Chapter 146
2011 -- S 0461 SUBSTITUTE A
Enacted 06/29/11
A N A C T
RELATING TO
INSURANCE - SMALL EMPLOYER HEALTH INSURANCE AND EARLY RETIREES
Introduced By: Senator Roger Picard
Date Introduced: March 10, 2011
It is enacted by the
General Assembly as follows:
SECTION 1. Section 27-50-3 of the General Laws in Chapter
27-50 entitled "Small
Employer Health Insurance
Availability Act" is hereby amended to read as follows:
27-50-3.
Definitions. [Effective December 31, 2010.] -- (a)
"Actuarial certification"
means a written statement signed by a member of the
individual acceptable to the director that a small employer
carrier is in compliance with the
provisions of section 27-50-5, based upon the person's
examination and including a review of the
appropriate records and the actuarial assumptions and methods
used by the small employer carrier
in establishing premium rates for applicable health
benefit plans.
(b) "Adjusted
community rating" means a method used to develop a carrier's premium
which spreads financial risk across the carrier's entire
small group population in accordance with
the requirements in 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) "Bona fide
association" means, with respect to health benefit plans offered in this
state, an association which:
(1) Has been actively
in existence for at least five (5) years;
(2) Has been formed and
maintained in good faith for purposes other than obtaining
insurance;
(3) Does not condition
membership in the association on any health-status related factor
relating to an individual (including an employee of an
employer or a dependent of an employee);
(4) Makes health
insurance coverage offered through the association available to all
members regardless of any health status-related factor
relating to those members (or individuals
eligible for coverage through a member);
(5) Does not make
health insurance coverage offered through the association available
other than in connection with a member of the association;
(6) Is composed of
persons having a common interest or calling;
(7) Has a constitution
and bylaws; and
(8) Meets any
additional requirements that the director may prescribe by regulation.
(f) "Carrier"
or "small employer carrier" means all entities licensed, or required
to be
licensed, in this state that offer health benefit plans
covering eligible employees of one or more
small employers pursuant to this chapter. For the purposes
of this chapter, carrier includes an
insurance company, a nonprofit hospital or medical service
corporation, a fraternal benefit
society, a health maintenance organization as defined in
chapter 41 of this title or as defined in
chapter 62 of title 42, or any other entity subject to state
insurance regulation that provides
medical care as defined in subsection (y) that is paid or
financed for a small employer by such
entity on the basis of a periodic premium, paid directly or through
an association, trust, or other
intermediary, and issued, renewed, or delivered within or without
employer pursuant to the laws of this or any other
jurisdiction, including a certificate issued to an
eligible employee which evidences coverage under a policy or
contract issued to a trust or
association.
(g) "Church
plan" has the meaning given this term under section 3(33) of the Employee
Retirement Income Security Act of
1974 [29 U.S.C. section 1002(33)].
(h) "Control"
is defined in the same manner as in chapter 35 of this title.
(i)
(1) "Creditable coverage" means, with respect to an individual,
health benefits or
coverage provided under any of the following:
(i)
A group health plan;
(ii) A health benefit
plan;
(iii) Part A or part B
of Title XVIII of the Social Security Act, 42 U.S.C. section
1395c
et seq., or 42 U.S.C. section 1395j et seq., (Medicare);
(iv)
Title XIX of the Social Security Act, 42 U.S.C. section 1396 et seq.,
(Medicaid),
other than coverage consisting solely of benefits under 42
U.S.C. section 1396s (the program for
distribution of pediatric vaccines);
(v) 10 U.S.C. section
1071 et seq., (medical and dental care for members and certain
former members of the uniformed services, and for their dependents)(Civilian
Health and
Medical Program of the Uniformed Services)(CHAMPUS). For purposes of 10 U.S.C. section
1071 et seq., "uniformed services" means the
armed forces and the commissioned corps of the
National Oceanic and Atmospheric Administration and of
the Public Health Service;
(vi)
A medical care program of the Indian Health Service or of a tribal
organization;
(vii) A state health
benefits risk pool;
(viii) A health plan
offered under 5 U.S.C. section 8901 et seq., (Federal
Employees
Health Benefits Program (FEHBP));
(ix) A public health
plan, which for purposes of this chapter, means a plan established or
maintained by a state, county, or other political subdivision of
a state that provides health
insurance coverage to individuals enrolled in the plan; or
(x) A health benefit
plan under section 5(e) of the Peace Corps Act (22 U.S.C. section
2504(e)).
(2) A period of
creditable coverage shall not be counted, with respect to enrollment of an
individual under a group health plan, if, after the period and
before the enrollment date, the
individual experiences a significant break in coverage.
