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SB81 INTRODUCED
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SB81
AR8AGQS-1
By Senators Stutts, Butler
RFD: Banking and Insurance
First Read: 13-Jan-26
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AR8AGQS-1 12/22/2025 JC (L)JC 2025-3221
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First Read: 13-Jan-26
SYNOPSIS:
The law does not currently regulate how insurers
that cover dental care spend the premiums received from
individuals and groups that contract for dental care
payment or reimbursement.
This bill would require dental insurers to spend
a specified percentage of the premiums they receive on
customer claims. Dental insurers that fail to spend at
least the specified percentage of premiums on claims
would be required to refund the excess premiums
retained to policyholders.
This bill would further require dental insurers
to report certain income and expense information to the
Commissioner of Insurance periodically and to make the
report available to the public.
A BILL
TO BE ENTITLED
AN ACT
Relating to dental insurance; to establish a dental
loss ratio as a percentage of premiums collected by an
insurer; to require reporting of the insurer's claims expenses
and income information for compliance with the dental loss
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and income information for compliance with the dental loss
ratio; to require an insurer to give a rebate to enrollees if
payments on claims are below the dental loss ratio; to provide
for disclosure of insurer financial information; and to amend
Sections 10A-20-6.16 and 27-21A-23, Code of Alabama 1975, to
make conforming changes.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. (a) For the purposes of this section, the
following terms have the following meanings:
(1) COMMISSIONER. The Commissioner of Insurance.
(2) DENTAL BENEFIT PLAN. a. Any underwritten
stand-alone individual or group plan, policy, or contract
issued, delivered, or renewed in this state which is limited
to paying or reimbursing the costs of dental care services.
b. The term shall not include:
1. Self-funded dental plans, nor any health benefit
plan that includes dental care services, including, but not
limited to, Medicare Advantage plans, individual or group
health benefit plans offered pursuant to the federal Patient
Protection and Affordable Care Act, 42 U.S.C. § 18001 et seq.,
or grandfathered individual health benefit plans; and
2. Any dental benefit plan or health benefit plan that
includes dental care services provided pursuant to Chapter 25A
of Title 16, Code of Alabama 1975, or Chapter 29 of Title 36,
Code of Alabama 1975.
(3) DENTAL CARE SERVICES. Any services furnished to an
individual for the purpose of preventing, managing,
alleviating, curing, or healing dental illness or injury as
indicated by codes used for payment or reimbursement by the
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indicated by codes used for payment or reimbursement by the
insurer.
(4) DENTAL LOSS RATIO. The percentage of premiums
collected by an insurer from policyholders or subscribers
which the insurer spends on dental care services for patients.
(5) INSURER. A person as defined in Section 27-1-2,
Code of Alabama 1975, which issues, delivers, or renews a
dental benefit plan, including a nonprofit agricultural
organization that offers health benefits to its membership
under Chapter 33 of Title 2, Code of Alabama 1975.
(6) REPORTING PERIOD. Three rolling consecutive
calendar years.
(b)(1) The minimum dental loss ratio for dental benefit
plans in this state shall be 75 percent for underwritten
stand-alone individual dental plans and 83 percent for
underwritten stand-alone group dental plans, to be calculated
pursuant to subdivisions (2) through (4).
(2) The percentage for dental loss ratio purposes is a
fraction of which the numerator is the aggregated claims paid
for dental care services by the insurer in a reporting period,
and the denominator is the amount of all premiums collected by
the insurer in a reporting period.
(3)a. The aggregated claims paid by the insurer for
dental care services shall be calculated by:
1. Adding the amount paid or reimbursed on claims for
dental care services; then
2. Adding the amount of reserves and liabilities for
claims received during the reporting period but unpaid or not
reimbursed within three months after the end of the reporting
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reimbursed within three months after the end of the reporting
period; then
3. Subtracting any amount expended for dental care
services that was recovered due to overpayment or utilization
management.
b. The amount of all premiums collected by the insurer
shall be calculated by:
1. Including the total amount of money received from
policyholders or subscribers as a condition of receiving
coverage for dental care services; then
2. Subtracting payments for federal and state taxes,
licensing, and regulatory fees.
