[ Search ] [ Legislation ]
[ Home ] [ Back ] [ Bottom ]
| [ Introduced ] | [ Engrossed ] | [ Enrolled ] |
| [ House Amendment 001 ] | [ Senate Amendment 002 ] |
91_HB2271sam001
SRS91HB2271MNsaam01
1 AMENDMENT TO HOUSE BILL 2271
2 AMENDMENT NO. . Amend House Bill 2271 by replacing
3 the title with the following:
4 "Section 1. Short title. This Act may be cited as the
5 Small Employer Health Insurance Rating Act.
6 Section 5. Purpose. The legislature recognizes that all
7 too often, small employers are forced to increase employee
8 co-pays and deductibles or drop health insurance coverage
9 altogether because of unexpected rate increases as a result
10 of one major medical problem. It is the intent of this Act
11 to improve the efficiency and fairness of the small group
12 health insurance marketplace.
13 Section 10. Definitions. For purposes of this Act:
14 "Actuarial certification" means a written statement by a
15 member of the American Academy of Actuaries or other
16 individual acceptable to the Director that a small employer
17 carrier is in compliance with the provisions of Section 30 of
18 this Act, based upon an examination which includes a review
19 of the appropriate records and of the actuarial assumptions
20 and methods utilized by the small employer carrier in
21 establishing premium rates for the applicable health benefit
22 plans.
-2- SRS91HB2271MNsaam01
1 "Base premium rate" means for each class of business as
2 to a rating period, the lowest premium rate charged or which
3 could be charged under a rating system for that class of
4 business by the small employer carrier to small employers
5 with similar case characteristics for health benefit plans
6 with the same or similar coverage.
7 "Carrier" means any entity which provides health
8 insurance in this State. For the purposes of this Act,
9 carrier includes a licensed insurance company, a prepaid
10 hospital or medical service plan, a health maintenance
11 organization, a multiple-employer welfare arrangement, or any
12 other entity providing a plan of health insurance or health
13 benefits subject to state insurance regulation.
14 "Case characteristics" means demographic, geographic or
15 other objective characteristics of a small employer, that are
16 considered by the small employer carrier, in the
17 determination of premium rates for the small employer. Claim
18 experience, health status, and duration of coverage shall not
19 be characteristics for the purposes of the Small Employer
20 Health Insurance Act.
21 "Class of business" means all or a separate grouping of
22 small employers established pursuant to Section 25.
23 "Director" means the Director of Insurance.
24 "Department" means the Department of Insurance.
25 "Eligible employee" means an employee who works on a
26 full-time basis for the small employer, with a normal week of
27 30 or more hours, and has satisfied the waiting period and is
28 a member of the class eligible for insurance. Eligible
29 employee may also include a sole proprietor, a partner of a
30 partnership or an independent contractor, provided such sole
31 proprietor, partner or independent contractor is included as
32 an employee under a health benefit plan of a small employer.
33 It does not include an employee who works on a part-time,
34 temporary, seasonal or substitute basis.
-3- SRS91HB2271MNsaam01
1 "ERISA" means the Employee Retirement Income Security Act
2 of 1974, as amended.
3 "Health benefit plan" or plan shall mean any hospital or
4 medical expense-incurred policy or certificate, hospital or
5 medical service plan contract, or health maintenance
6 organization subscriber contract. Health benefit plan shall
7 not include individual, accident-only, credit, dental,
8 vision, medicare supplement, hospital indemnity, long term
9 care or disability income insurance, coverage issued as a
10 supplement to liability insurance, workers' compensation or
11 similar insurance, or automobile medical payment insurance.
12 "Index rate" means, for each class of business as to a
13 rating period for small employers with similar case
14 characteristics, the arithmetic average of the applicable
15 base premium rate and the corresponding highest premium rate.
