Bill Summary – FastDemocracy

AFFORDABLE CARE ACT COVERAGE; MODIFY REQ.                               S.B. 1111 (S-1):
                                                       SUMMARY AS PASSED BY THE SENATE
Senate Bill 1111 (Substitute S-1 as passed by the Senate)
Sponsor: Senator Kevin Hertel
Committee: Health Policy
Date Completed: 12-27-24
CONTENT
The bill would amend Chapter 34 (Disability Insurance Policies) of the Insurance
Code to do the following:
-- Exempt retiree-only health insurance coverage from requirements related to
   coverage for dependents.
-- Allow retiree-only health insurance coverage and non-grandfathered health plan
   coverage to place lifetime or annual limits on the dollar value of essential health
   benefit coverage.
-- Exempt non-grandfathered health plan coverage and retiree-only health
   insurance coverage from the requirement to provide essential health benefits
   like hospitalization and pregnancy care.
-- Exempt insurance coverage that provided benefits for fixed indemnity, short-
   term duration policy, and non-grandfathered health plan coverage from the
   prohibition on limiting or excluding coverage based on a pre-existing condition.
Retiree-Only Health Insurance Coverage Exemptions
The Code prescribes requirements for an insurer who delivers a health insurance policy that
makes dependent coverage available under the policy. The insurer must do all the following:
-- Make available dependent coverage, at the option of the policyholder, until the dependent
   has attained 26 years of age.
-- Provide the same health insurance benefits to a dependent child that are available to any
   other covered dependent.
-- Provide health insurance benefits to a dependent child at the same rate or premium
   applicable to any other covered dependent.
-- Include provisions that the health insurance benefits applicable for children are payable
   with respect to a newly born child of the insured from the moment of birth.
-- Include provisions that the coverage for newly born children consists of coverage of injury
   or sickness including the necessary care and treatment of medically diagnosed congenital
   defects and birth abnormalities.
In addition, a health insurance policy that offers dependent coverage may not deny enrollment
to an insured’s child on any of the following grounds:
-- The child was born out of wedlock.
-- The child is not claimed as a dependent on the insured's Federal income tax return.
-- The child does not reside with the insured or in the insurer's service area.
Also, the Code prohibits an insurer that delivers, issues for delivery, or renews in the State a
health insurance policy from instituting either of the following:
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-- Lifetime limits on the dollar value of essential health benefit coverage under Section
   3406bb, which is described below.
-- Annual limits on the dollar value of essential health benefit coverage under Section
   3406bb.
Under the bill, all the provisions described above would not apply to retiree-only health
insurance.
Non-Grandfathered Health Plan Coverage
Section 3406bb of the Code requires an insurer that delivers, issues for delivery, or renews
in the individual or small group market in Michigan a health insurance policy to provide
coverage for all the following:
-- Ambulatory patient services.
-- Emergency services.
-- Hospitalization.
-- Pregnancy, maternity, and newborn care.
-- Mental health and substance use disorder services, including behavioral health treatment.
-- Prescription drugs.
-- Rehabilitative and habilitative services and devices.
-- Laboratory services.
-- Certain preventive and wellness services and chronic disease management identified by
   the Director of the Department of Insurance and Financial Services as meeting specified
   requirements.
-- Pediatric services, including oral and vision care.
The Code exempts certain insurance policies and plans from these provisions, such as a short-
term or limited duration policy. Under the bill, these provisions also would not apply to non-
grandfathered health plan coverage and retiree-only health insurance coverage.
"Non-grandfathered health plan coverage" would mean individual and small group transitional
insurance plans that have been afforded additional time to comply with certain market reform
provisions of the Affordable Care Act, and as specified annually by the Director of the
Department of Insurance and Financial Services, until the Centers for Medicare and Medicaid
Services requires these plans to come into full compliance with the Affordable Care Act.
Exemptions for Pre-existing Condition Exclusions
Finally, the Code prohibits an insurer from limiting or excluding coverage for an individual by
imposing a preexisting condition exclusion on the individual. The Code exempts certain plans
from this prohibition. Under the bill, the following would be exempt from this requirement:
-- Insurance coverage that provided benefits for a fixed indemnity.1
-- Insurance coverage that provided benefits for a short-term or one-time limited duration
   policy or certificate of not longer than six months.
-- Insurance coverage that provided benefits for non-grandfathered health plan coverage.
MCL 500.3403 et al.
1 Generally, fixed indemnity insurance is insurance that provides a fixed benefit amount for specific
coverage, regardless of the expense incurred by the insured.
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BRIEF RATIONALE
In 2023, Public Acts (PA) 156 to 163 codified provisions of the Affordable Care Act (ACA) into
the Insurance Code, such as prohibitions against exclusion of coverage due to a pre-existing
condition. According to testimony, these PAs did not incorporate all the intended provisions
of the ACA. The bill would further incorporate some of the intended ACA provisions, including
amendments to the Insurance Code to exempt certain plans from providing benefits for pre-
existing conditions in accordance with the ACA.
                                                                                         Legislative Analyst: Alex Krabill
FISCAL IMPACT
The bill would have no fiscal impact on State or local government.
                                                                                          Fiscal Analyst: Nathan Leaman
 SAS\S2324\s1111sb
 This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official
 statement of legislative intent.
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Statutes affected: 
Substitute (S-1): 500.3403
Senate Introduced Bill: 500.3403
As Passed by the Senate: 500.3403