HB 1042 revise small employer health plan requirements by...
ENTITLED, An Act to
revise small employer health plan requirements by clarifying the definition of
a small employer, exceptions to issuing a policy, rating provisions and minimum participation
requirements, and by deleting obsolete references relating to basic and standard plans.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section
1.
That
§
58-18B-1
be amended to read as follows:
58-18B-1.
Terms used in this chapter mean:
(1)
"Actuarial certification," a written statement by a member of the American Academy of
Actuaries or other individual approved by the director that a small employer carrier is in
compliance with the provisions of this chapter, based upon the person's examination,
including a review of the appropriate records and of the actuarial assumptions and methods
used by the carrier in establishing premium rates for applicable health benefit plans;
(2)
"Base premium rate," the lowest premium rate charged or which could have been charged
for each class of business for a rating period under a rating system for that class of
business, by the small employer carrier to small employers with similar case characteristics
for health benefit plans with the same or similar coverage;
(3)
"Carrier," any person who provides health insurance in this state. In this chapter, carrier
includes a licensed insurance company, a prepaid hospital or medical service plan, a health
maintenance organization, a multiple employer welfare arrangement, or any person
providing a plan of health insurance subject to state insurance regulation;
(4)
"Case characteristics," demographic or other relevant characteristics of a small employer,
as determined by a small employer carrier, which are considered by the carrier for the
determination of premium rates. Claim experience, health status, and duration of coverage
since issue are not case characteristics in this chapter;
(5)
"Class of business," all or a distinct grouping of small employers as shown on the records
of the small employer carrier;
(a)
A distinct grouping may only be established by a small employer carrier on the basis
that the applicable health benefit plans:
(i)
Are marketed and sold through individuals and organizations which are not
participating in the marketing or sale of other distinct groupings of small
employers for such small employer carrier;
(ii)
Have been acquired from another small employer carrier as a distinct
grouping of plans;
(iii)
Are provided through an association with membership of not less than
twenty-five small employers which has been formed for purposes other than
obtaining insurance; or
(iv)
Are in a class of business that meets the requirements for exception to the
restrictions related to premium rates provided in subsection 58-18B-3(1)(a);
(b)
A small employer carrier may establish no more than two additional groupings
under each of the subparagraphs in subsection (a) on the basis of underwriting
criteria which are expected to produce substantial variation in the health care costs;
(c)
The director may approve the establishment of additional distinct groupings upon
application to, and a finding by, the director that such action would enhance the
efficiency and fairness of the small employer insurance marketplace;
(6)
"Director," the director of the Division of Insurance;
(7)
"Division," the Division of Insurance of the Department of Commerce and Regulation;
(8)
"Index rate," the arithmetic average of the applicable base premium rate and the
corresponding highest premium rate for each class of business for small employers with
similar case characteristics;
(9)
"New business premium rate," the premium rate charged or offered by a small employer
carrier to small employers with similar case characteristics for newly issued health benefit
plans with the same or similar coverage for each class of business for a rating period;
(10)
"Rating period," the calendar period for which premium rates established by a small
employer carrier are assumed to be in effect, as determined by the small employer carrier;
(11)
"Small employer," any person, firm, corporation, partnership, or association actively
engaged in business which on an average of its working days during the preceding year,
employed no more than fifty and no less than two employees and who employs at least two
employees on the first day of the plan year. In determining the number of employees,
companies which are affiliated companies or which are eligible to file a combined tax
return for purposes of state taxation are considered to be one employer;
(12)
"Small employer carrier," any carrier which offers health benefit plans covering the
employees of a small employer;
(13)
"Affiliate" or "affiliated," any person who, directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control with, any other
specified person;
(14)
"Dependent," except as otherwise required by this title, any spouse, any unmarried child
under the age of nineteen years, any unmarried child who is a full-time student under the
age of twenty-three and who is financially dependent upon the parent, and any unmarried
child of any age who is medically certified as disabled and dependent upon the parent;
(15)
"Eligible employee," any employee who works on a permanent basis and has a normal
work week of thirty or more hours. The term includes any sole proprietor, any partner, and
any independent contractor, if the sole proprietor, partner, or independent contractor is
included as an employee under a health benefit plan of a small employer, but does not
include any employee who works less than thirty hours or on a temporary or substitute
basis;
(16) "Employee," has the meaning given such term under Section 3(6) of Title I of the
Employee Retirement Income Security Act of 1974 (ERISA) as amended to January 1,
2001;
(17)
"Health benefit plan," any hospital or medical policy or certificate, hospital or medical
service plan, or health maintenance organization subscriber contract. The term does not
include specified disease, hospital indemnity, fixed indemnity, accident-only, credit, dental,
vision, prescription drug, medicare supplement, long-term care, or disability income
insurance, coverage issued as a supplement to liability insurance, worker's compensation
or similar insurance, or automobile medical payment insurance;
(18)
"Restricted network provision," 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 to provide health care services to
covered individuals.