(j)
"Dependent" means a spouse, an unmarried child under the age of
nineteen (19) years,
an unmarried child who is a student under the age of
twenty-five (25) years, and an unmarried
child of any age who is financially dependent upon, the
parent and is medically determined to
have a physical or mental impairment which can be expected
to result in death or which has
lasted or can be expected to last for a continuous period of
not less than twelve (12) months.
(k)
"Director" means the director of the department of business
regulation.
(l) [Deleted by P.L.
2006, ch. 258, section 2, and P.L. 2006, ch. 296, section 2.]
(m) "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. Any retiree under contract with any
independently incorporated fire district is
also included in the definition of eligible employee,
as well as any former employee of an
employer who retired before normal retirement age, as defined
by 42 U.S.C. 18002(a)(2)(c) while
the employer participates in the early retiree
reinsurance program defined by that chapter. Persons
covered under a health benefit plan pursuant to the
Consolidated Omnibus Budget Reconciliation
Act of 1986 shall not be considered "eligible
employees" for purposes of minimum participation
requirements pursuant to section 27-50-7(d)(9).
(n) "Enrollment
date" means the first day of coverage or, if there is a waiting period,
the
first day of the waiting period, whichever is earlier.
(o) "Established
geographic service area" means a geographic area, as approved by the
director and based on the carrier's certificate of authority
to transact insurance in this state, within
which the carrier is authorized to provide coverage.
(p) "Family
composition" means:
(1) Enrollee;
(2) Enrollee, spouse
and children;
(3) Enrollee and
spouse; or
(4) Enrollee and
children.
(q) "Genetic
information" means information about genes, gene products, and inherited
characteristics that may derive from the individual or a family member.
This includes information
regarding carrier status and information derived from
laboratory tests that identify mutations in
specific genes or chromosomes, physical medical examinations,
family histories, and direct
analysis of genes or chromosomes.
(r) "Governmental
plan" has the meaning given the term under section 3(32) of the
Employee Retirement Income Security Act of 1974, 29
U.S.C. section 1002(32), and any federal
governmental plan.
(s) (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, 29 U.S.C. section 1002(1), to the
extent that the plan provides medical care, as defined in
subsection (y) of this section, and
including items and services paid for as medical care to
employees or their dependents as defined
under the terms of the plan directly or through insurance,
reimbursement, or otherwise.
(2) For purposes of
this chapter:
(i)
Any plan, fund, or program that would not be, but for PHSA Section 2721(e), 42
U.S.C. section 300gg(e), as
added by P.L. 104-191, an employee welfare benefit plan and that is
established or maintained by a partnership, to the extent that
the plan, fund or program provides
medical care, including items and services paid for as
medical care, to present or former partners
in the partnership, or to their dependents, as defined
under the terms of the plan, fund or program,
directly or through insurance, reimbursement or otherwise,
shall be treated, subject to paragraph
(ii) of this subdivision, as
an employee welfare benefit plan that is a group health plan;
(ii) In the case of a
group health plan, the term "employer" also includes the partnership
in relation to any partner; and
(iii) In the case of a
group health plan, the term "participant" also includes an individual
who is, or may become, eligible to receive a benefit
under the plan, or the individual's beneficiary
who is, or may become, eligible to receive a benefit
under the plan, if:
(A) In connection with
a group health plan maintained by a partnership, the individual is
a partner in relation to the partnership; or
(B) In connection with
a group health plan maintained by a self-employed individual,
under which one or more employees are participants, the
individual is the self-employed
individual.
(t) (1) "Health
benefit plan" means any hospital or medical policy or certificate, major
medical expense insurance, hospital or medical service
corporation subscriber contract, or health
maintenance organization subscriber contract. Health benefit plan
includes short-term and
catastrophic health insurance policies, and a policy that pays on
a cost-incurred basis, except as
otherwise specifically exempted in this definition.
(2) "Health
benefit plan" does not include one or more, or any combination of, the
following:
(i)
Coverage only for accident or disability income insurance, or any combination
of
those;
(ii) Coverage issued as
a supplement to liability insurance;
(iii) Liability
insurance, including general liability insurance and automobile liability
insurance;
(iv)
Workers' compensation or similar insurance;
(v) Automobile medical
payment insurance;
(vi)
Credit-only insurance;
(vii) Coverage for
on-site medical clinics; and
(viii) Other similar
insurance coverage, specified in 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" does not include the following benefits if they are provided
under a separate policy, certificate, or contract of
insurance or are otherwise not an integral part
of the plan:
(i) Limited scope dental or vision benefits;
(ii) Benefits for
long-term care, nursing home care, home health care, community-based
care, or any combination of those; or
(iii) Other similar,
limited benefits specified in federal regulations issued pursuant to
Pub. L. No. 104-191.
