SESSION OF 2019
SUPPLEMENTAL NOTE ON SENATE BILL NO. 32
As Amended by Senate Committee on Financial
Institutions and Insurance

Brief*
SB 32, as amended, would amend the Insurance Code
to add an entity to the list of those entities providing
healthcare benefit coverage that are not subject to the
jurisdiction of the Commissioner of Insurance
(Commissioner).
The bill would exempt a nonprofit agricultural
membership organization incorporated in Kansas on June 23,
1931 (the Kansas Farm Bureau, referred to as KFB
throughout this document), or an affiliate thereof, that
provides healthcare benefit coverage for the payment of
expenses to or for the members of the organization and their
dependents from the jurisdiction of the Commissioner.
The bill would specify the healthcare benefit coverage
provided by the nonprofit agricultural membership
organization would not be considered insurance,
notwithstanding any provision of law to the contrary. The bill
would permit the risk under such coverage to be reinsured by
a company authorized to conduct reinsurance in Kansas.
Further, the bill would require providers of this
healthcare benefit coverage to file a signed, certified actuarial
statement of plan reserves annually with the Commissioner.
Finally, the bill would make technical updates to
incorporate this new coverage.
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org
Background
The bill was introduced by the Senate Committee on
Financial Institutions and Insurance at the request of the KFB.
In the Senate Committee hearing, representatives of the
KFB and the Kansas Corn Growers Association and three
Kansas farmers spoke in favor of the bill. The proponents
generally stated the bill would offer more affordable
healthcare options to members of the KFB. Written-only
proponent testimony was provided by a representative of the
Wichita Regional Chamber of Commerce.
Representatives of Blue Cross and Blue Shield of
Kansas, Inc., Medica, and the National Multiple Sclerosis
Society testified in opposition of the bill. The opponents
generally stated the bill would exempt the KFB from federal
and state requirements, specifically citing coverage for pre-
existing medical conditions and other protections under the
law, including guaranteed issue; prompt payment of claims;
and health insurance benefit and provider mandates,
including essential health benefits. Written-only opponent
testimony was provided by representatives of the American
Cancer Society Action Network and the Leukemia &
Lymphoma Society.
Neutral testimony was provided by a representative of
the Kansas Insurance Department (Department), who
provided information on self-funded association health plans
(AHPs). [Note: Under current law, all entities exempted from
the Commissioner’s jurisdiction in KSA 2018 Supp. 40-2222
are self-funded AHPs who generally offer benefits coverage
through a self-insured plan.] Written-only neutral testimony
was provided by a representative of the Kansas Association
of Insurance Agents.
The Senate Committee amended the bill to specify the
healthcare benefit coverage described in the bill would not be
considered insurance; permit reinsurance for such coverage;
and require the submission of a signed, certified actuarial
2- 32
statement of plan reserves annually with the Commissioner.
The Senate Committee amendment modifies an amendment
submitted by the KFB during the Senate Committee hearing.
According to the fiscal note prepared by the Division of
the Budget, as introduced, the Department indicated the bill
could result in a decrease in premium taxes collected by the
State (insurance premium tax revenue) if individuals switch
from a fully-insured plan to a self-funded plan offered by the
KFB because carriers of fully-insured plans pay a 2.0 percent
premium tax (accident & health insurance companies) or a
5.77 percent privilege fee (Health Maintenance
Organizations) and carriers of self-insured plans pay a 1.0
percent premium tax. The Department indicated enactment of
the bill could result in a net increase in premium taxes
collected by the State if enrollment in the health insurance
plan includes mostly individuals who were previously
uninsured. However, the fiscal effect cannot be estimated as
the type of plan that KFB intends to offer and the individuals
that would comprise the membership of the plan are
unknown. Any fiscal effect associated with enactment of the
bill is not reflected in The FY 2020 Governor’s Budget Report.


3- 32


Statutes affected:
As introduced: 40-2222, 40-2222a, 40-2222b
As Amended by Senate Committee: 40-2222, 40-2222a, 40-2222b