(1) There has been an erosion in access to affordable employer-based health insurance coverage for low-income working Rhode Islanders, particularly those employed in small businesses.

(2) This decline in affordable employer-based health insurance coverage is due in part to instability in the state's health insurance market as is evidenced by the economic failure of one of the state's primary health maintenance organizations, the departure of another health insurance provider from the state, a significant increase in the premiums charged by the health insurance issuers remaining in Rhode Island, and growing tensions over the scope and costs of health care between health care insurers and licensed health care practitioners, hospitals and other providers.

(3) The escalating costs of private health coverage have made it difficult for small businesses to offer and contribute to the health insurance coverage of workers and their dependents and remain profitable.

(4) Although employer-based health insurance is no longer affordable for many low-income families, the rate of uninsured in Rhode Island has not increased. Rather, the number of enrollees in RIteCare who have access to employer-based health insurance has increased, and at a much greater rate than anticipated, at least in part because many low-income working families cannot afford to pay the higher premiums.

(5) State expenditures for the RIteCare Program have risen far above anticipated levels, and unless action is taken to improve access to affordable private employer-based plans, the state's ability to meet the goal of assuring access to health insurance coverage for all Rhode Islanders will be undermined.

(6) The 1996 Health Insurance Portability and Accountability Act requires reform of the state's small group and non-group markets. As a result, Rhode Island would gain state control and autonomy over this important economic activity. Additionally, in order to implement the RIteShare Health Insurance Premium Assistance Program in a fiscally responsible manner, stabilization of the small group health market is essential.

Wherefore, it is the intent of the general assembly to utilize state resources in a fair, efficient and economical manner to assist Rhode Islanders of limited means to obtain affordable health insurance by maintaining the RIteCare Program while assisting Rhode Islanders, wherever possible, to continue to utilize available, affordable private employer-based health insurance coverage and to stabilize the insurance market for such coverage. To respond to the disruption caused by the economic failure and withdrawal from Rhode Island of two health maintenance organizations, it is the intent of the general assembly to create new reserve and reporting standards for health plans operating in the state consistent with model standards promulgated by the National Association of Insurance Commissioners.

(b) Individuals who can afford it shall share in the cost. The department of human services is authorized and directed to apply for and obtain any necessary waivers from the Secretary of the United States Department of Health and Human Services, including but not limited to a waiver of the appropriate sections of Title XIX, to require that individuals eligible for RIteCare under chapters 40-8.4 or 42-12.3 with incomes equal to or greater than one hundred fifty percent (150%) of the federal poverty level pay a share of the costs of health insurance based on the individual's ability to pay, provided that such cost sharing shall not exceed three percent (3%) of the individual's annual income. The department of human services shall implement such cost-sharing by regulation, and shall consider co-payments, premium shares or other reasonable means to do so.

(c) Current RIteCare Enrollees with access to employer-based health insurance. The department of human services shall require any individual who receives RIteCare or whose family receives RIteCare on the effective date of the applicable regulations adopted in accordance with subsection (f) to enroll in an employer-based health insurance plan at the individual's eligibility redetermination date or at an earlier date determined by the department, provided that doing so meets the criteria established in the applicable sections of Title XIX for obtaining federal matching funds and the department has determined that the individual's and/or the family's enrollment in the employer-based health insurance plan is cost-effective and has determined that the health insurance plan meets the criteria in subsection (d) below. The insurer shall accept the enrollment of the individual and/or the family in the employer-based health insurance plan without regard to any enrollment season restrictions.

(d) Approval of health insurance plans for premium assistance. The department of human services shall adopt regulations providing for the approval of employer-based health insurance plans for premium assistance and shall approve such employer-based health insurance plans based on these regulations. In order for an employer-based health insurance plan to gain approval, the department must determine that the benefits offered by the employer-based health insurance plan are substantially similar in amount, scope and duration to the benefits provided to RIteCare eligible persons by the RIteCare Program, when such plan is evaluated in conjunction with available supplemental benefits provided by the department. The department shall obtain and make available to persons otherwise eligible for RIteCare as supplemental benefits those benefits not reasonably available under employer-based health insurance plans which are required for RIteCare eligible persons by state law or federal law or regulation.

(e) Maximization of Federal Contribution. The department of human services is authorized and directed to apply for and obtain federal approvals and waivers necessary to maximize the federal contribution for provision of medical assistance coverage under this section.

(f) Implementation by Regulation. The department of human services is authorized and directed to adopt regulations to ensure the establishment and implementation of the premium assistance program in accordance with the intent and purpose of this section, the requirements of Title XIX and any approved federal waivers.

(b) The committee shall consist of eight (8) members of the general assembly: four (4) of whom shall be members of the house of representatives, three (3) from the majority party and one (1) of whom shall be from the minority party, to be appointed by, and to serve at the discretion of, the speaker of the house of representatives; and four (4) of whom shall be from the senate, three (3) from the majority party and one (1) of whom from the minority party, to be appointed by, and to serve at the discretion of, the senate majority leader.

(c) The committee shall have co-chairpersons, one appointed by the speaker of the house of representatives and one by the senate majority leader.

(d) The committee may review or study any matter related to the provision of health care services that it considers of significance to the citizens of Rhode Island, including the availability of health care, the quality of health care, the effectiveness and efficiency of managed care systems, the efficiency and the operation of state health care programs, and the availability of improved processes or new technologies to achieve more effective and timely resolution of disputes, better communication, speedier, more reliable and less costly administrative processes, claims, payments, and other matters involving the interaction among any or all of government, employers, consumers of health care, providers, health care facilities, insurers and others. The committee may request and shall receive from any health care facility and from any instrumentality of the state, including the department of human services, the department of business regulation, the department of health and department of mental health, retardation, and hospitals, or any other governmental advisory body or commission, including but not limited to, the Governor's Advisory Council on Health, such information and assistance as it deems necessary for the proper execution of its powers and duties under this section, including the annual report of the Governor's Advisory Council on Health.

(e) In addition to the notification regarding regulations required under subsection 40-8.4-10(b), the department of human services shall file with the Permanent Joint Committee on Health Care Oversight a detailed plan for the implementation of the programs created under this chapter by August 1, 2000.

(f) The committee shall have the power to hold hearings, shall meet at least quarterly, may make recommendations to the general assembly, state agencies, private industry or any other entity, and shall report to the general assembly on its findings and recommendations as it determines appropriate.

(1) three (3) of whom shall represent the health care providers;

(2) three (3) of whom shall represent the health care insurers;

(3) three (3) of whom shall represent health care consumers or consumer organizations;

(4) two (2) of whom shall represent organized labor;

(5) one (1) of whom shall be the health care advocate in the office of the attorney general;

(6) three (3) of whom shall represent employers; and

(7) three (3) of whom shall be other members of the public.

(b) The commission may study all aspects of the provisions of the RIteCare and RIteShare Programs involving purchasers of health care, including employers, consumers and the state, health insurers, providers of health care, and health care facilities, and all matters related to the interaction among these groups, including methods to achieve more effective and timely resolution of disputes, better communication, speedier, more reliable and less costly administrative processes, claims, payments, and other reimbursement matters, and the application of new processes or technologies to such issues.

(c) Members of the commission shall be appointed in the month of July, each to hold office until the last day of June in the second year of his or her appointment or until his or her successor is appointed by the director.

(d) The commission shall meet at least quarterly, and the initial meeting of the commission shall take place on or before September 15, 2000. The commission may meet more frequently than quarterly at the call of the chair or at the call of any three (3) members of the commission.

(e) Members of the Permanent Joint Committee on Health Care Oversight established pursuant to section 40-8.4-14 shall be notified of each meeting of the commission and shall be invited to participate.

(d) Waiver. - The department of human services is authorized and directed to apply for and obtain appropriate waivers from the Secretary of the U.S. Department of Health and Human Services, including, but not limited to, a waiver of the appropriate provisions of Title XIX, to require that individuals with incomes equal to or greater than one hundred fifty percent (150%) of the federal poverty level pay a share of the costs of their medical assistance coverage provided through enrollment in either the RIteCare Program or under the premium assistance program under section 40-8.4-12, in a manner and at an amount consistent with comparable cost-sharing provisions under section 40-8.4-12, provided that such cost sharing shall not exceed three percent (3%) of annual adjusted income.

(b) When promulgating any rule or regulation necessary to implement this chapter or any rule or regulation related to RIteCare, the department shall send the notice referred to in section 42-35-3 and a true copy of the rule referred to in section 42-35-4 of the Rhode Island Administrative Procedure Act to each of the co-chairpersons of the Permanent Joint Committee on Health Care Oversight established by section 40-8.4-14.

CHAPTER 18.5
INDIVIDUAL HEALTH INSURANCE COVERAGE

(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 such 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 such additional requirements as the director may prescribe by regulation.

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

(i) Section 4980B of the Internal Revenue Code of 1986, other than the subsection (f)(1) of such 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, other than Section 609 of such act.

(iii) Title XXII of the United States Public Health Service Act.

(3) "Creditable coverage" has the same meaning as defined in the United States Public Health Service Act, Section 2701(c), as amended by P.L. 104-191.

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

(5) "Eligible individual" means an individual:

(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);

(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, or any state plan under title XIX of the Social Security Act (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 section 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 such coverage; and

(v) Who, if the individual elected such COBRA continuation coverage, has exhausted such continuation coverage under such provision or program.

(6) "Group health plan" means an employee welfare benefit plan as defined in section 3(1) of the Employee Retirement Income Security Act of 1974 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) "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. 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.

"Health insurance coverage" shall not include one or more, or any combination of, the following:

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

(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 federal regulations issued pursuant to P.L. 104-191, under which benefits for medical care are secondary or incidental to other insurance benefits.

"Health insurance coverage" shall 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 coverage:

(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 thereof;

(iii) Such other similar, limited benefits as are specified in federal regulation issued pursuant to P.L. 104-191.

"Health insurance coverage" shall 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 such 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:

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

(ii) Hospital indemnity or other fixed indemnity insurance.

"Health insurance coverage" shall not include the following if it is offered as a separate policy, certificate or contract of insurance:

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

(ii) Coverage supplemental to the coverage provided under chapter 55 of title 10, United States Code; and

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

(8) "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 or health benefits.

