1.1 	A bill for an act
1.2 	relating to insurance; regulating certain form approvals, coverages, filings, 
1.3 	utilization reviews, and claims; amending Minnesota Statutes 2004, sections 
1.4 	60C.02, subdivision 1; 61A.02, subdivision 3; 61A.092, subdivisions 1, 3; 
1.5 	62A.095, subdivision 1; 62A.17, subdivisions 1, 2, 5; 62A.27; 62A.3093; 
1.6 	62C.14, subdivisions 9, 10; 62L.02, subdivision 24; 62M.01, subdivision 2; 
1.7 	62M.09, subdivision 9; 72C.10, subdivision 1; 79.01, by adding subdivisions; 
1.8 	79.251, by adding a subdivision; 79.252, by adding subdivisions; 79A.23, 
1.9 	subdivision 3; Minnesota Statutes 2005 Supplement, sections 59B.01; 62A.316; 
1.10 	62Q.75, subdivision 3; 65B.49, subdivision 5a; 79A.04, subdivision 2; repealing 
1.11 	Minnesota Statutes 2004, section 79.251, subdivision 2; Minnesota Rules, parts 
1.12 	2781.0400; 2781.0500; 2781.0600.
1.13 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.14 	Section 1. Minnesota Statutes 2005 Supplement, section 59B.01, is amended to read:
1.15 	59B.01 SCOPE AND PURPOSE.
1.16 	(a) The purpose of this chapter is to create a legal framework within which service 
1.17 	contracts may be sold in this state.
1.18 	(b) The following are exempt from this chapter:
1.19 	(1) warranties;
1.20 	(2) maintenance agreements;
1.21 	(3) warranties, service contracts, or maintenance agreements offered by public 
1.22 	utilities, as defined in section 216B.02, subdivision 4, or an entity or operating unit owned 
1.23 	by or under common control with a public utility;
1.24 	(4) service contracts sold or offered for sale to persons other than consumers;
1.25 	(5) service contracts on tangible property where the tangible property for which the 
1.26 	service contract is sold has a purchase price of $250 or less, exclusive of sales tax;
2.1 	(6) motor vehicle service contracts as defined in section 65B.29, subdivision 1, 
2.2 	paragraph (1);
2.3 	(7) service contracts for home security equipment installed by a licensed technology 
2.4 	systems contractor; and
2.5 	(8) motor club membership contracts that typically provide roadside assistance 
2.6 	services to motorists stranded for reasons that include, but are not limited to, mechanical 
2.7 	breakdown or adverse road conditions; and
2.8 	(9) home warranties.
2.9 	(c) The types of agreements referred to in paragraph (b) are not subject to chapters 
2.10 	60A to 79A, except as otherwise specifically provided by law.

2.11 	Sec. 2. Minnesota Statutes 2004, section 60C.02, subdivision 1, is amended to read:
2.12 		Subdivision 1.Scope. This chapter applies to all kinds of direct insurance, except:
2.13 	(1) life;
2.14 	(2) annuity;
2.15 	(3) title;
2.16 	(4) accident and sickness;
2.17 	(5) credit;
2.18 	(6) vendor's single interest or collateral protection or any similar insurance 
2.19 	protecting the interests of a creditor arising out of a creditor debtor transaction;
2.20 	(7) mortgage guaranty;
2.21 	(8) financial guaranty or other forms of insurance offering protection against 
2.22 	investment risks;
2.23 	(9) ocean marine;
2.24 	(10) a transaction or combination of transactions between a person, including 
2.25 	affiliates of the person, and an insurer, including affiliates of the insurer, that involves the 
2.26 	transfer of investment or credit risk unaccompanied by transfer of insurance risk; or
2.27 	(11) insurance provided by or guaranteed by government; or.
2.28 	(12) insurance of warranties or service contracts, including insurance that provides 
2.29 	for the repair, replacement, or services of goods or property, or indemnification for repair, 
2.30 	replacement or service, for the operation or structural failure of the goods or property due 
2.31 	to a defect in materials, workmanship or normal wear and tear, or provides reimbursement 
2.32 	for the liability insured by the user of agreement or service contracts that provide these 
2.33 	benefits.

2.34 	Sec. 3. Minnesota Statutes 2004, section 61A.02, subdivision 3, is amended to read:
3.1 		Subd. 3.Disapproval. (a) The commissioner shall, within 60 days after the filing of 
3.2 	any form, disapprove the form:
3.3 	(1) if the benefits provided are unreasonable in relation to the premium charged;
3.4 	(2) if the safety and soundness of the company would be threatened by the offering 
3.5 	of an excess rate of interest on the policy or contract;
3.6 	(3) if it contains a provision or provisions which are unlawful, unfair, inequitable, 
3.7 	misleading, or encourages misrepresentation of the policy; or
3.8 	(4) if the form, or its provisions, is otherwise not in the public interest. It shall 
3.9 	be unlawful for the company to issue any policy in the form so disapproved. If the 
3.10 	commissioner does not within 60 days after the filing of any form, disapprove or otherwise 
3.11 	object, the form shall be deemed approved.
3.12 	(b) When an insurer or the Minnesota Comprehensive Health Association fails to 
3.13 	respond to an objection or inquiry within 60 days, the filing is automatically disapproved. 
3.14 	A resubmission is required if action by the Department of Commerce is subsequently 
3.15 	requested. An additional filing fee is required for the resubmission.
3.16 	(c) For purposes of paragraph (a), clause (2), an excess rate of interest is a rate of 
3.17 	interest exceeding the rate of interest determined by subtracting three percentage points 
3.18 	from Moody's corporate bond yield average as most recently available.

3.19 	Sec. 4. Minnesota Statutes 2004, section 61A.092, subdivision 1, is amended to read:
3.20 		Subdivision 1.Continuation of coverage. Every group insurance policy issued 
3.21 	or renewed within this state after August 1, 1987, providing coverage for life insurance 
3.22 	benefits shall contain a provision that permits covered employees who are voluntarily or 
3.23 	involuntarily terminated or laid off from their employment, if the policy remains in force 
3.24 	for any active employee of the employer, to elect to continue the coverage for themselves 
3.25 	and their dependents. If the policy includes other benefits, the election provided by this 
3.26 	section extends to those other benefits.
3.27 	An employee is considered to be laid off from employment if there is a reduction in 
3.28 	hours to the point where the employee is no longer eligible for coverage under the group 
3.29 	life insurance policy. Termination does not include discharge for gross misconduct.

