2015 -- S 0786 SUBSTITUTE A

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LC001754/SUB A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO INSURANCE -- HEALTH INSURANCE COVERAGE

     Introduced By: Senators Sosnowski, Miller, Crowley, Sheehan, and Ottiano

     Date Introduced: April 01, 2015

     Referred To: Senate Health & Human Services

     (OHIC)

It is enacted by the General Assembly as follows:

     SECTION 1. Sections 27-18.5-1, 27-18.5-2, 27-18.5-3, 27-18.5-4, 27-18.5-5 and, 27-

18.5-6 of the General Laws in Chapter 27-18.5 entitled "Individual Health Insurance Coverage"

are hereby amended to read as follows:

     27-18.5-1. Purpose. -- The purpose of this chapter is, among other things, to insure

compliance of all policies, contracts, certificates, and agreements of individual health insurance

coverage offered or delivered in this state with the Health Insurance Portability and

Accountability Act of 1996 (P.L. 104-191), and with the Patient Protection and Affordable Care

Act (Pub. L. 111-148).

     27-18.5-2. Definitions. -- The following words and phrases as used in this chapter have

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

      (1) "Bona fide association" means, with respect to health insurance coverage offered in

this state, an association which:

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

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

insurance;

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

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

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

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

eligible for coverage through a member);

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

other than in connection with a member of the association;

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

      (vii) Has a constitution and bylaws; and

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

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

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

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

     (ii) Part 6 of subtitle B of Title I of the Employee Retirement Income Security Act of

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

     (iii) Title XXII of the United States Public Health Service Act, 42 U.S.C. § 300bb-1 et

seq.;

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

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

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

     (5)(2) "Eligible individual" means an individual resident in this state:;

     (i) For whom, as of the date on which the individual seeks coverage under this chapter,

the aggregate of the periods of creditable coverage is eighteen (18) or more months and whose

most recent prior creditable coverage was under a group health plan, a governmental plan

established or maintained for its employees by the government of the United States or by any of

its agencies or instrumentalities, or church plan (as defined by the Employee Retirement Income

Security Act of 1974, 29 U.S.C. § 1001 et seq.);

     (ii) Who is not eligible for coverage under a group health plan, part A or part B of title

XVIII of the Social Security Act, 42 U.S.C. § 1395c et seq. or 42 U.S.C. § 1395j et seq., or any

state plan under title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq. (or any successor

program), and does not have other health insurance coverage;

     (iii) With respect to whom the most recent coverage within the coverage period was not

terminated based on a factor described in § 27-18.5-4(b)(relating to nonpayment of premiums or

fraud);

     (iv) If the individual had been offered the option of continuation coverage under a

COBRA continuation provision, or under chapter 19.1 of this title or under a similar state

program of this state or any other state, who elected the coverage; and

     (v) Who, if the individual elected COBRA continuation coverage, has exhausted the

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continuation coverage under the provision or program;

     (6)(3) "Group health plan" means an employee welfare benefit plan as defined in section

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

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

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

insurance, reimbursement or otherwise;

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

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

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

costs of health care services, including, without limitation, an insurance company offering

accident and sickness insurance, a health maintenance organization, a nonprofit hospital, or

medical or dental service corporation, or any other entity providing a plan of health insurance or

health benefits by which health care services are paid or financed for an eligible individual or his

or her dependents by such entity on the basis of a periodic premium, paid directly or through an

association, trust, or other intermediary, and issued, renewed, or delivered within or without

Rhode Island to cover a natural person who is a resident of this state, including a certificate issued

to a natural person which evidences coverage under a policy or contract issued to a trust or

association;

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

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

the costs of health care services.

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

following, if the coverage complies with all other applicable state and federal laws and

regulations:

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

those;

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

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

insurance;

     (D) Workers' compensation or similar insurance;

     (E) Automobile medical payment insurance;

     (F) Credit-only insurance;

     (G) Coverage for on-site medical clinics;

     (H) Other similar insurance coverage, specified in, and in compliance with federal and

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state regulations issued pursuant to P.L. 104-191, under which benefits for medical care are

secondary or incidental to other insurance benefits; and

     (I) Short term limited duration insurance; in accordance with regulations adopted by the

commissioner;

     (iii) "Health insurance coverage" does not include the following benefits if they are

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

the coverage, and if the coverage complies with all other applicable state and federal laws and

regulations:

     (A) Limited scope dental or vision benefits;

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

care, or any combination of these;

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

pursuant to P.L. 104-191;

     (iv) "Health insurance coverage" does not include the following benefits if the benefits

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

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

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

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

maintained by the same plan sponsor the coverage complies with all other applicable state and

federal laws and regulations:

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

     (B) Hospital indemnity or other fixed indemnity insurance; and

     (v) "Health insurance coverage" does not include the following if it is offered as a

separate policy, certificate, or contract of insurance; and if the insurance coverage complies with

all other applicable state and federal laws and regulations:

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

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

     (B) Coverage supplemental to the coverage provided under 10 U.S.C. § 1071 et seq.; and

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

     (9)(6) "Health status-related factor" means includes any of the following factors:

     (i) Health status;

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

     (iii) Claims experience;

     (iv) Receipt of health care;

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     (v) Medical history;

     (vi) Genetic information;

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

violence; and

     (viii) Disability;

     (10)(7) "Individual market" means the market for health insurance coverage offered to

individuals other than in connection with a group health plan;

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

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

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

contract with the carrier;

     (12)(9) "Preexisting condition" means, with respect to health insurance coverage, a

condition (whether physical or mental), regardless of the cause of the condition, that was present

before the date of enrollment for the coverage, for which medical advice, diagnosis, care, or

treatment was recommended or received within the six (6) month period ending on the enrollment

date. Genetic information shall not be treated as a preexisting condition in the absence of a

diagnosis of the condition related to that information; and

      (13) "High-risk individuals" means those individuals who do not pass medical

underwriting standards, due to high health care needs or risks;

      (14) "Wellness health benefit plan" means that health benefit plan offered in the

individual market pursuant to § 27-18.5-8; and

      (15)(10) "Commissioner" means the health insurance commissioner.

     27-18.5-3. Guaranteed availability to certain individuals. -- (a) Subject to subsections

(b) through (g) of this section, Notwithstanding any of the provisions of this title to the contrary,

all health insurance carriers that offer health insurance coverage in the individual market in this

state shall provide for the guaranteed availability of coverage to an eligible individual. A carrier

offering health insurance coverage in the individual market must offer to any eligible individual

in the state all health insurance coverage plans of that carrier that are approved for sale in the

individual market, and must accept any eligible individual that applies for coverage under those

plans. or an individual who has had health insurance coverage, including coverage in the

individual market, or coverage under a group health plan or coverage under 5 U.S.C. § 8901 et

seq. and had that coverage continuously for at least twelve (12) consecutive months and who

applies for coverage in the individual market no later than sixty-three (63) days following

termination of the coverage, desiring to enroll in individual health insurance coverage, and who is

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not eligible for coverage under a group health plan, part A or part B or title XVIII of the Social

Security Act, 42 U.S.C. § 1395c et seq. or 42 U.S.C. § 1395j et seq., or any state plan under title

XIX of the Social Security Act, 42 U.S.C. § 1396 et seq. (or any successor program) and does not

have other health insurance coverage (provided, that eligibility for the other coverage shall not

disqualify an individual with twelve (12) months of consecutive coverage if that individual

applies for coverage in the individual market for the primary purpose of obtaining coverage for a

specific pre-existing condition, and the other available coverage excludes coverage for that pre-

existing condition) and A carrier may not:

     (1) Decline to offer the coverage to, or deny enrollment of, the individual; or

     (2) Impose any preexisting condition exclusion with respect to the coverage.

