may be cited as the "Rhode Island Market Stability

and Reinsurance Act."

     (b) The purpose of this chapter is to authorize the director to create the Rhode Island

reinsurance program to stabilize health insurance rates and premiums in the individual market and

provide greater financial certainty to consumers of health insurance in this state.

     (c) Nothing in this chapter shall be construed as obligating the state to appropriate funds or

make payments to carriers.

     (c) No general revenue funding shall be used for reinsurance payments.

     42-157.1-5. Establishment of program fund.

     (a) A fund shall be The Health Insurance Market Integrity Fund is hereby established to

provide funding for the operation and administration of the program in carrying out the purposes

of the program under this chapter.

     (b) The director is authorized to administer the fund.

     (c) The fund shall consist of:

     (1) Any pass-through funds received from the federal government under a waiver approved

under 42 U.S.C. § 18052;

     (2) Any funds designated by the federal government to provide reinsurance to carriers that

offer individual health benefit plans in the state;

     (3) Any funds designated by the state to provide reinsurance to carriers that offer individual

health benefit plans in the state; and

     (4) Any other money from any other source accepted for the benefit of the fund.

     (d) Nothing in this chapter shall be construed as obligating the state to appropriate funds

or make payments to carriers.

     (d) No general revenue funding shall be used for reinsurance payments.

     (e) A restricted receipt account shall be established for the fund which may be used for the

purposes set forth in this section and shall be exempt from the indirect cost recovery provisions of

section 35-4-27 of the general laws.

     (f) Monies in the fund shall be used to provide reinsurance to health insurance carriers as

set forth in this chapter and its implementing regulations, and to support the personnel costs,

operating costs and capital expenditures of the exchange and the division of taxation that are

necessary to carry out the provisions of this chapter, sections 44-30-101 through 44-30-102 and

sections 42-157-11 through 42-157-14 of the general laws.

     (g) Any excess monies remaining in the fund, not including any monies received from the

federal government pursuant to paragraphs (1) or (2) and after making the payments required by

subsection (f), may be used for preventative health care programs for vulnerable populations in

consultation with the executive office of health and human services.

     42-157.1-7. Program contingent on federal waiver and appropriation of state funding

Program contingent on federal waiver.

     If the state innovation waiver request in § 42-157.1-6 is not approved, the director shall not

implement the program or provide reinsurance payments to eligible carriers.

     SECTION 5. Chapter 44-30 of the General Laws entitled “Personal Income Tax” is hereby

amended by adding thereto the following sections:

     44-30-101. Requirements concerning qualifying health insurance coverage.

     (a) Definitions. For purposes of this section:

     (1) “Applicable individual” has the same meaning as set forth in 26 U.S.C. § 5000A(d).

     (2) “Minimum essential coverage” has the same meaning as set forth in 26 U.S. C. §

5000A(f).

     (3) “Shared Responsibility Payment Penalty” means the penalty imposed pursuant to

subsection (c) of this section.

     (4) “Taxpayer” means any resident individual, as defined in section 44-30-5 of the general

laws.

     (b) Requirement to maintain minimum essential coverage. Every applicable individual

must maintain minimum essential coverage for each month beginning after December 31, 2019.

     (c) Shared Responsibility Payment Penalty imposed for failing to maintain minimum

essential coverage. As of January 1, 2020, every applicable individual required to file a personal

income tax return pursuant to section 44-30-51 of the general laws, shall indicate on the return, in

a manner to be prescribed by the tax administrator, whether and for what period of time during the

relevant tax year the individual and his or her spouse and dependents who are applicable individuals

were covered by minimum essential coverage. If a return submitted pursuant to this subsection

fails to indicate that such coverage was in force or indicates that any applicable individuals did not

have such coverage in force, a Shared Responsibility Payment Penalty shall hereby be assessed as

a tax on the return.

     (d) Shared Responsibility Payment Penalty calculation. Except as provided in subsection

(e), the Shared Responsibility Payment Penalty imposed shall be equal to a taxpayer’s federal

shared responsibility payment for the taxable year under section 5000A of the Internal Revenue

Code of 1986, as amended, and as in effect on the 15th day of December 2017.

