3/10/94....5548
3/22/94....5689s
05/05/94.....6350h
CHAPTER 294
1994 SESSION 4058B
94-2656
08/09
SENATE BILL 711
AN ACT relative to small employer and individual insurance.
SPONSORS: Sen. Shaheen, Dist 21; Sen. Fraser, Dist 4; Sen. Delahunty,
Dist 22; Sen. Hollingworth, Dist 23; Sen. J. King, Dist 18;
Sen. Blaisdell, Dist 10; Rep. Crory, Graf 10; Rep. K. Wheeler,
Straf 8; Rep. B. Packard, Hills 19; Rep. R. Foster, Carr 10
COMMITTEE: Insurance
ANALYSIS
This bill repeals the current chapter concerning small business insurance and replaces it with a small employer and individual insurance chapter.
The bill attempts to equalize access to health care by employees of small business and persons who buy individual insurance plans. The bill prohibits providers from charging higher premiums to some enrollees in group plans.
The bill establishes a community rating system for the setting of premiums. The bill also requires that enrollment be open to all of a business' employees.
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EXPLANATION: Matter added to current law appears in bold italics.
Matter removed from current law appears in [brackets].
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
3/10/94....5548
3/22/94....5689s
05/05/94.....6350h
CHAPTER 294
4058B
94-2656
08/09
SB 711
STATE OF NEW HAMPSHIRE
In the year of Our Lord
One Thousand Nine Hundred and Ninety-Four
AN ACT
relative to small employer and individual insurance.
Be it Enacted by the Senate and House of
Representatives in General Court convened:
294:1 Small Employer and Individual Insurance. RSA 420-G is repealed and reenacted to read as follows:
CHAPTER 420-G
SMALL EMPLOYER AND INDIVIDUAL INSURANCE
420-G:1 Purpose. The purpose of this chapter is to make fundamental changes in the way health insurance or health benefits plans are sold and rated by carriers, including health maintenance organizations, to both individuals and small employers in New Hampshire and to achieve the following goals:
I. To facilitate equal access to health insurance and health benefits plans by all New Hampshire residents who wish to obtain it directly or as members of small groups.
II. To promote competition among carriers, insurers and health maintenance organizations on the basis of efficient claims handling, ability to manage health care services, consumer satisfaction, and low administrative costs; and to prohibit underwriting and rating practices which allow some insurers to exclude higher risk applicants from coverage
and cause unaffordable premium rates to those unable to meet selection standards. Carriers will be expected to manage the risk of individuals or groups having above average experience.
420-G:2 Definitions.
I. "Carrier" means any person, entity, nonprofit corporation or company providing health insurance or the administration of health benefits plans in this state. For the purposes of this chapter, carrier includes a licensed insurance company, a prepaid hospital or medical service plan, a health maintenance organization or any other entity, as listed in RSA 420-G:9, which provides an individual, employee or small employer with a health insurance plan, health benefits plan or health insurance type plan.
II. "Community rating" means a rating methodology which produces the same premium for every person covered by a policy, certificate, contract form or other evidence of coverage.
III. "Commissioner" means the insurance commissioner.
IV. "Department" means the insurance department.
V. "Health insurance plan" or "health benefits plan" or "plan" means any arrangement with an entity which adjudicates and pays medical claims on behalf of an individual, an employee or dependents. This type of arrangement is evidenced by a hospital or medical policy or certificate, hospital or medical service plan contract, or health maintenance organization group or individual subscriber contract or other evidence of coverage. Health insurance plan does not include accident-only, credit, dental or disability income insurance; coverage issued as a supplement to liability insurance; medicare supplement insurance; workers' compensation or similar insurance; or automobile medical-payment insurance.
VI. "Individual" means a person and that person's dependents who are not eligible for health insurance plans or health benefit plans through employment.
VII. "Individual health insurance policy" means an insurance policy issued by a carrier under title XXXVII of the Revised Statutes Annotated, issued directly to an individual and not on a group or group remittance basis. This chapter does not affect policies covering any one of the
following: long term care benefits, nursing home benefits, home care benefits, dental or vision care services, hospital or surgical indemnity benefits with specific dollar amounts, accident only indemnity benefits, accidental death and dismemberment benefits, prescription drug benefits, or disability income benefits, specified disease benefits, or short-term, individual, nonrenewable medical, hospital or major medical policies. For the purposes of this chapter, franchise insurance as defined in RSA 415:19 shall be considered individual health insurance.
VIII. "Open enrollment" means an annual period of at least 60 days prior to the group's anniversary when employees of a small employer shall have the opportunity to enroll in the small employer's plan or change their membership status within that plan. Coverage shall become effective on the group's anniversary date, subject to a 30-day notification to the carrier.
