2012 -- H 7099

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LC00275

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO INSURANCE

     Introduced By: Representatives Gallison, San Bento, Silva, Serpa, and Fellela

     Date Introduced: January 11, 2012

     Referred To: House Small Business

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 27-50-3 of the General Laws in Chapter 27-50 entitled "Small

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Employer Health Insurance Availability Act" is hereby amended to read as follows:

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     27-50-3. Definitions. [Effective December 31, 2010.] -- (a) "Actuarial certification"

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means a written statement signed by a member of the American Academy of Actuaries or other

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individual acceptable to the director that a small employer carrier is in compliance with the

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provisions of section 27-50-5, based upon the person's examination and including a review of the

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appropriate records and the actuarial assumptions and methods used by the small employer carrier

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in establishing premium rates for applicable health benefit plans.

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      (b) "Adjusted community rating" means a method used to develop a carrier's premium

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which spreads financial risk across the carrier's entire small group population in accordance with

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the requirements in section 27-50-5.

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      (c) "Affiliate" or "affiliated" means any entity or person who directly or indirectly

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through one or more intermediaries controls or is controlled by, or is under common control with,

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a specified entity or person.

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      (d) "Affiliation period" means a period of time that must expire before health insurance

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coverage provided by a carrier becomes effective, and during which the carrier is not required to

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provide benefits.

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      (e) "Bona fide association" means, with respect to health benefit plans offered in this

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state, an association which:

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      (1) Has been actively in existence for at least five (5) years;

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      (2) Has been formed and maintained in good faith for purposes other than obtaining

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insurance;

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      (3) Does not condition membership in the association on any health-status related factor

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relating to an individual (including an employee of an employer or a dependent of an employee);

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      (4) Makes health insurance coverage offered through the association available to all

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members regardless of any health status-related factor relating to those members (or individuals

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eligible for coverage through a member);

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      (5) Does not make health insurance coverage offered through the association available

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other than in connection with a member of the association;

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      (6) Is composed of persons having a common interest or calling;

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      (7) Has a constitution and bylaws; and

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      (8) Meets any additional requirements that the director may prescribe by regulation.

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      (f) "Carrier" or "small employer carrier" means all entities licensed, or required to be

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licensed, in this state that offer health benefit plans covering eligible employees of one or more

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small employers pursuant to this chapter. For the purposes of this chapter, carrier includes an

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insurance company, a nonprofit hospital or medical service corporation, a fraternal benefit

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society, a health maintenance organization as defined in chapter 41 of this title or as defined in

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chapter 62 of title 42, or any other entity subject to state insurance regulation that provides

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medical care as defined in subsection (y) that is paid or financed for a small employer by such

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entity on the basis of a periodic premium, paid directly or through an association, trust, or other

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intermediary, and issued, renewed, or delivered within or without Rhode Island to a small

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employer pursuant to the laws of this or any other jurisdiction, including a certificate issued to an

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eligible employee which evidences coverage under a policy or contract issued to a trust or

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association.

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      (g) "Church plan" has the meaning given this term under section 3(33) of the Employee

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Retirement Income Security Act of 1974 [29 U.S.C. section 1002(33)_.

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      (h) "Control" is defined in the same manner as in chapter 35 of this title.

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      (i) (1) "Creditable coverage" means, with respect to an individual, health benefits or

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coverage provided under any of the following:

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      (i) A group health plan;

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      (ii) A health benefit plan;

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      (iii) Part A or part B of Title XVIII of the Social Security Act, 42 U.S.C. section 1395c

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et seq., or 42 U.S.C. section 1395j et seq., (Medicare);

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      (iv) Title XIX of the Social Security Act, 42 U.S.C. section 1396 et seq., (Medicaid),

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other than coverage consisting solely of benefits under 42 U.S.C. section 1396s (the program for

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distribution of pediatric vaccines);

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      (v) 10 U.S.C. section 1071 et seq., (medical and dental care for members and certain