(9) "Health status-related factor" means 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 conditions arising out of acts of domestic violence; and

(viii) Disability.

(10) "Individual market" means the market for health insurance coverage offered to individuals other than in connection with a group health plan.

(11) "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) "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 such 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 such information.

(1) decline to offer such coverage to, or deny enrollment of, such individual; or

(2) impose any preexisting condition exclusion with respect to such coverage.

(b) All health insurance carriers that offer health insurance coverage in the individual market in this state shall offer all policy forms of health insurance coverage. Provided, however, 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:

(1) are designed for, made generally available to, and actively market to, and enroll both eligible and other individuals by the carrier; and

(2) meet the requirements of subparagraph (i) or (ii) as elected by the carrier:

(i) if the carrier offers the policy forms with the largest, and next to the largest, premium volume of all such policy forms offered by the carrier in this state; or

(ii) 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.

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.

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

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 such 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.

The carrier elections under this subsection shall apply uniformly to all eligible individuals in this state for that carrier. Such an election shall be effective for policies offered during a period of not shorter than two (2) years.

(c) A carrier may deny health insurance coverage in the individual market to an eligible individual if the carrier has demonstrated to the director that:

(1) it does not have the financial reserves necessary to underwrite additional coverage; and

(2) 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 such individuals and without regard to whether the individuals are eligible individuals.

A carrier upon denying individual health insurance coverage in this state in accordance with this subsection may not offer such coverage in the individual market in this state for a period of one hundred eighty (180) days after the date such coverage is denied or until the carrier has demonstrated to the director 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 such 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 such carrier offers a conversion policy.

(f) 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 prevent a health insurance carrier offering health insurance coverage in the individual market from establishing premium rates or modifying otherwise applicable copayments or deductibles in return for adherence to programs of health promotion and disease prevention.

(g) 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 such coverage to those who live, reside, or work within the service areas for such network plan; and within the service areas of such plan, deny coverage to such individuals if the carrier has demonstrated to the director that:

(1) 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

(2) it is applying this subsection uniformly to individuals without regard to any health status-related factor of such individuals and without regard to whether the individuals are eligible individuals.

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

(b) A health insurance carrier may nonrenew or discontinue health insurance coverage of an individual in the individual market based only on one or more of the following:

(1) the individual 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 individual has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage;

(3) the carrier is ceasing to offer coverage in accordance with subsections (c) and (d) below;

(4) in the case of a carrier that offers health insurance coverage in the market through a 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 such coverage is terminated hereunder 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 individual in the association (on the basis of which the coverage is provided) ceases but only if such coverage is terminated hereunder 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 offered in the individual market, coverage of such type may be discontinued only if:

(1) the carrier provides notice, to each covered individual provided coverage of this type in such market, of such discontinuation at least ninety (90) days prior to the date of discontinuation of such coverage;

(2) the carrier offers to each 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 such market; and

(3) in exercising this option to discontinue coverage of this type and in offering the option of coverage under paragraph (2) above, the carrier acts uniformly without regard to any health status-related factor of enrolled individuals or individuals who may become eligible for such coverage.

(d) In any case in which a carrier elects to discontinue offering all health insurance coverage in the individual market in this state, health insurance coverage may be discontinued only if:

(1) the carrier provides notice to the director and to each individual of such discontinuation at least one hundred eighty (180) days prior to the date of the expiration of such coverage; and

(2) all health insurance issued or delivered in this state in such market is discontinued and coverage under this health insurance coverage in such market is not renewed.

(e) In the case of a discontinuation under subsection (d) above, 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 of the discontinuation of the last health insurance coverage not so renewed.

(f) The provisions of subsections (d) and (e) above shall not apply if, at the time of coverage renewal, a health insurance carrier modifies the health insurance coverage for a policy form offered to individuals in the individual market so long as such modification is otherwise consistent with this chapter and other applicable law and effective on a uniform basis among all individuals with that policy form.

(g) In applying this section in the case of health insurance coverage that is made available by a carrier in the individual market to individuals only through one (1) or more associations, a reference to an "individual" is deemed to include a reference to such an association (of which the individual is a member).

CHAPTER 18.6
LARGE GROUP HEALTH INSURANCE COVERAGE

(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 such period and no premium shall be charged to the participant or beneficiary for any coverage during the period.

(2) "Beneficiary" has the meaning given such term under section 3(8) of the Employee Retirement Security Act of 1974.

(3) "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 such 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 such additional requirements as the director may prescribe by regulation.

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

(i) Section 4980B of the Internal Revenue Code of 1986, other than the subsection (f)(1) of such 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, other than section 609 of such act.

(iii) Title XXII of the United States Public Health Service Act.

(5) "Creditable coverage" has the same meaning as defined in the United States Public Health Service Act, section 2701(c), as amended by P.L. 104-191.

(6) "Church plan" has the meaning given such term under section 3(33) of the Employee Retirement Income Security Act of 1974.

(7) "Dependent" means a spouse or unmarried child under the age of nineteen (19) years; an unmarried child who is a full-time student under the age of twenty-five (25) years and who is financially dependent upon the parent; and an unmarried child of any age who is medically certified as disabled and dependent upon the parent.

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

(9) "Employee" has the meaning given such term under section 3(6) of the Employee Retirement Income Security Act of 1974.

(10) "Employer" has the meaning given such term under section 3(5) of the Employee Retirement Income Security Act of 1974, except that such term shall include only employers of two (2) or more employees.

(11) "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 such enrollment.

(12) "Governmental plan" has the meaning given such term under section 3(32) of the Employee Retirement Income Security Act of 1974 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 thereof or by any agency or instrumentality of such government.

(13) "Group health insurance coverage" means, in connection with a group health plan, health insurance coverage offered in connection with such plan.

(14) "Group health plan" means an employee welfare benefits plan as defined in section 3(1) of the Employee Retirement Income Security Act of 1974 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.

(15) "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. 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.

"Health insurance coverage" shall not include one (1) or more, or any combination of, the following "excepted benefits":

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

(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 federal regulations issued pursuant to P.L. 104-191, under which benefits for medical care are secondary or incidental to other insurance benefits.

"Health insurance coverage" shall not include the following "limited, excepted benefits" if they are provided under a separate policy, certificate of insurance or are otherwise not an integral part of the plan:

(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 thereof;

(iii) Such other similar, limited benefits as are specified in federal regulations issued pursuant to P.L. 104-191.

"Health insurance coverage" shall not include the following "noncoordinated, excepted 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 such 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:

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

(ii) Hospital indemnity or other fixed indemnity insurance.

"Health insurance coverage" shall not include the following "supplemental, excepted benefits" if offered as a separate policy, certificate or contract of insurance:

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

(ii) Coverage supplemental to the coverage provided under chapter 55 of title 10, United States Code (Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)); and

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

(16) "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.

(17) "Health maintenance organization" ("HMO") means a health maintenance organization licensed under chapter 41 of this title.

(18) "Health status-related factor" means 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.

(19) "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) 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. In the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether such employer is a large employer shall be based on the average number of employees that is reasonably expected such employer will employ on business days in the current calendar year.

(20) "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.

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

(22) "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 (i) above; and

(iii) amounts paid for insurance covering medical care referred to in (i) and (ii) above.

(23) "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.

(24) "Participant" has the meaning given such term under section 3(7) of the Employee Retirement Income Security Act of 1974.

(25) "Placed for adoption" means, in connection with any placement for adoption of a child with any person, the assumption and retention by such person of a legal obligation for total or partial support of such child in anticipation of adoption of such child. The child's placement with such person terminates upon the termination of such legal obligation.

(26) "Plan sponsor" has the meaning given such term under section 3(16)(B) of the Employee Retirement Income Security Act of 1974. "Plan sponsor" shall also include any bona fide association, as defined in this section 27-18.6-2.

(27) "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 such coverage, whether or not any medical advice, diagnosis, care or treatment was recommended or received before such date.

(28) "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.

(1) such 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.

(2) such 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

(3) the period of any such 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.

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 such information.

(b) With respect to subsection (a)(3), a period of creditable coverage shall not be counted, with respect to enrollment of an individual under a group health plan, if, after such 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).

(d) Except as otherwise provided in subsection (e) below, for purposes of applying subsection (a)(3), 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) A group health plan or a health insurance carrier offering group health insurance may elect to apply subsection (a)(3) based on coverage of benefits within each of several classes or categories of benefits. Such 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. Such election shall be made on a uniform basis for all participants and beneficiaries. Under such 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 such class or category.

In the case of an election hereunder with respect to a group health plan (whether or not health insurance coverage is provided in connection with such plan), the plan shall:

(i) prominently state in any disclosure statements concerning the plan, and state to each enrollee under the plan, that the plan has made such election; and

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

In the case of an election hereunder 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 such election; and

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

(f) 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.

This provision 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) 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 shall not apply to coverage before the date of such adoption or placement for adoption.

This provision 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.

(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.

(i) 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:

(1) at the time an individual ceases to be covered under the plan or otherwise becomes covered under a COBRA continuation provision;

(2) in the case of an individual becoming covered under such a provision, at the time the individual ceases to be covered under such a provision; and

(3) on the request of an individual made not later than twenty-four (24) months after the date of cessation of the coverage described in subsection (1) or (2) above, whichever is later.

The certification under subsection (i) of this section may be provided, to the extent practicable, at a time consistent with notices required under any applicable COBRA continuation provision.

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

(1) the period of creditable coverage of the individual under such plan and the coverage (if any) under such COBRA continuation provision; and

(2) the waiting period (if any) (and affiliation period, if applicable) imposed with respect to the individual for any coverage under such plan.

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 such certification in accordance with this subsection.

In the case of an election taken pursuant to subsection (e) above 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 such entity's plan or coverage, and such entity may charge the requesting plan or carrier for the reasonable cost of disclosing such information.

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, shall be a violation of this chapter.

(j) A group health plan and a health insurance carrier offering group health insurance 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 such an employee if the dependent is eligible, but not enrolled, for coverage under such 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 such 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 such a statement at such time and provided the employee with notice of such requirement (and the consequences of such requirement) at such time.

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

(i) was under a COBRA continuation provision and the coverage under such provision was exhausted; or

(ii) was not under such a 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 such coverage were terminated.