     (b) (1) All health insurance carriers that offer health insurance coverage in the individual

market in this state shall offer, to all eligible individuals, all policy forms of health insurance

coverage. Provided, the carrier may elect to limit the coverage offered so long as it offers at least

two (2) different policy forms of health insurance coverage (policy forms which have different

cost-sharing arrangements or different riders shall be considered to be different policy forms)

both of which:

      (i) Are designed for, made generally available to, and actively market to, and enroll both

eligible and other individuals by the carrier; and

      (ii) Meet the requirements of subparagraph (A) or (B) of this paragraph as elected by the

carrier:

      (A) If the carrier offers the policy forms with the largest, and next to the largest,

premium volume of all the policy forms offered by the carrier in this state; or

      (B) If the carrier offers a choice of two (2) policy forms with representative coverage,

consisting of a lower-level coverage policy form and a higher-level coverage policy form each of

which includes benefits substantially similar to other individual health insurance coverage offered

by the carrier in this state and each of which is covered under a method that provides for risk

adjustment, risk spreading, or financial subsidization.

      (2) For the purposes of this subsection, "lower-level coverage" means a policy form for

which the actuarial value of the benefits under the coverage is at least eighty-five percent (85%)

but not greater than one hundred percent (100%) of the policy form weighted average.

      (3) For the purposes of this subsection, "higher-level coverage" means a policy form for

which the actuarial value of the benefits under the coverage is at least fifteen percent (15%)

greater than the actuarial value of lower-level coverage offered by the carrier in this state, and the

actuarial value of the benefits under the coverage is at least one hundred percent (100%) but not

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greater than one hundred twenty percent (120%) of the policy form weighted average.

      (4) For the purposes of this subsection, "policy form weighted average" means the

average actuarial value of the benefits provided by all the health insurance coverage issued (as

elected by the carrier) either by that carrier or, if the data are available, by all carriers in this state

in the individual market during the previous year (not including coverage issued under this

subsection), weighted by enrollment for the different coverage. The actuarial value of benefits

shall be calculated based on a standardized population and a set of standardized utilization and

cost factors.

      (5) The carrier elections under this subsection shall apply uniformly to all eligible

individuals in this state for that carrier. The election shall be effective for policies offered during

a period of not shorter than two (2) years.

     (c)(1) A carrier may deny health insurance coverage in the individual market to an

eligible individual if the carrier has demonstrated to the director satisfaction of the commissioner

that:

     (i) It does not have the financial reserves necessary to underwrite additional coverage;

and

     (ii) It is applying this subsection uniformly to all individuals in the individual market in

this state consistent with applicable state law and without regard to any health status-related

factor of the individuals and without regard to whether the individuals are eligible individuals.

     (2) A carrier upon denying individual health insurance coverage in this state in

accordance with this subsection may not offer that coverage in the individual market in this state

for a period of one hundred eighty (180) days after the date the coverage is denied or until the

carrier has demonstrated to the director commissioner that the carrier has sufficient financial

reserves to underwrite additional coverage, whichever is later.

     (d) Nothing in this section shall be construed to require that a carrier offering health

insurance coverage only in connection with group health plans or through one or more bona fide

associations, or both, offer health insurance coverage in the individual market.

     (e) A carrier offering health insurance coverage in connection with group health plans

under this title shall not be deemed to be a health insurance carrier offering individual health

insurance coverage solely because the carrier offers a conversion policy.

      (f) Except for any high risk pool rating rules to be established by the Office of the Health

Insurance Commissioner (OHIC) as described in this section, nothing Nothing in this section

shall be construed to create additional restrictions on the amount of premium rates that a carrier

may charge an individual for health insurance coverage provided in the individual market; or to

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prevent a health insurance carrier offering health insurance coverage in the individual market

from establishing premium rates discounts or modifying applicable copayments or deductibles in

return for adherence to programs of health promotion and disease prevention, in accordance with

federal and state laws and regulations.

     (g) OHIC may pursue federal funding in support of the development of a high risk pool

for the individual market, as defined in § 27-18.5-2, contingent upon a thorough assessment of

any financial obligation of the state related to the receipt of said federal funding being presented

to, and approved by, the general assembly by passage of concurrent general assembly resolution.

The components of the high risk pool program, including, but not limited to, rating rules,

eligibility requirements and administrative processes, shall be designed in accordance with §

2745 of the Public Health Service Act (42 U.S.C. § 300gg-45) also known as the State High Risk

Pool Funding Extension Act of 2006 and defined in regulations promulgated by the office of the

health insurance commissioner on or before October 1, 2007.

     (h)(g)(1) In the case of a health insurance carrier that offers health insurance coverage in

the individual market through a network plan, the carrier may limit the individuals who may be

enrolled under that coverage to those who live, reside, or work within the service areas for which

can be served by the providers and facilities that are participating in the network plan, consistent

with state and federal network adequacy requirements; and within the service areas of the plan,

deny coverage to individuals if the carrier has demonstrated to the director satisfaction of the

commissioner that:

     (i) It will not have the capacity to deliver services adequately to additional individual

enrollees because of its obligations to existing group contract holders and enrollees and individual

enrollees; and

     (ii) It is applying this subsection uniformly to individuals without regard to any health

status-related factor of the individuals and without regard to whether the individuals are eligible

individuals.

     (2) Upon denying health insurance coverage in any service area in accordance with the

terms of this subsection, a carrier may not offer coverage in the individual market within the

service area for a period of one hundred eighty (180) days after the coverage is denied.

     27-18.5-4. Continuation of coverage -- Renewability. -- (a) A health insurance carrier

that provides individual health insurance coverage to an eligible individual in this state shall

renew or continue in force to enforce that coverage at the option of the individual.

     (b) A health insurance carrier may non-renew or discontinue health insurance coverage of

an eligible individual in the individual market based only on one or more of the following:

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     (1) The eligible individual has failed to pay premiums or contributions in accordance

with the terms of the health insurance coverage, or the carrier has not received including terms

relating to timely premium payments;

     (2) The eligible individual has performed an act or practice that constitutes fraud or made

an intentional misrepresentation of material fact under the terms of the coverage within two (2)

years after the act or practice. After two (2) years, the carrier may non-renew or discontinue under

this subsection only if the eligible individual has failed to reimburse the carrier for the costs

associated with the fraud or misrepresentation;

     (3) The carrier is ceasing to offer coverage in accordance with subsections (c) and (d) of

this section;

     (4) In the case of a carrier that offers health insurance coverage in the market through a

geographically-restricted network plan, the individual no longer resides, lives, or works in the

service area (or in an area for which the carrier is authorized to do business) but only if the

coverage is terminated uniformly without regard to any health status-related factor of covered

individuals; or

     (5) In the case of health insurance coverage that is made available in the individual

market only through one or more bona fide associations, the membership of the eligible

individual in the association (on the basis of which the coverage is provided) ceases but only if

the coverage is terminated uniformly and without regard to any health status-related factor of

covered individuals.

     (c) In any case in which a carrier decides to discontinue offering a particular type of

health insurance coverage plan policy form offered in the individual market, coverage of that type

under that form may be discontinued only if:

     (1) The carrier provides notice, to each covered eligible individual provided coverage of

this type in the market, of the discontinuation at least ninety (90) days prior to the date of

discontinuation of the coverage;

     (2) The carrier offers to each eligible individual in the individual market provided

coverage of this type, the opportunity to purchase any other individual health insurance coverage

currently being offered by the carrier for individuals in the market; and

     (3) In exercising this option to discontinue coverage of this type and in offering the

option of coverage under subdivision (2) of this subsection, the carrier acts uniformly without

regard to any health status-related factor of enrolled individuals or individuals who may become

eligible for the coverage.

     (d) In any case in which a carrier elects to discontinue offering all health insurance

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coverage in the individual market in this state, health insurance coverage may be discontinued

only if:

     (1) The carrier provides notice to the director commissioner and to each eligible

individual of the discontinuation at least one hundred eighty (180) days prior to the date of the

expiration of the coverage; and

     (2) All health insurance issued or delivered in this state in the market is discontinued and

coverage under this health insurance coverage in the market is not renewed.