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former members of the uniformed services, and for their dependents)(Civilian Health and

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Medical Program of the Uniformed Services)(CHAMPUS). For purposes of 10 U.S.C. section

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1071 et seq., "uniformed services" means the armed forces and the commissioned corps of the

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National Oceanic and Atmospheric Administration and of the Public Health Service;

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      (vi) A medical care program of the Indian Health Service or of a tribal organization;

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      (vii) A state health benefits risk pool;

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      (viii) A health plan offered under 5 U.S.C. section 8901 et seq., (Federal Employees

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Health Benefits Program (FEHBP));

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      (ix) A public health plan, which for purposes of this chapter, means a plan established or

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maintained by a state, county, or other political subdivision of a state that provides health

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insurance coverage to individuals enrolled in the plan; or

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      (x) A health benefit plan under section 5(e) of the Peace Corps Act (22 U.S.C. section

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2504(e)).

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      (2) A period of creditable coverage shall not be counted, with respect to enrollment of an

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individual under a group health plan, if, after the period and before the enrollment date, the

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individual experiences a significant break in coverage.

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      (j) "Dependent" means a spouse, an unmarried child under the age of nineteen (19) years,

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an unmarried child who is a student under the age of twenty-five (25) years, and an unmarried

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child of any age who is financially dependent upon, the parent and is medically determined to

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have a physical or mental impairment which can be expected to result in death or which has

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lasted or can be expected to last for a continuous period of not less than twelve (12) months.

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      (k) "Director" means the director of the department of business regulation.

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      (l) [Deleted by P.L. 2006, ch. 258, section 2, and P.L. 2006, ch. 296, section 2.]

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      (m) "Eligible employee" means an employee who works on a full-time basis with a

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normal work week of thirty (30) or more hours, except that at the employer's sole discretion, the

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term shall also include an employee who works on a full-time basis with a normal work week of

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anywhere between at least seventeen and one-half (17.5) and thirty (30) hours, so long as this

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eligibility criterion is applied uniformly among all of the employer's employees and without

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regard to any health status-related factor. The term includes a self-employed individual, a sole

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proprietor, a partner of a partnership, and may include an independent contractor, if the self-

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employed individual, sole proprietor, partner, or independent contractor is included as an

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employee under a health benefit plan of a small employer, but does not include an employee who

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works on a temporary or substitute basis or who works less than seventeen and one-half (17.5)

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hours per week. Any retiree under contract with any independently incorporated fire district is

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also included in the definition of eligible employee. Persons covered under a health benefit plan

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pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 shall not be considered

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"eligible employees" for purposes of minimum participation requirements pursuant to section 27-

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50-7(d)(9).

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      (n) "Enrollment date" means the first day of coverage or, if there is a waiting period, the

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first day of the waiting period, whichever is earlier.

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      (o) "Established geographic service area" means a geographic area, as approved by the

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director and based on the carrier's certificate of authority to transact insurance in this state, within

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which the carrier is authorized to provide coverage.

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      (p) "Family composition" means:

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      (1) Enrollee;

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      (2) Enrollee, spouse and children;

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      (3) Enrollee and spouse; or

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      (4) Enrollee and children.

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      (q) "Genetic information" means information about genes, gene products, and inherited

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characteristics that may derive from the individual or a family member. This includes information

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regarding carrier status and information derived from laboratory tests that identify mutations in

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specific genes or chromosomes, physical medical examinations, family histories, and direct

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analysis of genes or chromosomes.

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      (r) "Governmental plan" has the meaning given the term under section 3(32) of the

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Employee Retirement Income Security Act of 1974, 29 U.S.C. section 1002(32), and any federal

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governmental plan.

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      (s) (1) "Group health plan" means an employee welfare benefit plan as defined in section

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3(1) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. section 1002(1), to the

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extent that the plan provides medical care, as defined in subsection (y) of this section, and

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including items and services paid for as medical care to employees or their dependents as defined

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under the terms of the plan directly or through insurance, reimbursement, or otherwise.