16 "Late enrollee" means an eligible employee or dependent
17 who requests enrollment in a health benefit plan of a small
18 employer following the initial enrollment period during which
19 the individual is entitled to enroll under the terms of the
20 health benefit plan, provided that the initial enrollment
21 period is a period of at least 30 days. However, an eligible
22 employee or dependent shall not be considered a late enrollee
23 if:
24 (1) the individual meets each of the following:
25 (A) the individual was covered under an
26 employer based health benefit plan at the time of
27 the initial enrollment;
28 (B) the individual lost coverage under
29 qualifying previous coverage as a result of
30 termination of employment or eligibility, the
31 involuntary termination of the qualifying previous
32 coverage, death of a spouse or divorce; and
33 (C) the individual requests enrollment within
34 30 days after the termination of the qualifying
-4- SRS91HB2271MNsaam01
1 previous coverage;
2 (2) the individual is employed by an employer which
3 offers multiple health benefit plans and the individual
4 elects a different plan during an open enrollment period;
5 or
6 (3) a court has ordered coverage be provided for a
7 spouse or minor or dependent child under a covered
8 employee's health benefit plan and request for enrollment
9 is made within 30 days after issuance of the court order.
10 "MEWA" means an "multiple-employer welfare arrangement"
11 as defined in Section 3 of ERISA, as amended, except for any
12 arrangement which is fully insured within the meaning of
13 Section 514(b)(6) of ERISA, as amended.
14 "New business premium rate" means, for each class of
15 business as to a rating period, the lowest premium rate
16 charged or offered or which could have been charged or
17 offered by the small employer carrier to small employers with
18 similar case characteristics for newly issued health benefit
19 plans with the same or similar coverage.
20 "Preexisting condition" means a condition which, during a
21 12 month period immediately preceding the effective date of
22 coverage, had manifested itself in such a manner as would
23 cause an ordinarily prudent person to seek medical advice,
24 diagnosis, care or treatment or for which medical advice,
25 diagnosis care, or treatment was recommended or received, or
26 a pregnancy existing on the effective date of coverage.
27 "Premium" means all monies paid by a small employer and
28 eligible employees as a condition of receiving coverage from
29 a small employer carrier, including any fees or other
30 contributions associated with the health benefit plan.
31 "Rating period" means the calendar period for which
32 premium rates established by a small employer carrier are
33 assumed to be in effect.
34 "Small employer" means any person, firm, corporation,
-5- SRS91HB2271MNsaam01
1 partnership, or association that is actively engaged in
2 business that, on at least 50% of its working days during the
3 preceding calendar quarter, employed at least 2 but no more
4 than 25 eligible employees, the majority of whom were
5 employed in this State. In determining the number of
6 eligible employees, companies that are affiliated companies,
7 or that are eligible to file a combined tax return for
8 purposes of state taxation, shall be considered one employer.
9 "Small employer carrier" means a carrier that offers
10 health benefit plans covering eligible employees of one or
11 more small employers in this State.
12 Section 15. Applicability and Scope.
13 (a) This Act shall apply to each health benefit plan for
14 a small employer that is delivered, issued for deliver,
15 renewed or continued in this State after January 1, 2000.
16 For purposes of this Section, the date a plan is continued
17 shall be the first rating period which commences after
18 January 1, 2000.
19 The Act shall apply to any such health benefit plan which
20 provides coverage to employees of a small employer, except
21 that the Act shall not apply to individual health insurance
22 policies.
23 (b)(1) Except as provided in paragraph (2) for the
24 purposes of this Act, carriers that are affiliated companies
25 or that are eligible to file a consolidate tax return shall
26 be treated as one carrier and any restrictions or limitations
27 imposed by this Act shall apply as if all health benefit
28 plans delivered or issued for delivery to small employers in
29 this State by such affiliated carriers were issued by one
30 carrier.
31 (2) An affiliated carrier that is a health maintenance
32 organization having a certificate of authority under Section
33 2-1 of the Health Maintenance Organization Act may be
-6- SRS91HB2271MNsaam01
1 considered to be a separate carrier for the purposes of this
2 Act.
3 Section 20. Underwriting Provisions.
4 Health benefit plans covering small employers and, to the
5 extent permitted by ERISA, other benefit arrangements
6 covering small employers shall be subject to the following
7 provisions, as applicable:
8 (1) Preexisting condition limitation: No policy
9 provision shall exclude or limit coverage for a
10 preexisting condition for a period beyond 12 months
11 following the effective date of a person's coverage.
