Legislative Report

January 31, 2014 BOSE PUBLIC AFFAIRS GROUP INSURANCE BULLETIN XIV, NUMBER 4

In This Issue

GENERAL ASSEMBLY OVERVIEW

The Indiana House voted to amend House Joint Resolution 3 this week in a surprising turn of events. On Monday, Rep. Randy Truitt (RWest Lafayette) offered an amendment to strike the second sentence of HJR 3 that would have banned civil unions in Indiana. The amendment led to powerful speeches on both sides of the aisle, and both sides of the issue, ending in a vote of 52-43 to approve striking the second sentence. The 52 yes votes consisted of 23 Republicans and 29 Democrats, a very bipartisan measure indeed. The vote likely ensures that the constitutional amendment will not reach the public for a vote until at least 2016, if at all. A constitutional amendment must be approved by two, separately elected legislatures to be placed on the ballot for approval. HJR 3 now proceeds to the Senate for discussion. Two differing versions of a business personal property tax cut passed the House and Senate this week. It should be noted both HB 1001 and SB 1 differ from Governor Pences agenda for decreasing the business personal property tax. The House version, HB 1001, is authored by Rep. Eric Turner (R-Cicero). Significant points of the bill include: At a countys option, exempt newly-acquired personal property (i.e., each county would have the option to exempt personal property that is new to Indiana not just new to the county). If a county exercises the option to exempt new personal property, the ordinance must be adopted by a county option income tax (COIT) council, which includes representatives from the county and cities/towns. Local option income tax (LOIT) would serve as the mechanism for local governments to collect any replacement revenue, if necessary. Excludes utility personal property; in other words, utilities would continue to pay personal property tax (in 2013, utilities paid $252.4 million in personal property taxes). Provides that a county income tax council may adopt an ordinance to exempt from property taxation any new business personal property (other than utility personal property) that is located in the county.

General Assembly Overview Unclaimed Life Insurance Benefits IDOI Bill Electronic Delivery of Insurance Notices and Documents Motor Vehicle Financial Responsibility Pollution Exclusion Lawsuit Lending Workers Comp Abortion Coverage Mandate High Cost Program Study Welfare Drug Testing Bill Biosimilar Bill

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HB 1001 passed the full House by a vote of 63-33 and will now

proceed to the Senate where Sen. Brandt Hershman (R-Buck Creek) will sponsor the bill. The Senate version, SB 1, is authored by Sen. Brandt Hershman. SB 1 includes the following provisions: Reduces Indianas corporate income tax rate to 4.9% by July 1, 2019. Once fully implemented, this would put $132 M back into the private sector economy annually. Exempts small businesses from personal property tax liability if they have less than $25,000 of personal property in a county. This change is projected to exempt up to 71% of business personal property tax filers. Revises and eliminates certain tax credits to help finance these tax cuts, including reducing the state R&D tax credit by 50%. Creates an 11-member Blue Ribbon Commission to study the impact of the business personal property tax on Indianas economic competitiveness.

SB 1 passed the full Senate by a vote of 35-11. Next week marks the halfway point of the 2014 legislative session. You will notice a significant amount of introduced bills drop from the bill track lists as many bills never make the cut to advance to the second house. The House will conclude the first half on Monday. The Senate technically could end their third reading calendar Wednesday; however, an impending snow storm has caused Senate President Pro Tem David Long (R-Fort Wayne) to aim for Tuesday to ensure safe travel for all.

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UNCLAIMED LIFE INSURANCE BENEFITS

SB 220, authored by Sen. Travis Holdman (R), requires insurers to use the SSAs Death Master File or a database as inclusive to help with the accurate administration of unclaimed death benefits. The bill passed out of the Senate last week with an amendment that would apply the bill prospectively for policies issued in Indiana after June 30, 2015. This week, the AGs office expressed concern over the prospective treatment of the bill and they may seek to have it amended in the House back to its original form. The bill will likely receive a hearing in the House Insurance Committee on the second or third Wednesday of February. Stay tuned.

IDOI BILL
HB 1206, authored by House Insurance Chairman Matt Lehman (R), does the following: (1) removes a requirement for life insurers to submit individual investments to the Department of Insurance; (2) removes a requirement that a foreign or alien insurer submit an application for admission to do business in Indiana in duplicate; (3) changes from March 15 to July 1 of each year the due date for

certain insurance holding company filings; (4) adopts ORSA; (5) repeals a provision requiring the Commissioner to examine and publish a foreign or alien insurers annual condensed statement of assets and liabilities; and (6) specifies requirements for service contracts. The bill passed the House last week. It is expected to receive a hearing in the Senate Insurance Committee on the second or third Thursday of February.