      (e) In the case of a discontinuation under subsection (d) of this section, the carrier may

not provide for the issuance of any health insurance coverage in the individual market in this state

during the five (5) year period beginning on the date the carrier filed its notice with the

department office to withdraw from the individual health insurance market in this state. This five

(5) year period may be reduced to a minimum of three (3) years at the discretion of the health

insurance commissioner, based on his/her analysis of market conditions and other related factors.

     (f) The provisions of subsections (d) and (e) of this section do not apply if, at the time of

coverage renewal, a health insurance carrier modifies the health insurance coverage for a policy

form offered to eligible individuals in the individual market so long as the modification is

consistent with this chapter and other applicable law and effective on a uniform basis among all

eligible individuals with that policy form.

     (g) In applying this section in the case of health insurance coverage made available by a

carrier in the individual market to eligible individuals only through one or more associations, a

reference to an "individual" includes a reference to the association (of which the individual is a

member).

     27-18.5-5. Enforcement -- Limitation on actions. -- The director commissioner has the

power to enforce the provisions of this chapter in accordance with § 42-14-16 and all other

applicable laws.

     27-18.5-6. Rules and regulations Rules and regulations; Compliance with federal

laws and regulations. -- The director commissioner may promulgate rules and regulations

necessary to effectuate the purposes of this chapter. A carrier shall comply with all federal and

state laws and regulations relating to health insurance coverage in the individual market, as

interpreted and enforced by the commissioner. In its construction and enforcement of the

provisions of this section, and in the interests of promoting uniform national rules for health

insurance carriers while protecting the interests of Rhode Island consumers and insurance

markets, the office of the health insurance commissioner shall give due deference to the

construction, enforcement policies, and guidance of the federal government with respect to

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federal law substantially similar to the provisions of this chapter.

     SECTION 2. Sections 27-18.5-7, 27-18.5-8 and 27-18.5-9 of the General Laws in

Chapter 27-18.5 entitled "Individual Health Insurance Coverage" are hereby repealed.

     27-18.5-7. Severability. -- If any provision of this chapter or the application of any

provision to any person or circumstances is for any reason held invalid, the remainder of the

chapter and the application of that provision to other persons or circumstances shall not be

affected by the invalidity.

     27-18.5-8. Wellness health benefit plan. -- All carriers that offer health insurance in the

individual market shall actively market and offer the wellness health direct benefit plan to eligible

individuals. The wellness health direct benefit plan shall be determined by regulation

promulgated by the office of the health insurance commissioner (OHIC). The OHIC shall develop

the criteria for the direct wellness health benefit plan, including, but not limited to, benefit levels,

cost sharing levels, exclusions and limitations in accordance with the following:

      (1) Form and utilize an advisory committee in accordance with subsection 27-50-10(5).

      (2) Set a target for the average annualized individual premium rate for the direct

wellness health benefit plan to be less than ten percent (10%) of the average annual statewide

wage, dependent upon the availability of reinsurance funds, as reported by the Rhode Island

department of labor and training, in their report entitled "Quarterly Census of Rhode Island

Employment and Wages." In the event that this report is no longer available, or the OHIC

determines that it is no longer appropriate for the determination of maximum annualized

premium, an alternative method shall be adopted in regulation by the OHIC. The maximum

annualized individual premium rate shall be determined no later than August 1st of each year, to

be applied to the subsequent calendar year premiums rates.

      (3) Ensure that the direct wellness health benefit plan creates appropriate incentives for

employers, providers, health plans and consumers to, among other things:

      (i) Focus on primary care, prevention and wellness;

      (ii) Actively manage the chronically ill population;

      (iii) Use the least cost, most appropriate setting; and

      (iv) Use evidence based, quality care.

      (4) The plan shall be made available in accordance with title 27, chapter 18.5 as required

by regulation on or before May 1, 2007.

     27-18.5-9. Affordable health plan reinsurance program for individuals. -- (a) The

commissioner shall allocate funds from the affordable health plan reinsurance fund for the

affordable health reinsurance program.

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      (b) The affordable health reinsurance program for individuals shall only be available to

high-risk individuals as defined in § 27-18.5-2, and who purchase the direct wellness health

benefit plan pursuant to the provisions of this section. Eligibility shall be determined based on

state and federal income tax filings.

      (c) The affordable health plan reinsurance shall be in the form of a carrier cost-sharing

arrangement, which encourages carriers to offer a discounted premium rate to participating

individuals, and whereby the reinsurance fund subsidizes the carriers' losses within a prescribed

corridor of risk as determined by regulation.

      (d) The specific structure of the reinsurance arrangement shall be defined by regulations

promulgated by the commissioner.

      (e) The commissioner shall determine total eligible enrollment under qualifying

individual health insurance contracts by dividing the funds available for distribution from the

reinsurance fund by the estimated per member annual cost of claims reimbursement from the

reinsurance fund.

      (f) The commissioner shall suspend the enrollment of new individuals under qualifying

individual health insurance contracts if the director determines that the total enrollment reported

under such contracts is projected to exceed the total eligible enrollment, thereby resulting in

anticipated annual expenditures from the reinsurance fund in excess of ninety-five percent (95%)

of the total funds available for distribution from the fund.

      (g) The commissioner shall provide the health maintenance organization, health insurers

and health plans with notification of any enrollment suspensions as soon as practicable after

receipt of all enrollment data.

      (h) The premiums of qualifying individual health insurance contracts must be no more

than ninety percent (90%) of the actuarially-determined and commissioner approved premium for

this health plan without the reinsurance program assistance.

      (i) The commissioner shall prepare periodic public reports in order to facilitate

evaluation and ensure orderly operation of the funds, including, but not limited to, an annual

report of the affairs and operations of the fund, containing an accounting of the administrative

expenses charged to the fund. Such reports shall be delivered to the co-chairs of the joint

legislative committee on health care oversight by March 1st of each year.

     SECTION 3. Sections 27-18.6-1, 27-18.6-2, 27-18.6-3, 27-18.6-5, 27-18.6-6, 27-18.6-7,

27-18.6-9 and 27-18.6-12 of the General Laws in Chapter 27-18.6 entitled "Large Group Health

Insurance Coverage" are hereby amended to read as follows:

     27-18.6-1. Purpose. -- The purpose of this chapter is to insure compliance of all policies,

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contracts, certificates, and agreements of group health insurance coverage offered or delivered in

this state with the Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191),

and with the Patient Protection and Affordable Care Act (Pub. L. 111-148).

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

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

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

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

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

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

participant or beneficiary for any coverage during the period;

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

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

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

state, an association which:

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

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

insurance;

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

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

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

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

eligible for coverage through a member);

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

other than in connection with a member of the association;

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

     (vii) Has a constitution and bylaws; and

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

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

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

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

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

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

     (iii) Title XXII of the United States Public Health Service Act, 42 U.S.C. § 300bb-1 et

seq.;

LC001754/SUB A - Page 13 of 57

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

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

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

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

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

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

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

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

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

employers of two (2) or more employees;

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

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

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

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

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

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

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

instrumentality of government;

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

plan, health insurance coverage offered in connection with that plan;

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

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

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

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

through insurance, reimbursement or otherwise;

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

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

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

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

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

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

services;

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

agreement offered by a health insurance carrier to provide, deliver, arrange for, pay for, or

LC001754/SUB A - Page 14 of 57

reimburse any of the costs of health care services. Health insurance coverage does include short-

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

except as otherwise specifically exempted in this definition;

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

following "excepted benefits"; provided, such coverage is in compliance with all other applicable

state and federal laws and regulations:

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

those;

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

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

insurance;

     (D) Workers' compensation or similar insurance;

     (E) Automobile medical payment insurance;

     (F) Credit-only insurance;

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

     (H) Other similar insurance coverage, specified in, and in compliance with federal and

state regulations issued pursuant to P.L. 104-191, under which benefits for medical care are

secondary or incidental to other insurance benefits;

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

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

integral part of the plan, and if the coverage complies with other applicable state and federal laws

and regulations:

     (A) Limited scope dental or vision benefits;

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

care, or any combination of those; and

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

issued pursuant to P.L. 104-191;

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

excepted benefits" if the coverage complies with all other applicable state and federal laws and

regulations the benefits are provided under a separate policy, certificate, or contract of insurance,

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

any group health plan maintained by the same plan sponsor, and the benefits are paid with respect

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

group health plan maintained by the same plan sponsor:

LC001754/SUB A - Page 15 of 57

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

     (B) Hospital indemnity or other fixed indemnity insurance;

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

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

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

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

     (B) Coverage supplemental to the coverage provided under 10 U.S.C. § 1071 et seq.; and

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

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

organization licensed under chapter 41 of this title;

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

     (i) Health status;

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

     (iii) Claims experience;

     (iv) Receipt of health care;

     (v) Medical history;

     (vi) Genetic information;

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

violence; and

     (viii) Disability;

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

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

one hundred and one (101) employees on business days during the preceding calendar year and

who employs at least two (2) employees on the first day of the plan year; provided that on or

before October 1, 2016 a carrier shall renew in the large group market an employer with fifty-one

(51) to one hundred (100) employees in accordance with federal transition guidance. In the case

of an employer which was not in existence throughout the preceding calendar year, the

determination of whether the employer is a large employer shall be based on the average number

of employees that is reasonably expected the employer will employ on business days in the

current calendar year;

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

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

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

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

LC001754/SUB A - Page 16 of 57

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

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

     (ii) A special enrollment period;

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

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

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

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

in paragraph (i) of this subdivision; and

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

(ii) of this subdivision;

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

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

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

contract with the carrier;

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

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

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

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

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

the person terminates upon the termination of the legal obligation;

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

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

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

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

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

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

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

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

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

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

plan. ; and

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

     27-18.6-3. Limitation on preexisting condition exclusion. -- (a) (1) Notwithstanding

any of the provisions of this title to the contrary, a group health plan and a health insurance

LC001754/SUB A - Page 17 of 57

carrier offering group health insurance coverage shall not deny, exclude, or limit benefits with

respect to a participant or beneficiary because of a preexisting condition exclusion except if:

     (i) The exclusion relates to a condition (whether physical or mental), regardless of the

cause of the condition, for which medical advice, diagnosis, care, or treatment was recommended

or received within the six (6) month period ending on the enrollment date;

     (ii) The exclusion extends for a period of not more than twelve (12) months (or eighteen

(18) months in the case of a late enrollee) after the enrollment date; and

     (iii) The period of the preexisting condition exclusion is reduced by the aggregate of the

periods of creditable coverage, if any, applicable to the participant or the beneficiary as of the

enrollment date.

     (2) For purposes of this section, genetic information shall not be treated as a preexisting

condition in the absence of a diagnosis of the condition related to that information.

     (b) With respect to paragraph (a)(1)(iii) of this section, a period of creditable coverage

shall not be counted, with respect to enrollment of an individual under a group health plan, if,

after that period and before the enrollment date, there was a sixty-three (63) day period during

which the individual was not covered under any creditable coverage.

      (c) Any period that an individual is in a waiting period for any coverage under a group

health plan or for group health insurance or is in an affiliation period shall not be taken into

account in determining the continuous period under subsection (b) of this section.

      (d) Except as otherwise provided in subsection (e) of this section, for purposes of

applying paragraph (a)(1)(iii) of this section, a group health plan and a health insurance carrier

offering group health insurance coverage shall count a period of creditable coverage without

regard to the specific benefits covered during the period.

      (e) (1) A group health plan or a health insurance carrier offering group health insurance

may elect to apply paragraph (a)(1)(iii) of this section based on coverage of benefits within each

of several classes or categories of benefits. Those classes or categories of benefits are to be

determined by the secretary of the United States Department of Health and Human Services

pursuant to regulation. The election shall be made on a uniform basis for all participants and

beneficiaries. Under the election, a group health plan or carrier shall count a period of creditable

coverage with respect to any class or category of benefits if any level of benefits is covered

within the class or category.

      (2) In the case of an election under this subsection with respect to a group health plan

(whether or not health insurance coverage is provided in connection with that plan), the plan

shall:

LC001754/SUB A - Page 18 of 57

      (i) Prominently state in any disclosure statements concerning the plan, and state to each

enrollee under the plan, that the plan has made the election; and

      (ii) Include in the statements a description of the effect of this election.

      (3) In the case of an election under this subsection with respect to health insurance

coverage offered by a carrier in the large group market, the carrier shall:

      (i) Prominently state in any disclosure statements concerning the coverage, and to each

employer at the time of the offer or sale of the coverage, that the carrier has made the election;

and

      (ii) Include in the statements a description of the effect of the election.

      (f) (1) A group health plan and a health insurance carrier offering group health insurance

coverage may not impose any preexisting condition exclusion in the case of an individual who, as

of the last day of the thirty (30) day period beginning with the date of birth, is covered under

creditable coverage.

      (2) Subdivision (1) of this subsection shall no longer apply to an individual after the end

of the first sixty-three (63) day period during all of which the individual was not covered under

any creditable coverage. Moreover, any period that an individual is in a waiting period for any

coverage under a group health plan (or for group health insurance coverage) or is in an affiliation

period shall not be taken into account in determining the continuous period for purposes of

determining creditable coverage.

      (g) (1) A group health plan and a health insurance carrier offering group health insurance

coverage may not impose any preexisting condition exclusion in the case of a child who is

adopted or placed for adoption before attaining eighteen (18) years of age and who, as of the last

day of the thirty (30) day period beginning on the date of the adoption or placement for adoption,

is covered under creditable coverage. The previous sentence does not apply to coverage before

the date of the adoption or placement for adoption.

      (2) Subdivision (1) of this subsection shall no longer apply to an individual after the end

of the first sixty-three (63) day period during all of which the individual was not covered under

any creditable coverage. Any period that an individual is in a waiting period for any coverage

under a group health plan (or for group health insurance coverage) or is in an affiliation period

shall not be taken into account in determining the continuous period for purposes of determining

creditable coverage.

      (h) A group health plan and a health insurance carrier offering group health insurance

coverage may not impose any preexisting condition exclusion relating to pregnancy as a

preexisting condition or with regard to an individual who is under nineteen (19) years of age.

LC001754/SUB A - Page 19 of 57

      (i) (1) Periods of creditable coverage with respect to an individual shall be established

through presentation of certifications. A group health plan and a health insurance carrier offering

group health insurance coverage shall provide certifications:

      (i) At the time an individual ceases to be covered under the plan or becomes covered

under a COBRA continuation provision;

      (ii) In the case of an individual becoming covered under a continuation provision, at the

time the individual ceases to be covered under that provision; and

      (iii) On the request of an individual made not later than twenty-four (24) months after the

date of cessation of the coverage described in paragraph (i) or (ii) of this subdivision, whichever

is later.

      (2) The certification under this subsection may be provided, to the extent practicable, at a

time consistent with notices required under any applicable COBRA continuation provision.

      (3) The certification described in this subsection is a written certification of:

      (i) The period of creditable coverage of the individual under the plan and the coverage (if

any) under the COBRA continuation provision; and

      (ii) The waiting period (if any) (and affiliation period, if applicable) imposed with

respect to the individual for any coverage under the plan.

      (4) To the extent that medical care under a group health plan consists of group health

insurance coverage, the plan is deemed to have satisfied the certification requirement under this

subsection if the health insurance carrier offering the coverage provides for the certification in

accordance with this subsection.

      (5) In the case of an election taken pursuant to subsection (e) of this section by a group

health plan or a health insurance carrier, if the plan or carrier enrolls an individual for coverage

under the plan and the individual provides a certification of creditable coverage, upon request of

the plan or carrier, the entity which issued the certification shall promptly disclose to the

requisition plan or carrier information on coverage of classes and categories of health benefits

available under that entity's plan or coverage, and the entity may charge the requesting plan or

carrier for the reasonable cost of disclosing the information.