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      (2) For purposes of this chapter:

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      (i) Any plan, fund, or program that would not be, but for PHSA Section 2721(e), 42

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U.S.C. section 300gg(e), as added by P.L. 104-191, an employee welfare benefit plan and that is

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established or maintained by a partnership, to the extent that the plan, fund or program provides

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medical care, including items and services paid for as medical care, to present or former partners

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in the partnership, or to their dependents, as defined under the terms of the plan, fund or program,

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directly or through insurance, reimbursement or otherwise, shall be treated, subject to paragraph

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(ii) of this subdivision, as an employee welfare benefit plan that is a group health plan;

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      (ii) In the case of a group health plan, the term "employer" also includes the partnership

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in relation to any partner; and

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      (iii) In the case of a group health plan, the term "participant" also includes an individual

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who is, or may become, eligible to receive a benefit under the plan, or the individual's beneficiary

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who is, or may become, eligible to receive a benefit under the plan, if:

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      (A) In connection with a group health plan maintained by a partnership, the individual is

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a partner in relation to the partnership; or

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      (B) In connection with a group health plan maintained by a self-employed individual,

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under which one or more employees are participants, the individual is the self-employed

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individual.

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      (t) (1) "Health benefit plan" means any hospital or medical policy or certificate, major

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medical expense insurance, hospital or medical service corporation subscriber contract, or health

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maintenance organization subscriber contract. Health benefit plan includes short-term and

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catastrophic health insurance policies, and a policy that pays on a cost-incurred basis, except as

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otherwise specifically exempted in this definition.

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      (2) "Health benefit plan" does not include one or more, or any combination of, the

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following:

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      (i) Coverage only for accident or disability income insurance, or any combination of

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those;

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      (ii) Coverage issued as a supplement to liability insurance;

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      (iii) Liability insurance, including general liability insurance and automobile liability

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insurance;

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      (iv) Workers' compensation or similar insurance;

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      (v) Automobile medical payment insurance;

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      (vi) Credit-only insurance;

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      (vii) Coverage for on-site medical clinics; and

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      (viii) Other similar insurance coverage, specified in federal regulations issued pursuant

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to Pub. L. No. 104-191, under which benefits for medical care are secondary or incidental to other

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insurance benefits.

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      (3) "Health benefit plan" does not include the following benefits if they are provided

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under a separate policy, certificate, or contract of insurance or are otherwise not an integral part

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of the plan:

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      (i) Limited scope dental or vision benefits;

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      (ii) Benefits for long-term care, nursing home care, home health care, community-based

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care, or any combination of those; or

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      (iii) Other similar, limited benefits specified in federal regulations issued pursuant to

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Pub. L. No. 104-191.

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      (4) "Health benefit plan" does not include the following benefits if the benefits are

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provided under a separate policy, certificate or contract of insurance, there is no coordination

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between the provision of the benefits and any exclusion of benefits under any group health plan

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maintained by the same plan sponsor, and the benefits are paid with respect to an event without

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regard to whether benefits are provided with respect to such an event under any group health plan

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maintained by the same plan sponsor:

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      (i) Coverage only for a specified disease or illness; or

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      (ii) Hospital indemnity or other fixed indemnity insurance.

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      (5) "Health benefit plan" does not include the following if offered as a separate policy,

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certificate, or contract of insurance:

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      (i) Medicare supplemental health insurance as defined under section 1882(g)(1) of the

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Social Security Act, 42 U.S.C. section 1395ss(g)(1);

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      (ii) Coverage supplemental to the coverage provided under 10 U.S.C. section 1071 et

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seq.; or

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      (iii) Similar supplemental coverage provided to coverage under a group health plan.