3.30 	Sec. 5. Minnesota Statutes 2004, section 61A.092, subdivision 3, is amended to read:
3.31 		Subd. 3.Notice of options. Upon termination of or layoff from employment of a 
3.32 	covered employee, the employer shall inform the employee of:
3.33 	(1) the employee's right to elect to continue the coverage;
4.1 	(2) the amount the employee must pay monthly to the employer to retain the 
4.2 	coverage;
4.3 	(3) the manner in which and the office of the employer to which the payment to 
4.4 	the employer must be made; and
4.5 	(4) the time by which the payments to the employer must be made to retain coverage.
4.6 	The employee has 60 days within which to elect coverage. The 60-day period shall 
4.7 	begin to run on the date coverage would otherwise terminate or on the date upon which 
4.8 	notice of the right to coverage is received, whichever is later.
4.9 	If the covered employee or covered dependent dies during the 60-day election period 
4.10 	and before the covered employee makes an election to continue or reject continuation, then 
4.11 	the covered employee will be considered to have elected continuation of coverage. The 
4.12 	estate ofbeneficiary previously selected by the former employee or covered dependent 
4.13 	would then be entitled to a death benefit equal to the amount of insurance that could have 
4.14 	been continued less any unpaid premium owing as of the date of death.
4.15 	Notice must be in writing and sent by first class mail to the employee's last known 
4.16 	address which the employee has provided to the employer.
4.17 	A notice in substantially the following form is sufficient: "As a terminated or laid 
4.18 	off employee, the law authorizes you to maintain your group insurance benefits, in an 
4.19 	amount equal to the amount of insurance in effect on the date you terminated or were laid 
4.20 	off from employment, for a period of up to 18 months. To do so, you must notify your 
4.21 	former employer within 60 days of your receipt of this notice that you intend to retain this 
4.22 	coverage and must make a monthly payment of $............ at ............. by the ............. of 
4.23 	each month."

4.24 	Sec. 6. Minnesota Statutes 2004, section 62A.095, subdivision 1, is amended to read:
4.25 		Subdivision 1.Applicability. (a) No health plan shall be offered, sold, or issued to a 
4.26 	resident of this state, or to cover a resident of this state, unless the health plan complies 
4.27 	with subdivision 2.
4.28 	(b) Health plans providing benefits under health care programs administered by the 
4.29 	commissioner of human services are not subject to the limits described in subdivision 
4.30 	2 but are subject to the right of subrogation provisions under section  256B.37 and the 
4.31 	lien provisions under section  256.015;  256B.042;  256D.03, subdivision 8; or  256L.03, 
4.32 	subdivision 6. 
4.33 	For purposes of this section, "health plan" includes coverage that is excluded under 
4.34 	section 62A.011, subdivision 3, clauses (4), (7), and (10).

5.1 	Sec. 7. Minnesota Statutes 2004, section 62A.17, subdivision 1, is amended to read:
5.2 		Subdivision 1.Continuation of coverage. Every group insurance policy, group 
5.3 	subscriber contract, and health care plan included within the provisions of section  62A.16, 
5.4 	except policies, contracts, or health care plans covering employees of an agency of the 
5.5 	federal government, shall contain a provision which permits every covered employee who 
5.6 	is voluntarily or involuntarily terminated or laid off from employment and every covered 
5.7 	dependent of the covered employee, if the policy, contract, or health care plan remains 
5.8 	in force for active employees of the employer, to elect to continue the coverage for the 
5.9 	employee and dependents. 
5.10 	An employee shall be considered to be laid off from employment if there is a 
5.11 	reduction in hours to the point where the employee is no longer eligible under the policy, 
5.12 	contract, or health care plan. Termination shall not include discharge for gross misconduct.
5.13 	Upon request by the terminated or laid off employee or any covered dependent, a 
5.14 	health carrier must provide the instructions necessary to enable the employee or dependent 
5.15 	to elect and receive continuation of coverage through the insurer in place of the former 
5.16 	employer.

5.17 	Sec. 8. Minnesota Statutes 2004, section 62A.17, subdivision 2, is amended to read:
5.18 		Subd. 2.Responsibility of employee. Every covered employee or dependent 
5.19 	electing to continue coverage shall pay the former employer, on a monthly basis, the 
5.20 	cost of the continued coverage. The policy, contract, or plan must require the group 
5.21 	policyholder or contract holder to, upon request, provide the employee or dependent with 
5.22 	written verification from the insurer of the cost of this coverage promptly at the time 
5.23 	of eligibility for this coverage and at any time during the continuation period. If the 
5.24 	policy, contract, or health care plan is administered by a trust, every covered employee 
5.25 	or dependent electing to continue coverage shall pay the trust the cost of continued 
5.26 	coverage according to the eligibility rules established by the trust. In no event shall the 
5.27 	amount of premium charged exceed 102 percent of the cost to the plan for such period 
5.28 	of coverage for similarly situated employees with respect to whom neither termination 
5.29 	nor layoff has occurred, without regard to whether such cost is paid by the employer or 
5.30 	employee. The employee and every covered dependent shall be eligible to continue the 
5.31 	coverage until the employee becomes covered under another group health plan, or for a 
5.32 	period of 18 months after the termination of or lay off from employment, whichever is 
5.33 	shorter. If the employee becomes covered under another group policy, contract, or health 
5.34 	plan that does not include dependent coverage, every covered dependent remains eligible 
5.35 	to continue coverage with the former employer subject to the conditions specified in this 
6.1 	subdivision. If the employee or any covered dependent becomes covered under another 
6.2 	group policy, contract, or health plan and the new group policy, contract, or health plan 
6.3 	contains any preexisting condition limitations, the employee or dependent may, subject to 
6.4 	the 18-month maximum continuation limit, continue coverage with the former employer 
6.5 	until the preexisting condition limitations have been satisfied. The new policy, contract, or 
6.6 	health plan is primary except as to the preexisting condition. In the case of a newborn 
6.7 	child who is a dependent of the employee, the new policy, contract, or health plan is 
6.8 	primary upon the date of birth of the child, regardless of which policy, contract, or health 
6.9 	plan coverage is deemed primary for the mother of the child.

6.10 	Sec. 9. Minnesota Statutes 2004, section 62A.17, subdivision 5, is amended to read:
6.11 		Subd. 5.Notice of options. Upon the termination of or lay off from employment 
6.12 	of an eligible employee, the employer shall inform the employee within ten days after 
6.13 	termination or lay off of:
6.14 	(a) the right to elect to continue the coverage;
6.15 	(b) the amount the employee must pay monthly to the employer or health carrier to 
6.16 	retain the coverage;
6.17 	(c) the manner in which and the office of the employer or health carrier to which the 
6.18 	payment to the employer or health carrier must be made; and
6.19 	(d) the time by which the payments to the employer or health carrier must be made 
6.20 	to retain coverage.
6.21 	If the policy, contract, or health care plan is administered by a trust, the employer 
6.22 	is relieved of the obligation imposed by clauses (a) to (d). The trust shall inform the 
6.23 	employee of the information required by clauses (a) to (d).
6.24 	The employee shall have 60 days within which to elect coverage. The 60-day period 
6.25 	shall begin to run on the date plan coverage would otherwise terminate or on the date upon 
6.26 	which notice of the right to coverage is received, whichever is later.
6.27 	Notice must be in writing and sent by first class mail to the employee's last known 
6.28 	address which the employee has provided the employer or trust.
6.29 	A notice in substantially the following form shall be sufficient: "As a terminated or 
6.30 	laid off employee, the law authorizes you to maintain your group medical insurance for 
6.31 	a period of up to 18 months. To do so you must notify your former employer or health 
6.32 	carrier within 60 days of your receipt of this notice that you intend to retain this coverage 
6.33 	and must make a monthly payment of $.......... to ........... at .......... by the ............... of 
6.34 	each month."