ELECTRONIC DELIVERY OF INSURANCE NOTICES AND DOCUMENTS

HB 1058 (Rep. Peggy Mayfield), which passed out of the House Insurance Committee last week, provides for the electronic delivery of insurance notices and documents instead of other modes of delivery otherwise required for such notices and documents. The bill also requires a recipient's consent to electronic delivery and a method to withdraw consent. The bill was amended and engrossed on second reading in the House to include provisions regarding electronic posting of documents on an insurers website. The bill passed the House on Monday by a vote of 92-0.

MOTOR VEHICLE FINANCIAL RESPONSIBILITY

HB 1059 (Rep. Matt Lehman) makes various changes to the motor vehicle financial responsibility law, including the: (1) definition of "registration" to include the license plate issued in connection with the registration of a vehicle; (2) requirement of proof of financial responsibility and reinstatement fees; (3) suspension of a registration as a consequence of operation of the vehicle without financial responsibility in effect; and (4) requirement of proof of future financial responsibility for five years related to operating a vehicle without financial responsibility in effect. The introduced version of this bill was prepared by the interim study committee on insurance. The bill passed the House on Monday by a vote of 81-13.

POLLUTION EXCLUSION
HB 1241, authored by Rep. Martin Carbaugh (R), is a resurrection of last sessions HB 1269, which clarifies when environmental coverage is excluded from a commercial general liability insurance policy. Amendments were adopted on second reading in the House which include additional consumer notification provisions as well as language that would apply the bill prospectively. The bill passed by the House by a vote of 57-36 and Senator Holdman

was named the Senate Sponsor.

LAWSUIT LENDING
HB 1205, authored by House Chairman Matt Lehman (R), regulates the practice of lawsuit lending subject to the jurisdiction of the Indiana Department of Insurance. The bill was amended on second reading in the House to increase the interest rate cap from 25% to 38%. As amended, the bill passed the House by a vote of 57-39. Senator Holdman was named the Sponsor and Senator Eckerty as cosponsor.

WORKERS COMP
As an encore to HEA 1320 (from last session), SB 294 originally provided the following: additional restrictions on repackaged prescription drugs; reduction to the reimbursement cap from 200% of Medicare to 150% of Medicare; cap on reimbursement for implants; clarified the definition of medical service provider. The bill was amended in the Senate Pensions & Labor Committee hearing on Wednesday and now only contains language relative to repackaged drugs and clarification with respect to the definition of a medical service provider. As amended, the bill passed out of Committee unanimously. It is scheduled for second reading in the Senate on Monday.

ABORTION COVERAGE MANDATE PASSES HOUSE

A bill requiring that abortion coverage is offered only as a separate rider to a major medical policy passed the House 80-14 this week. HB 1123 mandates that abortion coverage be offered as an election to a health plan and not a part of essential coverage. The bill was amended on the House floor to remove a provision that exempted student health plans. Sen. Greg Walker is the primary Senate sponsor for HB 1123. It will likely be referred to the Senate Health and Provider Services Committee.

HIGH COST POOL STUDY PASSES HOUSE

A bill directing the Legislative Council to study whether the state should start a new high risk program in place of ICHIA passed the House this week. HB 1335 was filed by Rep. Tim Brown and requires a study of the implementation of a high cost management program for individuals who incur more than $1.5 million in health care costs due to chronic conditions. Given the delays and slow uptake of health plans offered

in Indiana on the federal health insurance marketplace, there has been concern over shutting down the current high risk pool and moving high cost patients out of that program.

WELFARE DRUG TESTING BILL PASSES BY WIDE MARGIN

A bill placing limits on benefits for people receiving TANF benefits passed the House 71-22. HB 1351 requires FSSA to administer a drug testing program and curb benefits for those who test positive for drugs. The bill also puts restrictions on what type of food could be purchased under a statewide nutrition assistance program (SNAP). Similar legislation has failed to pass the last two sessions but seems to have broader support this year.

BIOSIMILAR BILL MOVES TO HOUSE

A biosimilar substitution bill that has been historically controversial passed the Senate 38-11. SB 262 establishes a process by which a pharmacist could substitute a brand name drug for a biosimilar. The substitution is limited to drugs the FDA has determined are interchangeable and can only occur if a prescriber permits substitution on the prescription. The pharmacist must also notify the physician of the substitution within five days. Rep. Ed Clere, who chairs the House Public Health Committee, is the House sponsor for SB 262.

For more information

Trent Hahn tfhahn@bosepublicaffairs.com Mike OBrien mobrien@bosepublicaffairs.com Telephone: 317/684-5400 Fax: 317/684-5432