(4) The insurer's overhead expenses, to include all of
the following components, shall be excluded from the
calculations made under subdivision (3):
a. Financial administration expenses, including
underwriting, auditing, actuarial analyses, treasury, and
investment expenses.
b. Marketing, sales, and distribution expenses,
including advertising; group, policyholder, or subscriber
enrollment and relations, regardless of whether these
activities are performed by the carrier or outsourced to a
third-party vendor.
c. Distribution expenses, including commissions and
relations with agents, producers, brokers, and benefit
consultants.
d. Claims operation expenses, including adjudication,
appeals, settlements, claims payment processing, and costs
directly related to upgrades in health information technology
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directly related to upgrades in health information technology
which are designed primarily or solely to improve claims
payment capabilities or to meet regulatory requirements for
processing claims.
e. Dental administration expenses, including activities
related to care and disease management, utilization review,
dental management, network development, secondary network
savings, administrative fees, claims processing, utilization
management, fraud prevention activities, and provider
credentialing expenses, regardless of whether these activities
are performed by the carrier or outsourced to a third-party
vendor.
f. Provider expenses, such as consultants for
professional or administrative services, which do not
represent compensation or reimbursement for covered services
provided to an enrollee.
g. Expenses incurred for developing and executing
provider contracts, including fees associated with
establishing or managing a provider network, and fees paid to
vendors, costs of stop-loss coverage or reinsurance, direct
sales salaries, workforce salaries and benefits, agents and
broker fees and commissions, and general and administrative
expenses.
h. Network operational expenses, including contracting,
dentist relations, and dental policy procedures.
i. Charitable expenses, including any contributions to
tax-exempt foundations and community benefits.
j. Industry association expenses, including membership
activities.
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activities.
k. Employee and personnel expenses, including payroll,
recruitment, and human resources.
l. Physical plant expenses, including construction,
leasing, maintenance, cleaning, furniture, and equipment.
m. Third-party vendor and professional contractor
expenses, including related services or goods required under
paragraphs a. through l.
(c)(1) No later than April 30 after the end of a
reporting period, an insurer shall file a report with the
commissioner which shall include all of the following
information for the previous reporting period:
a. All dental care services and products offered by the
insurer, identified by market with the number of individuals
enrolled within each market segment.
b. Dental loss ratio.
c. The aggregated claims paid by the insurer for dental
care services, including each amount required under
subparagraphs (b)(3)a.1. through 3.
d. The amount of premiums collected by the insurer,
including each amount required under subparagraphs (b)(3)b.1.
and 2.
e. Overhead expenses in total, to include in that total
each amount required under paragraphs (b)(4)a. through m.
(2) The commissioner shall make available to the public
the information submitted by the insurer pursuant to
subdivision (1) by posting the information on the website of
the Department of Insurance of the State of Alabama.
(3)a. If the commissioner has reasonable cause to
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(3)a. If the commissioner has reasonable cause to
believe that the information submitted by the insurer pursuant
to subdivision (1) is erroneous or false, the commissioner may
conduct an examination of the insurer to verify the
information submitted, according to the procedures provided
under Article 1 of Chapter 2 of Title 27, Code of Alabama
1975.
b. The provisions of Article 1 of Chapter 2 of Title
27, Code of Alabama 1975, including confidentiality of
information, remedies, and procedures available to both the
commissioner and the insurer, shall govern an examination
conducted pursuant to paragraph a.
(d)(1) If the report required by subsection (c), as
submitted by the insurer or as adjusted by the commissioner
upon an examination as provided in that subsection shows that
the dental loss ratio for the reporting period is less than
the percentage that applies under subdivision (b)(1) for
individual or group dental plans, the insurer shall refund the
excess premium collected to the covered individuals or groups
as a rebate.
