§4080g. Grandfathered plans

Link to law: http://legislature.vermont.gov/statutes/section/08/107/04080g
Published: 2015

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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.)
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