This statement of scope was approved by the governor on July 1, 2013.

Revises section Ins 3.40.

Coordination of benefits and affecting small business.

Permanent.

This will be promulgated as a permanent rule, as such no finding of emergency will be provided.

The Office intends to repeal and recreate s. Ins 3.40, Wis. Admin. Code, to update the coordination of benefit definitions and provisions and more closely align with the current National Association of Insurance Commissioners (NAIC) model regulation. The last substantive revision occurred in 1989 rendering Wisconsin's current rule inconsistent with other states and lacking helpful guidance on recent state and federal law changes including coverage for dependents to age 26, coordination with dental coverage and inclusion of individual health coverage. Updating the rule will result in less administrative cost to insurers while maintaining order in the coordination of benefits for the protection of insureds.

Section Ins 3.40, Wis. Admin. Code, relates to coordinating benefits when a person is covered by two or more health, disability, automobile medical benefits insurance policies. The coordination rule assists in determining which plan is primary and pays first and which plan is secondary. Without coordination of benefits insureds could collect maximum benefits from both policies and make a profit on their sickness or injury. To curtail this, insurers could design their policies to pay only excess benefits. However, if both insurers took that position benefit payments could be delayed while insurers determined which company should provide primary coverage.

The NAIC initially responded to the rise of issues by drafting and adopting the Coordination of Benefits (COB) Guidelines in the early 70s and current NAIC Coordination of Benefits Model Regulation was adopted in 2005 and is currently in the final stages before adoption of newly updated COB model regulation which is anticipated to be completed by the end of August 2013.

Updates to the Model Regulation include limiting financial gain by insureds, permitting coordination of individual health policies, coordination of dependent coverage to age 26, consideration of high deductible health plans and expanded definitions of “allowable expense" and “plans."

The statutory authority for this rule is ss. 227.11 (2) (a) and 601.41 (3), Wis. Stats., that provides for the commissioner's rule making authority in general. Also, s. 631.23, Wis. Stats., states that the Commissioner may “promulgate authorized clauses by rule based upon a finding as articulated in s. 631.23 (1) (a) to (d), Wis. Stats. The Commissioner has found that the coordination of benefits clauses are necessary to provide certainty of meaning and orderly and timely handling of claims. Regulation of contract forms will be more effective, litigation will be substantially reduced if there is uniformity regarding coordination of benefits provisions in health insurance policies, and costs incurred by insurers should decrease when the requirements for coordination of benefits more closely aligns with the NAIC model regulation.

200 hours and no other resources are necessary to develop the rule.

The rule applies to all insurers offering health care and disability insurance coverage including individual and group health and dental care coverage, medical benefits under automobile contracts, and Medicare and other federal governmental plans. Agents authorized to sell these types of insurance will need to be aware of the changes. Employers offering health care insurance may be impacted and benefit from updating coordination of coverage.

The Office is unaware of existing or proposed federal regulation intended to address the coordination of benefits.

The rule is not likely to have a significant impact on small businesses but to the extent there is an impact it will likely be positive through reduction in duplication. Insurers that meet the definition of small businesses will also likely experience a decrease in costs from reduced duplication of benefits. Additionally as the rule will implement the NAIC model regulation, insurers doing business in other states will be able to reduce costs since the coordination requirements will be uniform and not uniquely required by Wisconsin.

Significant economic impact on small businesses?

yes

X no

Local/statewide economic impact (choose one)

X minimal or none (< or = $50,000)

moderate ($50,000--$20,000,000)

significant (>$20,000,000)

Julie E. Walsh, Senior Attorney

julie.walsh@wisconsin.gov, (608) 264-8101

Office of the Commissioner of Insurance

This statement of scope was approved by the governor on July 1, 2013.

Revises sections Ins 6.91 et seq.

Navigators and nonnavigator assisters and affecting small business.

Both Emergency and Permanent.

In accordance with Wis. Stat. s. 623.98, the commissioner may promulgate rules under this Wis. Stat. s. 227.24 (1) (a) and (3), without providing evidence that promulgating a rule is necessary for the preservation of the public peace, health, safety, or welfare and without a finding of emergency. The commissioner intends to have the proposed rule published sufficiently in advance of October 1, 2013, to permit proper licensing, certification and training of navigators and nonnavigator assisters. The commissioner intends to promulgate permanent rules close in time to the emergency rules so not to create a gap in requirements.

The proposed rule will implement newly amended and created state law relating to navigators and nonnavigator assisters including application counselors. The newly enacted law requires navigators to be licensed with the office and complete prelicensing and annual training as a condition of continued licensure. The proposed rule will establish criteria for licensing consistent with the law and similar to existing agent licensing requirements. Subchapter V of Wis. Stat. ch. 628 delineates requirements for navigators including; training, licensure examination and financial responsibility requirements that the commissioner will implement through the proposed rule. Additionally, the proposed rule will develop guidelines and procedures for registration and training requirements for nonnavigator assisters.

The proposed rule implements the new law for individuals and entities not previously subject to oversight by the commissioner. The role navigators and nonnavigator assisters will have with Wisconsin consumers related to the regulation of insurance arose through recent changes in federal and state law. Since the law in some respects parallels requirements for agents, the proposed rule will likely parallel, to the extent possible and appropriate, existing requirements for licensed agents under Wis. Stat. ch. 628 and ch. Ins 6, Wis. Admin. Code.

The office has authority to promulgate rules interpreting chapter 628, Stats., as amended relating to the oversight and licensing of navigators and nonnavigator assisters. The commissioner has general authority to promulgate rules necessary to administer and enforce chs. 600 to 655 Stats., under Wis. Stat. ss. 227.11 (2) (a) and 601.41 (3). Further under Wis. Stat. s. 628.98, the commissioner was permitted to promulgate any rules necessary to carry out the purposes of the subch. V of Wis. Stat. ch. 628.