      (6) Failure of an entity to provide information under this subsection with respect to

previous coverage of an individual so as to adversely affect any subsequent coverage of the

individual under another group health plan or health insurance coverage, as determined in

accordance with rules and regulations established by the secretary of the United States

Department of Health and Human Services, is a violation of this chapter.

      (j) A group health plan and a health insurance carrier offering group health insurance

LC001754/SUB A - Page 20 of 57

coverage in connection with a group health plan shall permit an employee who is eligible, but not

enrolled, for coverage under the terms of the plan (or a dependent of an employee if the

dependent is eligible, but not enrolled, for coverage under the terms) to enroll for coverage under

the terms of the plan if each of the following conditions are met:

      (1) The employee or dependent was covered under a group health plan or had health

insurance coverage at the time coverage was previously offered to the employee or dependent;

      (2) The employee stated in writing at the time that coverage under a group health plan or

health insurance coverage was the reason for declining enrollment, but only if the plan sponsor or

carrier (if applicable) required a statement at the time and provided the employee with notice of

that requirement (and the consequences of the requirement) at the time;

      (3) The employee's or dependent's coverage described in subsection (j)(1):

      (i) Was under a COBRA continuation provision and the coverage under that provision

was exhausted; or

      (ii) Was not under a continuation provision and either the coverage was terminated as a

result of loss of eligibility for the coverage (including as a result of legal separation, divorce,

death, termination of employment, or reduction in the number of hours of employment) or

employer contributions towards the coverage were terminated; and

      (4) Under the terms of the plan, the employee requests enrollment not later than thirty

(30) days after the date of exhaustion of coverage described in paragraph (3)(i) of this subsection

or termination of coverage or employer contribution described in paragraph (3)(ii) of this

subsection.

      (k) (1) If a group health plan makes coverage available with respect to a dependent of an

individual, the individual is a participant under the plan (or has met any waiting period applicable

to becoming a participant under the plan and is eligible to be enrolled under the plan but for a

failure to enroll during a previous enrollment period), and a person becomes a dependent of the

individual through marriage, birth, or adoption or placement through adoption, the group health

plan shall provide for a dependent special enrollment period during which the person (or, if not

enrolled, the individual) may be enrolled under the plan as a dependent of the individual, and in

the case of the birth or adoption of a child, the spouse of the individual may be enrolled as a

dependent of the individual if the spouse is eligible for coverage.

      (2) A dependent special enrollment period shall be a period of not less than thirty (30)

days and shall begin on the later of:

      (i) The date dependent coverage is made available; or

      (ii) The date of the marriage, birth, or adoption or placement for adoption (as the case

LC001754/SUB A - Page 21 of 57

may be).

      (3) If an individual seeks to enroll a dependent during the first thirty (30) days of a

dependent special enrollment period, the coverage of the dependent shall become effective:

      (i) In the case of marriage, not later than the first day of the first month beginning after

the date the completed request for enrollment is received;

      (ii) In the case of a dependent's birth, as of the date of the birth; or

      (iii) In the case of a dependent's adoption or placement for adoption, the date of the

adoption or placement for adoption.

      (l) (1) A health maintenance organization which offers health insurance coverage in

connection with a group health plan and which does not impose any preexisting condition

exclusion allowed under subsection (a) of this section with respect to any particular coverage

option may impose an affiliation period for the coverage option, but only if that period is applied

uniformly without regard to any health status-related factors, and the period does not exceed two

(2) months (or three (3) months in the case of a late enrollee).

      (2) For the purposes of this subsection, an affiliation shall begin on the enrollment date.

      (3) An affiliation period under a plan shall run concurrently with any waiting period

under the plan.

      (4) The director may approve alternative methods from those described under this

subsection to address adverse selection.

      (m) For the purpose of determining creditable coverage pursuant to this chapter, no

period before July 1, 1996, shall be taken into account. Individuals who need to establish

creditable coverage for periods before July 1, 1996, and who would have the coverage credited

but for the prohibition in the preceding sentence may be given credit for creditable coverage for

those periods through the presentation of documents or other means in accordance with any rule

or regulation that may be established by the secretary of the United States Department of Health

and Human Services.

     (n) In the case of an individual who seeks to establish creditable coverage for any period

for which certification is not required because it relates to an event occurring before June 30,

1996, the individual may present other credible evidence of coverage in order to establish the

period of creditable coverage. The group health plan and a health insurance carrier shall not be

subject to any penalty or enforcement action with respect to the plan's or carrier's crediting (or not

crediting) the coverage if the plan or carrier has sought to comply in good faith with the

applicable requirements of this section.

     (o) Notwithstanding the provisions of any general or public law to the contrary, for plan

LC001754/SUB A - Page 22 of 57

or policy years beginning on and after January 1, 2014, a group health plan and a health insurance

carrier offering group health insurance coverage shall not deny, exclude, or limit coverage or

benefits with respect to a participant or beneficiary because of a preexisting condition exclusion.

     27-18.6-5. Continuation of coverage -- Renewability. -- (a) Notwithstanding any of the

provisions of this title to the contrary, a health insurance carrier that offers health insurance

coverage in the large group market in this state in connection with a group health plan shall renew

or continue in force that coverage at the option of the plan sponsor of the plan.

     (b) A health insurance carrier may nonrenew non-renew or discontinue health insurance

coverage offered in connection with a group health plan in the large group market based only on

one or more of the following:

     (1) The plan sponsor has failed to pay premiums or contributions in accordance with the

terms of the health insurance coverage or the carrier has not received timely premium payments;

     (2) The plan sponsor has performed an act or practice that constitutes fraud or made an

intentional misrepresentation of material fact under the terms of the coverage with two (2) years

from the date of the coverage application. After two (2) years, the carrier may non-renew under

this subdivision only if the plan sponsor has failed to reimburse the carrier for the costs associated

with the fraud or misrepresentation;

     (3) The plan sponsor has failed to comply with a material plan provision relating to

employer contribution or group participation rules, as permitted by the director commissioner

pursuant to rule or regulation;

     (4) The carrier is ceasing to offer coverage in accordance with subsections (c) and (d) of

this section;

     (5) The director commissioner finds that the continuation of the coverage would:

     (i) Not be in the best interests of the policyholders or certificate holders; or

     (ii) Impair the carrier's ability to meet its contractual obligations;

     (6) In the case of a health insurance carrier that offers health insurance coverage in the

large group market through a restricted provider network plan, there is no longer any enrollee in

connection with that plan who resides, lives, or works in the service area of the carrier (or in an

area for which the carrier is authorized to do business); and

     (7) In the case of health insurance coverage that is made available in the large group

market only through one or more bona fide associations, the membership of an employer in the

association (on the basis of which the coverage is provided) ceases, but only if the coverage is

terminated under this section uniformly without regard to any health status-related factor relating

to any covered individual.

LC001754/SUB A - Page 23 of 57

     (c) In any case in which a carrier decides to discontinue offering a particular type of

group health insurance coverage offered in the large group market, coverage of that type may be

discontinued by the carrier only if:

     (1) The carrier provides notice of the decision to all affected plan sponsors, participants,

and beneficiaries at least ninety (90) days prior to the date of discontinuation of coverage;

     (2) The carrier offers to each plan sponsor provided coverage of this type in the large

group market the option to purchase any other health insurance coverage currently being offered

by the carrier to a group health plan in the market; and

     (3) In exercising this option to discontinue coverage of this type and in offering the

option of coverage under subdivision (3) (2) of this subsection, the carrier acts uniformly without

regard to the claims experience of those plan sponsors or any health status-related factor relating

to any participants or beneficiaries covered or new participants or beneficiaries who may become

eligible for coverage.