(4) Under the terms of the plan, the employee requests such enrollment not later than thirty (30) days after the date of exhaustion of coverage described in paragraph (3)(i) above or termination of coverage or employer contribution described in paragraph (3)(ii) above.

(k) 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 such 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 otherwise 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 such spouse is otherwise eligible for coverage.

A dependent special enrollment period shall be a period of not less than thirty (30) days and shall begin on the later of:

(1) the date dependent coverage is made available; or

(2) the date of the marriage, birth, or adoption or placement for adoption (as the case may be).

If an individual seeks to enroll a dependent during the first thirty (30) days of such a dependent special enrollment period, the coverage of the dependent shall become effective:

(1) 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;

(2) in the case of a dependent's birth, as of the date of such birth; or

(3) in the case of a dependent's adoption or placement for adoption, the date of such adoption or placement for adoption.

(l) 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) above with respect to any particular coverage option may impose an affiliation period for such coverage option, but only if such period is applied uniformly without regard to any health status-related factors, and such period does not exceed two (2) months (or three (3) months in the case of a late enrollee).

For the purposes hereof, "such period" shall begin on the enrollment date.

An affiliation period under a plan shall run concurrently with any waiting period under the plan.

The director may approve alternative methods from those described under subsection (1) 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. However, individuals who need to establish creditable coverage for periods before July 1, 1996, and who would have such coverage credited but for the prohibition in the preceding sentence may be given credit for creditable coverage for such 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) Subject to subsection (m) above, subsection (i) above shall apply to events occurring after June 30, 1996. In no case shall a certification required under subsection (i) of this section be required to be provided before June 1, 1997.

In the case of an event occurring after June 30, 1996, and before October 1, 1996, a certification is not required to be provided under subsection (i) above unless an individual (with respect to whom the certification is otherwise required to be made) requests such certification in writing.

In the case of an individual who seeks to establish creditable coverage for any period for which certification is not required because is relates to an event occurring before June 30, 1996, the individual may present other credible evidence of such 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) such coverage if the plan or carrier has sought to comply in good faith with the applicable requirements hereof.

Rules for eligibility to enroll under a plan include rules defining any applicable waiting periods for such enrollment.

(b) Subsection (a) above shall not be construed:

(1) to require a group health plan or group health insurance coverage to provide particular benefits other than those provided under the terms of such plan or coverage; or

(2) to prevent such a plan or coverage from establishing limitations on the amount, level, extent, or nature of the benefits or coverage for similarly situated individuals enrolled in the coverage.

(c) A group health plan and a health insurance carrier offering health insurance coverage in connection with a group health plan may not require any individual (as a condition of enrollment or continued enrollment under the plan) to pay a premium or contribution which is greater than such premium or contribution for a similarly situated individual enrolled in the plan on the basis of any health status-related factor in relation to the individual or to an individual enrolled under the plan as dependent of the individual.

Nothing contained within this subsection (c) shall be construed to:

(1) restrict the amount that an employer may be charged for coverage under a group health plan; or

(2) prevent a group health plan and a health insurance carrier offering group health insurance 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.

(b) A health insurance carrier may nonrenew 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;

(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 pursuant to rule or regulation;

(4) the carrier is ceasing to offer coverage in accordance with subsections (c) and (d) below;

(5) the director 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 network plan, there is no longer any enrollee in connection with such 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 such coverage is terminated under this section uniformly without regard to any health status-related factor relating to any covered individual.

(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, and the director finds that that product form is obsolete and is being replaced with comparable coverage, coverage of such type may be discontinued by the carrier only if:

(1) the carrier provides advance notice of its decision to the insurance commissioner in each state in which it is licensed;

(2) the carrier provides notice of the decision to all affected plan sponsors, participants and beneficiaries, and to the insurance commissioner in each state in which an affected insured individual is known to reside at least one hundred eighty (180) days prior to the date of discontinuation of such 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;

(3) 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 such market; and

(4) in exercising this option to discontinue coverage of this type and in offering the option of coverage under paragraph (3) above, 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 such coverage.

(d) In any case in which a carrier elects to discontinue offering and to nonrenew all of its health insurance coverage in the large group market in this state, the carrier shall:

(1) provide advance notice to the director, to the insurance commissioner in each state in which the carrier is licensed, and to each plan sponsor (and participants and beneficiaries covered under such coverage and to the insurance commissioner in each state in which an affected insured individual is known to reside) of such decision at least one hundred eighty (180) days prior to the date of the discontinuation of such 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) above, 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.

(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 such employer.

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

(1) in the case of a plan that is a nonfederal governmental plan; and

(2) with respect to group health insurance coverage offered in connection with a group health plan (including such a plan that is a church plan or a governmental plan).

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 such form and manner as the secretary of the United States department of health and human services may prescribe by regulation), then the requirements hereof insofar as they apply directly to group health plans (and not merely to group health insurance coverage) shall not apply to such governmental plans for such period except as provided herein.

Such an election shall apply 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 such agreement.

Under the foregoing election, 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 such election, and certification and disclosure of creditable coverage under the plan with respect to enrollees in accordance with section 27-18.6-3(i).

(c) The requirements of this chapter shall 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 otherwise not an integral part of the plan.

(d) The requirements of this chapter shall 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 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 such benefits and any exclusion of benefits under any group health plan maintained by the same plan sponsor.

(3) such 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.

(e) The requirements of this chapter shall 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.

(f) 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 such 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.

In the case of a group health plan, the term "employer" also includes the partnership in relation to any partner.

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

(1) in connection with a group health plan maintained by a partnership, an individual who is a partner in relation to the partnership; or

(2) 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 such individual is, or may become, eligible to receive a benefit under the plan or such individual's beneficiaries may be eligible to receive any such benefits.

(1) the date on which the last of the collective bargaining agreements relating to the plan terminates (determined without regard to any extension thereof agreed to after the date of the enactment of this chapter); or

(2) July 1, 1997.

For purposes of paragraph (1), any plan amendment made pursuant to a collective bargaining agreement relating to the plan which amends the plan solely to conform to any requirement hereof shall not be treated as a termination of such collective bargaining agreement.

This chapter is not intended to provide a comprehensive solution to the problem of affordability of health care or health insurance.

(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 section 27-50-5.

(C) "Affiliate" or "affiliated" means any entity or person who directly or indirectly 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) "Basic health benefit plan" means the health benefit plan developed pursuant to the provisions of section 27-50-10.

(F) "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 such 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;

(8) meets such additional requirements as the director may prescribe by regulation.

(G) "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 act, 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 providing a plan of health insurance or health benefits subject to state insurance regulation.

(H) "Church plan" has the meaning given this term under section 3(33) of the Employee Retirement Income Security Act of 1974.

(I) "Control" shall be defined in the same manner as in chapter 27-35.

(J)(1) "Creditable coverage" means, with respect to an individual, health benefits or coverage provided under any of the following:

(a) A group health plan;

(b) A health benefit plan;

(c) Part A or part B of Title XVIII of the Social Security Act (Medicare);

(d) Title XIX of the Social Security Act (Medicaid), other than coverage consisting solely of benefits under section 1928 (the program for distribution of pediatric vaccines);

(e) Chapter 55 of title 10, United States Code (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 title 10, chapter 55, "uniformed services" means the armed forces and the Commissioned Corps of the National Oceanic and Atmospheric Administration and of the Public Health Service;

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

(g) A state health benefits risk pool;

(h) A health plan offered under chapter 89 of title 5, United States Code (Federal Employees Health Benefits Program (FEHBP));

(i) A public health plan, which for purposes of this act, 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

(j) A health benefit plan under section 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 such period and before the enrollment date, the individual experiences a significant break in coverage.

(K) "Dependent" means a spouse, an unmarried child under the age of nineteen (19) years, an unmarried child who is a full-time student under the age of twenty-five (25) years and who is financially dependent upon the parent, and an unmarried child of any age who is medically certified as disabled and dependent upon the parent.

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

(M) "Economy health plan" means a lower cost health benefit plan developed pursuant to the provisions of section 27-50-10.

(N) "Eligible employee" means 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. 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 Section 27- 50-7(D)(9).

(O) "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.

(P) "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.

(Q) "Family composition" means:

(1) Enrollee;

(2) Enrollee, spouse and children;

(3) Enrollee and spouse; or

(4) Enrollee and children.

(R) "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.

(S) "Governmental plan" has the meaning given the term under section 3(32) of the Employee Retirement Income Security Act of 1974 and any federal governmental plan.

(T)(1) "Group health plan" means an employee welfare benefit plan as defined in section 3(1) of the Employee Retirement Income Security Act of 1974 to the extent that the plan provides medical care, as defined in Subsection (Z), 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:

(a) Any plan, fund or program that would not be, but for PHSA section 2721(e), as added by Pub. L. No. 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 Subparagraph (b), as an employee welfare benefit plan that is a group health plan;

(b) In the case of a group health plan, the term "employer" also includes the partnership in relation to any partner; and

(c) 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:

(i) In connection with a group health plan maintained by a partnership, the individual 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 individual is the self-employed individual.

(U) (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" shall not include one or more, or any combination of, the following:

(a) Coverage only for accident, or disability income insurance, or any combination thereof;

(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 federal 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" shall 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:

(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 thereof; or

(c) Other similar, limited benefits specified in federal regulations issued pursuant to Pub. L. No. 104-191.

(4) "Health benefit plan" shall 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:

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

(b) Hospital indemnity or other fixed indemnity insurance.

(5) "Health benefit plan" shall not include the following 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;

(b) Coverage supplemental to the coverage provided under chapter 55 of title 10, United States Code; or

(c) 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:

(a) The carrier files on or before March 1 of each year a certification with the director that contains the statement and information described in Subparagraph (b);

(b) The certification required in Subparagraph (a) shall contain the following:

(i) 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

(ii) 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 such policies and certificates in this state; and

(c) 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 the effective date of the chapter, the carrier files with the director the information and statement required in subparagraph (b) at least thirty (30) days prior to the date such a policy or certificate is issued or delivered in this state.

(V) "Health maintenance organization" or "HMO" means a health maintenance organization licensed under chapter 27-41.

(W) "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.

(X)(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.

