TITLE 27
Insurance
CHAPTER 27-50
Small Employer Health Insurance Availability Act
SECTION 27-50-7
§ 27-50-7 Availability of coverage.
(a) Until October 1, 2004, for purposes of this section, "small employer"
includes any person, firm, corporation, partnership, association, or political
subdivision that is actively engaged in business that on at least fifty percent
(50%) of its working days during the preceding calendar quarter, employed a
combination of no more than fifty (50) and no less than two (2) eligible
employees and part-time employees, 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. After October
1, 2004, for the purposes of this section, "small employer" has the meaning
used in § 27-50-3(kk).
(b)(1) Every small employer carrier shall, as a condition of
transacting business in this state with small employers, actively offer to
small employers all health benefit plans it actively markets to small employers
in this state including a wellness health benefit plan. A small employer
carrier shall be considered to be actively marketing a health benefit plan if
it offers that plan to any small employer not currently receiving a health
benefit plan from the small employer carrier.
(2) Subject to subdivision (1) of this subsection, a small
employer carrier shall issue any health benefit plan to any eligible small
employer that applies for that 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. However, no carrier is required to
issue a health benefit plan to any self-employed individual who is covered by,
or is eligible for coverage under, a health benefit plan offered by an employer.
(c)(1) A small employer carrier shall file with the director,
in a format and manner prescribed by the director, the health benefit plans to
be used by the carrier. A health benefit plan filed pursuant to this
subdivision may be used by a small employer carrier beginning thirty (30) days
after it is filed unless the director disapproves its use.
(2) The director may at any time may, after providing notice
and an opportunity for a hearing to the small employer carrier, disapprove the
continued use by a small employer carrier of a health benefit plan on the
grounds that the plan does not meet the requirements of this chapter.
(d) Health benefit plans covering small employers shall
comply with the following provisions:
(1) A health benefit plan shall not deny, exclude, or limit
benefits for a covered individual for losses incurred more than six (6) months
following the enrollment date of the individual's coverage due to a preexisting
condition, or the first date of the waiting period for enrollment if that date
is earlier than the enrollment date. A health benefit plan shall not define a
preexisting condition more restrictively than as defined in § 27-50-3.
(2)(i) Except as provided in subdivision (3) of this
subsection, a small employer carrier shall reduce the period of any preexisting
condition exclusion by the aggregate of the periods of creditable coverage
without regard to the specific benefits covered during the period of creditable
coverage, provided that the last period of creditable coverage ended on a date
not more than ninety (90) days prior to the enrollment date of new coverage.
(ii) The aggregate period of creditable coverage does not
include any waiting period or affiliation period for the effective date of the
new coverage applied by the employer or the carrier, or for the normal
application and enrollment process following employment or other triggering
event for eligibility.
(iii) A carrier that does not use preexisting condition
limitations in any of its health benefit plans may impose an affiliation period
that:
(A) Does not exceed sixty (60) days for new entrants and not
to exceed ninety (90) days for late enrollees;
(B) During which the carrier charges no premiums and the
coverage issued is not effective; and
(C) Is applied uniformly, without regard to any health
status-related factor.
(iv) This section does not preclude application of any
waiting period applicable to all new enrollees under the health benefit plan,
provided that any carrier-imposed waiting period is no longer than sixty (60)
days.
(3)(i) Instead of as provided in paragraph (2)(i) of this
subsection, a small employer carrier may elect to reduce the period of any
preexisting condition exclusion based on coverage of benefits within each of
several classes or categories of benefits specified in federal regulations.
(ii) A small employer electing to reduce the period of any
preexisting condition exclusion using the alternative method described in
paragraph (i) of this subdivision shall:
(A) Make the election on a uniform basis for all enrollees;
and
(B) Count a period of creditable coverage with respect to any
class or category of benefits if any level of benefits is covered within the
class or category.
(iii) A small employer carrier electing to reduce the period
of any preexisting condition exclusion using the alternative method described
under paragraph (i) of this subdivision shall:
(A) Prominently state that the election has been made in any
disclosure statements concerning coverage under the health benefit plan to each
enrollee at the time of enrollment under the plan and to each small employer at
the time of the offer or sale of the coverage; and
(B) Include in the disclosure statements the effect of the
election.
(4)(i) A health benefit plan shall accept late enrollees, but
may exclude coverage for late enrollees for preexisting conditions for a period
not to exceed twelve (12) months.
(ii) A small employer carrier shall reduce the period of any
preexisting condition exclusion pursuant to subdivision (2) or (3) of this
subsection.