IX. "Qualified association trust or other entity" means an association established trust or other entity in existence on January 1, 1995 and providing health benefit plans covering at least 1,000 employees and /or the dependents of association members, which association:
(a) Was established and maintained for purposes other than the provision of health insurance plans;
(b) Was in existence for at least 10 years prior to January 1, 1995; and
(c) Conducts regular meetings designed to further the interests of its members.
X. "Small employer" means a business or organization which employs one and up to 100 employees, including owners and self-employed persons. A small employer is subject to this chapter whether or not it becomes a part of an association, multi-employer plan, trust or any other entity as cited in RSA 420-G:9 provided it meets this definition. Small employer does not include an employer participating in a pooled risk management program meeting the standards of RSA 5-B or an employer providing benefits through a qualified association trust or other entity as defined in RSA 420-G:2, IX.
XI. "Small employer carrier" means any carrier which offers coverage for a health insurance plan or a health benefits plan for employees,
dependents, or both of a small employer.
420-G:3 Health Insurance Plans or Health Benefits Plans Subject to this Chapter.
I. Except as provided in paragraph II, the provisions of this chapter shall apply to any health insurance plan or health benefits plan which provides coverage to small employers employing one and up to 100 employees.
II. The provisions of this chapter shall apply to individual health insurance policies.
III. Notwithstanding any law to the contrary, the provisions of this chapter shall prevail with respect to the subject matter within this chapter.
420-G:4 Practices Relating to Premium Rates and Coverage.
I. Premium rates for health insurance plans or health benefits plans subject to this chapter shall be subject to the following provisions:
(a) All premiums charged to either individuals or small employers shall be solely based on a community rating basis and shall be guaranteed for at least 6 months.
(1) Community rating shall be set by each carrier as the single average premium computed for each month or quarter for each membership type (including single, 2 person, and family) with no modification for gender, geographical location, occupation, health status, individual and/or group claims experience or duration of coverage.
(2) Carriers may modify such average premium for age only in accordance with the following limitations:
(A) During the first calendar year that this chapter is in effect the maximum premium differential for age as determined by ratio shall be 4 to 1;
(B) During the second calendar year and all subsequent years that this chapter is in effect such maximum premium differential shall be 3 to 1.
(3) Carriers modifying such average premium for age may do so only by using the following age brackets.
0-24
25-34
35-44
45-54
55-64
65+
(4) Upon the renewal of an individual or small group policy a carrier is prohibited from increasing the premium rate by more than 25 percent of the rate which applied in the preceeding year. Such rate increase limitation shall not include any premium rate increase which is based on a carriers annual cost and utilization trends; changes in the number of covered members in the group; or changes in group composition due to members moving to a different age bracket. This subparagraph shall expire on January 1, 2000.
(5) The same rating methodology shall apply to individuals or new groups and to individuals renewing and groups renewing at each annual renewal date or anniversary date. There shall be no adjustments in the form of new group discounts, rebates, anticipated refunds, experience, or tier or durational factors or any other factor which affects an individual's or small employer's rate. Rating methodology shall not be construed to include carrier incentives to individual subscribers or members to participate in wellness and fitness programs provided such incentives are approved by the insurance department.
(6) The only other modification to be allowed in community rating will be that component of the administrative fees which reflects the cost of doing business with different group sizes. The commissioner shall not approve any filing if such filing is excessive, inadequate or contrary to the intent of this chapter.
(b) Medical underwriting, the use of individual or small employer group health statements or screenings or the use of prior individual or group claims history to establish or modify premium rates, is prohibited.
(1) Carriers shall not make any adjustments to the community rate due to any past, current or anticipated medical condition.
(2) Carriers shall not make any inquiry about applicant's avocations, hobbies or other activities.
(3) Carriers shall not require attending physician statements, questionnaires or any investigations or reviews regarding health status, health history or family health status.
(4) Carriers shall not knowingly provide coverage to groups where medical underwriting has been performed by the employer or anyone acting on the group's behalf.
(5) Carriers shall not offer riders or endorsements which provide for medical underwriting or offer incentives to individuals or small employers to provide medical information.
(6) Carriers shall not offer riders or endorsements to exclude certain illnesses or health conditions in order to avoid the purpose of this chapter.
(c) All rates, either for individuals or new small employer groups or for the renewal of existing individuals or small employer groups, shall be provided on a guaranteed acceptance and renewability basis.
(1) Carriers shall actively market, accept and renew all individuals or small employers for all of the benefits plans they sell in the individual or small employer market.
(2) Carriers shall not deny coverage to any person nor any eligible dependent, except in accordance with the provisions of this chapter.
(3) High risk pools are not allowed.