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

(a) Who meets each of the following:

(i) The individual was covered under creditable coverage at the time of the initial enrollment;

(ii) 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 chapters 40-5.1 or 42-12.3 or for RIteShare under chapter 40-8.4; and

(iii) 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;

(b) If, where provided for in contract or where otherwise provided in state law, the individual enrolls during the specified bona fide open enrollment period;

(c) 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;

(d) 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;

(e) 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;

(f) If the individual had coverage under a COBRA continuation provision and the coverage under that provision has been exhausted; or

(g) Who meets the requirements for special enrollment pursuant to section 27-50-7 or 27-50-8.

(Y) "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.

(Z) "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 Paragraph (1); and

(3) Insurance covering medical care referred to in Paragraphs (1) and (2).

(AA) "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.

(BB) "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.

(CC) "Plan sponsor" has the meaning given this term under section 3(16)(B) of the Employee Retirement Income Security Act of 1974.

(DD) (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" shall 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 Paragraph (1) for which a preexisting condition exclusion may be imposed in the absence of a diagnosis of the condition related to the information.

(EE) "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.

(FF) "Producer" means any insurance producer licensed under chapter 27-2.3.

(GG) "Rating period" means the calendar period for which premium rates established by a small employer carrier are assumed to be in effect.

(HH) "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.

(II) "Risk adjustment mechanism" means the mechanism established pursuant to section 27-50-16.

(JJ) "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 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.

(KK) "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.

(LL) "Small employer" means, except for its use in section 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 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 (1) 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.

(MM) "Standard health benefit plan" means a health benefit plan developed pursuant to the provisions of section 27-50-10.

(NN) "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.

(A) Any portion of the premium or benefits is paid by or on behalf of the small employer;

(B) 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;

(C) 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; or

(D) The health benefit plan is marketed to individual employees through an employer.

(E)(1) Except as provided in subsection (E) (2), 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 such affiliated carriers were issued by one (1) carrier.

(2) An affiliated carrier that is a health maintenance organization having a license under chapter 27-41 or a health maintenance organization as defined in chapter 42-62 may be considered to be a separate carrier for the purposes of this chapter.

(3) Unless otherwise authorized by the director, a small employer carrier shall not enter into one or more ceding arrangements with respect to health benefit plans delivered or issued for delivery to small employers in this state if such arrangements would result in less than fifty percent (50%) of the insurance obligation or risk for such health benefit plans being retained by the ceding carrier. The department of business regulation's statutory provisions under this title shall apply if a small employer carrier cedes or assumes all 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.

(1) Subject to subsection (2), a small employer carrier shall develop its rates based on an adjusted community rate and may only vary the adjusted community rate for:

(a) Age;

(b) Gender; and

(c) Family composition.

(2) Until October 1, 2002, a small employer carrier who as of June 1, 2000 varied rates by health status may vary the adjusted community rates for health status by ten percent (10%), provided that the resulting rates comply with the other requirements of this section, including subsection (5). After October 1, 2002, no small employer carrier may vary the adjusted community rate based on health status.

(3) The adjustment for age in Paragraph(1)(a) may not use age brackets smaller than five year increments and these shall begin with age thirty (30) and end with age sixty-five (65).

(4) The small employer carriers shall be 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 shall be subject to the requirements of this subsection.

(5) For each health benefit plan offered by a carrier, the highest premium rate for each family composition type shall not exceed two (2) times the premium rate that could be charged to a small employer with the lowest premium rate for that family composition type, effective two (2) years after enactment of this chapter. During the first two (2) years after enactment of this chapter the highest premium rate for each family composition type shall not exceed four (4) times the premium rate that could be charged to a small employer with the lowest premium rate for that family composition.

(6) Upon renewal of a health benefit plan, the premium rate for each group shall not exceed the premium rate charged by that carrier to that group during the prior rating period by more than: (1) cost and utilization trends for that carrier; plus (2) the sum of any premium changes due to changes in the size, age, gender or family composition of the group; plus, (3) ten percent (10%); plus (4) the change in the actuarial value of the benefits due to changes in the health benefit plan for that group. This subsection shall expire on September 30, 2002.

(7) Premium rates for bona fide associations shall comply with the requirements of section 27-50-5.

(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:

(1) Changes to the enrollment of the small employer;

(2) Changes to the family composition of the employee; or

(3) Changes to the health benefit plan requested by the small employer.

(C) Premium rates for health benefit plans shall comply with the requirements of this section.

(D) Small employer carriers shall apply rating factors consistently with respect to all small employers. Rating factors shall produce premiums for identical groups which differ only by the amounts attributable to plan design and do not reflect differences due to the nature of the groups assumed to select particular health benefit plans. However, nothing in this section shall be construed to prevent a group health plan and a health insurance carrier offering health insurance 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, provided that the resulting rates comply with the other requirements of this section, including subsection (5).

(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 director 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

(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:

(1) The provisions of the health benefit plan concerning the small employer carrier's right to change premium rates and the factors, other than claim experience, that affect changes in premium rates;

(2) The provisions relating to renewability of policies and contracts;

(3) The provisions relating to any preexisting condition provision; and

(4) A listing of and descriptive information, including benefits and premiums, about all benefit plans for which the small employer is qualified.

(H)(1) Each small employer carrier shall maintain at its principal place of business a complete and detailed description of its rating practices and renewal underwriting practices, including information and documentation that demonstrate that its rating methods and practices are based upon commonly accepted actuarial assumptions and are in accordance with sound actuarial principles.

(2) Each small employer carrier shall file with the director annually on or before March 15, an actuarial certification certifying that the carrier is in compliance with this chapter and that the rating methods of the small employer carrier are actuarially sound. The certification shall be in a form and manner, and shall contain such information, as specified by the director. A copy of the certification shall be retained by the small employer carrier at its principal place of business.

(3) A small employer carrier shall make the information and documentation described in Subsection (E)(1) available to the director upon request. Except in cases of violations of this chapter, the information shall be considered proprietary and trade secret information and shall not be subject to disclosure by the director to persons outside of the department except as agreed to by the small employer carrier or as ordered by a court of competent jurisdiction.

(I) The requirements of this section shall apply to all health benefit plans issued or renewed on or after October 1, 2000.

(1) The plan sponsor has failed to pay premiums or contributions in accordance with the terms of the health benefit plan or the carrier has not received timely premium payments;

(2) The plan sponsor or, with respect to coverage of individual insureds under the health benefit plan, the insured or the insured's representative has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of coverage;

(3) Noncompliance with the carrier's minimum participation requirements;

(4) Noncompliance with the carrier's employer contribution requirements;

(5) The small employer carrier elects to discontinue offering all of its health benefit plans delivered or issued for delivery to small employers in this state if the carrier:

(a) Provides advance notice of its decision under this paragraph to the commissioner in each state in which it is licensed; and

(b) Provides notice of the decision to:

(i) All affected small employers and enrollees and their dependents; and

(ii) The insurance commissioner in each state in which an affected insured individual is known to reside at least one hundred and eighty (180) days prior to the nonrenewal of any health benefit plans by the carrier, provided the notice to the commissioner under this subparagraph is sent at least three (3) working days prior to the date the notice is sent to the affected small employers and enrollees and their dependents;

(6) The director:

(a) Finds that the continuation of the coverage would not be in the best interests of the policyholders or certificate holders or would impair the carrier's ability to meet its contractual obligations; and

(b) Assists affected small employers in finding replacement coverage;

(7) The director finds that the product form is obsolete and is being replaced with comparable coverage and the small employer carrier decides to discontinue offering that particular type of health benefit plan (obsolete product form) in the state's small employer market if the carrier:

(a) Provides advance notice of its decision under this paragraph to the commissioner in each state in which it is licensed;

(b) Provides notice of the decision not to renew coverage at least one hundred and eighty (180) days prior to the nonrenewal of any health benefit plans to:

(i) All affected small employers and enrollees and their dependents; and

(ii) The commissioner in each state in which an affected insured individual is known to reside, provided the notice sent to the commissioner under this subparagraph is sent at least three (3) working days prior to the date the notice is sent to the affected small employers and enrollees and their dependents;

(c) Offers to each small employer issued that particular type of health benefit plan (obsolete product form) the option to purchase all other health benefit plans currently being offered by the carrier to small employers in the state; and

(d) In exercising this option to discontinue that particular type of health benefit plan (obsolete product form) and in offering the option of coverage pursuant to Subparagraph (c) acts uniformly without regard to the claims experience of those small employers or any health status-related factor relating to any enrollee or dependent of an enrollee or enrollees and their dependents covered or new enrollees and their dependents who may become eligible for coverage; or

(8) In the case of health benefit plans that are made available in the small group market through a network plan, there is no longer an employee of the small employer living, working or residing within the carrier's established geographic service area and the carrier would deny enrollment in the plan pursuant to section 27-50-7(E)(1)(b); or,

(9) In the case of a health benefit plan that is made available in the small employer market only through one or more bona fide associations, the membership of an employer in the bona fide association, on the basis of which the coverage is provided, ceases, but only if the coverage is terminated under this paragraph uniformly without regard to any health status-related factor relating to any covered individual.

(B)(1) A small employer carrier that elects not to renew health benefit plan coverage pursuant to subsection (A)(2) because of the small employer's fraud or intentional misrepresentation of material fact under the terms of coverage may choose not to issue a health benefit plan to that small employer for one (1) year after the date of nonrenewal.

(2) This subsection shall not be construed to affect the requirements of section 27-50-7 as to the obligations of other small employer carriers to issue any health benefit plan to the small employer.

(C)(1) A small employer carrier that elects to discontinue offering health benefit plans under subsection (A)(5) shall be prohibited from writing new business in the small employer market in this state for a period of five (5) years beginning on the date the carrier ceased offering new coverage in this state.

(2) In the case of a small employer carrier that ceases offering new coverage in this state pursuant to subsection (A)(5), the small employer carrier, as determined by the director, may renew its existing business in the small employer market in the state or may be required to nonrenew all of its existing business in the small employer market in the state.

(D) A small employer carrier offering coverage through a network plan shall not be required to offer coverage or accept applications pursuant to subsection (A) or (B) in the case of the following:

(i) to an eligible person who 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 coverage is terminated under this paragraph uniformly without regard to any health status-related factor of covered individuals; or

(ii) to a small employer that no longer has any enrollee in connection with such plan who lives, resides or works in the service area of the carrier, or the area for which the carrier is authorized to do business.