7.1 	Sec. 10. Minnesota Statutes 2004, section 62A.27, is amended to read:
7.2 	62A.27 COVERAGE OF ADOPTED CHILDREN.
7.3 	(a) A health plan that provides coverage to a Minnesota resident must cover adopted 
7.4 	children of the insured, subscriber, participant, or enrollee on the same basis as other 
7.5 	dependents. Consequently, the plan shall not contain any provision concerning preexisting 
7.6 	condition limitations, insurability, eligibility, or health underwriting approval concerning 
7.7 	children placed for adoption with the participant.
7.8 	(b) The coverage required by this section is effective from the date of placement 
7.9 	for adoption. For purposes of this section, placement for adoption means the assumption 
7.10 	and retention by a person of a legal obligation for total or partial support of a child in 
7.11 	anticipation of adoption of the child. The child's placement with a person terminates upon 
7.12 	the termination of the legal obligation for total or partial support.
7.13 	(c) For the purpose of this section, health plan includes:
7.14 	(1) coverage offered by community integrated service networks;
7.15 	(2) coverage that is designed solely to provide dental or vision care; and
7.16 	(3) any plan under the federal Employee Retirement Income Security Act of 1974 
7.17 	(ERISA), United States Code, title 29, sections 1001 to 1461.
7.18 	(d) No policy or contract covered by this section may require notification to a health 
7.19 	carrier as a condition for this dependent coverage. However, if the policy or contract 
7.20 	mandates an additional premium for each dependent, the health carrier is entitled to 
7.21 	all premiums that would have been collected had the health carrier been aware of the 
7.22 	additional dependent. The health carrier may withhold payment of any health benefits 
7.23 	for the new dependent until it has been compensated with the applicable premium 
7.24 	which would have been owed if the health carrier had been informed of the additional 
7.25 	dependent immediately.

7.26 	Sec. 11. Minnesota Statutes 2004, section 62A.3093, is amended to read:
7.27 	62A.3093 COVERAGE FOR DIABETES.
7.28 	A health plan, including a plan providing the coverage specified in section  62A.011, 
7.29 	subdivision 3, clause (10), must provide coverage for: (1) all physician prescribed 
7.30 	medically appropriate and necessary equipment and supplies used in the management and 
7.31 	treatment of diabetes not otherwise covered under Medicare or Medicare Part D; and (2) 
7.32 	diabetes outpatient self-management training and education, including medical nutrition 
7.33 	therapy, that is provided by a certified, registered, or licensed health care professional 
7.34 	working in a program consistent with the national standards of diabetes self-management 
7.35 	education as established by the American Diabetes Association. Coverage must include 
8.1 	persons with gestational, type I or type II diabetes. Coverage required under this section is 
8.2 	subject to the same deductible or coinsurance provisions applicable to the plan's hospital, 
8.3 	medical expense, medical equipment, or prescription drug benefits. A health carrier may 
8.4 	not reduce or eliminate coverage due to this requirement. 