(4) A health insurance plan or health benefits plan subject to this chapter shall be renewable to all individuals or employees and dependents at the option of the small employer, except for the following reasons:
(A) Nonpayment of required premiums.
(B) Fraud or misrepresentation of the individual or small employer, or with respect to coverage of an employee, fraud or
misrepresentation by the employee or dependent or such individual or employee's representative.
(C) Noncompliance with plan provisions.
(D) The number of employees covered under the plan is less than the number or percentage of eligible employees required by percentage requirements under the plan.
(E) The small employer is no longer actively engaged in the business in which it was engaged on the effective date of the plan.
(F) The small employer medically underwrites or otherwise violates a provision of this chapter.
II. Individual and small employer health insurance plan or health benefits plan coverage may include waiting periods for pre-existing conditions, but the provisions shall be at least as favorable to covered persons as those set forth in this section.
(a)(1) Except for federally-qualified health maintenance organizations, no waiting period provision shall exclude coverage for a preexisting condition period in excess of a period of 3 consecutive months ending while the individual's health insurance plan is in force and during which the individual incurred no medical care treatment expenses in connection with the preexisting condition, nor for a preexisting condition period in excess of 9 months following the effective date of coverage for the covered person and may apply only to conditions manifesting themselves in symptoms or conditions for which medical advice was received or recommended or which caused or would cause an ordinarily prudent person to seek medical advice, diagnosis, care or treatment and/or was recommended or received during the 3 months immediately preceding the effective date of coverage.
(2) For federally-qualified health maintenance organizations, no preexisting condition provision shall impose a copayment for a preexisting condition that exceeds 50 percent of the cost of providing services for that condition. Copayments on preexisting conditions may be charged for 12 months following the effective date of coverage for the covered person and may apply only to conditions manifesting themselves in
symptoms or conditions for which medical advice was received or recommended or which caused or would cause an ordinarily prudent person to seek medical advice, diagnosis, care or treatment and/or was recommended or received during the 3 months immediately preceding the effective date of coverage.
(b) In applying a preexisting condition provision to an eligible person, the carrier shall credit the time the person was covered under previous health insurance or health benefits plans, whether insured or self-insured.
(1) If the individual, employee, or dependent did not have a health insurance plan or health benefits plan during a period of unemployment prior to the effective date of new coverage, the lack of coverage during the period of unemployment shall be disregarded and, when applying the continuous coverage requirement of this subparagraph to an eligible person, coverage shall be considered to have been continuous from the date of the termination of any health benefit plan insuring the individual immediately prior to the period of unemployment to the effective date of the new coverage. The period of unemployment shall also be credited toward the time needed to satisfy any waiting period provision of the new coverage.
(2) An employee who declines a small employer's plan during the initial offering or subsequent open enrollment periods shall be a late enrollee and shall not be allowed on the plan until the next open enrollment period. However, an eligible employee or dependent shall not be considered a late enrollee if the individual:
(A) Was covered under a public or private health insurance or other health benefit arrangement at the time the individual was able to enroll; and
(B) Has lost coverage under a public or private health insurance or other health benefit arrangement as a result of termination of employment or eligibility, the termination of the other plan's coverage, death of a spouse, or divorce; and
(C) Requests enrollment within 30 days after termination of coverage provided under a public or private health insurance or other health benefit arrangement; or
(D) The individual is employed by an employer which offers multiple health benefit plans and the individual elects a different plan during an open enrollment period; or
(E) A court has ordered coverage to be provided for an ex-spouse or a minor child under a covered employee's health benefit plan and request for enrollment is made within 30 days after issuance of such court order.
III. A small employer carrier may not require more than 75 percent of the employees eligible for benefits in a small employer group to participate in the carrier's health insurance or health benefits plan, except as noted below.
(a) For the purpose of calculating whether or not a small employer group meets the minimum enrollment requirements, the number of eligible employees shall be counted as the total number of full-time employees and part-time employees who are eligible for benefits. Any full-time or part-time employee who is covered as a dependent on another health insurance or health benefits plan shall be excluded from the count.
(b) A carrier, when calculating the participation percentage, shall not consider employees who have coverage under another health insurance plan or health benefits plan sponsored by the same employer.
(c) The minimum participation requirements shall be calculated on an employer-by-employer basis if the small employer is part of an association, trust or other similar arrangement.
(d) In performing the computation to determine the actual enrollment required for qualification as a small employer plan, the small employer carrier shall calculate 75 percent of the actual number of eligible employees, defined in RSA 420-G:4, III(a) and (b), and round any factional number to the higher integer.
IV. There shall be an annual open enrollment period of 60 days prior to a group's anniversary when employees or dependents can apply to the small employer for coverage upon the small employer's anniversary date.