12 (2) Portability of coverage: The preexisting
13 condition limitation period shall be reduced to the
14 extent a person was covered under a prior employer-based
15 health benefit plan if:
16 (A) the person is not a late enrollee; and
17 (B) the prior coverage was continuous to a
18 date not more than 30 days prior to the effective
19 date of the new coverage, exclusive of any
20 applicable waiting period.
21 (3) If a small employer carrier offers coverage to
22 a small employer, the small employer carrier shall offer
23 coverage to all of the eligible employees of a small
24 employer and their dependents. A small employer carrier
25 shall not offer coverage to only certain individuals in
26 an eligible class of a small employer group, except in
27 the case of late enrollees. Persons lawfully excluded by
28 a carrier prior to the effective date of this Act may
29 continue to be excluded by that carrier.
30 (4) A small employer carrier shall not modify a
31 health benefit plan with respect to a small employer or
32 any eligible employee or dependent, except that for
33 employees to whom the preexisting condition
-7- SRS91HB2271MNsaam01
1 limitations may apply, a small employer carrier may
2 restrict or exclude coverage or benefits for a specific
3 condition for a maximum period of 12 months from the
4 effective date of the eligible employee's or dependent's
5 coverage by way of rider or endorsement. As to employees
6 to whom the portability of coverage provisions apply, no
7 riders or endorsements may reduce or limit benefits to be
8 provided under the portability of coverage provisions.
9 Any modification legally implemented by a carrier prior
10 to the effective date of this Act may be continued by
11 that carrier.
12 Section 25. Establishment of Class of Business.
13 (a) A small employer carrier may establish a separate
14 class of business only to reflect substantial differences in
15 expected claims experience or administrative costs related to
16 the following reasons:
17 (1) the small employer carrier uses more than one
18 type of system for the marketing and sale of health
19 benefit plans to small employers;
20 (2) the small employer carrier has acquired a class
21 of business from another small employer carrier; or
22 (3) the small employer carrier provides coverage to
23 one or more association groups.
24 (b) A small employer carrier may establish up to 3
25 separate classes of business under subsection (a).
26 (c) The Director may establish regulations to provide
27 for a period of transition in order for a small employer
28 carrier to come into compliance with subsection (b) in the
29 instance of acquisition of an additional class of business
30 from another small employer carrier.
31 (d) The Director may approve the establishment of
32 additional classes of business upon application to the
33 Director and a finding by the Director that such action would
-8- SRS91HB2271MNsaam01
1 enhance the efficiency and fairness of the small employer
2 marketplace.
3 Section 30. Premium Rates.
4 (a) Premium rates for health benefit plans subject to
5 this Act shall be subject to all of the following provisions:
6 (1) The index rate for a rating period for any
7 class of business shall not exceed the index rate for any
8 other class of business by more than 20%.
9 (2) For a class of business, the premium rates
10 charged during a rating period to small employers with
11 similar case characteristics for the same or similar
12 coverage, or the rates that could be charged to such
13 employers under the rating system for that class of
14 business, shall not vary from the index rate by more than
15 25% of the index rate.
16 (3) The percentage increase in the premium rate
17 charged to a small employer for a new rating period shall
18 not exceed the sum of the following:
19 (A) the percentage change in the new business
20 premium rate measured from the first day of the
21 prior rating period to the first day of the new
22 rating period. In the case of a health benefit plan
23 into which the small employer carrier is no longer
24 enrolling new small employers, the small employer
25 carrier shall use the percentage change in the base
26 premium rate;
27 (B) an adjustment, not to exceed 15% annually
28 and adjusted pro rata for rating periods of less
29 than one year, due to claim experience, health
30 status, or duration of coverage of the employees or
31 dependents of the small employer as determined from
32 the small employer carrier's rate manual for the
33 class of business; and
-9- SRS91HB2271MNsaam01
1 (C) any adjustment due to change in coverage
2 or change in the case characteristics of the small
3 employer as determined from the small employer
4 carrier's rate manual for the class of business.
5 (4) Adjustments in rates for a new rating period
6 due to claim experience, health status and duration of
7 coverage shall not be charged to individual employees or
8 dependents. Any such adjustment shall be applied
9 uniformly to the rates charged for all employees and
10 dependents of the small employer.