(5) A small employer carrier shall not impose a preexisting
condition exclusion:
(i) Relating to pregnancy as a preexisting condition; or
(ii) With regard to a child who is covered under any
creditable coverage within thirty (30) days of birth, adoption, or placement
for adoption, provided that the child does not experience a significant break
in coverage, and provided that the child was adopted or placed for adoption
before attaining eighteen (18) years of age.
(6) A small employer carrier shall not impose a preexisting
condition exclusion in the case of 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 the medical advice,
diagnosis, care or treatment was a covered benefit under the plan, provided
that the creditable coverage was continuous to a date not more than ninety (90)
days prior to the enrollment date of the new coverage.
(7)(i) A small employer carrier shall permit an employee or a
dependent of the employee, who is eligible, but not enrolled, to enroll for
coverage under the terms of the group health plan of the small employer during
a special enrollment period if:
(A) The employee or dependent was covered under a group
health plan or had coverage under a health benefit plan at the time coverage
was previously offered to the employee or dependent;
(B) The employee stated in writing at the time coverage was
previously offered that coverage under a group health plan or other health
benefit plan was the reason for declining enrollment, but only if the plan
sponsor or carrier, if applicable, required that statement at the time coverage
was previously offered and provided notice to the employee of the requirement
and the consequences of the requirement at that time;
(C) The employee's or dependent's coverage described under
subparagraph (A) of this paragraph:
(I) Was under a COBRA continuation provision and the coverage
under this provision has been exhausted; or
(II) Was not under a COBRA continuation provision and that
other coverage has been terminated as a result of loss of eligibility for
coverage, including as a result of a legal separation, divorce, death,
termination of employment, or reduction in the number of hours of employment or
employer contributions towards that other coverage have been terminated; and
(D) Under terms of the group health plan, the employee
requests enrollment not later than thirty (30) days after the date of
exhaustion of coverage described in item (C)(I) of this paragraph or
termination of coverage or employer contribution described in item (C)(II) of
this paragraph.
(ii) If an employee requests enrollment pursuant to
subparagraph (i)(D) of this subdivision, the enrollment is effective not later
than the first day of the first calendar month beginning after the date the
completed request for enrollment is received.
(8)(i) A small employer carrier that makes coverage available
under a group health plan with respect to a dependent of an individual shall
provide for a dependent special enrollment period described in paragraph (ii)
of this subdivision during which the person or, if not enrolled, the individual
may be enrolled under the group health plan as a dependent of the individual
and, in the case of the birth or adoption of a child, the spouse of the
individual may be enrolled as a dependent of the individual if the spouse is
eligible for coverage if:
(A) The individual is a participant under the health benefit
plan or has met any waiting period applicable to becoming a participant under
the plan and is eligible to be enrolled under the plan, but for a failure to
enroll during a previous enrollment period; and
(B) A person becomes a dependent of the individual through
marriage, birth, or adoption or placement for adoption.
(ii) The special enrollment period for individuals that meet
the provisions of paragraph (i) of this subdivision is a period of not less
than thirty (30) days and begins on the later of:
(A) The date dependent coverage is made available; or
(B) The date of the marriage, birth, or adoption or placement
for adoption described in subparagraph (i)(B) of this subdivision.
(iii) If an individual seeks to enroll a dependent during the
first thirty (30) days of the dependent special enrollment period described
under paragraph (ii) of this subdivision, the coverage of the dependent is
effective:
(A) In the case of marriage, not later than the first day of
the first month beginning after the date the completed request for enrollment
is received;
(B) In the case of a dependent's birth, as of the date of
birth; and
(C) In the case of a dependent's adoption or placement for
adoption, the date of the adoption or placement for adoption.
(9)(i) Except as provided in this subdivision, requirements
used by a small employer carrier in determining whether to provide coverage to
a small employer, including requirements for minimum participation of eligible
employees and minimum employer contributions, shall be applied uniformly among
all small employers applying for coverage or receiving coverage from the small
employer carrier.
(ii) For health benefit plans issued or renewed on or after
October 1, 2000, a small employer carrier shall not require a minimum
participation level greater than seventy-five percent (75%) of eligible
employees.
(iii) In applying minimum participation requirements with
respect to a small employer, a small employer carrier shall not consider
employees or dependents who have creditable coverage in determining whether the
applicable percentage of participation is met.
(iv) A small employer carrier shall not increase any
requirement for minimum employee participation or modify any requirement for
minimum employer contribution applicable to a small employer at any time after
the small employer has been accepted for coverage.
(10)(i) If a small employer carrier offers coverage to a
small employer, the small employer carrier shall offer coverage to all of the
eligible employees of a small employer and their dependents who apply for
enrollment during the period in which the employee first becomes eligible to
enroll under the terms of the plan. A small employer carrier shall not offer
coverage to only certain individuals or dependents in a small employer group or
to only part of the group.
(ii) A small employer carrier shall not place any restriction
in regard to any health status-related factor on an eligible employee or
dependent with respect to enrollment or plan participation.
(iii) Except as permitted under subdivisions (1) and (4) of
this subsection, a small employer carrier shall not modify a health benefit
plan with respect to a small employer or any eligible employee or dependent,
through riders, endorsements, or otherwise, to restrict or exclude coverage or
benefits for specific diseases, medical conditions, or services covered by the
plan.
(e)(1) Subject to subdivision (3) of this subsection, a small
employer carrier is not required to offer coverage or accept applications
pursuant to subsection (b) of this section in the case of the following:
(i) To a small employer, where the small employer does not
have eligible individuals who live, work, or reside in the established
geographic service area for the network plan;
(ii) To an employee, when the employee does not live, work,
or reside within the carrier's established geographic service area; or
(iii) Within an area where the small employer carrier
reasonably anticipates, and demonstrates to the satisfaction of the director,
that it will not have the capacity within its established geographic service
area to deliver services adequately to enrollees of any additional groups
because of its obligations to existing group policyholders and enrollees.
(2) A small employer carrier that cannot offer coverage
pursuant to paragraph (1)(iii) of this subsection may not offer coverage in the
applicable area to new cases of employer groups until the later of one hundred
and eighty (180) days following each refusal or the date on which the carrier
notifies the director that it has regained capacity to deliver services to new
employer groups.
(3) A small employer carrier shall apply the provisions of
this subsection uniformly to all small employers without regard to the claims
experience of a small employer and its employees and their dependents or any
health status-related factor relating to the employees and their dependents.
(f)(1) A small employer carrier is not required to provide
coverage to small employers pursuant to subsection (b) of this section if:
(i) For any period of time the director determines the small
employer carrier does not have the financial reserves necessary to underwrite
additional coverage; and
(ii) The small employer carrier is applying this subsection
uniformly to all small employers in the small group market in this state
consistent with applicable state law and without regard to the claims
experience of a small employer and its employees and their dependents or any
health status-related factor relating to the employees and their dependents.
(2) A small employer carrier that denies coverage in
accordance with subdivision (1) of this subsection may not offer coverage in
the small group market for the later of:
(i) A period of one hundred and eighty (180) days after the
date the coverage is denied; or
(ii) Until the small employer has demonstrated to the
director that it has sufficient financial reserves to underwrite additional
coverage.
(g)(1) A small employer carrier is not required to provide
coverage to small employers pursuant to subsection (b) of this section if the
small employer carrier elects not to offer new coverage to small employers in
this state.
(2) A small employer carrier that elects not to offer new
coverage to small employers under this subsection may be allowed, as determined
by the director, to maintain its existing policies in this state.
(3) A small employer carrier that elects not to offer new
coverage to small employers under subdivision (g)(1) shall provide at least one
hundred and twenty (120) days notice of its election to the director and is
prohibited from writing new business in the small employer market in this state
for a period of five (5) years beginning on the date the carrier ceased
offering new coverage in this state.
(h) No small group carrier may impose a pre-existing
condition exclusion pursuant to the provisions of subdivisions 27-50-7(d)(1),
27-50-7(d)(2), 27-50-7(d)(3), 27-50-7(d)(4), 27-50-7(d)(5) and 27-50-7(d)(6)
with regard to an individual that is less than nineteen (19) years of age. With
respect to health benefit plans issued on and after January 1, 2014 a small
employer carrier shall offer and issue coverage to small employers and eligible
individuals notwithstanding any pre-existing condition of an employee, member,
or individual, or their dependents.
History of Section.
(P.L. 2000, ch. 200, § 9; P.L. 2000, ch. 229, § 10; P.L. 2002, ch.
41, § 1; P.L. 2002, ch. 292, § 90; P.L. 2002, ch. 366, § 1; P.L.
2003, ch. 120, § 1; P.L. 2003, ch. 286, § 1; P.L. 2004, ch. 406,
§ 2; P.L. 2004, ch. 502, § 2; P.L. 2006, ch. 258, § 2; P.L.
2006, ch. 296, § 2; P.L. 2012, ch. 256, § 11; P.L. 2012, ch. 262,
§ 11.)