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      (6) A carrier offering policies or certificates of specified disease, hospital confinement

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indemnity, or limited benefit health insurance shall comply with the following:

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      (i) The carrier files on or before March 1 of each year a certification with the director

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that contains the statement and information described in paragraph (ii) of this subdivision;

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      (ii) The certification required in paragraph (i) of this subdivision shall contain the

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following:

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      (A) A statement from the carrier certifying that policies or certificates described in this

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paragraph are being offered and marketed as supplemental health insurance and not as a substitute

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for hospital or medical expense insurance or major medical expense insurance; and

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      (B) A summary description of each policy or certificate described in this paragraph,

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including the average annual premium rates (or range of premium rates in cases where premiums

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vary by age or other factors) charged for those policies and certificates in this state; and

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      (iii) In the case of a policy or certificate that is described in this paragraph and that is

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offered for the first time in this state on or after July 13, 2000, the carrier shall file with the

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director the information and statement required in paragraph (ii) of this subdivision at least thirty

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(30) days prior to the date the policy or certificate is issued or delivered in this state.

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      (u) "Health maintenance organization" or "HMO" means a health maintenance

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organization licensed under chapter 41 of this title.

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      (v) "Health status-related factor" means any of the following factors:

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      (1) Health status;

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      (2) Medical condition, including both physical and mental illnesses;

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      (3) Claims experience;

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      (4) Receipt of health care;

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      (5) Medical history;

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      (6) Genetic information;

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      (7) Evidence of insurability, including conditions arising out of acts of domestic

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violence; or

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      (8) Disability.

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      (w) (1) "Late enrollee" means an eligible employee or dependent who requests

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enrollment in a health benefit plan of a small employer following the initial enrollment period

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during which the individual is entitled to enroll under the terms of the health benefit plan,

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provided that the initial enrollment period is a period of at least thirty (30) days.

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      (2) "Late enrollee" does not mean an eligible employee or dependent:

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      (i) Who meets each of the following provisions:

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      (A) The individual was covered under creditable coverage at the time of the initial

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enrollment;

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      (B) The individual lost creditable coverage as a result of cessation of employer

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contribution, termination of employment or eligibility, reduction in the number of hours of

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employment, involuntary termination of creditable coverage, or death of a spouse, divorce or

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legal separation, or the individual and/or dependents are determined to be eligible for RIteCare

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under chapter 5.1 of title 40 or chapter 12.3 of title 42 or for RIteShare under chapter 8.4 of title

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40; and

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      (C) The individual requests enrollment within thirty (30) days after termination of the

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creditable coverage or the change in conditions that gave rise to the termination of coverage;

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      (ii) If, where provided for in contract or where otherwise provided in state law, the

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individual enrolls during the specified bona fide open enrollment period;

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      (iii) If the individual is employed by an employer which offers multiple health benefit

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plans and the individual elects a different plan during an open enrollment period;

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      (iv) If a court has ordered coverage be provided for a spouse or minor or dependent child

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under a covered employee's health benefit plan and a request for enrollment is made within thirty

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(30) days after issuance of the court order;

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      (v) If the individual changes status from not being an eligible employee to becoming an

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eligible employee and requests enrollment within thirty (30) days after the change in status;

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      (vi) If the individual had coverage under a COBRA continuation provision and the

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coverage under that provision has been exhausted; or

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      (vii) Who meets the requirements for special enrollment pursuant to section 27-50-7 or

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27-50-8.

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      (x) "Limited benefit health insurance" means that form of coverage that pays stated

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predetermined amounts for specific services or treatments or pays a stated predetermined amount

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per day or confinement for one or more named conditions, named diseases or accidental injury.

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      (y) "Medical care" means amounts paid for:

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      (1) The diagnosis, care, mitigation, treatment, or prevention of disease, or amounts paid

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for the purpose of affecting any structure or function of the body;

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      (2) Transportation primarily for and essential to medical care referred to in subdivision

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(1); and

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      (3) Insurance covering medical care referred to in subdivisions (1) and (2) of this

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subsection.

