LEG REG REVIEW 2014, 10th Issue April 14, 2014

LEG REG REVIEW is a periodic newsletter produced by PHILLIPS ASSOCIATES, a professional lobbying and consultant firm located near the State Capitol.  It contains news on the legislative and regulatory scene in Pennsylvania that may be of interest to the Insurance and Business Communities.  It is a free member benefit for those who are members of the Pennsylvania Association of Health Underwriters (PAHU).  Subscription information may be obtained by contacting PHILLIPS ASSOCIATES at 717/728-1217 FAX 717/232-7005 or e-mail to xenobun@aol.com.  Please email jtrout2792@aol.com supplying both your name and e-mail address if you wish to be removed from or added to this list.


Both House and Senate acted on a variety of insurance bills including:

  • The Senate Banking & Insurance Committee approved Senate Bill 1329 (White-R-Indiana) to update the PA Life & Health Guaranty Association which pays claims in case of a liquidated entity.  Included was a provision to increase the payment cap to $500,000 (now $300,000)
  • The Senate Banking & Insurance Committee also:

–          Approved Senate Bill 594 (McIlhinney-R-Bucks) limiting cost-sharing by health insurance companies.  The bill states that an insurer may not impose a co-payment or coinsurance that exceeds an insured’s primary care physician office visit or coinsurance for covered medical expenses.  Given industry concerns according to the Insurance Federation, the bill may have a hearing later this spring.

–          Senate Resolution 340 (White-R-Indiana) asks the US Congress to reauthorize federal TRIA (Terrorism back-stop) law at the national level.

  • The House Insurance Committee was not idle either.  It met April 7 to approve House Bills 2135 and 2136 (Tobash-R-Schuylkill).  These clarify the definition of “affiliate” and try to facilitate how personal lines customers are transferred between corporate affiliates.
  • The full House unanimously passed a Workers’ Compensation bill April 8.  House Bill 1846 (Quinn-R-Bucks) limits the prescriptions that a physician may prescribe in a Workers’ Compensation case and prohibits them from prescribing over the counter medications.  It now goes to the Senate.  According to the sponsorship memo, the goal is to address prescription costs in the WC system by such means as preventing a more expensive reimbursement code for repacked drugs from being used.
  • The House voted 191-0 to adopt House Bill 1907 (Saylor-R-York) which would require hospitals to fully disclose whether or not a patient was being admitted versus being held for observation.  According to Rep. Saylor, Medicare and Medicaid consider observation as outpatient care meaning more costs are paid by the consumer versus an admission which means smaller cost via a single co-pay.


The PA Senate adopted Senate Resolution 250 (Argall-R-Schuylkill) to require that the Legislative Budget & Finance Committee undertake a study detailing the range of health benefits offered by the state’s 500 school districts as a precursor to legislative consideration of school benefit consolidation.  The report is to be completed by November 30.  The assumption of this resolution is that size and composition of an insured group impacts premiums with larger groups getting better premiums.  Of note is that the study must also document financial impact of the Patient Protection Affordable Care Act (ACA) on the school districts.  In February 2004, the PA Legislative Budget & Finance Committee released a similar report thanks to an earlier resolution, House Resolution 159.  Called the Hay Group study, it recommended that the Commonwealth “explicitly or implicitly” require school districts and intermediate units to join a statewide health plan.  PA Association of Health Underwriters (PAHU) actively opposed this approach in 2003-04 and will be testifying against this approach under SR 250.  NOTE:  If you insure school districts, please contact PAHU lobbyist Vince Phillips so that PAHU can include your experience and views on this issue.


The PA Insurance Department is liquidating Commonwealth Insurance Company, a monoline surety bond company.  According to the Insurance Department, April 19, 2014, is the date on which all bonds now in effect are canceled although this does not void claims against bonds.  A warning is presented that claims may not be paid for several years depending on the resources which are available for that purpose.  The Department has a page on its website devoted to the liquidation.  It includes the claim form.  Agents are advised to look at the FAQs section in particular as it outlines claims procedures including procedures for filing a claim for agent commissions.  Questions: 717/787-7823


NOTE:  According to the Commissioner’s Annual Statistical Report for 2013, Commonwealth Insurance Company only accounted for $687,000 in direct premiums written or less than one-half of one-percent of the total surety market.  The report did not itemize how much business it had on the books.


The National Flood Insurance Program (NFIP) issued two memos of interest to the insurance producer community.  First is Notice W-14013 issued April 11, 2014 announcing June 1, 2014 changes in the NFIP Flood Insurance Manual.  Those with questions are asked to contact iService Write Your Own Support at wyo@nfip-iservice.com .  Link to the Manual changes is at: https://www.fema.gov/media-library/assets/documents/93344.

The second document is Notice 14011 dated April 3, 2014.  It presents a summary of changes to the NFIP through congressional passage of the Homeowner Flood Insurance Affordability Act in March 2014.  FEMA says that its first priority is to stop the price increases stemming from implementation of the Biggert-Waters Act (for example rate increases where the discount on pre-Flood Insurance Rate Map was eliminated).  Updated information on the Homeowner Flood Insurance Affordability Act is found at  https://fema.gov/flood-insurance-reform or by contacting Joe Cecil at Joseph.Cecil@fema.dhs.gov.

As a sampler, did you know?

–          There is a per policy premium surcharge on every NFIP policy to help fund a National Flood Insurance Program reserve fund.

–          Subsidized property premiums will increase by at least 5% annually until the class premium reaches its full-risk rate.

–          Close to 80% of NFIP policyholders paid full-risk premiums before either Biggert-Waters or the 2014 legislation.

–          The $250,000 cap on the amount that FEMA can spend to reimburse homeowners who won a mapping appeal based on a scientific or technical error has been lifted.


On April 9, the House Health Committee reported out House Resolution 735 (Cutler-R-Lancaster) to require that the Joint State Government Commission establish an advisory committee to study the question as to what shortages of physician care may exist in the Commonwealth.  The study would be used as documentation for and against further legislation seeking tort reform in the medical malpractice insurance debate.  Doctors have repeatedly said that there are significant shortages of doctor care in some specialties and in rural areas.  The study committee is also charged with proposing strategies for eliminating physician shortages.

 CE NOTE…On April 24, 2014, PHILLIPS ASSOCIATES is offering the four-hour long-term care insurance partnership training required for those in that market along with a two-hour class in Medicare Supplement insurance in Erie.  Details: xenobun@aol.com

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