     (d) In any case in which a carrier elects to discontinue offering and to nonrenew non-

renew all of its health insurance coverage in the large group market in this state, the carrier shall:

     (1) Provide advance notice to the director commissioner, to the insurance commissioner

in each state in which the carrier is licensed, and to each plan sponsor (and participants and

beneficiaries covered under that coverage and to the insurance commissioner in each state in

which an affected insured individual is known to reside) of the decision at least one hundred

eighty (180) days prior to the date of the discontinuation of coverage. Notice to the insurance

commissioner shall be provided at least three (3) working days prior to the notice to the affected

plan sponsors, participants, and beneficiaries; and

     (2) Discontinue all health insurance issued or delivered for issuance in this state's large

group market and not renew coverage under any health insurance coverage issued to a large

employer.

     (e) In the case of a discontinuation under subsection (d) of this section, the carrier shall

be prohibited from the issuance of any health insurance coverage in the large group market in this

state for a period of five (5) years from the date of notice to the director commissioner.

     (f) At the time of coverage renewal, a health insurance carrier may modify the health

insurance coverage for a product offered to a group health plan in the large group market.

     (g) In applying this section in the case of health insurance coverage that is made available

by a carrier in the large group market to employers only through one or more associations, a

reference to a "plan sponsor" is deemed, with respect to coverage provided to an employer

member of the association, to include a reference to that employer.

LC001754/SUB A - Page 24 of 57

     27-18.6-6. Applicability -- Exclusion of certain plans. -- (a) The requirements of this

chapter do not apply to any group health plan (and health insurance coverage offered in

connection with a group health plan) for any plan year if, on the first day of the plan year, the

plan does not meet the definition of large employer and is subject to the provisions of chapter 50

of this title.

     (b) (1) The requirements of this chapter apply with respect to group health plans only:

     (i) In the case of a plan that is a nonfederal governmental plan; and

     (ii) With respect to group health insurance coverage offered in connection with a group

health plan (including a plan that is a church plan or a governmental plan).

     (2) If the plan sponsor of a nonfederal governmental plan which is a group health plan to

which this chapter otherwise applies makes an election (in the form and manner as the secretary

of the United States Department of Health and Human Services may prescribe by regulation),

then the requirements of this subsection insofar as they apply directly to group health plans (and

not merely to group health insurance coverage) do not apply to those governmental plans for the

period except as provided in this section.

     (3) An election applies for a single specified plan year (which may be extended through

subsequent elections), or in the case of a plan provided pursuant to a collective bargaining

agreement, for the term of that agreement.

     (4) Under the election in subdivision (3), the plan shall provide for notice to enrollee (on

an annual basis and at the time of enrollment under the plan) of the fact and consequences of the

election, and certification and disclosure of creditable coverage under the plan with respect to

enrollees. in accordance with § 27-18.6-3(i).

     (c) The requirements of this chapter do not apply to any group health plan (and group

health insurance coverage offered in connection with a group health plan) in relation to its

provision of limited, excepted benefits if the benefits are provided under a separate policy,

certificate, or contract of insurance, or are not an integral part of the plan, and if the plan complies

with all other applicable state and federal laws and regulations.

     (d) The requirements of this chapter do not apply to any group health plan (and group

health insurance coverage offered in connection with a group health plan) in relation to its

provision of noncoordinated, excepted benefits, if the plan complies with all other applicable state

and federal laws and regulations if all of the following conditions are met:

     (1) The benefits are provided under a separate policy, certificate, or contract of insurance;

     (2) There is no coordination between the provision of benefits and any exclusion of

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

LC001754/SUB A - Page 25 of 57

     (3) The benefits are paid with respect to an event without regard to whether benefits are

provided with respect to that event under any group health plan maintained by the same plan

sponsor.

     (e) The requirements of this chapter do not apply to any group health plan (and group

health insurance coverage) in relation to its provision of supplemental, excepted benefits if the

benefits are provided under a separate policy, certificate, or contract of insurance, and if the plan

complies with all other applicable state and federal laws and regulations.

     (f) (1) For purposes of this chapter, any plan, fund, or program which would not be (but

for this subsection) an employee welfare benefit plan and which is established or maintained by a

partnership, to the extent that the plan, fund, or program provides medical care (including items

and services paid as medical care) to present or former partners in the partnership or to their

dependents (as defined under the terms of the plan, fund or program), directly or through

insurance, reimbursement, or otherwise, shall be treated as an employee welfare benefit plan

which is a group health plan.

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

in relation to any partner.

     (3) In the case of a group health plan, the term "participant" also includes:

     (i) In connection with a group health plan maintained by a partnership, an individual who

is a partner in relation to the partnership; or

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

(under which one or more employees are participants), the self-employed individual, if that

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

beneficiaries may be eligible to receive any benefits.

     27-18.6-7. Collective bargaining agreements. -- (a) Notwithstanding anything

contained in this chapter to the contrary, except as provided in § 27-18.6-3(n), in the case of a

group health plan maintained pursuant to one or more collective bargaining agreements between

employee representatives and one or more employers ratified before July 13, 2000, this chapter

does not apply to plan years beginning before the later of:

     (1) The date on which the last of the collective bargaining agreements relating to the plan

terminates (determined without regard to any extension of the collective bargaining agreement

agreed to after July 13, 2000); or

     (2) July 1, 1997.

     (b) For purposes of subdivision (a)(1) of this section, any plan amendment made pursuant

to a collective bargaining agreement relating to the plan which amends the plan solely to conform

LC001754/SUB A - Page 26 of 57

to any requirement of this chapter shall not be treated as a termination of the collective bargaining

agreement.

     27-18.6-9. Rules and regulations. -- The director commissioner may promulgate rules

and regulations necessary to effectuate the purposes of this chapter.

     27-18.6-12. Health plan loss information. -- (a) To ensure maximum competition in the

purchase of group health insurance, all employers with at least one hundred (100) one hundred

and one (101) employees enrolled in their group health plan shall be entitled to receive their

health plan loss information upon request and without charge. No contract between any health

insurance carrier, third-party administrator, employer group, or pool of employers shall abridge

this right in any manner. For purposes of this section, "health plan loss information" shall mean:

(1) aggregate total cost figures for four (4) separate categories of medical claims covered by the

employer's group health plan: physician, hospital, prescription drug, and miscellaneous; and (2)

that were incurred for the twelve (12) month period paid through the fourteen (14) months which

end within the sixty (60) day period prior to the date of the request. "Health plan loss

information" shall not include any information: (1) pertaining to specific medical diagnoses,

treatments or drugs; or (2) that identifies or reasonably could lead to the identity of any

individuals covered under the group health plan; or (3) that is defined as protected or confidential

health information under state or federal laws.

     (b) Upon written request from any employer with one hundred (100) one hundred one

(101) or more employees enrolled in its group health plan, every health insurance carrier shall

provide that employer's health plan loss information within thirty (30) calendar days of receipt of

the request. An employer shall not be entitled by this section to more than two (2) health plan loss

information requests in any twelve (12) month period, however, nothing shall prohibit a carrier

from fulfilling more frequent requests on a mutually agreed upon basis.

     (c) If an employer requests health plan loss information from an insurance agent or other

authorized representative, the agent or authorized representative shall transmit the request to the

health insurance carrier within four (4) working days.

     SECTION 4. Chapter 27-18.6 of the General Laws entitled "Large Group Health

Insurance Coverage" is hereby amended by adding thereto the following sections:

     27-18.6-13. Waiting periods. -- At the election of the plan sponsor, the health coverage

plan may provide for a waiting period applicable to all new enrollees under the plan, provided

that the waiting period is no longer than ninety (90) days.

     27-18.6-14. Compliance with federal law. -- A carrier shall comply with all federal laws

and regulations relating to health insurance coverage in the large group market, as interpreted by

LC001754/SUB A - Page 27 of 57

the commissioner. The commissioner may establish additional standards relating to health

insurance coverage in the large group market that the commissioner determines are necessary to

provide greater protection for Rhode Island consumers, to ensure the stability and proper

functioning of the large group health insurance market, and to clarify the meaning of the

requirements of federal laws and regulations.