(B)(1) Every small employer carrier shall, as a condition of transacting business in this state with small employers, actively offer to small employers all health benefit plans it actively markets to small employers in this state including at least three (3) health benefit plans. One health benefit plan offered by each small employer carrier shall be a basic health benefit plan, one plan shall be a standard health benefit plan, and one plan shall be an economy health benefit plan. A small employer carrier shall be considered to be actively marketing a health benefit plan if it offers that plan to any small employer not currently receiving a health benefit plan from such small employer carrier.

(2) Subject to subsection (1), a small employer carrier shall issue any health benefit plan to any eligible small employer that applies for such plan and agrees to make the required premium payments and to satisfy the other reasonable provisions of the health benefit plan not inconsistent with this chapter. However, no carrier shall be required to issue a health benefit plan to any self-employed individual who is covered by, or is eligible for coverage under, a health benefit plan offered by an employer.

(3) Notwithstanding any other provision in this section, between October 1, 2000 and September 30, 2002, a carrier may choose to limit the time during which it will accept new groups for coverage to a period of not less than ninety consecutive days during each consecutive twelve month period.

(C) (1) A small employer carrier shall file with the director, in a format and manner prescribed by the director, the health benefit plans to be used by the carrier. A health benefit plan filed pursuant to this paragraph may be used by a small employer carrier beginning thirty (30) days after it is filed unless the director disapproves its use.

(2) The director may at any time may, after providing notice and an opportunity for a hearing to the small employer carrier, disapprove the continued use by a small employer carrier of a health benefit plan on the grounds that the plan does not meet the requirements of this act.

(D) Health benefit plans covering small employers shall comply with the following provisions:

(1) A health benefit plan shall not deny, exclude or limit benefits for a covered individual for losses incurred more than six (6) months following the enrollment date of the individual's coverage due to a preexisting condition, or the first date of the waiting period for enrollment if that date is earlier than the enrollment date. A health benefit plan shall not define a preexisting condition more restrictively than as defined in section 27-50-3.

(2)(a) Except as provided in subsection (3), a small employer carrier shall reduce the period of any preexisting condition exclusion without regard to the specific benefits covered during the period of creditable coverage, provided that the last period of creditable coverage ended on a date not more than ninety (90) days prior to the enrollment date of new coverage.

(b) The aggregate period of creditable coverage shall not include any waiting period or affiliation period for the effective date of the new coverage applied by the employer or the carrier, or for the normal application and enrollment process following employment or other triggering event for eligibility.

(c) A carrier that does not use preexisting condition limitations in any of its health benefit plans may impose an affiliation period that:

(i) Does not exceed sixty (60) days for new entrants and not to exceed ninety (90) days for late enrollees;

(ii) During which the carrier charges no premiums and the coverage issued is not effective; and

(iii) Is applied uniformly, without regard to any health status-related factor.

(d) This section does not preclude application of any waiting period applicable to all new enrollees under the health benefit plan, provided that any carrier-imposed waiting period be no longer than sixty (60) days.

(3)(a) Instead of as provided in subsection (2)(a), a small employer carrier may elect to reduce the period of any preexisting condition exclusion based on coverage of benefits within each of several classes or categories of benefits specified in federal regulations.

(b) A small employer electing to reduce the period of any preexisting condition exclusion using the alternative method described in subsection (3)(a) shall:

(i) Make the election on a uniform basis for all enrollees; and

(ii) 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.

(c) A small employer carrier electing to reduce the period of any preexisting condition exclusion using the alternative method described under subsection (3)(a) shall:

(i) Prominently state that the election has been made in any disclosure statements concerning coverage under the health benefit plan to each enrollee at the time of enrollment under the plan and to each small employer at the time of the offer or sale of the coverage; and

(ii) Include in the disclosure statements the effect of the election.

(4)(a) A health benefit plan shall accept late enrollees, but may exclude coverage for late enrollees for preexisting conditions for a period not to exceed twelve (12) months.

(b) A small employer carrier shall reduce the period of any preexisting condition exclusion pursuant to Paragraph (2) or Paragraph (3).

(5) A small employer carrier shall not impose a preexisting condition exclusion:

(a) Relating to pregnancy as a preexisting condition; or

(b) With regard to a child who is covered under any creditable coverage within thirty (30) days of birth, adoption or placement for adoption, provided that the child does not experience a significant break in coverage, and provided that the child was adopted or placed for adoption before attaining eighteen (18) years of age.

(6) A small employer carrier shall not impose a preexisting condition exclusion in the case of 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 the medical advice, diagnosis, care or treatment was a covered benefit under the plan, provided that the creditable coverage was continuous to a date not more than ninety (90) days prior to the enrollment date of the new coverage.

(7)(a) A small employer carrier shall permit an employee or a dependent of the employee, who is eligible, but not enrolled, to enroll for coverage under the terms of the group health plan of the small employer during a special enrollment period if:

(i) The employee or dependent was covered under a group health plan or had coverage under a health benefit plan at the time coverage was previously offered to the employee or dependent;

(ii) The employee stated in writing at the time coverage was previously offered that coverage under a group health plan or other health benefit plan was the reason for declining enrollment, but only if the plan sponsor or carrier, if applicable, required such a statement at the time coverage was previously offered and provided notice to the employee of the requirement and the consequences of the requirement at that time;

(iii) The employee's or dependent's coverage described under Item (i):

(I) Was under a COBRA continuation provision and the coverage under this provision has been exhausted; or

(II) Was not under a COBRA continuation provision and that other coverage has been terminated as a result of loss of eligibility for coverage, including as a result of a legal separation, divorce, death, termination of employment, or reduction in the number of hours of employment or employer contributions towards that other coverage have been terminated; and

(iv) Under terms of the group health plan, the employee requests enrollment not later than thirty (30) days after the date of exhaustion of coverage described in Item (iii)(I) or termination of coverage or employer contribution described in Item (iii)(II).

(b) If an employee requests enrollment pursuant to Item (iv), the enrollment is effective not later than the first day of the first calendar month beginning after the date the completed request for enrollment is received.

(8)(a) A small employer carrier that makes coverage available under a group health plan with respect to a dependent of an individual shall provide for a dependent special enrollment period described in Subparagraph (b) during which the person or, if not otherwise enrolled, the individual may be enrolled under the group health 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 otherwise eligible for coverage if:

(i) The individual is a participant under the health benefit 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

(ii) A person becomes a dependent of the individual through marriage, birth or adoption or placement for adoption.

(b) The special enrollment period for individuals that meet the provisions of subsection (8)(a) shall be a period of not less than thirty (30) days and begins 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 described in Subparagraph (a)(ii).

(c) If an individual seeks to enroll a dependent during the first thirty (30) days of the dependent special enrollment period described under Subparagraph (b), the coverage of the dependent shall be 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 birth; and

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

(9)(a) Except as provided in this subsection, requirements used by a small employer carrier in determining whether to provide coverage to a small employer, including requirements for minimum participation of eligible employees and minimum employer contributions, shall be applied uniformly among all small employers applying for coverage or receiving coverage from the small employer carrier.

(b) For health benefit plans issued or renewed on or after October 1, 2000, a small employer carrier shall not require a minimum participation level greater than:

(i) One hundred percent (100%) of eligible employees working for groups of ten (10) or less employees; and

(ii) Seventy-five percent (75%) of eligible employees working for groups with more than ten (10) employees.

(c) In applying minimum participation requirements with respect to a small employer, a small employer carrier shall not consider employees or dependents who have creditable coverage in determining whether the applicable percentage of participation is met.

(d) A small employer carrier shall not increase any requirement for minimum employee participation or modify any requirement for minimum employer contribution applicable to a small employer at any time after the small employer has been accepted for coverage.

(10)(a) If a small employer carrier offers coverage to a small employer, the small employer carrier shall offer coverage to all of the eligible employees of a small employer and their dependents who apply for enrollment during the period in which the employee first becomes eligible to enroll under the terms of the plan. A small employer carrier shall not offer coverage to only certain individuals or dependents in a small employer group or to only part of the group.

(b) A small employer carrier shall not place any restriction in regard to any health status-related factor on an eligible employee or dependent with respect to enrollment or plan participation.

(c) Except as permitted under subsection (D)(1) and (D)(4), a small employer carrier shall not modify a health benefit plan with respect to a small employer or any eligible employee or dependent, through riders, endorsements or otherwise, to restrict or exclude coverage or benefits for specific diseases, medical conditions or services otherwise covered by the plan.

(E)(1) Subject to subsection (E)(3), a small employer carrier shall not be required to offer coverage or accept applications pursuant to subsection (B) in the case of the following:

(a) To a small employer, where the small employer does not have eligible individuals who live, work or reside in the established geographic service area for such network plan;

(b) To an employee, when the employee does not live, work or reside within the carrier's established geographic service area; or

(c) Within an area where the small employer carrier reasonably anticipates, and demonstrates to the satisfaction of the director, that it will not have the capacity within its established geographic service area to deliver services adequately to enrollees of any additional groups because of its obligations to existing group policyholders and enrollees.

(2) A small employer carrier that cannot offer coverage pursuant to subsection (E)(1)(c) may not offer coverage in the applicable area to new cases of employer groups until the later of one hundred and eighty (180) days following each such refusal or the date on which the carrier notifies the director that it has regained capacity to deliver services to new employer groups.

(3) A small employer carrier shall apply the provisions of this subsection uniformly to all small employers without regard to the claims experience of a small employer and its employees and their dependents or any health status-related factor relating to such employees and their dependents.

(F)(1) A small employer carrier shall not be required to provide coverage to small employers pursuant to subsection (B) if:

(a) For any period of time the director determines the small employer carrier does not have the financial reserves necessary to underwrite additional coverage; and

(b) The small employer carrier is applying this subsection uniformly to all small employers in the small group market in this state consistent with applicable state law and without regard to the claims experience of a small employer and its employees and their dependents or any health status-related factor relating to such employees and their dependents.

(2) A small employer carrier that denies coverage in accordance with Paragraph (1) may not offer coverage in the small group market for the later of:

(a) A period of one hundred and eighty (180) days after the date the coverage is denied; or

(b) Until the small employer has demonstrated to the director that it has sufficient financial reserves to underwrite additional coverage.

