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The Vermont Statutes Online
Title
08
:
Banking and Insurance
Chapter
107
:
HEALTH INSURANCE
Subchapter
001
:
GENERALLY
§
4080g. Grandfathered plans
(a) Application.
Notwithstanding the provisions of 33 V.S.A. § 1811, on and after January 1,
2014, the provisions of this section shall apply to an individual, small group,
or association plan that qualifies as a grandfathered health plan under Section
1251 of the Patient Protection and Affordable Care Act (Public Law 111-148), as
amended by the Health Care and Education Reconciliation Act of 2010 (Public Law
111-152)("Affordable Care Act"). In the event that a plan no longer
qualifies as a grandfathered health plan under the Affordable Care Act, the
provisions of this section shall not apply and the provisions of 33 V.S.A. §
1811 shall govern the plan.
(b) Small group
plans.
(1) Definitions.
As used in this subsection:
(A) "Small
employer" means an employer who, on at least 50 percent of its working
days during the preceding calendar quarter, employs at least one and no more
than 50 employees. The term includes self-employed persons. Calculation of the
number of employees of a small employer shall not include a part-time employee
who works fewer than 30 hours per week. The provisions of this subsection shall
continue to apply until the plan anniversary date following the date that the
employer no longer meets the requirements of this subdivision.
(B) "Small
group" means:
(i) a small
employer; or
(ii) an
association, trust, or other group issued a health insurance policy subject to
regulation by the Commissioner under subdivision 4079(2), (3), or (4) of this
title.
(C) "Small group
plan" means a group health insurance policy, a nonprofit hospital or
medical service corporation service contract, or a health maintenance
organization health benefit plan offered or issued to a small group, including
common health care plans approved by the Commissioner under subdivision (5) of
this subsection. The term does not include disability insurance policies,
accident indemnity or expense policies, long-term care insurance policies,
student or athletic expense or indemnity policies, dental policies, policies
that supplement the Civilian Health and Medical Program of the Uniformed
Services, or Medicare supplemental policies.
(D)
"Registered small group carrier" means any person except an insurance
agent, broker, appraiser, or adjuster who issues a small group plan and who has
a registration in effect with the Commissioner as required by this subsection.
(2) No person
may provide a small group plan unless the plan complies with the provisions of
this subsection.
(3) No person
may provide a small group plan unless such person is a registered small group
carrier. The Commissioner, by rule, shall establish the minimum financial,
marketing, service, and other requirements for registration. Such registration
shall be effective upon approval by the Commissioner and shall remain in effect
until revoked or suspended by the Commissioner for cause or until withdrawn by
the carrier. A small group carrier may withdraw its registration upon at least
six months' prior written notice to the Commissioner. A registration filed with
the Commissioner shall be deemed to be approved unless it is disapproved by the
Commissioner within 30 days of filing.
(4)(A) A
registered small group carrier shall guarantee acceptance of all small groups
for any small group plan offered by the carrier. A registered small group
carrier shall also guarantee acceptance of all employees or members of a small
group and each dependent of such employees or members for any small group plan
it offers.
(B)
Notwithstanding subdivision (A) of this subdivision (b)(4), a health
maintenance organization shall not be required to cover:
(i) a small
employer which is not physically located in the health maintenance
organization's approved service area; or
(ii) a small
employer or an employee or member of the small group located or residing within
the health maintenance organization's approved service area for which the
health maintenance organization:
(I) is not
providing coverage; and
(II) reasonably
anticipates and demonstrates to the satisfaction of the Commissioner that it
will not have the capacity within its network of providers to deliver adequate
service because of its existing group contract obligations, including contract
obligations subject to the provisions of this subsection and any other group contract
obligations.
(5) A registered
small group carrier shall offer one or more common health care plans approved
by the Commissioner. The Commissioner, by rule, shall adopt standards and a
process for approval of common health care plans that ensure that consumers may
compare the costs of plans offered by carriers and that ensure the development
of an affordable common health care plan, providing for deductibles,
coinsurance arrangements, managed care, cost containment provisions, and any
other term, not inconsistent with the provisions of this title, deemed useful
in making the plan affordable. A health maintenance organization may add
limitations to a common health care plan if the Commissioner finds that the
limitations do not unreasonably restrict the insured from access to the
benefits covered by the plans.
