Chapter 095

2008 -- S 2680 SUBSTITUTE A

Enacted 06/26/08

 

A N A C T

RELATING TO INSURANCE -- SMALL EMPLOYER HEALTH INSURANCE

AVAILABILITY ACT

          

     Introduced By: Senators Miller, Perry, Bates, Gibbs, and C Levesque

     Date Introduced: February 26, 2008

   

It is enacted by the General Assembly as follows:

 

     SECTION 1. Section 27-50-5 of the General Laws in Chapter 27-50 entitled "Small

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

 

     27-50-5. Restrictions relating to premium rates. -- (a) Premium rates for health benefit

plans subject to this chapter are subject to the following provisions:

      (1) Subject to subdivision (2) of this subsection, a small employer carrier shall develop

its rates based on an adjusted community rate and may only vary the adjusted community rate for:

      (i) Age;

      (ii) Gender; and

      (iii) Family composition.; and

     (2) A small employer carrier who as of June 1, 2000, varied rates by health status may

vary the adjusted community rates for health status may vary the adjusted community rate for

employer groups covering only one enrolled employee of any family composition by up to a ten

percent (10%) upward adjustment, provided that the adjustment percentage applied must be the

same for all groups with one such enrolled employee, and the resulting rates comply with the

other requirements of this section, including excepting subdivision (5) of this subsection.

      (2) (3) The adjustment for age in paragraph (1)(i) of this subsection may not use age

brackets smaller than five (5) year increments and these shall begin with age thirty (30) and end

with age sixty-five (65).

      (3) (4) The small employer carriers are permitted to develop separate rates for

individuals age sixty-five (65) or older for coverage for which Medicare is the primary payer and

coverage for which Medicare is not the primary payer. Both rates are subject to the requirements

of this subsection.

      (4) (5) For each health benefit plan offered by a carrier, 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.

      (5) (6) Premium rates for bona fide associations except for the Rhode Island Builders'

Association whose membership is limited to those who are actively involved in supporting the

construction industry in Rhode Island shall comply with the requirements of 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 that 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. 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,

including those included in affordable health benefit plans, provided that the resulting rates

comply with the other requirements of this section, including subdivision (a)(5) of this section.

      The calculation of premium discounts, rebates, or modifications to otherwise applicable

copayments or deductibles for affordable health benefit plans shall be made in a manner

consistent with accepted actuarial standards and based on actual or reasonably anticipated small

employer claims experience. As used in the preceding sentence, "accepted actuarial standards"

includes actuarially appropriate use of relevant data from outside the claims experience of small

employers covered by affordable health plans, including, but not limited to, experience derived

from the large group market, as this term is defined in section 27-18.6-2(20).

      (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 health insurance commissioner may establish regulations to implement

the provisions of this section and to assure that rating practices used by small employer carriers

are consistent with the purposes of this chapter, including regulations that assure that differences

in rates charged for health benefit plans by small employer carriers are reasonable and reflect

objective differences in plan design or coverage (not including differences due to the nature of the

groups assumed to select particular health benefit plans or separate claim experience for

individual health benefit plans) and to ensure that small employer groups with one eligible

subscriber are notified of rates for health benefit plans in the individual market.

      (g) In connection with the offering for sale of any health benefit plan to a small

employer, a small employer carrier shall make a reasonable disclosure, as part of its solicitation

and sales materials, of all of the following:

      (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 commissioner 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 the information, specified by the

director commissioner. 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

subdivision (1) of this subsection available to the director commissioner 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.

      (4) For the wellness health benefit plan described in section 27-50-10, the rates proposed

to be charged and the plan design to be offered by any carrier shall be filed by the carrier at the

office of the health insurance commissioner no less than thirty (30) days prior to their proposed

date of use. The carrier shall be required to establish that the rates proposed to be charged and the

plan design to be offered are consistent with the proper conduct of its business and with the

interest of the public. The health insurance commissioner may approve, disapprove, or modify the

rates and/or approve or disapprove the plan design proposed to be offered by the carrier. Any

disapproval by the health insurance commissioner of a plan design proposed to be offered shall be

based upon a determination that the plan design is not consistent with the criteria established

pursuant to subsection 27-50-10(b).

      (i) The requirements of this section apply to all health benefit plans issued or renewed on

or after September 1, 2000.

 

     SECTION 2. This act shall take effect on January 1, 2009, and shall apply to all health

benefit plans issued or renewed to take effect on or after January 1, 2009.

     

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LC01975/SUB A

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