(G)(1) A small employer carrier shall not be required to provide coverage to small employers pursuant to subsection (B) if the small employer carrier elects not to offer new coverage to small employers in this state.

(2) A small employer carrier that elects not to offer new coverage to small employers under this subsection may be allowed, as determined by the director, to maintain its existing policies in this state.

(3) A small employer carrier that elects not to offer new coverage to small employers under subsection (G)(1) shall provide at least one hundred and twenty (120) days notice of its election to the director and shall be prohibited from writing new business in the small employer market in this state for a period of five (5) years beginning on the date the carrier ceased offering new coverage in this state.

(B) The certification of creditable coverage shall be provided:

(1) At the time an individual ceases to be covered under the health benefit plan or otherwise becomes covered under a COBRA continuation provision;

(2) In the case of an individual who becomes covered under a COBRA continuation provision, at the time the individual ceases to be covered under that provision; and

(3) At the time a request is made on behalf of an individual if the request is made not later than twenty-four (24) months after the date of cessation of coverage described in subsection (B) (1) or (B) (2), whichever is later.

(C) Small employer carriers may provide the certification of creditable coverage required under subsection (B)(1) at a time consistent with notices required under any applicable COBRA continuation provision.

(D) The certificate of creditable coverage required to be provided pursuant to Subsection (A) shall contain:

(1) Written certification of the period of creditable coverage of the individual under the health benefit plan and the coverage, if any, under the applicable COBRA continuation provision; and

(2) The waiting period, if any, and, if applicable, affiliation period imposed with respect to the individual for any coverage under the health benefit plan.

(E) To the extent medical care under a group health plan consists of group health insurance coverage, the plan is deemed to have satisfied the certification requirement under Subsection (A) if the carrier offering the coverage provides for certification in accordance with Subsection (B).

(F)(1) If an individual enrolls in a group health plan that uses the alternative method of counting creditable coverage pursuant to Section 27-50-7(C)(3) of this act and the individual provides a certificate of coverage that was provided to the individual pursuant to subsection (B), on request of the group health plan, the entity that issued the certification to the individual promptly shall disclose to the group health plan information on the classes and categories of health benefits available under the entity's health benefit plan.

(2) The entity providing the information pursuant to Paragraph (1) may charge the requesting group health plan the reasonable cost of disclosing the information.

(B)(1) The standard health benefit plan shall include:

(i) Inpatient hospital care up to twenty (20) days per year;

(ii) Outpatient hospital care including, but not limited to, surgery and anesthesia, preadmission testing, radiation therapy, and chemotherapy;

(iii) Emergency care through emergency room care and emergency admissions to a hospital, excluding, however, care for conditions that are not life-threatening;

(iv) Pediatric care and well baby exams, with up to six (6) visits in a child's first year, and childhood immunizations until age eight (8);

(v) Physician office visits or community health center visits for primary or sick care, up to four (4) visits per year and laboratory fees, surgery and anesthesia, diagnostic x-rays, and physician care in a hospital inpatient or outpatient setting;

(vi) Maternity care including prenatal office visits, care in the hospital for mother, and child and newborn nursery care;

(vii) Newborn metabolic and sickle cell screening, mammography, and pap tests;

(viii) Psychiatric care and substance abuse care up to twenty (20) outpatient visits per year, inpatient psychiatric care and inpatient substance abuse care shall be included in the twenty (20) days provided by subsection (B)(1)(i). The lifetime substance abuse benefit shall be a maximum of forty-five (45) inpatient days; and

(ix) Home nursing care in lieu of or to reduce hospital length of stay, up to twenty (20) visits per year;

(2) The term "physician" shall include doctors of medicine, osteopathy, and optometry;

(3) Standard health care benefits shall include the following copayments:

(i) A twenty percent (20%) copayment will be charged for all services except for inpatient hospitalization;

(ii) A two hundred dollar ($200) per day copayment will be charged for each day of inpatient hospitalization in any acute care hospital or psychiatric care or substance abuse care treatment facility;

(iii) A twenty percent (20%) copayment will be charged for any covered emergency room visit, except that when a patient is admitted to the hospital as an inpatient, the copayment shall be waived; and

(iv) There shall be an annual out of pocket stop loss of two thousand five hundred dollars ($2,500) per individual and five thousand dollars ($5,000) per family. After the stop loss amount has been reached, no additional copayments shall be charged until the beginning of the next contract year; and

(4) Cost containment mechanisms may be used for all services to include, but not be limited to, the following:

(i) Primary care gatekeepers;

(ii) Preadmission certification;

(iii) Mandatory second opinion prior to elective surgery;

(iv) Preauthorization for specified services;

(v) Concurrent utilization review and management;

(vi) Discharge planning for hospital care;

(vii) Design and implementation of a structure of copayments as described in this chapter; and

(viii) Less costly alternatives to inpatient care.

(C)(1) The economy health benefit plan shall include:

(i) Inpatient hospital care up to twenty (20) days per year;

(ii) Outpatient hospital care including, but not limited to, surgery and anesthesia, preadmission testing, radiation therapy, and chemotherapy;

(iii) Emergency care through emergency room care and emergency admissions to a hospital excluding, however, care for conditions that are not life threatening;

(iv) Pediatric care and well baby exams, with up to six (6) visits in a child's first year, and childhood immunizations until age eight (8);

(v) Physician office visits or community health center visits for primary or sick care, up to four (4) visits per year and laboratory fees, surgery and anesthesia, diagnostic x-rays, and physician care in a hospital inpatient or outpatient setting;

(vi) Maternity care including prenatal office visits, care in the hospital for mother and child, and newborn nursery care;

(vii) Newborn metabolic and sickle cell screening, mammography, and pap tests;

(viii) Psychiatric care and substance abuse care up to twenty (20) outpatient visits per year, inpatient psychiatric care and inpatient substance abuse care shall be included in the twenty (20) days provided by subsection (C)(1)(i). The lifetime substance abuse benefit shall be a maximum of forty-five (45) inpatient days; and

(ix) Home nursing care in lieu of or to reduce hospital length of stay, up to twenty (20) visits per year;

(2) The term "physician" shall include doctors of medicine, osteopathy, and optometry;

(3) Economy health care benefits shall include the following copayments:

(i) A twenty percent (20%) copayment shall be charged for any covered service contained in subsections (C)(1)(iv), (C)(1)(vi), (C)(1)(vii), and (C)(1)(ix);

(ii) A three hundred dollar ($300) per day copayment will be charged for each day of inpatient hospitalization in any acute care hospital or psychiatric care or substance abuse care treatment facility;

(iii) A fifty percent (50%) copayment shall be charged for any covered service contained in subsections (C)(1)(ii), (C)(1)(iii), (C)(1)(v), and (C)(1)(viii), except that when a patient is admitted to the hospital from the emergency room, the copayment shall be waived; and

(iv) There shall be an annual out of pocket stop loss of two thousand five hundred dollars ($2,500) per individual and five thousand dollars ($5,000) per family. After the stop loss amount has been reached, no additional copayments shall be charged until the beginning of the next contract year; and

(4) Cost containment mechanisms may be used for all services to include, but not be limited to, the following:

(i) Primary care gatekeepers;

(ii) Preadmission certification;

(iii) Mandatory second opinion prior to elective surgery;

(iv) Preauthorization for specified services;

(v) Concurrent utilization review and management;

(vi) Discharge planning for hospital care;

(vii) Design and implementation of a structure of copayments as described in this chapter; and

(viii) Less costly alternatives to inpatient care.

(D) The basic health benefit plan shall be developed by regulation by the director in consultation with the department of human services, including, but not limited to, benefit levels, cost-sharing levels, exclusions and limitations. The plan may include cost containment features such as those specified in subsections (B)(4) and (C)(4). The plan shall be made available as required by regulation.

(B)(1) Except as provided in subsection (B)(2), no small employer carrier or producer shall, directly or indirectly, engage in the following activities:

(a) Encouraging or directing small employers to refrain from filing an application for coverage with the small employer carrier because of any health status-related factor, age, gender, industry, occupation or geographic location of the small employer;

(b) Encouraging or directing small employers to seek coverage from another carrier because of any health status-related factor, age, gender, industry, occupation or geographic location of the small employer.

(2) The provisions of subsection (B)(1) shall not apply with respect to information provided by a small employer carrier or producer to a small employer regarding the established geographic service area or a restricted network provision of a small employer carrier.

(C)(1) Except as provided in subsection (C)(2), no small employer carrier shall, directly or indirectly, enter into any contract, agreement or arrangement with a producer that provides for or results in the compensation paid to a producer for the sale of a health benefit plan to be varied because of any initial or renewal, industry, occupation or geographic location of the small employer.

(2) Subsection (C)(1) shall not apply with respect to a compensation arrangement that provides compensation to a producer on the basis of percentage of premium, provided that the percentage shall not vary because of any health status-related factor, industry, occupation or geographic area of the small employer.

(D) A small employer carrier shall provide reasonable compensation, as provided under the plan of operation of the program, to a producer, if any, for the sale of any health benefit plan subject to section 27-50-10.

(E) No small employer carrier may terminate, fail to renew or limit its contract or agreement of representation with a producer for any reason related to health status-related factor, occupation or geographic location of the small employers placed by the producer with the small employer carrier.

(F) No small employer carrier or producer shall induce or otherwise encourage a small employer to separate or otherwise exclude an employee or dependent from health coverage or benefits provided in connection with the employee's employment.

(G) Denial by a small employer carrier of an application for coverage from a small employer shall be in writing and shall state the reason or reasons for the denial.

(H) The director may establish regulations setting forth additional standards to provide for the fair marketing and broad availability of health benefit plans to small employers in this state.

(I)(1) A violation of this section by a small employer carrier or a producer shall be an unfair trade practice under chapter 6-13.

(2) If a small employer carrier enters into a contract, agreement or other arrangement with a third-party administrator to provide administrative, marketing or other services related to the offering of health benefit plans to small employers in this state, the third-party administrator shall be subject to this section as if it were a small employer carrier.