(6) A registered
small group carrier shall offer a small group plan rate structure which at
least differentiates between single-person, two-person, and family rates.
(7)(A) A
registered small group carrier shall use a community rating method acceptable
to the Commissioner for determining premiums for small group plans. Except as
provided in subdivision (B) of this subdivision (7), the following risk
classification factors are prohibited from use in rating small groups,
employees or members of such groups, and dependents of such employees or
members:
(i) demographic
rating, including age and gender rating;
(ii) geographic
area rating;
(iii) industry
rating;
(iv) medical
underwriting and screening;
(v) experience
rating;
(vi) tier
rating; or
(vii) durational
rating.
(B)(i) The
Commissioner shall, by rule, adopt standards and a process for permitting
registered small group carriers to use one or more risk classifications in
their community rating method, provided that the premium charged shall not
deviate above or below the community rate filed by the carrier by more than 20
percent and provided further that the Commissioner's rules may not permit any
medical underwriting and screening.
(ii) The Commissioner's
rules shall permit a carrier, including a hospital or medical service
corporation and a health maintenance organization, to establish rewards,
premium discounts, split benefit designs, rebates, or otherwise waive or modify
applicable co-payments, deductibles, or other cost-sharing amounts in return
for adherence by a member or subscriber to programs of health promotion and
disease prevention. The Commissioner shall consult with the Commissioner of
Health, the Director of the Blueprint for Health, and the Commissioner of
Vermont Health Access in the development of health promotion and disease
prevention rules that are consistent with the Blueprint for Health. Such rules
shall:
(I) limit any
reward, discount, rebate, or waiver or modification of cost-sharing amounts to
not more than a total of 15 percent of the cost of the premium for the
applicable coverage tier, provided that the sum of any rate deviations under
subdivision (i) of this subdivision (7)(B) does not exceed 30 percent;
(II) be designed
to promote good health or prevent disease for individuals in the program and
not be used as a subterfuge for imposing higher costs on an individual based on
a health factor;
(III) provide
that the reward under the program is available to all similarly situated
individuals and complies with the nondiscrimination provisions of the federal
Health Insurance Portability and Accountability Act of 1996; and
(IV) provide a
reasonable alternative standard to obtain the reward to any individual for whom
it is unreasonably difficult due to a medical condition or other reasonable
mitigating circumstance to satisfy the otherwise applicable standard for the
discount and disclose in all plan materials that describe the discount program
the availability of a reasonable alternative standard.
(iii) The
Commissioner's rules shall include:
(I) standards
and procedures for health promotion and disease prevention programs based on
the best scientific, evidence-based medical practices as recommended by the
Commissioner of Health;
(II) standards
and procedures for evaluating an individual's adherence to programs of health
promotion and disease prevention; and
(III) any other
standards and procedures necessary or desirable to carry out the purposes of
this subdivision (7)(B).
(C) The
Commissioner may require a registered small group carrier to identify that
percentage of a requested premium increase which is attributed to the following
categories: hospital inpatient costs, hospital outpatient costs, pharmacy
costs, primary care, other medical costs, administrative costs, and projected
reserves or profit. Reporting of this information shall occur at the time a
rate increase is sought and shall be in the manner and form as directed by the
Commissioner. Such information shall be made available to the public in a
manner that is easy to understand.
(D) The
Commissioner may exempt from the requirements of this subsection an association
as defined in subdivision 4079(2) of this title which:
(i) offers a
small group plan to a member small employer which is community rated in
accordance with the provisions of subdivisions (A) and (B) of this subdivision
(b)(7). The plan may include risk classifications in accordance with
subdivision (B) of this subdivision (7);
(ii) offers a
small group plan that guarantees acceptance of all persons within the
association and their dependents; and
(iii) offers one
or more of the common health care plans approved by the Commissioner under
subdivision (5) of this subsection.
(E) The
Commissioner may revoke or deny the exemption set forth in subdivision (D) of
this subdivision (7) if the Commissioner determines that:
(i) because of
the nature, size, or other characteristics of the association and its members,
the employees or members are in need of the protections provided by this
subsection; or
(ii) the
association exemption has or would have a substantial adverse effect on the
small group market.