     (e) Exceptions.

     (1) Penalty cap. The amount of the Shared Responsibility Payment Penalty imposed under

this section shall be determined, if applicable, using the statewide average premium for bronze-

level plans offered through the Rhode Island health benefits exchange rather than the national

average premium for bronze-level plans.

     (2) Hardship exemption determinations. Determinations as to hardship exemptions shall

be made by the exchange under section 42-157-11 of the general laws.

     (3) Religious conscience exemption determinations. Determinations as to religious

conscience exemptions shall be made by the exchange under section 42-157-11 of the general laws.

     (4) Taxpayers with gross income below state filing threshold. No penalty shall be imposed

under this section with respect to any applicable individual for any month during a calendar year if

the taxpayer’s household income for the taxable year as described in section 1412(b)(1)(B) of the

Patient Protection and Affordable Care Act is less than the amount of gross income requiring the

taxpayer to file a return as set forth in section 44-30-51 of the general laws.

     (5) Out of State Residents. No penalty shall be imposed by this section with respect to any

applicable individual for any month during which the individual is a bona fide resident of another

state.

     (f) Health Insurance Market Integrity Fund. The tax administrator is authorized to withhold

from any state tax refund due to the taxpayer an amount equal to the calculated Shared

Responsibility Payment Penalty and shall place such amounts in the Health Insurance Market

Integrity Fund created pursuant to section 42-157.1-5 of the general laws.

     (g) Deficiency. If, upon examination of a taxpayer’s return, the tax administrator

determines there is a deficiency because any refund due to the taxpayer is insufficient to satisfy the

Shared Responsibility Penalty or because there was no refund due, the tax administrator may notify

the taxpayer of such deficiency in accordance with section 44-30-81 and interest shall accrue on

such deficiency as set forth in section 44-30-84. All monies collected on said deficiency shall be

placed in the Health Insurance Market Integrity Fund created pursuant to section 42-157.1-5 of the

general laws.

     (h) Application of Federal law. The Shared Responsibility Payment Penalty shall be

assessed and collected as set forth in this chapter and, where applicable, consistent with regulations

promulgated by the federal government, the exchange and/or the tax administrator. Any federal

regulation implementing section 5000A of the Internal Revenue Code of 1986, as amended, and in

effect on the 15th day of December 2017, shall apply as though incorporated into the Rhode Island

Code of Regulations. Federal guidance interpreting these federal regulations shall similarly apply.

Except as provided in subsections (j) and (k), all references to federal law shall be construed as

references to federal law as in effect on December 15, 2017, including applicable regulations and

administrative guidance that were in effect as of that date.

     (i) Unavailability of Federal premium tax credits. For any taxable year in which federal

premium tax credits available pursuant to 26 U.S.C. section 36B become unavailable due to the

federal government repealing that section or failing to fund the premium tax credits, the Shared

Responsibility Payment Penalty under this section shall not be enforced.

     (j) Imposition of Federal shared responsibility payment. For any taxable year in which a

federal penalty under section 5000A of the Internal Revenue Code of 1986 is imposed on a taxpayer

in an amount comparable to the Shared Responsibility Payment Penalty assessed under this section,

the state penalty shall not be enforced.

     (k) Agency Coordination. Where applicable, the tax administrator shall implement this

section in consultation with the office of the health insurance commissioner, the office of

management and budget, the executive office of health and human services, and the Rhode Island

health benefits exchange.

     44-30-102. Reporting Requirement for Applicable Entities providing Minimum

Essential Coverage.

     (a) Findings.

     (1) Ensuring the health of insurance markets is a responsibility reserved for states under

the McCarran-Ferguson Act and other federal law.

     (2) There is substantial evidence that being uninsured causes health problems and

unnecessary deaths.

     (3) The Shared Responsibility Payment Penalty imposed by subsection 44-30-101(c) of the

general laws is necessary to protect the health and welfare of the state’s residents.

     (4) The reporting requirement provided for in this section is necessary for the successful

implementation of the Shared Responsibility Payment Penalty imposed by subsection 44-30-101(c)

of the general laws. This requirement provides the only widespread source of third-party reporting

to help taxpayers and the tax administrator verify whether an applicable individual maintains

minimum essential coverage. There is compelling evidence that third-party reporting is crucial for

ensuring compliance with tax provisions.