     SECTION 5. Section 27-18.6-8 of the General Laws in Chapter 27-18.6 entitled "Large

Group Health Insurance Coverage" is hereby repealed.

     27-18.6-8. Enforcement -- Limitation on actions. -- The director has the power to

enforce the provisions of this chapter in accordance with § 42-14-16 and all other applicable state

law.

     SECTION 6. Sections 27-50-2, 27-50-3, 27-50-4, 27-50-5, 27-50-6, 27-50-7, 27-50-11,

27-50-12, and 27-50-15 of the General Laws in Chapter 27-50 entitled "Small Employer Health

Insurance Availability Act" are hereby amended to read as follows:

     27-50-2. Purpose. -- (a) The purpose and intent of this chapter are to enhance the

availability of health insurance coverage to small employers regardless of their health status or

claims experience, to prevent abusive rating practices, to prevent segmentation of the health

insurance market based upon health risk, to spread health insurance risk more broadly, to require

disclosure of rating practices to purchasers, to establish rules regarding renewability of coverage,

to limit the use of preexisting condition exclusions, to provide for development of "economy",

"standard" and "basic" health benefit plans to be offered to all small employers, and to improve

the overall fairness and efficiency of the small group health insurance market, and to implement

the federal Patient Protection and Affordable Care Act (Pub.L. 111-148).

      (b) This chapter is not intended to provide a comprehensive solution to the problem of

affordability of health care or health insurance.

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

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

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

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

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

in establishing premium rates for applicable health benefit plans.

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

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

the requirements in § 27-50-5.

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

LC001754/SUB A - Page 28 of 57

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

a specified entity or person.

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

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

provide benefits.

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

state, an association which:

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

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

insurance;

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

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

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

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

eligible for coverage through a member);

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

other than in connection with a member of the association;

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

      (7) Has a constitution and bylaws; and

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

regulation.

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

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

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

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

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

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

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

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

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

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

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

association.

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

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

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

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

coverage provided under any of the following:

      (i) A group health plan;

      (ii) A health benefit plan;

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

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

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

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

of pediatric vaccines);

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

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

Program of the Uniformed Services)(CHAMPUS). For purposes of 10 U.S.C. § 1071 et seq.,

"uniformed services" means the armed forces and the commissioned corps of the National

Oceanic and Atmospheric Administration and of the Public Health Service;

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

      (vii) A state health benefits risk pool;

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

Benefits Program (FEHBP));

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

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

insurance coverage to individuals enrolled in the plan; or

      (x) A health benefit plan under § 5(e) of the Peace Corps Act (22 U.S.C. § 2504(e)).

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

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

individual experiences a significant break in coverage.

      (j)(i) "Dependent" means a spouse, child under the age twenty-six (26) years, and an

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

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

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

months.

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

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

LC001754/SUB A - Page 30 of 57

      (m)(k) "Eligible employee" "Employee" means an individual employed by an employer.

an employee who works on a full-time basis with a normal work week of thirty (30) or more

hours, except that at the employer's sole discretion, the term shall also include an employee who

works on a full-time basis with a normal work week of anywhere between at least seventeen and

one-half (17.5) and thirty (30) hours, so long as this eligibility criterion is applied uniformly

among all of the employer's employees and without regard to any health status-related factor. The

term includes a self-employed individual, a sole proprietor, a partner of a partnership, and may

include an independent contractor, if the self-employed individual, sole proprietor, partner, or

independent contractor is included as an employee under a health benefit plan of a small

employer, but does not include an employee who works on a temporary or substitute basis or who

works less than seventeen and one-half (17.5) hours per week. Any retiree under contract with

any independently incorporated fire district is also included in the definition of eligible employee,

as well as any former employee of an employer who retired before normal retirement age, as

defined by 42 U.S.C. 18002(a)(2)(c) while the employer participates in the early retiree

reinsurance program defined by that chapter. Persons covered under a health benefit plan

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

"eligible employees" for purposes of minimum participation requirements pursuant to § 27-50-

7(d)(9).

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

the first day of the waiting period, whichever is earlier.

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

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

within which the carrier is authorized to provide coverage.

      (p) "Family composition" means:

      (1) Enrollee;

      (2) Enrollee, spouse and children;

      (3) Enrollee and spouse; or

      (4) Enrollee and children.

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

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

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

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

analysis of genes or chromosomes.

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

LC001754/SUB A - Page 31 of 57

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

governmental plan.

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

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

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

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

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

      (2) For purposes of this chapter:

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

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

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

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

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

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

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

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

in relation to any partner; and

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

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

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

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

a partner in relation to the partnership; or

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

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

individual.

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

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

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

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

otherwise specifically exempted in this definition.

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

following, provided the plan is in compliance with all other state and federal laws and

regulations:

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

LC001754/SUB A - Page 32 of 57

those;

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

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

insurance;

      (iv) Workers' compensation or similar insurance;

      (v) Automobile medical payment insurance;

      (vi) Credit-only insurance;

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

      (viii) Other similar insurance coverage, specified in, and in compliance with state and

federal laws and regulations issued pursuant to Pub. L. No. 104-191, under which benefits for

medical care are secondary or incidental to other insurance benefits.

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

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

of the plan, and if the plan is in compliance with all other applicable state and federal laws and

regulations :

      (i) Limited scope dental or vision benefits;

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

care, or any combination of those; or

      (iii) Other similar, limited benefits specified in state and federal laws and regulations

issued pursuant to Pub. L. No. 104-191.

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

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

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

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

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

maintained by the same plan sponsor the plan is in compliance with all other applicable state and

federal laws and regulations:

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

      (ii) Hospital indemnity or other fixed indemnity insurance.

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

certificate, or contract of insurance, and if the plan is in compliance with state and federal laws

and regulations:

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

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

LC001754/SUB A - Page 33 of 57

      (ii) Coverage supplemental to the coverage provided under 10 U.S.C. § 1071 et seq.; or

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

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

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

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

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

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

following:

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

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

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

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

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

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

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

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

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

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

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

organization licensed under chapter 41 of this title.

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

      (1) Health status;

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

      (3) Claims experience;

      (4) Receipt of health care;

      (5) Medical history;

      (6) Genetic information;

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

violence; or

      (8) Disability.

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

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

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

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

LC001754/SUB A - Page 34 of 57

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

      (i) Who meets each of the following provisions:

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

enrollment;

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

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

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

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

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

40; and

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

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

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

individual enrolls during the specified bona fide open enrollment period;

      (iii) If 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;

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

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

(30) days after issuance of the court order;

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

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

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

coverage under that provision has been exhausted; or

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

8.

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

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

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

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

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

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

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

(1); and

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

LC001754/SUB A - Page 35 of 57

subsection.

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

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

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

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

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

combination of the foregoing.

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

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

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

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

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

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

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

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

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

days prior to the enrollment date of the new coverage.

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

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

diagnosis of the condition related to the information.

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

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

contributions associated with the health benefit plan.

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

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

by a small employer carrier are assumed to be in effect.

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

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

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

services to covered individuals.

      (hh) "Risk adjustment mechanism" means the mechanism established pursuant to § 27-

50-16.

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

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

LC001754/SUB A - Page 36 of 57

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

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

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

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

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

coverage.

      (kk)(cc)(1) "Small employer" means, except for its use in § 27-50-7, any person, firm,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

definition. The term small employer includes a self-employed individual. , in connection with a

group health plan with respect to a calendar year and a plan year, an employer who employed an

average of at least one but not more than one hundred (100) employees on business days during

the preceding calendar year and who employs at least one employee on the first day of the plan

year; provided that on or before October 1, 2016, a carrier shall renew in the large group market

an employer with fifty-one (51) to one hundred (100) employees in accordance with federal

transition guidance.

     (2) For plan years beginning on or before October 1, 2016, or such later date as

determined by the commissioner in accordance with federal transitional guidance, subsection

(c)(1) of this section shall be read to substitute "fifty (50) employees" for "one hundred (100)

employees".