(8) A registered
small group carrier shall file with the Commissioner an annual certification by
a member of the American Academy of Actuaries of the carrier's compliance with
this subsection. The requirements for certification shall be as the
Commissioner by rule prescribes.
(9) A registered
small group carrier shall provide, on forms prescribed by the Commissioner,
full disclosure to a small group of all premium rates and any risk
classification formulas or factors prior to acceptance of a small group plan by
the group.
(10) A
registered small group carrier shall guarantee the rates on a small group plan
for a minimum of six months.
(11)(A) A
registered small group carrier may require that 75 percent or less of the
employees or members of a small group with more than 10 employees participate
in the carrier's plan. A registered small group carrier may require that 50
percent or less of the employees or members of a small group with 10 or fewer
employees or members participate in the carrier's plan. A small group carrier's
rules established pursuant to this subdivision shall be applied to all small
groups participating in the carrier's plans in a consistent and
nondiscriminatory manner.
(B) For purposes
of the requirements set forth in subdivision (A) of this subdivision (11), a
registered small group carrier shall not include in its calculation an employee
or member who is already covered by another group health benefit plan as a
spouse or dependent or who is enrolled in Medicaid or Medicare. Employees or
members of a small group who are enrolled in the employer's plan and receiving
premium assistance under the Health Insurance Premium Payment program
established pursuant to Section 1906 of the Social Security Act, 42 U.S.C. §
1396e, shall be considered to be participating in the plan for purposes of this
subsection. If the small group is an association, trust, or other substantially
similar group, the participation requirements shall be calculated on an
employer-by-employer basis.
(C) A small
group carrier may not require recertification of compliance with the
participation requirements set forth in this subdivision (11) more often than
annually at the time of renewal. If, during the recertification process, a
small group is found not to be in compliance with the participation
requirements, the small group shall have 120 days to become compliant prior to
termination of the plan.
(12) This
subsection shall apply to the provisions of small group plans. This subsection
shall not be construed to prevent any person from issuing or obtaining a bona
fide individual health insurance policy; provided that no person may offer a
health benefit plan or insurance policy to individual employees or members of a
small group as a means of circumventing the requirements of this subsection.
The Commissioner shall adopt, by rule, standards and a process to carry out the
provisions of this subsection.
(13) The
guaranteed acceptance provision of subdivision (4) of this subsection shall not
be construed to limit an employer's discretion in contracting with his or her
employees for insurance coverage.
(14) Registered
small group carriers, except nonprofit medical and hospital service
organizations and nonprofit health maintenance organizations, shall form a
reinsurance pool for the purpose of reinsuring small group risks. This pool
shall not become operative until the Commissioner has approved a plan of operation.
The Commissioner shall not approve any plan which he or she determines may be
inconsistent with any other provision of this subsection. Failure or delay in
the formation of a reinsurance pool under this subsection shall not delay
implementation of this subdivision. The participants in the plan of operation
of the pool shall guarantee, without limitation, the solvency of the pool, and
such guarantee shall constitute a permanent financial obligation of each
participant, on a pro rata basis.
(c) Nongroup
health benefit plans.
(1) Definitions.
As used in this subsection:
(A)
"Individual" means a person who is not eligible for coverage by group
health insurance as defined by section 4079 of this title.
(B)
"Nongroup plan" means a health insurance policy, a nonprofit hospital
or medical service corporation service contract, or a health maintenance
organization health benefit plan offered or issued to an individual, including
common health care plans approved by the Commissioner under subdivision (5) of this
subsection. The term does not include disability insurance policies, accident
indemnity or expense policies, long-term care insurance policies, student or
athletic expense or indemnity policies, Medicare supplemental policies, and
dental policies. The term also does not include hospital indemnity policies or
specified disease indemnity or expense policies, provided such policies are
sold only as supplemental coverage when a common health care plan or other
comprehensive health care policy is in effect.
(C)
"Registered nongroup carrier" means any person, except an insurance
agent, broker, appraiser, or adjuster, who issues a nongroup plan and who has a
registration in effect with the Commissioner as required by this subsection.