11 (5) In the case of health benefit plans delivered
12 or issued for deliver prior to the effective date of this
13 Act, a premium rate for a rating period may exceed the
14 ranges set forth in items (1) and (2) of subsection (a)
15 for a period of 3 years following the effective date of
16 this Act. In such case, the percentage increase in the
17 premium rate charged to a small employer for a new rating
18 period shall not exceed the sum of the following:
19 (A) the percentage change in the new business
20 premium rate measured from the first day of the
21 prior rating period to the first day of the new
22 rating period; in the case of a class of business
23 into which the small employer carrier is no longer
24 enrolling new small employes, the small employer
25 carrier shall use the percentage change in the base
26 premium rate, provided that such change does not
27 exceed, on a percentage basis, the change in the new
28 business premium rate for the most similar class of
29 business into which the small employer carrier is
30 actively enrolling new small employers; and
31 (B) any adjustment due to change in coverage
32 or change in the case characteristics of the small
33 employer as determined from the carrier's rate
34 manual for the class of business.
-10- SRS91HB2271MNsaam01
1 (6) Small employer carriers shall apply rating
2 factors, including case characteristics, consistently
3 with respect to all small employers in a class of
4 business. A small employer carrier shall treat all health
5 benefit plans issued or renewed in the same calendar
6 month as having the same rating period.
7 (7) For the purposes of this subsection, a health
8 benefit plan that contains a restricted network provision
9 shall not be considered similar coverage to a health
10 benefit plan that does not contain such a provision,
11 provided that the restriction of benefits to network
12 providers results in substantial differences in claim
13 costs.
14 (b) A small employer carrier shall not transfer a small
15 employer involuntarily into or out of a class of business. A
16 small employer carrier shall not offer to transfer a small
17 employer into or out of a class of business unless such offer
18 is made to transfer all small employers in the class of
19 business without regard to case characteristics, claim
20 experience, health status or duration of coverage since
21 issue.
22 (c) The Director may suspend for a specified period the
23 application of item (1) of subsection (a) as to the premium
24 rates applicable to one or more small employers included
25 within a class of business of a small employer carrier for
26 one or more rating periods upon a filing by the small
27 employer carrier and a finding by the Director either that
28 the suspension is reasonable in light of the financial
29 condition of the small employer carrier or that suspension
30 would enhance the efficiency and fairness of the marketplace
31 for small employer health insurance.
32 Section 35. Rating and underwriting records.
33 (a) A small employer carrier shall maintain at its
-11- SRS91HB2271MNsaam01
1 principal place of business a complete and detailed
2 description of its rating practices and renewal underwriting
3 practices, including information and documentation that
4 demonstrates that its rating methods and practices are based
5 upon commonly accepted actuarial assumptions and are in
6 accordance with sound actuarial principles.
7 (b) A small employer carrier shall file with the
8 Director annually on or before March 15, an actuarial
9 certification certifying that the carrier is in compliance
10 with this Act, and that the rating methods of the small
11 employer carrier are actuarially sound. Such certification
12 shall be in a form and manner, and shall contain such
13 information, as specified by the Director. A copy of the
14 certification shall be retained by the small employer carrier
15 at its principal place of business.
16 (c) A small employer carrier shall make the information
17 and documentation described in subsection (a) available to
18 the Director upon request. Except in cases of violations of
19 this Act, the information shall be considered proprietary and
20 trade secret information and shall not be subject to
21 disclosure by the Director to persons outside of the
22 Department except as agreed to by the small employer carrier
23 or as ordered by a court of competent jurisdiction.
24 Section 40. Suspension of Rate Requirements. The
25 Director may suspend all or any part of Section 30 as to the
26 premium rates applicable to one or more small employers for
27 one or more rating periods upon a filing by the small
28 employer carrier and a finding by the Director that either
29 the suspension is reasonable in light of the financial
30 condition of the carrier or the suspension would enhance the
31 efficiency and fairness of the small employer health
32 insurance marketplace.
-12- SRS91HB2271MNsaam01
1 Section 45. Director's Regulatory Authority. The
2 Director may adopt and promulgate rules and regulations to
3 carry out the provisions of this Act.
4 Section 99. Effective date. This Act takes effect
5 January 1, 2000.".