8.5 	EFFECTIVE DATE. This section is effective January 1, 2006.

8.6 	Sec. 12. Minnesota Statutes 2005 Supplement, section 62A.316, is amended to read:
8.7 	62A.316 BASIC MEDICARE SUPPLEMENT PLAN; COVERAGE.
8.8 	(a) The basic Medicare supplement plan must have a level of coverage that will 
8.9 	provide:
8.10 	(1) coverage for all of the Medicare Part A inpatient hospital coinsurance amounts, 
8.11 	and 100 percent of all Medicare part A eligible expenses for hospitalization not covered 
8.12 	by Medicare, after satisfying the Medicare Part A deductible;
8.13 	(2) coverage for the daily co-payment amount of Medicare Part A eligible expenses 
8.14 	for the calendar year incurred for skilled nursing facility care;
8.15 	(3) coverage for the coinsurance amount, or in the case of outpatient department 
8.16 	services paid under a prospective payment system, the co-payment amount, of Medicare 
8.17 	eligible expenses under Medicare Part B regardless of hospital confinement, subject to 
8.18 	the Medicare Part B deductible amount;
8.19 	(4) 80 percent of the hospital and medical expenses and supplies incurred during 
8.20 	travel outside the United States as a result of a medical emergency;
8.21 	(5) coverage for the reasonable cost of the first three pints of blood, or equivalent 
8.22 	quantities of packed red blood cells as defined under federal regulations under Medicare 
8.23 	Parts A and B, unless replaced in accordance with federal regulations;
8.24 	(6) 100 percent of the cost of immunizations not otherwise covered under Part D of 
8.25 	the Medicare program and routine screening procedures for cancer screening including 
8.26 	mammograms and pap smears; and
8.27 	(7) 80 percent of coverage for all physician prescribed medically appropriate and 
8.28 	necessary equipment and supplies used in the management and treatment of diabetes not 
8.29 	otherwise covered under Part D of the Medicare program. Coverage must include persons 
8.30 	with gestational, type I, or type II diabetes.
8.31 	(b) Only the following optional benefit riders may be added to this plan:
8.32 	(1) coverage for all of the Medicare Part A inpatient hospital deductible amount;
9.1 	(2) a minimum of 80 percent of eligible medical expenses and supplies not covered 
9.2 	by Medicare Part B, not to exceed any charge limitation established by the Medicare 
9.3 	program or state law;
9.4 	(3) coverage for all of the Medicare Part B annual deductible;
9.5 	(4) coverage for at least 50 percent, or the equivalent of 50 percent, of usual and 
9.6 	customary prescription drug expenses. An outpatient prescription drug benefit must not 
9.7 	be included for sale or issuance in a Medicare policy or certificate issued on or after 
9.8 	January 1, 2006;
9.9 	(5) preventive medical care benefit coverage for the following preventative health 
9.10 	services not covered by Medicare:
9.11 	(i) an annual clinical preventive medical history and physical examination that may 
9.12 	include tests and services from clause (ii) and patient education to address preventive 
9.13 	health care measures;
9.14 	(ii) preventive screening tests or preventive services, the selection and frequency of 
9.15 	which is determined to be medically appropriate by the attending physician.
9.16 	Reimbursement shall be for the actual charges up to 100 percent of the 
9.17 	Medicare-approved amount for each service, as if Medicare were to cover the service as 
9.18 	identified in American Medical Association current procedural terminology (AMA CPT) 
9.19 	codes, to a maximum of $120 annually under this benefit. This benefit shall not include 
9.20 	payment for a procedure covered by Medicare;
9.21 	(6) coverage for services to provide short-term at-home assistance with activities of 
9.22 	daily living for those recovering from an illness, injury, or surgery:
9.23 	(i) For purposes of this benefit, the following definitions apply:
9.24 	(A) "activities of daily living" include, but are not limited to, bathing, dressing, 
9.25 	personal hygiene, transferring, eating, ambulating, assistance with drugs that are normally 
9.26 	self-administered, and changing bandages or other dressings;
9.27 	(B) "care provider" means a duly qualified or licensed home health aide/homemaker, 
9.28 	personal care aid, or nurse provided through a licensed home health care agency or 
9.29 	referred by a licensed referral agency or licensed nurses registry;
9.30 	(C) "home" means a place used by the insured as a place of residence, provided 
9.31 	that the place would qualify as a residence for home health care services covered by 
9.32 	Medicare. A hospital or skilled nursing facility shall not be considered the insured's 
9.33 	place of residence;
9.34 	(D) "at-home recovery visit" means the period of a visit required to provide at-home 
9.35 	recovery care, without limit on the duration of the visit, except each consecutive four 
9.36 	hours in a 24-hour period of services provided by a care provider is one visit;
10.1 	(ii) Coverage requirements and limitations:
10.2 	(A) at-home recovery services provided must be primarily services that assist in 
10.3 	activities of daily living;
10.4 	(B) the insured's attending physician must certify that the specific type and 
10.5 	frequency of at-home recovery services are necessary because of a condition for which a 
10.6 	home care plan of treatment was approved by Medicare;
10.7 	(C) coverage is limited to:
10.8 	(I) no more than the number and type of at-home recovery visits certified as 
10.9 	necessary by the insured's attending physician. The total number of at-home recovery 
10.10 	visits shall not exceed the number of Medicare-approved home care visits under a 
10.11 	Medicare-approved home care plan of treatment;
10.12 	(II) the actual charges for each visit up to a maximum reimbursement of $40 per visit;
10.13 	(III) $1,600 per calendar year;
10.14 	(IV) seven visits in any one week;
10.15 	(V) care furnished on a visiting basis in the insured's home;
10.16 	(VI) services provided by a care provider as defined in this section;
10.17 	(VII) at-home recovery visits while the insured is covered under the policy or 
10.18 	certificate and not otherwise excluded;
10.19 	(VIII) at-home recovery visits received during the period the insured is receiving 
10.20 	Medicare-approved home care services or no more than eight weeks after the service date 
10.21 	of the last Medicare-approved home health care visit;
10.22 	(iii) Coverage is excluded for:
10.23 	(A) home care visits paid for by Medicare or other government programs; and
10.24 	(B) care provided by family members, unpaid volunteers, or providers who are 
10.25 	not care providers;
10.26 	(7) coverage for at least 50 percent, or the equivalent of 50 percent, of usual and 
10.27 	customary prescription drug expenses to a maximum of $1,200 paid by the issuer annually 
10.28 	under this benefit. An issuer of Medicare supplement insurance policies that elects to 
10.29 	offer this benefit rider shall also make available coverage that contains the rider specified 
10.30 	in clause (4). An outpatient prescription drug benefit must not be included for sale or 
10.31 	issuance in a Medicare policy or certificate issued on or after January 1, 2006.;
10.32 	(8)(i) Medicare Part A Deductible: coverage for 50 percent of the Medicare Part A 
10.33 	inpatient hospital deductible amount per benefit period until the out-of-pocket limitation is 
10.34 	met as described in clause (vii);
10.35 	(ii) Skilled Nursing Facility Care: coverage for 50 percent of the coinsurance 
10.36 	amount for each day used from the 21st through the 100th day in a Medicare benefit period 
11.1 	for posthospital skilled nursing care eligible under Medicare Part A until the out-of-pocket 
11.2 	limitation is met as described in clause (vii);
11.3 	(iii) Hospice Care: coverage for 50 percent of cost sharing for all Medicare Part A 
11.4 	eligible expenses and respite care until the out-of-pocket limitation is met as described 
11.5 	in clause (vii);
11.6 	(iv) coverage for 50 percent, under Medicare Part A or B, of the reasonable cost of 
11.7 	the first three pints of blood (or equivalent quantities of packed red blood cells, as defined 
11.8 	under federal regulations) unless replaced in accordance with federal regulations until the 
11.9 	out-of-pocket limitation is met as described in clause (vii);
11.10 	(v) except for coverage provided in this clause, coverage for the 50 percent of the 
11.11 	cost sharing otherwise applicable under Medicare Part B after the policyholder pays 
11.12 	the Medicare Part B deductible until the out-of-pocket limitation is met as described 
11.13 	in clause (vii);
11.14 	(vi) coverage of 100 percent of the cost sharing for Medicare Part B preventive 
11.15 	services after the policyholder pays the Part B deductible; and
11.16 	(vii) coverage of 100 percent of all cost sharing under Medicare Parts A and B 
11.17 	for the balance of the calendar year after the individual has reached the out-of-pocket 
11.18 	limitation on annual expenditures under Medicare Parts A and B of $4,000 in 2006, 
11.19 	indexed each year by the appropriate inflation adjustment by the Secretary of the United 
11.20 	States Department of Health and Human Services; and
11.21 	(9)(i) the benefits described in clause (8)(vi);
11.22 	(ii) the benefit described in clause (8)(i), (ii), (iii), (iv), and (v), but substituting 75 
11.23 	percent for 50 percent; and
11.24 	(iii) the benefit described in clause (8)(vii), but substituting $2,000 for $4,000.

11.25 	Sec. 13. Minnesota Statutes 2004, section 62C.14, subdivision 9, is amended to read:
11.26 		Subd. 9.Required filing. No service plan corporation shall deliver or issue 
11.27 	for delivery in this state any subscriber contract, endorsement, rider, amendment or 
11.28 	application until a copy of the form thereof has been filed with the commissioner, subject 
11.29 	to disapproval by the commissioner. Any such form issued or in use on August 1, 1971, if 
11.30 	filed with the commissioner within 60 days after August 1, 1971, shall be deemed filed 
11.31 	upon receipt by the commissioner. When an insurer, service plan corporation, or the 
11.32 	Minnesota Comprehensive Health Association fails to respond to an objection or inquiry 
11.33 	within 60 days, the filing is automatically disapproved. A resubmission is required if 
11.34 	action by the Department of Commerce is subsequently requested. An additional filing 
11.35 	fee is required for the resubmission. The commissioner also may by regulation exempt 
12.1 	from filing those subscriber contracts issued to a group of not less than 300 subscribers, 
12.2 	or to other groups upon such reasonable conditions and restrictions as the commissioner 
12.3 	may require.