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      (z) "Network plan" means a health benefit plan issued by a carrier under which the

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financing and delivery of medical care, including items and services paid for as medical care, are

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provided, in whole or in part, through a defined set of providers under contract with the carrier.

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      (aa) "Person" means an individual, a corporation, a partnership, an association, a joint

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venture, a joint stock company, a trust, an unincorporated organization, any similar entity, or any

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combination of the foregoing.

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      (bb) "Plan sponsor" has the meaning given this term under section 3(16)(B) of the

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Employee Retirement Income Security Act of 1974, 29 U.S.C. section 1002(16)(B).

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      (cc) (1) "Preexisting condition" means a condition, regardless of the cause of the

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condition, for which medical advice, diagnosis, care, or treatment was recommended or received

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during the six (6) months immediately preceding the enrollment date of the coverage.

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      (2) "Preexisting condition" does not mean a condition for which medical advice,

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diagnosis, care, or treatment was recommended or received for the first time while the covered

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person held creditable coverage and that was a covered benefit under the health benefit plan,

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provided that the prior creditable coverage was continuous to a date not more than ninety (90)

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days prior to the enrollment date of the new coverage.

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      (3) Genetic information shall not be treated as a condition under subdivision (1) of this

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subsection for which a preexisting condition exclusion may be imposed in the absence of a

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diagnosis of the condition related to the information.

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      (dd) "Premium" means all moneys paid by a small employer and eligible employees as a

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condition of receiving coverage from a small employer carrier, including any fees or other

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contributions associated with the health benefit plan.

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      (ee) "Producer" means any insurance producer licensed under chapter 2.4 of this title.

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      (ff) "Rating period" means the calendar period for which premium rates established by a

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small employer carrier are assumed to be in effect.

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      (gg) "Restricted network provision" means any provision of a health benefit plan that

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conditions the payment of benefits, in whole or in part, on the use of health care providers that

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have entered into a contractual arrangement with the carrier pursuant to provide health care

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services to covered individuals.

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      (hh) "Risk adjustment mechanism" means the mechanism established pursuant to section

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27-50-16.

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      (ii) "Self-employed individual" means an individual or sole proprietor who derives a

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substantial portion of his or her income from a trade or business through which the individual or

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sole proprietor has attempted to earn taxable income and for which he or she has filed the

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appropriate Internal Revenue Service Form 1040, Schedule C or F, for the previous taxable year.

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      (jj) "Significant break in coverage" means a period of ninety (90) consecutive days

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during all of which the individual does not have any creditable coverage, except that neither a

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waiting period nor an affiliation period is taken into account in determining a significant break in

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coverage.

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      (kk) "Small employer" means, except for its use in section 27-50-7, any person, firm,

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corporation, partnership, association, political subdivision, or self-employed individual that is

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actively engaged in business including, but not limited to, a business or a corporation organized

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under the Rhode Island Non-Profit Corporation Act, chapter 6 of title 7, or a similar act of

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another state that, on at least fifty percent (50%) of its working days during the preceding

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calendar quarter, employed no more than fifty (50) eligible employees, with a normal work week

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of thirty (30) or more hours, the majority of whom were employed within this state, and is not

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formed primarily for purposes of buying health insurance and in which a bona fide employer-

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employee relationship exists. In determining the number of eligible employees, companies that

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are affiliated companies, or that are eligible to file a combined tax return for purposes of taxation

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by this state, shall be considered one employer. Subsequent to the issuance of a health benefit

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plan to a small employer and for the purpose of determining continued eligibility, the size of a

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small employer shall be determined annually. Except as otherwise specifically provided,

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provisions of this chapter that apply to a small employer shall continue to apply at least until the

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plan anniversary following the date the small employer no longer meets the requirements of this

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definition. The term small employer includes a self-employed individual.