Section
2.
That
§
58-18B-17
be amended to read as follows:
58-18B-17.
The premium rates for an individual covered in a small employer plan may not exceed
the premium rate for any other individual covered under the same small employer carrier because of
age alone by a factor of 3:1. A small employer carrier may not require any individual to pay any
premium or contribution that is greater than that for a similarly situated individual enrolled in the plan.
Nothing in this section prohibits a group health plan, and a health insurance issuer 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 or
disease prevention.
Section
3.
That
§
58-18B-20
be amended to read as follows:
58-18B-20.
A small employer carrier shall issue health benefit plans to any small employer that
applies for a 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. If, on the first day
of the plan year, a small employer plan has fewer than two participants who are current employees,
the carrier is not required to issue a policy to the small employer. A small employer carrier may apply
reasonable criteria in determining whether to accept a small employer into a particular class of
business if:
(1)
The criteria are not related to the health status or claim experience of the small employer;
(2)
The criteria are applied consistently to all small employers applying for coverage in the
class of business; and
(3)
The small employer carrier provides for the acceptance of all eligible small employers into
one or more classes of business.
The provisions of this section do not apply to a class of business into which the small employer
carrier is no longer enrolling new small businesses. If the director determines that all carriers in the
small employer market have met the two percent threshold, the threshold shall, upon order of the
director, be expanded an additional two percent. The threshold shall be expanded in additional two
percent increments if all small employer carriers meet the previous threshold. No small employer
carrier is required to issue coverage to any small employer if the small employers who are at high-risk
constitute two percent of that carrier's earned premium on an annual basis from small employer health
benefit plans. The director may promulgate rules pursuant to chapter 1-26 to determine which policies
may be used to determine the two percent threshold, the procedures involved, and the applicable time
frames. In making that determination, the director shall develop a method designed to limit the
number of high risk groups to which any one carrier may be required to issue coverage.
Section
4.
That
§
58-18B-25
be amended to read as follows:
58-18B-25.
In applying minimum participation requirements with respect to a small employer,
a small employer carrier may consider employees or dependents who have creditable coverage in
determining whether the applicable percentage of participation is met. If any employee or dependent
with other creditable coverage is to be considered towards calculating the applicable percentage of
participation, the employee or dependent shall be counted as participating in the plan.
Section
5.
That
§
58-18B-29
be repealed.
Section
6.
That
§
58-18B-31
be repealed.
Section
7.
That
§
58-18B-32
be repealed.
Section
8.
That
§
58-18B-55
be amended to read as follows:
58-18B-55.
Any policy or certificate of specified disease, short-term hospital-surgical care of six
months or less duration, hospital confinement indemnity, limited benefit health insurance, or other
policy or certificate that provide benefits less than that of a major medical plan that is offered to a
small employer in this state is exempt from the provisions of this chapter only if the carrier offering
the policy or certificate at the time of filing for policy form approval, submits a statement certifying
that policies or certificates described in this section are being offered and marketed as supplemental
health insurance or as individual health benefit plans of six-month duration or less and not renewable,
and not as a substitute for hospital or medical expense insurance or major medical insurance. For
policy forms approved prior to July 1, 1998, the carrier shall submit such a statement with the
director.
For purposes of this section a major medical policy is any policy which provides benefits which
are actuarially equivalent to or exceed the basic plan as was approved and adopted by rule by the
director pursuant to chapter 1-26. Policies which are not certified pursuant to this section and which
are not major medical policies may not be used as a substitute for major medical policies and must
provide for adequate disclosure of the scope of the benefits contained therein.
An Act to revise small employer health plan requirements by clarifying the definition of a small
employer, exceptions to issuing a policy, rating provisions and minimum participation requirements,
and by deleting obsolete references relating to basic and standard plans.
=========================
I certify that the attached
Act
originated in the
HOUSE as
Bill
No.
1042
|
____________________________
Chief Clerk
=========================
____________________________
Speaker of the House
____________________________
Chief Clerk
____________________________
President of the Senate
____________________________
Secretary of the Senate
House
Bill
No.
1042
File No. ____
Chapter No. ______
=========================
Received at this Executive Office
this _____ day of _____________ ,
20____ at ____________ M.
By _________________________
for the Governor
=========================
The attached Act is hereby
approved this ________ day of
______________ , A.D., 20___
____________________________
Governor
=========================
STATE OF SOUTH DAKOTA,
ss.
Office of the Secretary of State
Filed ____________ , 20___
at _________ o'clock __ M.
____________________________
Secretary of State
By _________________________
Asst. Secretary of State