(4) "Health
benefit plan" does not include the following benefits if the benefits are
provided under a separate policy, certificate or contract of
insurance, there is no coordination
between the provision of the benefits and any exclusion of
benefits under any group health plan
maintained by the same plan sponsor, and the benefits are paid
with respect to an event without
regard to whether benefits are provided with respect to such
an event under any group health plan
maintained by the same plan sponsor:
(i)
Coverage only for a specified disease or illness; or
(ii) Hospital indemnity
or other fixed indemnity insurance.
(5) "Health
benefit plan" does not include the following if offered as a separate
policy,
certificate, or contract of insurance:
(i)
Medicare supplemental health insurance as defined under section 1882(g)(1) of the
Social Security Act, 42 U.S.C. section 1395ss(g)(1);
(ii) Coverage
supplemental to the coverage provided under 10 U.S.C.
section 1071 et
seq.; or
(iii) Similar
supplemental coverage provided to coverage under a group health plan.
(6) A carrier offering
policies or certificates of specified disease, hospital confinement
indemnity, or limited benefit health insurance shall comply
with the following:
(i)
The carrier files on or before March 1 of each year a certification with the
director
that contains the statement and information described in
paragraph (ii) of this subdivision;
(ii) The certification
required in paragraph (i) of this subdivision shall
contain the
following:
(A) A statement from
the carrier certifying that policies or certificates described in this
paragraph are being offered and marketed as supplemental health
insurance and not as a substitute
for hospital or medical expense insurance or major
medical expense insurance; and
(B) A summary
description of each policy or certificate described in this paragraph,
including the average annual premium rates (or range of premium
rates in cases where premiums
vary by age or other factors) charged for those policies
and certificates in this state; and
(iii) In the case of a
policy or certificate that is described in this paragraph and that is
offered for the first time in this state on or after July 13,
2000, the carrier shall file with the
director the information and statement required in paragraph
(ii) of this subdivision at least thirty
(30) days prior to the date
the policy or certificate is issued or delivered in this state.
(u) "Health
maintenance organization" or "HMO" means a
health maintenance
organization licensed under chapter 41 of this title.
(v) "Health
status-related factor" means any of the following factors:
(1) Health status;
(2) Medical condition,
including both physical and mental illnesses;
(3) Claims experience;
(4) Receipt of health
care;
(5) Medical history;
(6) Genetic
information;
(7) Evidence of
insurability, including conditions arising out of acts of domestic
violence; or
(8) Disability.
(w) (1) "Late
enrollee" means an eligible employee or dependent who requests
enrollment in a health benefit plan of a small employer
following the initial enrollment period
during which the individual is entitled to enroll under the
terms of the health benefit plan,
provided that the initial enrollment period is a period of at
least thirty (30) days.
(2) "Late
enrollee" does not mean an eligible employee or dependent:
(i)
Who meets each of the following provisions:
(A) The individual was
covered under creditable coverage at the time of the initial
enrollment;
(B) The individual lost
creditable coverage as a result of cessation of employer
contribution, termination of employment or eligibility, reduction
in the number of hours of
employment, involuntary termination of creditable coverage, or
death of a spouse, divorce or
legal separation, or the individual and/or dependents are
determined to be eligible for RIteCare
under chapter 5.1 of title 40 or chapter 12.3 of title 42
or for RIteShare under chapter 8.4 of title
40; and
(C) The individual
requests enrollment within thirty (30) days after termination of the
creditable coverage or the change in conditions that gave rise
to the termination of coverage;
(ii) If, where provided
for in contract or where otherwise provided in state law, the
individual enrolls during the specified bona fide open
enrollment period;
(iii) If the individual
is employed by an employer which offers multiple health benefit
plans and the individual elects a different plan during an
open enrollment period;
(iv)
If a court has ordered coverage be provided for a spouse or minor or
dependent child
under a covered employee's health benefit plan and a
request for enrollment is made within thirty
(30) days after issuance of
the court order;
(v) If the individual
changes status from not being an eligible employee to becoming an
eligible employee and requests enrollment within thirty (30)
days after the change in status;
(vi)
If the individual had coverage under a COBRA continuation provision and
the
coverage under that provision has been exhausted; or
(vii) Who meets the
requirements for special enrollment pursuant to section 27-50-7 or
27-50-8.
(x) "Limited
benefit health insurance" means that form of coverage that pays stated
predetermined amounts for specific services or treatments or pays a
stated predetermined amount
per day or confinement for one or more named conditions,
named diseases or accidental injury.
(y) "Medical
care" means amounts paid for:
(1) The diagnosis,
care, mitigation, treatment, or prevention of disease, or amounts paid
for the purpose of affecting any structure or function of
the body;
(2) Transportation
primarily for and essential to medical care referred to in subdivision
(1); and
(3) Insurance covering
medical care referred to in subdivisions (1) and (2) of this
subsection.