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     ( ll ) "Waiting period" means, with respect to a group health plan and an individual who

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is a potential enrollee in the plan, the period that must pass with respect to the individual before

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the individual is eligible to be covered for benefits under the terms of the plan. For purposes of

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calculating periods of creditable coverage pursuant to subsection (j)(2) of this section, a waiting

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period shall not be considered a gap in coverage. For purposes of this chapter, a health benefit

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plan issued to a small employer through an association health benefit plan with an aggregate

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number of at least one hundred (100) insured individuals is exempt from the provisions of this

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chapter.

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      (mm) "Wellness health benefit plan" means a plan developed pursuant to section 27-50-

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10.

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      (nn) "Health insurance commissioner" or "commissioner" means that individual

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appointed pursuant to section 42-14.5-1 of the general laws and afforded those powers and duties

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as set forth in sections 42-14.5-2 and 42-14.5-3 of title 42.

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      (oo) "Low-wage firm" means those with average wages that fall within the bottom

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quartile of all Rhode Island employers.

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      (pp) "Wellness health benefit plan" means the health benefit plan offered by each small

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employer carrier pursuant to section 27-50-7.

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      (qq) "Commissioner" means the health insurance commissioner.

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     SECTION 2. Section 27-18.6-2 of the General Laws in Chapter 27-18.6 entitled "Large

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Group Health Insurance Coverage" is hereby amended to read as follows:

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     27-18.6-2. Definitions. -- The following words and phrases as used in this chapter have

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the following meanings unless a different meaning is required by the context:

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      (1) "Affiliation period" means a period which, under the terms of the health insurance

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coverage offered by a health maintenance organization, must expire before the health insurance

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coverage becomes effective. The health maintenance organization is not required to provide

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health care services or benefits during the period and no premium shall be charged to the

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participant or beneficiary for any coverage during the period;

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      (2) "Beneficiary" has the meaning given that term under section 3(8) of the Employee

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Retirement Security Act of 1974, 29 U.S.C. section 1002(8);

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      (3) "Bona fide association" means, with respect to health insurance coverage in this state,

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an association which:

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      (i) Has been actively in existence for at least five (5) years;

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      (ii) Has been formed and maintained in good faith for purposes other than obtaining

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insurance;

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      (iii) Does not condition membership in the association on any health status-relating

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factor relating to an individual (including an employee of an employer or a dependent of an

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employee);

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      (iv) Makes health insurance coverage offered through the association available to all

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members regardless of any health status-related factor relating to the members (or individuals

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eligible for coverage through a member);

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      (v) Does not make health insurance coverage offered through the association available

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other than in connection with a member of the association;

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      (vi) Is composed of persons having a common interest or calling;

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      (vii) Has a constitution and bylaws; and

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      (viii) Meets any additional requirements that the director may prescribe by regulation;

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      (4) "COBRA continuation provision" means any of the following:

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      (i) Section 4980(B) of the Internal Revenue Code of 1986, 26 U.S.C. section 4980B,

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other than the subsection (f)(1) of that section insofar as it relates to pediatric vaccines;

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      (ii) Part 6 of subtitle B of title 1 of the Employee Retirement Income Security Act of

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1974, 29 U.S.C. section 1161 et seq., other than section 609 of that act, 29 U.S.C. section 1169;

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or

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      (iii) Title XXII of the United States Public Health Service Act, 42 U.S.C. section 300bb-

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1 et seq.;

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      (5) "Creditable coverage" has the same meaning as defined in the United States Public

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Health Service Act, section 2701(c), 42 U.S.C. section 300gg(c), as added by P.L. 104-191;

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      (6) "Church plan" has the meaning given that term under section 3(33) of the Employee

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Retirement Income Security Act of 1974, 29 U.S.C. section 1002(33);

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      (7) "Director" means the director of the department of business regulation;

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      (8) "Employee" has the meaning given that term under section 3(6) of the Employee

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Retirement Income Security Act of 1974, 29 U.S.C. section 1002(6);

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      (9) "Employer" has the meaning given that term under section 3(5) of the Employee