(2) No person
may provide a nongroup plan unless the plan complies with the provisions of
this subsection.
(3) No person
may provide a nongroup plan unless such person is a registered nongroup
carrier. The Commissioner, by rule, shall establish the minimum financial,
marketing, service, and other requirements for registration. Registration under
this subsection shall be effective upon approval by the Commissioner and shall
remain in effect until revoked or suspended by the Commissioner for cause or
until withdrawn by the carrier. A nongroup carrier may withdraw its
registration upon at least six months' prior written notice to the
Commissioner. A registration filed with the Commissioner shall be deemed to be
approved unless it is disapproved by the Commissioner within 30 days of filing.
(4)(A) A
registered nongroup carrier shall guarantee acceptance of any individual for
any nongroup plan offered by the carrier. A registered nongroup carrier shall
also guarantee acceptance of each dependent of such individual for any nongroup
plan it offers.
(B)
Notwithstanding subdivision (A) of this subdivision, a health maintenance
organization shall not be required to cover:
(i) an
individual who is not physically located in the health maintenance
organization's approved service area; or
(ii) an individual
residing within the health maintenance organization's approved service area for
which the health maintenance organization:
(I) is not
providing coverage; and
(II) reasonably
anticipates and demonstrates to the satisfaction of the Commissioner that it
will not have the capacity within its network of providers to deliver adequate
service because of its existing contract obligations, including contract
obligations subject to the provisions of this subsection and any other group
contract obligations.
(5) A registered
nongroup carrier shall offer two or more common health care plans approved by
the Commissioner. The Commissioner, by rule, shall adopt standards and a
process for approval of common health care plans that ensure that consumers may
compare the cost of plans offered by carriers. At least one plan shall be a
low-cost common health care plan that may provide for deductibles, coinsurance
arrangements, managed care, cost-containment provisions, and any other term not
inconsistent with the provisions of this title that are deemed useful in making
the plan affordable. A health maintenance organization may add limitations to a
common health care plan if the Commissioner finds that the limitations do not
unreasonably restrict the insured from access to the benefits covered by the
plan.
(6) A registered
nongroup carrier shall offer a nongroup plan rate structure which at least
differentiates between single-person, two-person, and family rates.
(7) For a
12-month period from the effective date of coverage, a registered nongroup
carrier may limit coverage of preexisting conditions which exist during the
12-month period before the effective date of coverage; provided that a
registered nongroup carrier shall waive any preexisting condition provisions
for all individuals and their dependents who produce evidence of continuous
health benefit coverage during the previous nine months substantially
equivalent to the carrier's common health care plan approved by the
Commissioner. If an individual has a preexisting condition excluded under a
subsequent policy, such exclusion shall not continue longer than the period
required under the original contract or 12 months, whichever is less. Credit
shall be given for prior coverage that occurred without a break in coverage of 63
days or more. For an eligible individual as such term is defined in Section
2741 of Title XXVII of the Public Health Service Act, a registered nongroup
carrier shall not limit coverage of preexisting conditions.
(8)(A) A
registered nongroup carrier shall use a community rating method acceptable to
the Commissioner for determining premiums for nongroup plans. Except as
provided in subdivision (B) of this subsection, the following risk
classification factors are prohibited from use in rating individuals and their
dependents:
(i) demographic
rating, including age and gender rating;
(ii) geographic
area rating;
(iii) industry
rating;
(iv) medical
underwriting and screening;
(v) experience
rating;
(vi) tier
rating; or
(vii) durational
rating.
(B)(i) The Commissioner
shall, by rule, adopt standards and a process for permitting registered
nongroup carriers to use one or more risk classifications in their community
rating method, provided that the premium charged shall not deviate above or
below the community rate filed by the carrier by more than 20 percent and
provided further that the Commissioner's rules may not permit any medical
underwriting and screening and shall give due consideration to the need for
affordability and accessibility of health insurance.
