58-18B-1      Definition of terms.
58-18B-2      Chapter applicable to small employer benefit plans.
58-18B-3      Regulations on premium rates.
58-18B-3.1      Base rate increase to be filed with director--Approval or disapproval.
58-18B-4, 58-18B-5.      Repealed.
58-18B-6      Disclosure in solicitation and sales materials.
58-18B-7      Information and documentation required--Disclosure.
58-18B-8      Suspension of rate requirements.
58-18B-9      Application of chapter.
58-18B-10      Repealed.
58-18B-11      Health maintenance organization considered separate carrier.
58-18B-12      Ceding arrangements resulting in less than fifty percent of obligation or risk retained by carrier prohibited.
58-18B-13      Transition period when acquiring additional class of business.
58-18B-14      Rate changes only for small employer business.
58-18B-15      Provisions for premium rates.
58-18B-16      Repealed.
58-18B-17      Limit on premium rates.
58-18B-18      Promulgation of rules for rating practices.
58-18B-19      Repealed.
58-18B-20      Small employer carrier to issue plan to any small employer--Criteria--Exceptions--Two percent earned premium threshold.
58-18B-21, 58-18B-22.      Repealed.
58-18B-23      Uniform application of requirements used to determine eligibility of employers.
58-18B-24      Application of minimum participation and minimum employer contribution requirements.
58-18B-25      Considerations in applying minimum participation requirements--Premium discounts.
58-18B-26      Increase in minimum requirements for employee participation or employer contribution prohibited after acceptance for coverage.
58-18B-27      Modification to exclude certain diseases prohibited.
58-18B-27.1      Exclusion of benefits for injury while under the influence of alcohol or drugs prohibited--Exception for sickness or injury caused in commission of felony.
58-18B-28      Requirements lifted from small employer carrier in financially impaired condition.
58-18B-29      Repealed.
58-18B-30      Repealed.
58-18B-31, 58-18B-32.      Repealed.
58-18B-33      Repealed.
58-18B-34      Repealed.
58-18B-35      Director to promulgate rules regulating sale of multiple employer trusts and welfare arrangements--Scope of rules.
58-18B-36      Rules governing implementation and administration of this chapter.
58-18B-37      Marketing health benefit plans--Denial of coverage to employer.
58-18B-38      Prohibited activities of small employer carriers or insurance producers.

58-18B-1. Definition of terms.

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 Labor 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.

Source: SL 1991, ch 402, § 1; SL 1995, ch 281, § 1; SL 1997, ch 289, § 14; SL 2001, ch 279, § 1; SL 2003, ch 272 (Ex. Ord. 03-1), § 27; SL 2011, ch 1 (Ex. Ord. 11-1), § 162, eff. Apr. 12, 2011.

58-18B-2. Chapter applicable to small employer benefit plans.

This chapter is applicable to any health benefit plan which provides coverage to two or more employees of a small employer and policies which meet the following criteria:

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

(2)    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 125 or section 106 of the United States Internal Revenue Code as of January 1, 1995.

This chapter does not apply to any employer plan with only one employee. Any employer plan with only one employee, even if the employer pays a portion or all of the premium, may be sold as individual policies subject to the provisions of chapter 58-17. If a plan covering one employee is sold as an individual plan and new employees are added which brings the number of employees to at least two but not more than fifty, then the individual carrier may nonrenew the coverage or accept those new employees and bring the plan into compliance with the applicable provisions of chapters 58-18 and 58-18B.

Source: SL 1991, ch 402, § 2; SL 1995, ch 281, § 2; SL 1996, ch 298; SL 1998, ch 292, § 1.

58-18B-3. Regulations on premium rates.

Premium rates for health benefit plans subject to this chapter are subject to the following provisions:

(1)    The index rate for a rating period for any class of business may not exceed the index rate for any other class of business by more than twenty percent unless:

(a)    The class of business is one for which the carrier does not reject, and never has rejected, small employers included within the definition of employers eligible for the class of business or otherwise eligible employees and dependents who enroll on a timely basis, based upon their claim experience or health status;

(b)    The carrier does not involuntarily transfer, and never has involuntarily transferred, a health benefit plan into or out of the class of business; or

(c)    The class of business is currently available for purchase;

(2)    For a class of business, the premium rates charged during a rating period to small employers with similar case characteristics for the same or similar coverage, or the rates which could be charged to such employers under the rating system for that class of business, may not vary from the index rate by more than twenty-five percent of the index rate;

(3)    The percentage increase in the premium rate charged to a small employer for a new rating period may not exceed the sum of the following:

(a)    The percentage change in the new business premium rate measured from the first day of the prior rating period to the first day of the new rating period. In the case of a class of business for which the small employer carrier is not issuing new policies, the carrier shall use the percentage change in the base premium rate;

(b)    An adjustment, not to exceed fifteen percent annually and adjusted pro rata for rating periods of less than one year, due to the claim experience, health status or duration of coverage of the employees or dependents of the small employer as determined from the carrier's rate manual for the class of business; and

(c)    Any adjustment due to change in coverage or change in the case characteristics of the small employer as determined from the carrier's rate manual for the class of business;

(4)    For health benefit plans issued prior to July 1, 1991, a premium rate for a rating period may exceed the ranges described in subdivision (1) or (2) of this section for a period of five years from July 1, 1991. In that case, the percentage increase in the premium rate charged to a small employer in such a class of business for a new rating period may not exceed the sum of the following:

(a)    The percentage change in the new business premium rate measured from the first day of the prior rating period to the first day of the new rating period. In the case of a class of business for which the small employer carrier is not issuing new policies, the carrier shall use the percentage change in the base premium rate; and

(b)    Any adjustment due to change in coverage or change in the case characteristics of the small employer as determined from the carrier's rate manual for the class of business.

This section does not affect the use by a small employer carrier of legitimate rating factors other than claim experience, health status or duration of coverage in the determination of premium rates. Small employer carriers shall apply rating factors, including case characteristics, consistently with respect to all small employers in a class of business.

A small employer carrier may not involuntarily transfer a small employer into or out of a class of business. A small employer carrier may not offer to transfer a small employer into or out of a class of business unless the offer is made to transfer all small employers in the class of business without regard to case characteristics, claim experience, health status, or duration since issue.

Source: SL 1991, ch 402, § 3.

58-18B-3.1. Base rate increase to be filed with director--Approval or disapproval.

No small employer carrier may increase its small employer base rates unless the small employer carrier has filed the base rate increase with the director for review at least thirty days prior to the implementation of the rate increase. The base rates are deemed approved at the expiration of thirty days after the filing thereof unless disapproved by the director within thirty days after the date of filing. The filing of the base rate increase shall include documentation sufficient to actuarially justify the increase and a history of the earned premiums and incurred claims on the policy forms applicable to the rate increase. The base rates shall be reasonable in relation to the benefits.

Source: SL 2011, ch 216, § 18.

Commission Note: SL 2011, ch 216, § 19 provides: "The provisions of this Act are repealed if the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (2010) is found to be unconstitutional in its entirety by a final decision of a federal court of competent jurisdiction and all appeals exhausted or time for appeals elapsed."