      (5) The Shared Responsibility Payment Penalty imposed by subsection 44-30-101(c) of

the general laws, and therefore the reporting requirement in this section, is necessary to ensure a

stable and well-functioning health insurance market. There is compelling evidence that, without

an effective Shared Responsibility Payment Penalty in place for those who go without coverage,

there would be substantial instability in health insurance markets, including higher prices and the

possibility of areas without any insurance available.

     (6) The Shared Responsibility Payment Penalty imposed by subsection 44-30-101(c) of the

general laws, and therefore the reporting requirement in this section, is also necessary to foster

economic stability and growth in the state.

      (7) The reporting requirement in this section has been narrowly tailored to support

compliance with the Shared Responsibility Payment Penalty imposed by subsection 44-30-101(c)

of the general laws, while imposing only an incidental burden on reporting entities. In particular,

the information that must be reported is limited to the information that must already be reported

under a similar federal reporting requirement under section 6055 of the Internal Revenue Code of

1986. In addition, this section provides that its reporting requirement may be satisfied by providing

the same information that is currently reported under such federal requirement.

     (b) Definitions. For purposes of this section:

     (1) “Applicable entity” means:

     (i) An employer or other sponsor of an employment-based health plan that offers

employment-based minimum essential coverage to any resident of Rhode Island.

     (ii) The Rhode Island Medicaid single state agency providing Medicaid or Children’s

Health Insurance Program (CHIP) coverage.

     (iii) Carriers licensed or otherwise authorized by the Rhode Island office of the health

insurance commissioner to offer health coverage providing coverage that is not described in

subparagraphs (i) or (ii).

     (2) “Minimum essential coverage” has the meaning given such term by section 44-30-

101(a)(2) of the general laws.

     (c) For purposes of administering the Shared Responsibility Payment Penalty to individuals

who do not maintain minimum essential coverage under subsection 44-30-101(b) of the general

laws, every applicable entity that provides minimum essential coverage to an individual during a

calendar year shall, at such time as the tax administrator may prescribe, file a form in a manner

prescribed by the tax administrator.

     (d) Form and manner of return.

     (1) A return, in such form as the tax administrator may prescribe, contains the following

information:

     (i) the name, address and TIN of the primary insured and the name and TIN of each other

individual obtaining coverage under the policy;

     (ii) the dates during which such individual was covered under minimum essential coverage

during the calendar year, and

     (iii) such other information as the tax administrator may require.

     (2) Sufficiency of information submitted for federal reporting. Notwithstanding the

requirements of paragraph (1), a return shall not fail to be a return described in this section if it

includes the information contained in a return described in section 6055 of the Internal Revenue

Code of 1986, as that section is in effect and interpreted on the 15th day of December 2017.

     (e) Statements to be furnished to individuals with respect to whom information is reported.

     (1) Any applicable entity providing a return under the requirements of this section shall

also provide to each individual whose name is included in such return a written statement

containing the name, address and contact information of the person required to provide the return

to the tax administrator and the information included in the return with respect to the individuals

listed thereupon. Such written statement must be provided on or before January 31 of the year

following the calendar year for which the return was required to be made or by such date as may

be determined by the tax administrator.

     (2) Sufficiency of federal statement. Notwithstanding the requirements of paragraph (1),

the requirements of this subsection (e) may be satisfied by a written statement provided to an

individual under section 6055 of the Internal Revenue Code of 1986, as that section is in effect and

interpreted on the 15th day of December 2017.

     (f) Reporting responsibility.

     (1) Coverage provided by governmental units. In the case of coverage provided by an

applicable entity that is any governmental unit or any agency or instrumentality thereof, the officer

or employee who enters into the agreement to provide such coverage (or the person appropriately

designated for purposes of this section) shall be responsible for the returns and statements required

by this section.

     (2) Delegation. An applicable entity may contract with third-party service providers,

including insurance carriers, to provide the returns and statements required by this section.

     SECTION 6. Section 2 of this article shall take effect January 1, 2020. The remainder of

this article shall take effect upon passage.