(ii) The
Commissioner's rules shall permit a carrier, including a hospital or medical
service corporation and a health maintenance organization, to establish
rewards, premium discounts, and rebates or otherwise waive or modify applicable
co-payments, deductibles, or other cost-sharing amounts in return for adherence
by a member or subscriber to programs of health promotion and disease
prevention. The Commissioner shall consult with the Commissioner of Health and
the Commissioner of Vermont Health Access in the development of health
promotion and disease prevention rules. Such rules shall:
(I) limit any
reward, discount, rebate, or waiver or modification of cost-sharing amounts to
not more than a total of 15 percent of the cost of the premium for the applicable
coverage tier, provided that the sum of any rate deviations under subdivision
(B)(i) of this subdivision (8) does not exceed 30 percent;
(II) be designed
to promote good health or prevent disease for individuals in the program and
not be used as a subterfuge for imposing higher costs on an individual based on
a health factor;
(III) provide
that the reward under the Program is available to all similarly situated
individuals; and
(IV) provide a
reasonable alternative standard to obtain the reward to any individual for whom
it is unreasonably difficult due to a medical condition or other reasonable
mitigating circumstance to satisfy the otherwise applicable standard for the
discount and disclose in all plan materials that describe the discount program
the availability of a reasonable alternative standard.
(iii) The
Commissioner's rules shall include:
(I) standards
and procedures for health promotion and disease prevention programs based on
the best scientific, evidence-based medical practices as recommended by the
Commissioner of Health;
(II) standards
and procedures for evaluating an individual's adherence to programs of health
promotion and disease prevention; and
(III) any other
standards and procedures necessary or desirable to carry out the purposes of this
subdivision (8)(B).
(iv) The
Commissioner may require a registered nongroup carrier to identify that
percentage of a requested premium increase which is attributed to the following
categories: hospital inpatient costs, hospital outpatient costs, pharmacy
costs, primary care, other medical costs, administrative costs, and projected
reserves or profit. Reporting of this information shall occur at the time a
rate increase is sought and shall be in the manner and form directed by the
Commissioner. Such information shall be made available to the public in a
manner that is easy to understand.
(9)
Notwithstanding subdivision (8)(B) of this subsection, the Commissioner shall
not grant rate increases, including increases for medical inflation, for
individuals covered pursuant to the provisions of this subsection that exceed
20 percent in any one year; provided that the Commissioner may grant an
increase that exceeds 20 percent if the Commissioner determines that the 20
percent limitation will have a substantial adverse effect on the financial
safety and soundness of the insurer. In the event that this limitation prevents
implementation of community rating to the full extent provided for in
subdivision (8) of this subsection, the Commissioner may permit insurers to limit
community rating provisions accordingly as applicable to individuals who would
otherwise be entitled to rate reductions.
(10) A
registered nongroup carrier shall file with the Commissioner an annual
certification by a member of the American Academy of Actuaries of the carrier's
compliance with this subsection. The requirements for certification shall be as
the Commissioner by rule prescribes.
(11) A
registered nongroup carrier shall guarantee the rates on a nongroup plan for a
minimum of 12 months.
(12) Registered
nongroup carriers, except nonprofit medical and hospital service organizations
and nonprofit health maintenance organizations, shall form a reinsurance pool
for the purpose of reinsuring nongroup risks. This pool shall not become
operative until the Commissioner has approved a plan of operation. The
Commissioner shall not approve any plan which he or she determines may be
inconsistent with any other provision of this subsection. Failure or delay in
the formation of a reinsurance pool under this subsection shall not delay
implementation of this subdivision. The participants in the plan of operation
of the pool shall guarantee, without limitation, the solvency of the pool, and
such guarantee shall constitute a permanent financial obligation of each
participant, on a pro rata basis.
(13) The
Commissioner shall disapprove any rates filed by any registered nongroup
carrier, whether initial or revised, for nongroup insurance policies unless the
anticipated loss ratios for the entire period for which rates are computed are
at least 70 percent. For the purpose of this subdivision, "anticipated
loss ratio" shall mean a comparison of earned premiums to losses incurred
plus a factor for industry trend where the methodology for calculating trend shall
be determined by the Commissioner by rule. (Added 2011, No. 171 (Adj. Sess.), §
4, eff. Jan. 1, 2013; amended 2013, No. 79, § 7, eff. Jan. 1, 2014.)