12.4 	Sec. 14. Minnesota Statutes 2004, section 62C.14, subdivision 10, is amended to read:
12.5 		Subd. 10.Filing or disapproval. Except as otherwise provided in subdivision 9, 
12.6 	all forms received by the commissioner shall be deemed filed 60 days after received 
12.7 	unless disapproved by order transmitted to the corporation stating that the form used in a 
12.8 	specified respect is contrary to law, contains a provision or provisions which are unfair, 
12.9 	inequitable, misleading, inconsistent or ambiguous, or is in part illegible. It shall be 
12.10 	unlawful to issue or use a document disapproved by the commissioner. When an insurer, 
12.11 	service plan corporation, or the Minnesota Comprehensive Health Association fails to 
12.12 	respond to an objection or inquiry within 60 days, the filing is automatically disapproved. 
12.13 	A resubmission is required if action by the Department of Commerce is subsequently 
12.14 	requested. An additional filing fee is required for the resubmission.

12.15 	Sec. 15. Minnesota Statutes 2004, section 62L.02, subdivision 24, is amended to read:
12.16 		Subd. 24.Qualifying coverage. "Qualifying coverage" means health benefits or 
12.17 	health coverage provided under:
12.18 	(1) a health benefit plan, as defined in this section, but without regard to whether it is 
12.19 	issued to a small employer and including blanket accident and sickness insurance, other 
12.20 	than accident-only coverage, as defined in section  62A.11; 
12.21 	(2) part A or part B of Medicare;
12.22 	(3) medical assistance under chapter 256B;
12.23 	(4) general assistance medical care under chapter 256D;
12.24 	(5) MCHA;
12.25 	(6) a self-insured health plan;
12.26 	(7) the MinnesotaCare program established under section  256L.02; 
12.27 	(8) a plan provided under section  43A.316,  43A.317, or  471.617; 
12.28 	(9) the Civilian Health and Medical Program of the Uniformed Services 
12.29 	(CHAMPUS) or other coverage provided under United States Code, title 10, chapter 55;
12.30 	(10) coverage provided by a health care network cooperative under chapter 62R;
12.31 	(11) a medical care program of the Indian Health Service or of a tribal organization;
12.32 	(12) the federal Employees Health Benefits Plan, or other coverage provided under 
12.33 	United States Code, title 5, chapter 89;
13.1 	(13) a health benefit plan under section 5(e) of the Peace Corps Act, codified as 
13.2 	United States Code, title 22, section 2504(e);
13.3 	(14) a health plan; or
13.4 	(15) a plan similar to any of the above plans provided in this state or in another 
13.5 	state as determined by the commissioner.;
13.6 	(16) any plan established or maintained by a state, the United States government, or 
13.7 	a foreign country, or any political subdivision of a state, the United States government, or a 
13.8 	foreign country that provides health coverage to individuals who are enrolled in the plan; or
13.9 	(17) the State Children's Health Insurance Program (SCHIP).

13.10 	Sec. 16. Minnesota Statutes 2004, section 62M.01, subdivision 2, is amended to read:
13.11 		Subd. 2.Jurisdiction. Sections  62M.01 to  62M.16 apply to any insurance company 
13.12 	licensed under chapter 60A to offer, sell, or issue a policy of accident and sickness 
13.13 	insurance as defined in section  62A.01; a health service plan licensed under chapter 
13.14 	62C; a health maintenance organization licensed under chapter 62D; the Minnesota 
13.15 	Comprehensive Health Association created under chapter 62E; a community integrated 
13.16 	service network licensed under chapter 62N; an accountable provider network operating 
13.17 	under chapter 62T; a fraternal benefit society operating under chapter 64B; a joint 
13.18 	self-insurance employee health plan operating under chapter 62H; a multiple employer 
13.19 	welfare arrangement, as defined in section 3 of the Employee Retirement Income Security 
13.20 	Act of 1974 (ERISA), United States Code, title 29, section 1103, as amended; a third 
13.21 	party administrator licensed under section  60A.23, subdivision 8, that provides utilization 
13.22 	review services for the administration of benefits under a health benefit plan as defined in 
13.23 	section  62M.02; or any entity performing utilization review on behalf of a business entity 
13.24 	in this state pursuant to a health benefit plan covering a Minnesota resident. 

13.25 	Sec. 17. Minnesota Statutes 2004, section 62M.09, subdivision 9, is amended to read:
13.26 		Subd. 9.Annual report. A utilization review organization shall file an annual 
13.27 	report with the annual financial statement it submits to the commissioner of commerce 
13.28 	that includes:
13.29 	(1) per 1,000 claims utilization reviews, the number and rate of claims denied
13.30 	determinations not to certify based on medical necessity for each procedure or service; and
13.31 	(2) the number and rate of denials overturned on appeal.
13.32 	A utilization review organization that is not a licensed health carrier must submit the 
13.33 	annual report required by this subdivision on April 1 of each year.

14.1 	Sec. 18. Minnesota Statutes 2005 Supplement, section 62Q.75, subdivision 3, is 
14.2 	amended to read:
14.3 		Subd. 3.Claims filing. Unless otherwise provided by contract, by section 16A.124, 
14.4 	subdivision 4a, or by federal law, or unless the contract provides for a shorter time period, 
14.5 	the health care providers and facilities specified in subdivision 2 must submit their charges 
14.6 	to a health plan company or third-party administrator within six months from the date of 
14.7 	service or the date the health care provider knew or was informed of the correct name and 
14.8 	address of the responsible health plan company or third-party administrator, whichever 
14.9 	is later. A health care provider or facility that does not make an initial submission of 
14.10 	charges within the six-month period shall not be reimbursed for the charge and may not 
14.11 	collect the charge from the recipient of the service or any other payer. The six-month 
14.12 	submission requirement may be extended to 12 months in cases where a health care 
14.13 	provider or facility specified in subdivision 2 has determined and can substantiate that 
14.14 	it has experienced a significant disruption to normal operations that materially affects 
14.15 	the ability to conduct business in a normal manner and to submit claims on a timely 
14.16 	basis. This subdivision also applies to all health care providers and facilities that submit 
14.17 	charges to workers' compensation payers for treatment of a workers' compensation injury 
14.18 	compensable under chapter 176, or to reparation obligors for treatment of an injury 
14.19 	compensable under chapter 65B.

14.20 	Sec. 19. Minnesota Statutes 2005 Supplement, section 65B.49, subdivision 5a, is 
14.21 	amended to read:
14.22 		Subd. 5a.Rental vehicles. (a) Every plan of reparation security insuring a natural 
14.23 	person as named insured, covering private passenger vehicles as defined under section 
14.24 	65B.001, subdivision 3, and pickup trucks and vans as defined under section 168.011 must 
14.25 	provide that all of the obligation for damage and loss of use to a rented private passenger 
14.26 	vehicle, including pickup trucks and vans as defined under section 168.011, and rented 
14.27 	trucks with a registered gross vehicle weight of 26,000 pounds or less would be covered 
14.28 	by the property damage liability portion of the plan. This subdivision does not apply to 
14.29 	plans of reparation security covering only motor vehicles registered under section 168.10, 
14.30 	subdivision 1a, 1b, 1c, or 1d, or recreational equipment as defined under section 168.011. 
14.31 	The obligation of the plan must not be contingent on fault or negligence. In all cases 
14.32 	where the plan's property damage liability coverage is less than $35,000, the coverage 
14.33 	available under the subdivision must be $35,000. Other than as described in this paragraph 
14.34 	or in paragraph (j), nothing in this section amends or alters the provisions of the plan of 
14.35 	reparation security as to primacy of the coverages in this section.
15.1 	(b) A vehicle is rented for purposes of this subdivision:
15.2 	(1) if the rate for the use of the vehicle is determined on a monthly, weekly, or 
15.3 	daily basis; or
15.4 	(2) during the time that a vehicle is loaned as a replacement for a vehicle being 
15.5 	serviced or repaired regardless of whether the customer is charged a fee for the use 
15.6 	of the vehicle.
15.7 	A vehicle is not rented for the purposes of this subdivision if the rate for the vehicle's 
15.8 	use is determined on a period longer than one month or if the term of the rental agreement 
15.9 	is longer than one month. A vehicle is not rented for purposes of this subdivision if the 
15.10 	rental agreement has a purchase or buyout option or otherwise functions as a substitute for 
15.11 	purchase of the vehicle.
15.12 	(c) The policy or certificate issued by the plan must inform the insured of the 
15.13 	application of the plan to private passenger rental vehicles, including pickup trucks and 
15.14 	vans as defined under section 168.011, and that the insured may not need to purchase 
15.15 	additional coverage from the rental company.
15.16 	(d) Where an insured has two or more vehicles covered by a plan or plans of 
15.17 	reparation security containing the rented motor vehicle coverage required under paragraph 
15.18 	(a), the insured may select the plan the insured wishes to collect from and that plan is 
15.19 	entitled to a pro rata contribution from the other plan or plans based upon the property 
15.20 	damage limits of liability. If the person renting the motor vehicle is also covered by the 
15.21 	person's employer's insurance policy or the employer's automobile self-insurance plan, 
15.22 	the reparation obligor under the employer's policy or self-insurance plan has primary 
15.23 	responsibility to pay claims arising from use of the rented vehicle.
15.24 	(e) A notice advising the insured of rental vehicle coverage must be given by the 
15.25 	reparation obligor to each current insured with the first renewal notice after January 1, 
15.26 	1989. The notice must be approved by the commissioner of commerce. The commissioner 
15.27 	may specify the form of the notice.
15.28 	(f) When a motor vehicle is rented in this state, there must be attached to the rental 
15.29 	contract a separate form containing a written notice in at least 10-point bold type, if 
15.30 	printed, or in capital letters, if typewritten, which states:
15.31 	Under Minnesota law, a personal automobile insurance policy issued in Minnesota 
15.32 	must cover the rental of this motor vehicle against damage to the vehicle and against 
15.33 	loss of use of the vehicle. Therefore, purchase of any collision damage waiver 
15.34 	or similar insurance affected in this rental contract is not necessary if your policy 
15.35 	was issued in Minnesota.
16.1 	No collision damage waiver or other insurance offered as part of or in conjunction with 
16.2 	a rental of a motor vehicle may be sold unless the person renting the vehicle provides a 
16.3 	written acknowledgment that the above consumer protection notice has been read and 
16.4 	understood.
16.5 	(g) When damage to a rented vehicle is covered by a plan of reparation security as 
16.6 	provided under paragraph (a), the rental contract must state that payment by the reparation 
16.7 	obligor within the time limits of section 72A.201 is acceptable, and prior payment by 
16.8 	the renter is not required.
16.9 	(h) Compensation for the loss of use of a damaged rented motor vehicle is limited to 
16.10 	a period no longer than 14 days.
16.11 	(i)(1) For purposes of this paragraph, "rented motor vehicle" means a rented vehicle 
16.12 	described in paragraph (a), using the definition of "rented" provided in paragraph (b).
16.13 	(2) Notwithstanding section 169.09, subdivision 5a, an owner of a rented motor 
16.14 	vehicle is not vicariously liable for legal damages resulting from the operation of the 
16.15 	rented motor vehicle in an amount greater than $100,000 because of bodily injury to one 
16.16 	person in any one accident and, subject to the limit for one person, $300,000 because of 
16.17 	injury to two or more persons in any one accident, and $50,000 because of injury to or 
16.18 	destruction of property of others in any one accident, if the owner of the rented motor 
16.19 	vehicle has in effect, at the time of the accident, a policy of insurance or self-insurance, as 
16.20 	provided in section 65B.48, subdivision 3, covering losses up to at least the amounts set 
16.21 	forth in this paragraph. Nothing in this paragraph alters or affects the obligations of an 
16.22 	owner of a rented motor vehicle to comply with the requirements of compulsory insurance 
16.23 	through a policy of insurance as provided in section 65B.48, subdivision 2, or through 
16.24 	self-insurance as provided in section 65B.48, subdivision 3; or with the obligations arising 
16.25 	from section 72A.125 for products sold in conjunction with the rental of a motor vehicle. 
16.26 	Nothing in this paragraph alters or affects liability, other than vicarious liability, of an 
16.27 	owner of a rented motor vehicle.
16.28 	(3) (2) The dollar amounts stated in this paragraph shall be adjusted for inflation 
16.29 	based upon the Consumer Price Index for all urban consumers, known as the CPI-U, 
16.30 	published by the United States Bureau of Labor Statistics. The dollar amounts stated 
16.31 	in this paragraph are based upon the value of that index for July 1995, which is the 
16.32 	reference base index for purposes of this paragraph. The dollar amounts in this paragraph 
16.33 	shall change effective January 1 of each odd-numbered year based upon the percentage 
16.34 	difference between the index for July of the preceding year and the reference base index, 
16.35 	calculated to the nearest whole percentage point. The commissioner shall announce and 
16.36 	publish, on or before September 30 of the preceding year, the changes in the dollar 
17.1 	amounts required by this paragraph to take effect on January 1 of each odd-numbered 
17.2 	year. The commissioner shall use the most recent revision of the July index available as 
17.3 	of September 1. Changes in the dollar amounts must be in increments of $5,000, and no 
17.4 	change shall be made in a dollar amount until the change in the index requires at least 
17.5 	a $5,000 change. If the United States Bureau of Labor Statistics changes the base year 
17.6 	upon which the CPI-U is based, the commissioner shall make the calculations necessary 
17.7 	to convert from the old base year to the new base year. If the CPI-U is discontinued, the 
17.8 	commissioner shall use the available index that is most similar to the CPI-U.
17.9 	(j) The plan of reparation security covering the owner of a rented motor vehicle is 
17.10 	excess of any residual liability coverage insuring an operator of a rented motor vehicle if 
17.11 	the vehicle is loaned as a replacement for a vehicle being serviced or repaired, regardless 
17.12 	of whether a fee is charged for use of the vehicle, provided that the vehicle so loaned is 
17.13 	owned by the service or repair business.

17.14 	Sec. 20. Minnesota Statutes 2004, section 72C.10, subdivision 1, is amended to read:
17.15 		Subdivision 1.Readability compliance; filing and approval. No insurer shall 
17.16 	make, issue, amend, or renew any policy or contract after the dates specified in section  
17.17 	72C.11 for the applicable type of policy unless the contract is in compliance with the 
17.18 	requirements of sections  72C.06 to  72C.09 and unless the contract is filed with the 
17.19 	commissioner for approval. The contract shall be deemed approved 90 60 days after filing 
17.20 	unless disapproved by the commissioner within the 90-day 60-day period. When an 
17.21 	insurer, service plan corporation, or the Minnesota Comprehensive Health Association 
17.22 	fails to respond to an objection or inquiry within 60 days, the filing is automatically 
17.23 	disapproved. A resubmission is required if action by the Department of Commerce 
17.24 	is subsequently requested. An additional filing fee is required for the resubmission. 
17.25 	The commissioner shall not unreasonably withhold approval. Any disapproval shall be 
17.26 	delivered to the insurer in writing, stating the grounds therefor. Any policy filed with the 
17.27 	commissioner shall be accompanied by a Flesch scale readability analysis and test score 
17.28 	and by the insurer's certification that the policy or contract is in its judgment readable 
17.29 	based on the factors specified in sections  72C.06 to  72C.08. 

17.30 	Sec. 21. Minnesota Statutes 2004, section 79.01, is amended by adding a subdivision 
17.31 	to read:
17.32 		Subd. 1a.Assigned risk plan. "Assigned risk plan" means:
17.33 	(1) the method to provide workers' compensation coverage to employers unable to 
17.34 	obtain coverage through licensed workers' compensation companies; and
18.1 	(2) the procedures established by the commissioner to implement that method of 
18.2 	providing coverage including administration of all assigned risk losses and reserves.

18.3 	Sec. 22. Minnesota Statutes 2004, section 79.01, is amended by adding a subdivision 
18.4 	to read:
18.5 		Subd. 1b.Employer. "Employer" has the meaning given in section 176.011, 
18.6 	subdivision 10.

18.7 	Sec. 23. Minnesota Statutes 2004, section 79.251, is amended by adding a subdivision 
18.8 	to read:
18.9 		Subd. 2a.Assigned risk rating plan. (a) Employers insured through the assigned 
18.10 	risk plan are subject to paragraphs (b) to (d).
18.11 	(b) Classifications must be assigned according to the Basic Manual, Workers' 
18.12 	Compensation and Employers' Liability Insurance, 1980 Edition, National Council on 
18.13 	Compensation Insurance, with exceptions approved for Minnesota.
18.14 	(c) Rates must be modified according to the experience rating plan contained in the 
18.15 	Experience Rating Plan Manual for Workers' Compensation and Employers' Liability 
18.16 	Insurance, 1980 Edition, National Council on Compensation Insurance, with exceptions 
18.17 	approved for Minnesota. Minnesota exceptions approved for section III, rule 1, Eligibility 
18.18 	Requirements, are revoked.
18.19 	(d) Employers that do not qualify for the experience rating plan are subject to the 
18.20 	small risk merit rating plan. The rules and procedures governing the small risk merit rating 
18.21 	plan must be the same as for the assigned risk experience rating plan, except as regards 
18.22 	to the premium modification factor. The premium modification factor for the small risk 
18.23 	merit rating plan must be based on the number of claims attributable to an experience 
18.24 	period of three years beginning four years before and ending one year before the date for 
18.25 	which the rating is promulgated, excluding claims for which medical losses only are 
18.26 	expected. The merit rating premium modification factor is as follows: zero claims, credit 
18.27 	modification factor; one claim, zero or debit modification factor; two or more claims, a 
18.28 	greater debit modification factor. The amount of the modification factors must be fixed by 
18.29 	the commissioner simultaneously with the schedule of rates pursuant to subdivision 3.
18.30 	(e) Rates must be modified according to a premium discount factor whereby standard 
18.31 	premium is reduced 0.0 percent for the first $1,000 of premium, and progressively 
18.32 	greater percentages for the next $4,000, for the next $95,000, and for all premiums over 
18.33 	$100,000. The amount of the percentage reductions must be fixed by the commissioner 
18.34 	simultaneously with the schedule of rates, pursuant to subdivision 3.

19.1 	Sec. 24. Minnesota Statutes 2004, section 79.252, is amended by adding a subdivision 
19.2 	to read:
19.3 		Subd. 2a.Minimum qualifications. Any employer that (1) is required to carry 
19.4 	workers' compensation insurance pursuant to chapter 176 and (2) has a current written 
19.5 	notice of refusal to insure pursuant to subdivision 2, is entitled to coverage upon making 
19.6 	written application to the assigned risk plan, and paying the applicable premium.

19.7 	Sec. 25. Minnesota Statutes 2004, section 79.252, is amended by adding a subdivision 
19.8 	to read:
19.9 		Subd. 3a.Disqualifying factors. An employer may be denied or terminated from 
19.10 	coverage through the assigned risk plan if the employer:
19.11 	(1) applies for coverage for only a portion of the employer's statutory liability under 
19.12 	chapter 176, excluding wrap-up policies;
19.13 	(2) has an outstanding debt due and owing to the assigned risk plan at the time of 
19.14 	renewal arising from a prior policy;
19.15 	(3) persistently refuses to permit completion of an adequate payroll audit;
19.16 	(4) repeatedly submits misleading or erroneous payroll information; or
19.17 	(5) flagrantly disregards safety or loss control recommendations. Cancellation for 
19.18 	nonpayment of premium may be initiated by the service contractor upon 30 days' written 
19.19 	notice to the employer pursuant to section ....., subdivision ...

19.20 	Sec. 26. Minnesota Statutes 2004, section 79.252, is amended by adding a subdivision 
19.21 	to read:
19.22 		Subd. 3b.Occupational disease exposure. An employer having a significant 
19.23 	occupational disease exposure, as determined by the commissioner, to be entitled to 
19.24 	coverage shall have physical examinations made:
19.25 	(a) of employees who have not been examined within one year of the date of 
19.26 	application for assignment;
19.27 	(b) of new employees before hiring; and
19.28 	(c) of terminated employees. Upon request, the findings and reports of doctors 
19.29 	making examinations, together with x-rays and other original exhibits, must be furnished 
19.30 	to the assigned risk plan or the Department of Labor and Industry.

19.31 	Sec. 27. Minnesota Statutes 2005 Supplement, section 79A.04, subdivision 2, is 
19.32 	amended to read:
20.1 		Subd. 2.Minimum deposit. The minimum deposit is 110 percent of the private 
20.2 	self-insurer's estimated future liability. The deposit may be used to secure payment of 
20.3 	all administrative and legal costs, and unpaid assessments required by section 79A.12, 
20.4 	subdivision 2, relating to or arising from its or other employers' self-insuring. As used 
20.5 	in this section, "private self-insurer" includes both current and former members of the 
20.6 	self-insurers' security fund; and "private self-insurers' estimated future liability" means 
20.7 	the private self-insurers' total of estimated future liability as determined by an Associate 
20.8 	or Fellow of the Casualty Actuarial Society every year for group member private 
20.9 	self-insurers and, for a nongroup member private self-insurer's authority to self-insure, 
20.10 	every year for the first five years. After the first five years, the nongroup member's total 
20.11 	shall be as determined by an Associate or Fellow of the Casualty Actuarial Society at least 
20.12 	every two years, and each such actuarial study shall include a projection of future losses 
20.13 	during the period until the next scheduled actuarial study, less payments anticipated to 
20.14 	be made during that time.
20.15 	All data and information furnished by a private self-insurer to an Associate or 
20.16 	Fellow of the Casualty Actuarial Society for purposes of determining private self-insurers' 
20.17 	estimated future liability must be certified by an officer of the private self-insurer to be 
20.18 	true and correct with respect to payroll and paid losses, and must be certified, upon 
20.19 	information and belief, to be true and correct with respect to reserves. The certification 
20.20 	must be made by sworn affidavit. In addition to any other remedies provided by law, 
20.21 	the certification of false data or information pursuant to this subdivision may result in a 
20.22 	fine imposed by the commissioner of commerce on the private self-insurer up to the 
20.23 	amount of $5,000, and termination of the private self-insurers' authority to self-insure. 
20.24 	The determination of private self-insurers' estimated future liability by an Associate or 
20.25 	Fellow of the Casualty Actuarial Society shall be conducted in accordance with standards 
20.26 	and principles for establishing loss and loss adjustment expense reserves by the Actuarial 
20.27 	Standards Board, an affiliate of the American Academy of Actuaries. The commissioner 
20.28 	may reject an actuarial report that does not meet the standards and principles of the 
20.29 	Actuarial Standards Board, and may further disqualify the actuary who prepared the report 
20.30 	from submitting any future actuarial reports pursuant to this chapter. Within 30 days after 
20.31 	the actuary has been served by the commissioner with a notice of disqualification, an 
20.32 	actuary who is aggrieved by the disqualification may request a hearing to be conducted in 
20.33 	accordance with chapter 14. Based on a review of the actuarial report, the commissioner 
20.34 	of commerce may require an increase in the minimum security deposit in an amount the 
20.35 	commissioner considers sufficient.
21.1 	In addition, the Minnesota self-insurers' security fund may, at its sole discretion 
21.2 	and cost, undertake an independent actuarial review or an actuarial study of a private 
21.3 	self-insurers' estimated future liability as defined herein. The review or study must be 
21.4 	conducted by an associate or fellow of the Casualty Actuarial Society. The actuary has 
21.5 	the right to receive and review data and information of the self-insurer necessary for 
21.6 	the actuary to complete its review or study. A copy of this report must be filed with the 
21.7 	commissioner and a copy must be furnished to the self-insurer.
21.8 	Estimated future liability is determined by first taking the total amount of the 
21.9 	self-insured's future liability of workers' compensation claims and then deducting the 
21.10 	total amount which is estimated to be returned to the self-insurer from any specific 
21.11 	excess insurance coverage, aggregate excess insurance coverage, and any supplementary 
21.12 	benefits or second injury benefits which are estimated to be reimbursed by the special 
21.13 	compensation fund. However, in the determination of estimated future liability, the 
21.14 	actuary for the self-insurer shall not take a credit for any excess insurance or reinsurance 
21.15 	which is provided by a captive insurance company which is wholly owned by the 
21.16 	self-insurer. Supplementary benefits or second injury benefits will not be reimbursed by 
21.17 	the special compensation fund unless the special compensation fund assessment pursuant 
21.18 	to section 176.129 is paid and the reports required thereunder are filed with the special 
21.19 	compensation fund. In the case of surety bonds, bonds shall secure administrative and 
21.20 	legal costs in addition to the liability for payment of compensation reflected on the face of 
21.21 	the bond. In no event shall the security be less than the last retention limit selected by the 
21.22 	self-insurer with the Workers' Compensation Reinsurance Association, provided that the 
21.23 	commissioner may allow former members to post less than the Workers' Compensation 
21.24 	Reinsurance Association retention level if that amount is adequate to secure payment 
21.25 	of the self-insurers' estimated future liability, as defined in this subdivision, including 
21.26 	payment of claims, administrative and legal costs, and unpaid assessments required by 
21.27 	section 79A.12, subdivision 2. The posting or depositing of security pursuant to this 
21.28 	section shall release all previously posted or deposited security from any obligations under 
21.29 	the posting or depositing and any surety bond so released shall be returned to the surety. 
21.30 	Any other security shall be returned to the depositor or the person posting the bond.
21.31 	As a condition for the granting or renewing of a certificate to self-insure, the 
21.32 	commissioner may require a private self-insurer to furnish any additional security the 
21.33 	commissioner considers sufficient to insure payment of all claims under chapter 176.

21.34 	Sec. 28. Minnesota Statutes 2004, section 79A.23, subdivision 3, is amended to read:
22.1 		Subd. 3.Operational audit. (a) The commissioner, prior to authorizing surplus 
22.2 	distribution of a commercial self-insurance group's first fund year or no later than after 
22.3 	the third anniversary of the group's authority to self-insure, may conduct an operational 
22.4 	audit of the commercial self-insurance group's claim handling and reserve practices as 
22.5 	well as its underwriting procedures to determine if they adhere to the group's business 
22.6 	plan and sound business practices. The commissioner may select outside consultants to 
22.7 	assist in conducting the audit. After completion of the audit, the commissioner shall either 
22.8 	renew or revoke the commercial self-insurance group's authority to self-insure. The 
22.9 	commissioner may also order any changes deemed necessary in the claims handling, 
22.10 	reserving practices, or underwriting procedures of the group.
22.11 	(b) The cost of the operational audit shall be borne by the commercial self-insurance 
22.12 	group.

22.13 	Sec. 29.  REPEALER.
 22.14 	(a) Minnesota Statutes 2004, section 79.251, subdivision 2, is repealed.
22.15 	(b) Minnesota Rules, parts 2781.0400; 2781.0500; and 2781.0600, are repealed.