(2) The total amount of the rebate shall equal the
amount by which the dental loss ratio authorized by
subdivision (b)(1) exceeds the insurer's reported dental loss
ratio, multiplied by the amount of all premiums collected by
the insurer as calculated under paragraph (b)(3)b.
(3) Within 60 days of the calculation of the rebate,
the insurer shall notify all individuals and groups that were
covered under the applicable reporting period that they
qualify for the refund, which may be paid directly to the
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qualify for the refund, which may be paid directly to the
individuals and groups or issued as a credit on the premium
for the subsequent reporting period.
(e) The commissioner shall adopt rules, forms, and
schedules necessary to implement and enforce this section.
Section 2. Sections 10A-20-6.16 and 27-21A-23, Code of
Alabama 1975, are amended to make conforming changes to read
as follows:
"§10A-20-6.16
(a) No statute of this state applying to insurance
companies shall be applicable to any corporation organized
under this article and amendments thereto or to any contract
made by the corporation; except the corporation shall be
subject to the following:
(1) The provisions regarding annual premium tax to be
paid by insurers on insurance premiums.
(2) Chapter 55 of Title 27.
(3) Article 2 and Article 3 of Chapter 19 of Title 27.
(4) Section 27-1-17.
(5) Chapter 56 of Title 27.
(6) Rules adopted by the Commissioner of Insurance
pursuant to Sections 27-7-43 and 27-7-44.
(7) Chapter 54 of Title 27.
(8) Chapter 57 of Title 27.
(9) Chapter 58 of Title 27.
(10) Chapter 59 of Title 27.
(11) Chapter 54A of Title 27.
(12) Chapter 12A of Title 27.
(13) Chapter 2B of Title 27.
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(13) Chapter 2B of Title 27.
(14) Chapter 29 of Title 27.
(15) Chapter 62 of Title 27.
(16) Chapter 63 of Title 27.
(17) Chapter 45A of Title 27.
(18) Section 1 of the act amending this section.
(b) The provisions in subsection (a) that require
specific types of coverage to be offered or provided shall not
apply when the corporation is administering a self-funded
benefit plan or similar plan, fund, or program that it does
not insure."
"§27-21A-23
(a) Except as otherwise provided in this chapter,
provisions of the insurance law and provisions of health care
service plan laws shall not be applicable to any health
maintenance organization granted a certificate of authority
under this chapter. This provision shall not apply to an
insurer or health care service plan licensed and regulated
pursuant to the insurance law or the health care service plan
laws of this state except with respect to its health
maintenance organization activities authorized and regulated
pursuant to this chapter.
(b) Solicitation of enrollees by a health maintenance
organization granted a certificate of authority shall not be
construed to violate any provision of law relating to
solicitation or advertising by health professionals.
(c) Any health maintenance organization authorized
under this chapter shall not be deemed to be practicing
medicine and shall be exempt from the provisions of Section
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medicine and shall be exempt from the provisions of Section
34-24-310 , et seq., relating to the practice of medicine.
(d) No person participating in the arrangements of a
health maintenance organization other than the actual provider
of health care services or supplies directly to enrollees and
their families shall be liable for negligence, misfeasance,
nonfeasance, or malpractice in connection with the furnishing
of such services and supplies.
(e) Nothing in this chapter shall be construed in any
way to repeal or conflict with any provision of the
certificate of need law.
(f) Notwithstanding the provisions of subsection (a), a
health maintenance organization shall be subject to all of the
following:
(1) Section 27-1-17.
(2) Chapter 56.
(3) Chapter 54.
(4) Chapter 57.
(5) Chapter 58.
(6) Chapter 59.
(7) Rules adopted by the Commissioner of Insurance
pursuant to Sections 27-7-43 and 27-7-44.
(8) Chapter 12A.
(9) Chapter 54A.
(10) Chapter 2B.
(11) Chapter 29.
(12) Chapter 62.
(13) Chapter 63.
(14) Chapter 45A
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(14) Chapter 45A
(15) Section 1 of the act amending this section ."
Section 3. This act shall become effective on October
1, 2026.
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