27-50-14. Severability. If any provision of this chapter or the application thereof to any person or circumstances is for any reason held to be invalid, the remainder of the chapter and the application of its provisions to other persons or circumstances shall not be affected thereby.

(1) "Adjusted RBC report" means an RBC report which has been adjusted by the commissioner in accordance with section 27-4.7-3;

(2) "Corrective order" means an order issued by the commissioner specifying corrective actions which the commissioner has determined are required;

(3) "Commissioner" means the Director of the Department of Business Regulation;

(4) "Domestic health organization" means a health organization domiciled in this state;

(5) "Foreign health organization" means a health organization that is licensed or otherwise authorized to do business in this state pursuant to title 27 but is not domiciled in this state;

(6) "NAIC" means the National Association of Insurance Commissioners;

(7) "Health organization" means a health maintenance organization, limited health service organization, dental or vision plan, hospital, medical and dental indemnity or service corporation or other managed care organization or any other entity providing a plan of health insurance, health benefits, or health services subject to title 27. This definition does not include an organization that is licensed as either a life and health insurer or a property and casualty insurer pursuant to chapter 27-1 or chapter 27-2 and that is otherwise subject to either the life or property and casualty RBC requirements;

(8) "RBC" means risk-based capital;

(9) "RBC instructions" means the RBC report, including risk-based capital instructions adopted by the NAIC, as these RBC instructions may be amended by the NAIC from time to time in accordance with the procedures adopted by the NAIC;

(10) "RBC level" means a health organization's company action level RBC, regulatory action level RBC, authorized control level RBC, or mandatory control level RBC where:

(i) "Company action level RBC" means, with respect to any health organization, the product of two (2.0) and its authorized control level RBC;

(ii) "Regulatory action level RBC" means the product of one and one-half (1.5) and its authorized control level (RBC);

(iii) "Authorized control level RBC" means the number determined under the risk-based capital formula in accordance with the RBC instructions;

(iv) "Mandatory control level RBC" means the product of seven tenths (.70) and the authorized control level RBC.

(11) "RBC plan" means a comprehensive financial plan containing the elements specified in section 27-4.7-4(b). If the commissioner rejects the RBC plan, and it is revised by the health organization, with or without the commissioner's recommendation, the plan shall be called the "revised RBC plan";

(12) "RBC report" means the report required in section 27-4.7-3;

(13) "Total adjusted capital" means the sum of:

(i) health organization's statutory capital and surplus (i.e. net worth) as determined in accordance with the statutory accounting applicable to the annual and quarterly financial statements required to be filed by health organizations pursuant to applicable sections of title 27; and

(ii) Such other items, if any, as the RBC instructions may provide.

(1) With the NAIC in accordance with the RBC instructions; and

(2) With the insurance commissioner in any state in which the health organization is authorized to do business, if the insurance commissioner has notified the health organization of its request in writing, in which case the health organization shall file its RBC report not later than the later of:

(i) Fifteen (15) days from the receipt of notice to file its RBC report with that state; or

(ii) The filing date.

(b) A health organization's RBC shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take the following into account (and may adjust for the covariance between) determined in each case by applying the factors in the manner set forth in the RBC instructions:

(1) Asset risk;

(2) Credit risk;

(3) Underwriting risk; and

(4) All other business risks and such other relevant risks as are set forth in the RBC instructions.

(c) An excess of capital (i.e. net worth) over the amount produced by the risk-based capital requirements contained in this chapter and the formulas, schedules and instructions referenced in this chapter is desirable in the business of health insurance. Accordingly, health organizations should seek to maintain capital above the RBC levels required by this chapter. Additional capital is used and useful in the insurance business and helps to secure a health organization against various risks inherent in, or affecting, the business of insurance and not accounted for, or only partially measured by, the risk-based capital requirements contained in this chapter.

(d) If a domestic health organization files an RBC report that in the judgment of the commissioner is inaccurate, then the commissioner shall adjust the RBC report to correct the inaccuracy and shall notify the health organization of the adjustment. The notice shall contain a statement of the reason for the adjustment. An RBC report as so adjusted is referred to as an "adjusted RBC report."

(1) The filing of an RBC report by a health organization that indicates that the health organization's total adjusted capital is greater than or equal to its regulatory action level RBC but less than its company action level RBC;

(2) Notification by the commissioner to the health organization of an adjusted RBC report that indicates an event in paragraph (1) of this subsection, provided the health organization does not challenge the adjusted RBC report under section 27-4.7-8; or

(3) If, pursuant to section 27-4.7-8, a health organization challenges an adjusted RBC report that indicates the event in paragraph (1) of this subsection, the notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge.

(b) In the event of a company action level event, the health organization shall prepare and submit to the commissioner an RBC plan that shall:

(1) Identify the conditions that contribute to the company action level event;

(2) Contain proposals of corrective actions that the health organization intends to take and that would be expected to result in the elimination of the company action level event;

(3) Provide projections of the health organization's financial results in the current year and at least the two (2) succeeding years, both in the absence of proposed corrective actions and giving effect to the proposed corrective actions, including projections of statutory balance sheets, operating income, net income, capital and surplus, and RBC levels. The projections for both new and renewal business might include separate projections for each major line of business and separately identify each significant income, expense and benefit component;

(4) Identify the key assumptions impacting the health organization's projections and the sensitivity of the projections to the assumptions; and

(5) Identify the quality of, and problems associated with, the health organization's business, including but not limited to its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business and use of reinsurance, if any, in each case.

(c) The RBC plan shall be submitted:

(1) Within forty-five (45) days of the company action level event; or

(2) If the health organization challenges an adjusted RBC report pursuant to section 27-4.7-8 within forty-five (45) days after notification to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge.

(d) Within sixty (60) days after the submission by a health organization of an RBC plan to the commissioner, the commissioner shall notify the health organization whether the RBC plan shall be implemented or is, in the judgment of the commissioner, unsatisfactory. If the commissioner determines the RBC plan is unsatisfactory, in the notification to the health organization shall set forth the reasons for the determination, and may set forth proposed revisions which will render the RBC plan satisfactory in the judgment of the commissioner. Upon notification from the commissioner, the health organization shall prepare a revised RBC plan, which may incorporate by reference any revisions proposed by the commissioner, and shall submit the revised RBC plan to the commissioner:

(1) Within forty-five (45) days after the notification from the commissioner; or

(2) If the health organization challenges the notification from the commissioner under section 27-4.7-8, within forty-five (45) days after a notification to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge.

(e) In the event of a notification by the commissioner to a health organization that the health organization's RBC plan or revised RBC plan is unsatisfactory, the commissioner may, at the commissioner's discretion, subject to the health organization's right to a hearing under section 27-4.7-8, specify in the notification that the notification constitutes a regulatory action level event.

(f) Every domestic health organization that files an RBC plan or revised RBC plan with the commissioner shall file a copy of the RBC plan or revised RBC plan with the insurance commissioner in any state in which the health organization is authorized to do business if:

(1) The state has an RBC provision substantially similar to section 27-4.7-9(a); and

(2) The insurance commissioner of that state has notified the health organization of its request for the filing in writing, in which case the health organization shall file a copy of the RBC plan or revised RBC plan in that state no later than the later of:

(a) Fifteen (15) days after the receipt of notice to file a copy of its RBC plan or revised RBC plan with the state; or

(b) The date on which the RBC plan or revised RBC plan is filed under subsections (c) and (d) of this section.

(1) The filing of an RBC report by the health organization that indicates that the health organization's total adjusted capital is greater than or equal to its authorized control level RBC but less than its regulatory action level RBC;

(2) Notification by the commissioner to a health organization of an adjusted RBC report that indicates the event in paragraph (1) of this subsection, provided the health organization does not challenge the adjusted RBC report under section 27-4.7-8;

(3) If, pursuant to section 27-4.7-8, the health organization challenges an adjusted RBC report that indicates the event in paragraph (1) of this subsection, the notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge;

(4) The failure of the health organization to file an RBC report by the filing date, unless the health organization has provided an explanation for the failure that is satisfactory to the commissioner and has cured the failure within ten (10) days after the filing date;

(5) The failure of the health organization to submit an RBC plan to the commissioner within the time period set forth in section 27-4.7-4(c);

(6) Notification by the commissioner to the health organization that:

(a) The RBC plan or revised RBC plan submitted by the health organization is, in the judgment of the commissioner, unsatisfactory; and

(b) Notification constitutes a regulatory action level event with respect to the health organization, provided the health organization has not challenged the determination under section 27-4.7-8.

(7) If, pursuant to section 27-4.7-8, the health organization challenges a determination by the commissioner under paragraph (6) of this subsection, the notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the challenge;

(8) Notification by the commissioner to the health organization that the health organization has failed to adhere to its RBC plan or revised RBC plan, but only if the failure has a substantial adverse effect on the ability of the health organization to eliminate the company action level event in accordance with its RBC plan or revised RBC plan and the commissioner has so stated in the notification, provided the health organization has not challenged the determination under section 27-4.7-8; or

(9) If, pursuant to section 27-4.7-8, the health organization challenges a determination by the commissioner under paragraph (8) of this subsection, the notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the challenge.

(b) In the event of a regulatory action level event the commissioner shall:

(1) Require the health organization to prepare and submit an RBC plan or, if applicable, a revised RBC plan;

(2) Perform such examination or analysis as the commissioner deems necessary of the assets, liabilities and operations of the health organization including a review of its RBC plan or revised RBC plan; and

(3) Subsequent to the examination or analysis, issue an order specifying such corrective actions as the commissioner shall determine are required (a "corrective order").

(c) In determining corrective actions, the commissioner may take into account factors the commissioner deems relevant with respect to the health organization based upon the commissioner's examination or analysis of the assets, liabilities and operations of the health organization, including, but not limited to, the results of any sensitivity tests undertaken pursuant to the RBC instructions. The RBC plan or revised RBC plan shall be submitted:

(1) Within forty-five (45) days after the occurrence of the regulatory action level event;

(2) If the health organization challenges an adjusted RBC report pursuant to section 27-4.7-8 and the challenge is not frivolous in the judgment of the commissioner within forty-five (45) days after the notification to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge; or

(3) If the health organization challenges a revised RBC plan pursuant to section 27-4.7-8, and the challenge is not frivolous in the judgment of the commissioner, within forty-five (45) days after the notification to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge.

(d) The commissioner may retain actuaries and investment experts and other consultants as may be necessary in the judgment of the commissioner to review the health organization's RBC plan or revised RBC plan, examine or analyze the assets, liabilities and operations (including contractual relationships) of the health organization and formulate the corrective order with respect to the health organization. The fees, costs and expenses relating to consultants shall be borne by the affected health organization or such other party as directed by the commissioner.

(1) The filing of an RBC report by the health organization that indicates that the health organization's total adjusted capital is greater than or equal to its mandatory control level RBC but less than its authorized control level RBC;

(2) The notification by the commissioner to the health organization of an adjusted RBC report that indicates the event in paragraph (1), provided the health organization does not challenge the adjusted RBC report under section 27-4.7-8;

(3) If, pursuant to section 27-4.7-8, the health organization challenges an adjusted RBC report that indicates the event in paragraph (1), notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge;

(4) The failure of the health organization to respond, in a manner satisfactory to the commissioner, to a corrective order (provided the health organization has not challenged the corrective order under section 27-4.7-8); or

(5) If the health organization has challenged a corrective order under section 27-4.7-8 and the commissioner has, after a hearing, rejected the challenge or modified the corrective order, the failure of the health organization to respond, in a manner satisfactory to the commissioner, to the corrective order subsequent to rejection or modification by the commissioner.

(b) In the event of an authorized control level event with respect to a health organization, the commissioner shall:

(1) Take such actions as are required under section 27-4.7-5 regarding a health organization with respect to which a regulatory action level event has occurred; or

(2) If the commissioner deems it to be in the best interests of the policyholders and creditors of the health organization and of the public, take such actions as are necessary to cause the health organization to be placed under regulatory control pursuant to chapters 27-14.1, 27-14.2 and 27-14.3. In the event the commissioner takes such actions, the authorized control level event shall be deemed sufficient grounds for the commissioner to take action under chapters 27-14.1, 27-14.2 and 27-14.3, and the commissioner shall have the rights, powers and duties with respect to the health organization as are set forth in chapters 27-14.1, 27-14.2 and 27-14.3. In the event the commissioner takes actions under this paragraph pursuant to an adjusted RBC report, the health organization shall be entitled to such protections as are afforded to health organizations under the provisions of chapter 35 of title 42 pertaining to summary proceedings.

(1) The filing of an RBC report which indicates that the health organization's total adjusted capital is less than its mandatory control level RBC;

(2) Notification by the commissioner to the health organization of an adjusted RBC report that indicates the event in paragraph (1) of this subsection, provided the health organization does not challenge the adjusted RBC report under section 27-4.7-8; or

(3) If, pursuant to section 27-4.7-8, the health organization challenges an adjusted RBC report that indicates the event in paragraph (1) of this subsection, notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge.

(b) In the event of a mandatory control level event, the commissioner shall take such actions as are necessary to place the health organization under regulatory control pursuant to chapters 27-14.1, 27-14.2 and 27-14.3. In that event, the mandatory control level event shall be deemed sufficient grounds for the commissioner to take action under chapters 27-14.1, 27-14.2 and 27-14.3, and the commissioner shall have the rights, powers and duties with respect to the health organization as are set forth in chapters 27-14.1, 27-14.2 and 27-14.3. If the commissioner takes actions pursuant to an adjusted RBC report, the health organization shall be entitled to the protections of chapter 35 of title 42 pertaining to summary proceedings. Notwithstanding any of the foregoing, the commissioner may forego action for up to ninety (90) days after the mandatory control level event if the commissioner finds there is a reasonable expectation that the mandatory control level event may be eliminated within the ninety (90) day period.

(a) Notification to a health organization by the commissioner of an adjusted RBC report;

(b) Notification to a health organization by the commissioner that:

(1) The health organization's RBC plan or revised RBC plan is unsatisfactory; and

(2) Notification constitutes a regulatory action level event with respect to the health organization;

(c) Notification to a health organization by the commissioner that the health organization has failed to adhere to its RBC plan or revised RBC plan and that the failure has a substantial adverse effect on the ability of the health organization to eliminate the company action level event with respect to the health organization in accordance with its RBC plan or revised RBC plan; or

(d) Notification to a health organization by the commissioner of a corrective order with respect to the health organization.

(b) It is the judgment of the legislature that the comparison of a health organization's total adjusted capital to any of its RBC levels is a regulatory tool which may indicate the need for corrective action with respect to the health organization, and is not intended as a means to rank health organizations generally. Therefore, except as otherwise required under the provisions of this chapter, the making, publishing, disseminating, circulating or placing before the public, or causing, directly or indirectly to be made, published, disseminated, circulated or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over a radio or television station, or in any other way, an advertisement, announcement or statement containing an assertion, representation or statement with regard to the RBC levels of any health organization, or of any component derived in the calculation, by any health organization, agent, broker or other person engaged in any manner in the insurance business, would be misleading and is therefore prohibited; provided, however, that if any materially false statement with respect to the comparison regarding a health organization's total adjusted capital to its RBC levels (or any of them) or an inappropriate comparison of any other amount to the health organization's RBC levels is published in any written publication and the health organization is able to demonstrate to the commissioner with substantial proof the falsity of the statement, or the inappropriateness, as the case may be, then the health organization may publish an announcement in a written publication, if the sole purpose of the announcement is to rebut the materially false statement.

(b) The commissioner may adopt reasonable rules necessary for the implementation of this chapter.

(c) The commissioner may exempt from the application of this chapter or modify the requirements of this chapter for:

(1) a domestic health organization that:

(A) Writes direct business only in this state;

(B) Assumes no reinsurance in excess of five percent (5%) of direct premium written; and

(C) Writes direct annual premiums for comprehensive medical business of two million dollars ($2,000,000) or less; or

(D) Is a limited health service organization that covers less than two thousand (2,000) lives; or

(2) A domestic health organization that provides a plan of health insurance, health benefits, or health services to members, eighty-five percent (85%) or greater of which are participants in the RIte Care program administered by the State of Rhode Island, if the health organization has contracts with insurers, hospital or medical service corporations, governments or other organizations that are sufficient to reasonably assure the performance of its obligations; provided, however, that in no event shall the net worth or total adjusted capital requirement be less than one hundred thousand dollars ($100,000).

(A) The date an RBC report would be required to be filed by a domestic health organization under this chapter;

(B) Fifteen (15) days after the request is received by the foreign health organization.

(2) A foreign health organization shall, at the written request of the commissioner, promptly submit to the commissioner a copy of any RBC plan that is filed with the insurance commissioner of any other state.

(b) In the event of a company action level event, regulatory action level event or authorized control level event with respect to a foreign health organization as determined under the RBC statute applicable in the state of domicile of the health organization (or, if no RBC statute is in force in that state, under the provisions of this chapter), if the insurance commissioner of the state of domicile of the foreign health organization fails to require the foreign health organization to file an RBC plan in the manner specified under that state's RBC statute (or, if no RBC statute is in force in that state, under section 27-4.7-4), the commissioner may require the foreign health organization to file an RBC plan with the commissioner. In such event, the failure of the foreign health organization to file an RBC plan with the commissioner shall be grounds to order the health organization to cease and desist from writing new insurance business in this state.

(c) In the event of a mandatory control level event with respect to a foreign health organization, if no domiciliary receiver has been appointed with respect to the foreign health organization under the rehabilitation and liquidation statue applicable in the state of domicile of the foreign health organization, the commissioner may make application to the superior court of the county of Providence permitted under chapter 27-14.3 with respect to the liquidation of property of foreign health organizations found in this state, and the occurrence of the mandatory control level event shall be considered adequate grounds for the application.

(a) In the event of a company action level event with respect to a domestic health organization, the commissioner shall take no regulatory action under this chapter.

(b) In the event of a regulatory action level event under section 27-4.7-5(a)(1), (2) or (3) with respect to a domestic health organization, the commissioner shall take the actions required under section 27-4.7-4 with respect to the health organization.

(c) In the event of a regulatory action level event under section 27-4.7-5(a)(4), (5), (6), (7), (8) or (9) or an authorized control level event, the commissioner shall take the actions required under section 27-4.7-5 with respect to the health organization.

(d) In the event of a mandatory control level event with respect to a health organization, the commissioner shall take the actions required under section 27-4.7-6 with respect to the health organization.

(e) In the event the health organization's total adjusted capital at December 31, 2000 is less than the product of twenty-five one hundredths (.25) and its authorized control level RBC, the commissioner shall take the actions required under section 27-4.7-7 with respect to the health organization.

(f) In the event the health organization's total adjusted capital at December 31, 2001 is less than the product of one-half (.5) and its authorized control level RBC, the commission shall take the actions required under section 27-4.7-7 with respect to the health organization.

(b) Any health organization in violation of this notification requirement shall be subject to an administrative penalty in an amount not less than five hundred dollars ($500) nor more than fifty thousand dollars ($50,000).

(e) With respect to individual and group health benefit contracts, including managed care contracts, written by an insurance company or health organization subject to the requirements of this chapter, when the expected claim payments or incurred costs, claims adjustment expenses and administration costs exceed the premiums to be collected for the remainder of a contract period, the insurer or health organization shall recognize a premium deficiency reserve by recording an additional liability for the deficiency, with a corresponding charge to operations. The reserve shall be calculated in accordance with regulations promulgated pursuant to this chapter.

(f) In addition to the powers which the commissioner has under other sections of this title relating to the financial statements of health organizations, the commissioner shall also have the power to require any health organizations subject to this title to file the annual audited financial statements of its controlling affiliate or person whether or not the controlling affiliate or person is licensed or authorized pursuant to this title. Additionally, if the controlling affiliate or person is an insurer or health organization that prepares statutory financial statements for submission to its state of domicile, such annual and/or quarterly statutory financial statements shall be filed with the commissioner. In the event the health organization fails to comply with a request of the commissioner pursuant to this section, the commissioner shall have the power to suspend or revoke the license of the health organization and/or to examine the controlling affiliate or person.

(g) As used in this section, the term "control" including "controlling," and the terms "affiliate" and "person" shall have the meanings ascribed to them in section 27-35-1. The term "health organization" shall have the meaning ascribed to it in section 27-4.7-2.