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Retirement Income Security Act of 1974, 29 U.S.C. section 1002(5), except that the term includes

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only employers of two (2) or more employees;

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      (10) "Enrollment date" means, with respect to an individual covered under a group health

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plan or health insurance coverage, the date of enrollment of the individual in the plan or coverage

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or, if earlier, the first day of the waiting period for the enrollment;

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      (11) "Governmental plan" has the meaning given that term under section 3(32) of the

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Employee Retirement Income Security Act of 1974, 29 U.S.C. section 1002(32), and includes any

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governmental plan established or maintained for its employees by the government of the United

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States, the government of any state or political subdivision of the state, or by any agency or

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instrumentality of government;

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      (12) "Group health insurance coverage" means, in connection with a group health plan,

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health insurance coverage offered in connection with that plan;

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      (13) "Group health plan" means an employee welfare benefits plan as defined in section

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3(1) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. section 1002(1), to the

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extent that the plan provides medical care and including items and services paid for as medical

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care to employees or their dependents as defined under the terms of the plan directly or through

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insurance, reimbursement or otherwise;

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      (14) "Health insurance carrier" or "carrier" means any entity subject to the insurance

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laws and regulations of this state, or subject to the jurisdiction of the director, that contracts or

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offers to contract to provide, deliver, arrange for, pay for, or reimburse any of the costs of health

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care services, including, without limitation, an insurance company offering accident and sickness

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insurance, a health maintenance organization, a nonprofit hospital, medical or dental service

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corporation, or any other entity providing a plan of health insurance, health benefits, or health

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services;

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      (15) (i) "Health insurance coverage" means a policy, contract, certificate, or agreement

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offered by a health insurance carrier to provide, deliver, arrange for, pay for, or reimburse any of

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the costs of health care services. Health insurance coverage does include short-term and

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catastrophic health insurance policies, and a policy that pays on a cost-incurred basis, except as

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otherwise specifically exempted in this definition;

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      (ii) "Health insurance coverage" does not include one or more, or any combination of,

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the following "excepted benefits":

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      (A) Coverage only for accident, or disability income insurance, or any combination of

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those;

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      (B) Coverage issued as a supplement to liability insurance;

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      (C) Liability insurance, including general liability insurance and automobile liability

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insurance;

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      (D) Workers' compensation or similar insurance;

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      (E) Automobile medical payment insurance;

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      (F) Credit-only insurance;

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      (G) Coverage for on-site medical clinics; and

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      (H) Other similar insurance coverage, specified in federal regulations issued pursuant to

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P.L. 104-191, under which benefits for medical care are secondary or incidental to other

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insurance benefits;

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      (iii) "Health insurance coverage" does not include the following "limited, excepted

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benefits" if they are provided under a separate policy, certificate of insurance, or are not an

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integral part of the plan:

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      (A) Limited scope dental or vision benefits;

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      (B) Benefits for long-term care, nursing home care, home health care, community-based

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care, or any combination of those; and

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      (C) Any other similar, limited benefits that are specified in federal regulations issued

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pursuant to P.L. 104-191;

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      (iv) "Health insurance coverage" does not include the following "noncoordinated,

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excepted benefits" if the benefits are provided under a separate policy, certificate, or contract of

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insurance, there is no coordination between the provision of the benefits and any exclusion of

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benefits under any group health plan maintained by the same plan sponsor, and the benefits are

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paid with respect to an event without regard to whether benefits are provided with respect to the

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event under any group health plan maintained by the same plan sponsor:

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      (A) Coverage only for a specified disease or illness; and

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      (B) Hospital indemnity or other fixed indemnity insurance;

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      (v) "Health insurance coverage" does not include the following "supplemental, excepted

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benefits" if offered as a separate policy, certificate, or contract of insurance:

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      (A) Medicare supplemental health insurance as defined under section 1882(g)(1) of the

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Social Security Act, 42 U.S.C. section 1395ss(g)(1);