(a) A carrier shall not refuse any eligible employees or dependents applying for coverage during the open enrollment period.
(b) A carrier shall not use medical underwriting questionnaires or health statements for any employees or dependents eligible for enrollment.
(c) Employees or dependents coming on at the time of an open enrollment period shall have the same premiums as the rest of the small employer group shall have upon the new or renewal effective date.
V. All carriers shall electronically provide claims data to the division of public health services, department of health and human services, or its agent.
VI. All carriers shall accept electronic claims submitted in health care financing administration (HCFA) format for UB-92 or HCFA-1500 records, or as amended by HCFA.
420-G:5 Qualified Association Trust or Other Entity. A qualified association trust or other entity as defined in RSA 420-G:2, IX shall:
I. Use the community rating methodology outlined in RSA 420-G:4, I(a)(1)-(6) for all small employer members with 100 or fewer employees based upon the associations group experience;
II. Offer all eligible members as defined under the applicable trust or other documents, coverage and rate on a guaranteed issue and renewability basis;
III. Comply with the prohibitions concerning medical underwriting contained in RSA 420-G:4, I(b)(1)-(6), and
IV. Comply with the preexisting conditions provisions of RSA 420-G:4, II.
420-G:6 Disclosure of Rating Practices and Renewability Provisions. Each carrier shall make reasonable disclosure in solicitation and sales materials provided to individuals and small employers of the following:
I. The methodology by which premium rates for an individual or specific small employer are established. Each carrier shall state that rates and practices are in full compliance with this chapter.
II. The provisions concerning the carrier's right to change premium rates and the factors which affect changes in premium rates.
III. The provisions relating to renewability of coverage.
420-G:7 Maintenance of Records.
I. Each carrier shall maintain at its principal place of business a complete and detailed description of its rating practices and renewal underwriting practices, including information and documentation which demonstrate that its rating methods and practices are based upon commonly accepted acturial assumptions and are in accordance with sound actuarial principles.
II. Each carrier shall file each March 1, with the commissioner, an actuarial certification stating that the carrier is in compliance with this section and that the rating methods of the carrier are actuarially sound.
III. A carrier shall make the information and documentation described in paragraph I available to the commissioner upon request.
420-G:8 Filing of Rates. No policy or contract of insurance or any certificate under such policy or contract or other evidence of coverage shall be issued under this chapter until the premium rates have been filed and approved by the commissioner. The commissioner shall approve or disapprove such rates within 30 days of receipt. The commissioner may disapprove rate filings if he finds such rates to be excessive, inadequate or contrary to the intent of this chapter.
420-G:9 Rulemaking. The commissioner shall adopt rules, under RSA 541-A, necessary to the proper administration of this chapter.
420-G:10 Applicability; Carriers.
I. This chapter shall apply to any entity licensed, controlled or regulated by RSA 415, RSA 415-E, RSA 419, RSA 420, RSA 420-A, RSA 420-B or RSA 420-C which offers or provides individual or small employer health insurance plans or health benefits plans for delivery in this state. This chapter shall also apply to any multi-employer plan, trust, association, claims administrator, claims paying agent or any other entity whether fully insured, partially insured, or self-funded which offers or provides individual or small employer health insurance plans or health benefits plans for delivery in this state. This chapter shall not apply to pooled risk management programs which meet the standards established by RSA 5-B.
II. Notwithstanding any other provision of this chapter, any multiple employer welfare arrangement which meets the requirements of
RSA 415-E:2, III shall be exempt from the provisions of this chapter until January 1, 1998.
420-G:11 Severability. If any provision of this chapter or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the chapter which can be given effect without the invalid provisions or applications, and to this end the provisions of this chapter are severable.
420-G:12 Penalties. Any carrier who proposes, advertises, solicits, issues or delivers to any person or entity in this state any form which does not comply with this chapter or who shall in any way violate this chapter may:
I. Be prohibited from marketing, selling or otherwise administering to the individual or small employer market if the commissioner finds a carrier to be in violation of RSA 420-G.
II. Be subject to an administrative fine not to exceed $2,500 for each violation. Repeated violations of the same chapter shall constitute separate fineable offenses.
III. Have its certificate of authority indefinitely suspended or revoked at the discretion of the commissioner.
294:2 Commissioner's Report. The insurance commissioner shall issue a report to the governor, the senate president and the speaker of the house regarding the implementation of the community rating system no later than January 1, 1998. The report shall include the affect of community rating on premiums, the availability of insurance and the uninsured population in the state.
294:3 Effective Date. This act shall take effect January 1, 1995.
Approved: June 6, 1994
Effective: January 1, 1995