(z) "Network
plan" means a health benefit plan issued by a carrier under which the
financing and delivery of medical care, including items and
services paid for as medical care, are
provided, in whole or in part, through a defined set of
providers under contract with the carrier.
(aa) "Person" means an individual, a
corporation, a partnership, an association, a joint
venture, a joint stock company, a trust, an unincorporated
organization, any similar entity, or any
combination of the foregoing.
(bb)
"Plan sponsor" has the meaning given this term under section 3(16)(B) of the
Employee Retirement Income Security Act of 1974, 29
U.S.C. section 1002(16)(B).
(cc) (1)
"Preexisting condition" means a condition, regardless of the cause of
the
condition, for which medical advice, diagnosis, care, or
treatment was recommended or received
during the six (6) months immediately preceding the
enrollment date of the coverage.
(2) "Preexisting
condition" does not mean a condition for which medical advice,
diagnosis, care, or treatment was recommended or received for
the first time while the covered
person held creditable coverage and that was a covered benefit
under the health benefit plan,
provided that the prior creditable coverage was continuous to
a date not more than ninety (90)
days prior to the enrollment date of the new coverage.
(3) Genetic information
shall not be treated as a condition under subdivision (1) of this
subsection for which a preexisting condition exclusion may be
imposed in the absence of a
diagnosis of the condition related to the information.
(dd) "Premium" means all moneys paid by a
small employer and eligible employees as a
condition of receiving coverage from a small employer carrier,
including any fees or other
contributions associated with the health benefit plan.
(ee) "Producer" means any insurance producer
licensed under chapter 2.4 of this title.
(ff)
"Rating period" means the calendar period for which premium rates
established by a
small employer carrier are assumed to be in effect.
(gg) "Restricted network provision" means
any provision of a health benefit plan that
conditions the payment of benefits, in whole or in part, on the
use of health care providers that
have entered into a contractual arrangement with the
carrier pursuant to provide health care
services to covered individuals.
(hh) "Risk adjustment mechanism" means the
mechanism established pursuant to section
27-50-16.
(ii)
"Self-employed individual" means an individual or sole proprietor who
derives a
substantial portion of his or her income from a trade or business
through which the individual or
sole proprietor has attempted to earn taxable income and
for which he or she has filed the
appropriate Internal Revenue Service Form 1040, Schedule C or F,
for the previous taxable year.
(jj) "Significant break in coverage" means a
period of ninety (90) consecutive days
during all of which the individual does not have any
creditable coverage, except that neither a
waiting period nor an affiliation period is taken into
account in determining a significant break in
coverage.
(kk) "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, chapter
6 of title 7, or a similar act of
another state that, on at least fifty percent (50%) of its
working days during the preceding
calendar quarter, employed no more than fifty (50) eligible
employees, with a normal work week
of thirty (30) or more hours, the majority of whom were
employed within this state, and is not
formed primarily for purposes of buying health insurance and
in which a bona fide employer-
employee relationship exists. In determining the number of
eligible employees, companies that
are affiliated companies, or that are eligible to file a
combined tax return for purposes of taxation
by this state, shall be considered one employer.
Subsequent to the issuance of a health benefit
plan to a small employer and for the purpose of
determining continued eligibility, the size of a
small employer shall be determined annually. Except as
otherwise specifically provided,
provisions of this chapter that apply to a small employer shall
continue to apply at least until the
plan anniversary following the date the small employer no
longer meets the requirements of this
definition. The term small employer includes a self-employed
individual.
( ll ) "Waiting period" means, with respect
to a group health plan and an individual who
is a potential enrollee in the plan, the period that
must pass with respect to the individual before
the individual is eligible to be covered for benefits
under the terms of the plan. For purposes of
calculating periods of creditable coverage pursuant to subsection
(j)(2) of this section, a waiting
period shall not be considered a gap in coverage.
(mm)
"Wellness health benefit plan" means a plan developed pursuant to
section 27-50-
10.
(nn) "Health insurance commissioner" or
"commissioner" means that individual
appointed pursuant to section 42-14.5-1 of the general laws and
afforded those powers and duties
as set forth in sections 42-14.5-2 and 42-14.5-3 of
title 42.
(oo) "Low-wage firm" means those with
average wages that fall within the bottom
quartile of all
(pp) "Wellness
health benefit plan" means the health benefit plan offered by each small
employer carrier pursuant to section 27-50-7.
(qq) "Commissioner" means the health
insurance commissioner.
SECTION 2. This act shall take effect upon passage.
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LC01320/SUB A
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