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      (B) Coverage supplemental to the coverage provided under 10 U.S.C. section 1071 et

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seq.; and

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      (C) Similar supplemental coverage provided to coverage under a group health plan;

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      (16) "Health maintenance organization" ("HMO") means a health maintenance

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organization licensed under chapter 41 of this title;

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      (17) "Health status-related factor" means any of the following factors:

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      (i) Health status;

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      (ii) Medical condition, including both physical and mental illnesses;

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      (iii) Claims experience;

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      (iv) Receipt of health care;

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      (v) Medical history;

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      (vi) Genetic information;

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      (vii) Evidence of insurability, including contributions arising out of acts of domestic

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violence; and

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      (viii) Disability;

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      (18) "Large employer" means, in connection with a group health plan with respect to a

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calendar year and a plan year, an employer who employed an average of at least fifty-one (51)

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employees on business days during the preceding calendar year and who employs at least two (2)

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employees on the first day of the plan year. In the case of an employer which was not in existence

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throughout the preceding calendar year, the determination of whether the employer is a large

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employer shall be based on the average number of employees that is reasonably expected the

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employer will employ on business days in the current calendar year;

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     A large employer shall include an association that issues health benefit plans to small

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employers with an aggregate number of at least one hundred (100) insured individuals as defined

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in chapter 27-50 of this title;

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      (19) "Large group market" means the health insurance market under which individuals

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obtain health insurance coverage (directly or through any arrangement) on behalf of themselves

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(and their dependents) through a group health plan maintained by a large employer;

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      (20) "Late enrollee" means, with respect to coverage under a group health plan, a

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participant or beneficiary who enrolls under the plan other than during:

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      (i) The first period in which the individual is eligible to enroll under the plan; or

14-62

      (ii) A special enrollment period;

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      (21) "Medical care" means amounts paid for:

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      (i) The diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid

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for the purpose of affecting any structure or function of the body;

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      (ii) Amounts paid for transportation primarily for and essential to medical care referred

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to in paragraph (i) of this subdivision; and

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      (iii) Amounts paid for insurance covering medical care referred to in paragraphs (i) and

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(ii) of this subdivision;

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      (22) "Network plan" means health insurance coverage offered by a health insurance

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carrier under which the financing and delivery of medical care including items and services paid

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for as medical care are provided, in whole or in part, through a defined set of providers under

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contract with the carrier;

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      (23) "Participant" has the meaning given such term under section 3(7) of the Employee

15-75

Retirement Income Security Act of 1974, 29 U.S.C. section 1002(7);

15-76

      (24) "Placed for adoption" means, in connection with any placement for adoption of a

15-77

child with any person, the assumption and retention by that person of a legal obligation for total

15-78

or partial support of the child in anticipation of adoption of the child. The child's placement with

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the person terminates upon the termination of the legal obligation;

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      (25) "Plan sponsor" has the meaning given that term under section 3(16)(B) of the

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Employee Retirement Income Security Act of 1974, 29 U.S.C. section 1002(16)(B). "Plan

15-82

sponsor" also includes any bona fide association, as defined in this section;

15-83

      (26) "Preexisting condition exclusion" means, with respect to health insurance coverage,

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a limitation or exclusion of benefits relating to a condition based on the fact that the condition

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was present before the date of enrollment for the coverage, whether or not any medical advice,

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diagnosis, care or treatment was recommended or received before the date; and

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      (27) "Waiting period" means, with respect to a group health plan and an individual who

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is a potential participant or beneficiary in the plan, the period that must pass with respect to the

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individual before the individual is eligible to be covered for benefits under the terms of the plan.

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     SECTION 3. This act shall take effect upon passage.

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LC00275

========

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO INSURANCE

***

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     This act would provide that a health benefit plan issued to a small employer with an

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aggregate number of at least 100 insured individuals be exempt from the provisions of the small

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employer Health Insurance Availability Act.

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     This act would take effect upon passage.

=======

LC00275

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