     (3) Special rules for determining small employer status.

     (i) Application of aggregation rule for employers. -- All persons treated as a single

LC001754/SUB A - Page 37 of 57

employer under subsections (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of

1986 shall be treated as a single employer.

     (ii) Employers not in existence in preceding year. -- In the case of an employer which

was not in existence throughout the preceding calendar year, the determination of whether such

employer is a small employer shall be based on the average number of employees that it is

reasonably expected such employer will employ on business days in the current calendar year.

     (iii) Predecessors. -- Any reference in this subsection to an employer shall include a

reference to any predecessor of such employer.

     (iv) Continuation of participation for growing small employers. -- If: (A) A small

employer makes enrollment in qualified health plans offered in the small group market available

to its employees through an exchange; and (B) The employer ceases to be a small employer by

reason of an increase in the number of employees of such employer; the employer shall continue

to be treated as a small employer for purposes of this chapter for the period beginning with the

increase and ending with the first day on which the employer does not make such enrollment

available to its employees.

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

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

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

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

a waiting period shall not be considered a gap in coverage.

      (mm) "Wellness health benefit plan" means a plan developed pursuant to § 27-50-10.

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

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

forth in §§ 42-14.5-2 and 42-14.5-3 of title 42.

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

quartile of all Rhode Island employers.

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

employer carrier pursuant to § 27-50-7.

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

     27-50-4. Applicability and scope. -- (a) This chapter applies to any health benefit plan

that provides coverage to the employees of a small employer in this state, whether issued directly

by a carrier or through a trust, association, or other intermediary, and regardless of issuance or

delivery of the policy, if any of the following conditions are met:

      (1) Any portion of the premium or benefits is paid by or on behalf of the small employer;

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      (2) An eligible employee or dependent is reimbursed, whether through wage adjustments

or otherwise, by or on behalf of the small employer for any portion of the premium;

      (3) The health benefit plan is treated by the employer or any of the eligible employees or

dependents as part of a plan or program for the purposes of Section 162, Section 125, or Section

106 of the United States Internal Revenue Code, 26 U.S.C. § 162, 125, or 106; or

      (4) The health benefit plan is marketed to individual employees through an employer.

      (b) (1) Except as provided in subdivision (2)(1) of this subsection, for the purposes of

this chapter, carriers that are affiliated companies or that are eligible to file a consolidated tax

return shall be treated as one carrier and any restrictions or limitations imposed by this chapter

shall apply as if all health benefit plans delivered or issued for delivery to small employers in this

state by the affiliated carriers were issued by one carrier.

      (2) An affiliated carrier that is a health maintenance organization having a license under

chapter 41 of this title or a health maintenance organization as defined in chapter 62 of title 42

may be considered to be a separate carrier for the purposes of this chapter.

      (3) Unless otherwise authorized by the director commissioner, a small employer carrier

shall not enter into one or more ceding arrangements with another carrier with respect to health

benefit plans delivered or issued for delivery to small employers in this state if those

arrangements would result in less than fifty percent (50%) of the insurance obligation or risk for

the health benefit plans being retained by the ceding carrier. The department of business

regulation's statutory provisions relating to licensing and the regulation of licensed insurers under

this title shall apply if a small employer carrier cedes or assumes all any material portion of the

insurance obligation or risk with respect to one or more health benefit plans delivered or issued

for delivery to small employers in this state.

     27-50-5. Restrictions relating to premium rates. -- (a) Premium rates for health benefit

plans subject to this chapter are subject to the following provisions:

      (1) Subject to subdivision (2) of this subsection, a A small employer carrier shall develop

its rates based on an adjusted community rate and may only vary the adjusted community rate for:

      (i) Age. The age of an enrollee shall be determined as the date of plan issuance or

renewal; and

      (ii) Gender; and.

      (iii) Family composition;

      (2) The adjustment for age in paragraph (1)(i) of this subsection may not use age

brackets smaller than five (5) year increments and these shall begin with age thirty (30) and end

with age sixty-five (65) small employer carrier shall determine premium rates for a small

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employer by summing the premium amounts for each covered employee and dependent, in

accordance with federal and state laws and regulations.

      (3) The small employer carriers are permitted to develop separate rates for individuals

age sixty-five (65) or older for coverage for which Medicare is the primary payer and coverage

for which Medicare is not the primary payer. Both rates are subject to the requirements of this

subsection.

      (4)(3) For each health benefit plan offered by a carrier, the highest premium rate for each

family composition type the age sixty-five (65) age bracket shall not exceed four (4) three (3)

times the premium rate that could be charged to a small employer with the lowest premium rate

for that family composition for the youngest adult age bracket.

      (5)(4) Premium rates for bona fide associations except for the Rhode Island Builders'

Association whose membership is limited to those who are actively involved in supporting the

construction industry in Rhode Island shall comply with the requirements of § 27-50-5.

      (6) For a small employer group renewing its health insurance with the same small

employer carrier which provided it small employer health insurance in the prior year, the

combined adjustment factor for age and gender for that small employer group will not exceed one

hundred twenty percent (120%) of the combined adjustment factor for age and gender for that

small employer group in the prior rate year.

      (b) The premium charged for a health benefit plan may not be adjusted more frequently

than annually except that the rates may be changed to reflect: changes to the health benefit plan

requested by the small employer.

      (1) Changes to the enrollment of the small employer;

      (2) Changes to the family composition of the employee; or

      (3) Changes

      (c) Premium rates for health benefit plans shall comply with the requirements of this

section.

      (d)(1) Small employer carriers shall apply rating factors consistently with respect to all

small employers. Rating factors shall produce premiums for identical groups that differ only by

the amounts attributable to plan design, such as different cost sharing or provider network

restrictions, and do not reflect differences due to the nature of the groups or individuals assumed

to select particular health benefit plans. Two groups that are otherwise identical, but which have

different prior year rate factors may, however, have rating factors that produce premiums that

differ because of the requirements of subdivision 27-50-5(a)(6). Nothing in this section shall be

construed to prevent a group health plan and a health insurance carrier offering health insurance

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coverage from establishing premium discounts or rebates or modifying otherwise applicable

copayments or deductibles in return for adherence to programs of health promotion and disease

prevention, including those included in affordable health benefit plans, provided that the resulting

rates comply with the other requirements of this section, including subdivision (a)(5) of this

section.

      The calculation of premium discounts, rebates, or modifications to otherwise applicable

copayments or deductibles for affordable health benefit plans shall be made in a manner

consistent with accepted actuarial standards and based on actual or reasonably anticipated small

employer claims experience. As used in the preceding sentence, "accepted actuarial standards"

includes actuarially appropriate use of relevant data from outside the claims experience of small

employers covered by affordable health plans, including, but not limited to, experience derived

from the large group market, as this term is defined in § 27-18.6-2(19).

     (2) A group health plan and a health insurance carrier offering health insurance coverage

may vary benefits, including cost-sharing mechanisms (such as a deductible, copayment, or

coinsurance) based on whether an individual has met the standards of a wellness program that

satisfies the requirements of federal and state laws and regulations.

     (e) For the purposes of this section, a health benefit plan that contains a restricted

network provision shall not be considered similar coverage to a health benefit plan that does not

contain such a provision, provided that the restriction of benefits to network providers results in

substantial differences in claim costs.

      (f) The health insurance commissioner may establish regulations to implement the

provisions of this section and to assure that rating practices used by small employer carriers are

consistent with the purposes of this chapter, including regulations that assure that differences in

rates charged for health benefit plans by small employer carriers are reasonable and reflect

objective differences in plan design or coverage (not including differences due to the nature of the

groups assumed to select particular health benefit plans or separate claim experience for

individual health benefit plans) and to ensure that small employer groups with one eligible

subscriber are notified of rates for health benefit plans in the individual market.

      (g) In connection with the offering for sale of any health benefit plan to a small

employer, a small employer carrier shall make a reasonable disclosure, as part of its solicitation

and sales materials, of all of the following: