On July 17, 2009, Governor Ted Strickland signed into law Amended Substitute House Bill 1 (H.B. 1), Ohio’s 2010-2011 biennial budget. His signature marked the end of a contentious political debate over the $50.5 billion spending measure.

The bill, which emerged from Conference Committee by a 5-1 vote, was endorsed by the Democratic controlled Ohio House by a vote of 54-44 and by the Ohio Senate that is controlled by Republicans, by a 17-15 vote. Both Chamber votes were cast mostly along party lines.

Key revenue components include $2.5 billion in spending cuts from the previous two year budget, language authorizing video lottery terminals (VLTs) at Ohio’s seven horse racetracks, counted on to generate $933 million in new revenue, and heavy reliance on one-time federal stimulus money.

There were no changes to insurance company premium tax rates or structure. However, a number of provisions in H.B. 1 are of interest to the industry:

  • Actuarial Opinion Requirements for Property & Casualty Insurers. R.C. 3903.77 was added requiring property and casualty insurers to annually submit a statement of actuarial opinion that certifies the adequacy of a company’s reserves to the Superintendent of the Ohio Department of Insurance.
  • Ohio’s Minority Business Bonding Program. R.C. 122.89, which outlines Ohio’s Minority Business Bonding Program, was amended waiving the bonding requirements for certain minority businesses. The changes permit small and emerging contractors, under certain conditions, to do four state or local construction projects without bonding. The first project without bonding in a state project may be up to $25,000 after which a contractor can obtain a contract of up to $50,000 without providing the bonds required under Ohio law. The third contract without bonding is for a project up to $100,000 and the fourth is a project of up to $300,000 (with $200,000 being the maximum amount for contracts with any instrumentality of the state).
  • Ohio’s Alternative Retirement Plan Program. H.B. 1 includes language imposing a “moratorium” on the approval of additional insurers and mutual funds to provide investment options under Ohio’s alternative retirement plan program for state colleges and universities. The moratorium, which expires after July 1, 2010, does not apply to changes to the investment options offered by providers previously approved to participate in the program.
  • Franchise Plan Arrangements. R.C. 3923.11 was amended allowing disability income and long term care insurance to be offered on a franchise plan if two or more employees or two or more members of an association or union are covered in order to allow disability and long term care insurers to offer discounts on premiums to those purchasing individual coverage on franchise plans.
  • Group Life Insurance. R.C. 124.81 was amended requiring the Ohio Department of Administrative Services to obtain group life insurance coverage for all municipal and county court judges.

H.B. 1 also included provisions intended to reduce the state’s uninsured population. These provisions are of interest not only to health insurers, but they may be of interest to all Ohio employers. A summary of those key provisions follows:

  • Open Enrollment Program. H.B. 1 makes a number of changes to Ohio’s open enrollment program. Key changes include:
    • Reducing the maximum premium rates and contractual periodic prepayments that insurers and HMOs may charge all individuals, in certain circumstances. For years 2010 and 2011, payments charged may not exceed 2 times the “base rate” charged other individuals for similar coverage and for year 2012 and subsequent years, payments charged may not exceed 1.5 times the base rate.
    • Increasing the number of individuals that insurers and HMOs are required to accept under open enrollment from .5 percent for insurers and 1 percent for HMOs of the company’s total number of insured individuals residing in Ohio to 4 percent for each in 2010 and 2011 and 8 percent in 2012 and subsequent years, if certain conditions are met.
  • Continuation Coverage. H.B. 1 makes permanent the changes adopted earlier this year to Ohio’s “mini COBRA” law. Specifically, continuation coverage was extended from six months to 12 months, entitlement to employment compensation is no longer required for eligibility, employees must be involuntarily terminated to be eligible, and continuation coverage must include prescription drug coverage if it is included in the terminated group coverage.
  • Prompt Payment. H.B. 1 amends Ohio’s prompt pay law by imposing electronic payment requirements under certain conditions. (R.C. 3901.381).
  • Premium Rate Filings. H.B. 1 requires insurers to file premium rates for individual and small group health policies.
  • Section 125 Cafeteria Plans. H.B. 1 requires certain employers to adopt and maintain a Section 125 cafeteria plan allowing an employer’s employees to pay for health care coverage.

The entire text of H.B. 1 is available at: http://www.legislature.state.oh.us/bills.cfm?ID=128_HB_1.