§27-50-3  Definitions. –

Published: 2015

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Small Employer Health Insurance Availability Act

SECTION 27-50-3

   § 27-50-3  Definitions. –

(a) "Actuarial certification" means a written statement signed by a member of

the American Academy of Actuaries or other individual acceptable to the

director that a small employer carrier is in compliance with the provisions of

§ 27-50-5, based upon the person's examination and including a review of

the appropriate records and the actuarial assumptions and methods used by the

small employer carrier in establishing premium rates for applicable health

benefit plans.

   (b) "Adjusted community rating" means a method used to

develop a carrier's premium which spreads financial risk across the carrier's

entire small group population in accordance with the requirements in §


   (c) "Affiliate" or "affiliated" means any entity or person

who directly or indirectly through one or more intermediaries controls or is

controlled by, or is under common control with, a specified entity or person.

   (d) "Affiliation period" means a period of time that must

expire before health insurance coverage provided by a carrier becomes

effective, and during which the carrier is not required to provide benefits.

   (e) "Bona fide association" means, with respect to health

benefit plans offered in this state, an association which:

   (1) Has been actively in existence for at least five (5)


   (2) Has been formed and maintained in good faith for purposes

other than obtaining insurance;

   (3) Does not condition membership in the association on any

health-status related factor relating to an individual (including an employee

of an employer or a dependent of an employee);

   (4) Makes health insurance coverage offered through the

association available to all members regardless of any health status-related

factor relating to those members (or individuals eligible for coverage through

a member);

   (5) Does not make health insurance coverage offered through

the association available other than in connection with a member of the


   (6) Is composed of persons having a common interest or


   (7) Has a constitution and bylaws; and

   (8) Meets any additional requirements that the director may

prescribe by regulation.

   (f) "Carrier" or "small employer carrier" means all entities

licensed, or required to be licensed, in this state that offer health benefit

plans covering eligible employees of one or more small employers pursuant to

this chapter. For the purposes of this chapter, carrier includes an insurance

company, a nonprofit hospital or medical service corporation, a fraternal

benefit society, a health maintenance organization as defined in chapter 41 of

this title or as defined in chapter 62 of title 42, or any other entity subject

to state insurance regulation that provides medical care as defined in

subsection (y) that is paid or financed for a small employer by such entity on

the basis of a periodic premium, paid directly or through an association,

trust, or other intermediary, and issued, renewed, or delivered within or

without Rhode Island to a small employer pursuant to the laws of this or any

other jurisdiction, including a certificate issued to an eligible employee

which evidences coverage under a policy or contract issued to a trust or


   (g) "Church plan" has the meaning given this term under

§ 3(33) of the Employee Retirement Income Security Act of 1974 [29

U.S.C. § 1002(33)].

   (h) "Control" is defined in the same manner as in chapter 35

of this title.

   (i)(1) "Creditable coverage" means, with respect to an

individual, health benefits or coverage provided under any of the following:

   (i) A group health plan;

   (ii) A health benefit plan;

   (iii) Part A or part B of Title XVIII of the Social Security

Act, 42 U.S.C. § 1395c et seq., or 42 U.S.C. § 1395j et seq.,


   (iv) Title XIX of the Social Security Act, 42 U.S.C. §

1396 et seq., (Medicaid), other than coverage consisting solely of benefits

under 42 U.S.C. § 1396s (the program for distribution of pediatric


   (v) 10 U.S.C. § 1071 et seq., (medical and dental care

for members and certain former members of the uniformed services, and for their

dependents)(Civilian Health and Medical Program of the Uniformed

Services)(CHAMPUS). For purposes of 10 U.S.C. § 1071 et seq., "uniformed

services" means the armed forces and the commissioned corps of the National

Oceanic and Atmospheric Administration and of the Public Health Service;

   (vi) A medical care program of the Indian Health Service or

of a tribal organization;

   (vii) A state health benefits risk pool;

   (viii) A health plan offered under 5 U.S.C. § 8901 et

seq., (Federal Employees Health Benefits Program (FEHBP));

   (ix) A public health plan, which for purposes of this

chapter, means a plan established or maintained by a state, county, or other

political subdivision of a state that provides health insurance coverage to

individuals enrolled in the plan; or

   (x) A health benefit plan under § 5(e) of the Peace

Corps Act (22 U.S.C. § 2504(e)).

   (2) A period of creditable coverage shall not be counted,

with respect to enrollment of an individual under a group health plan, if,

after the period and before the enrollment date, the individual experiences a

significant break in coverage.

   (j) "Dependent" means a spouse, child under the age

twenty-six (26) years, and an unmarried child of any age who is financially

dependent upon, the parent and is medically determined to have a physical or

mental impairment which can be expected to result in death or which has lasted

or can be expected to last for a continuous period of not less than twelve (12)


   (k) "Director" means the director of the department of

business regulation.

   (l) [Deleted by P.L. 2006, ch. 258, § 2, and P.L.

2006, ch. 296, § 2.]

   (m) "Eligible employee" means an employee who works on a

full-time basis with a normal work week of thirty (30) or more hours, except

that at the employer's sole discretion, the term shall also include an employee

who works on a full-time basis with a normal work week of anywhere between at

least seventeen and one-half (17.5) and thirty (30) hours, so long as this

eligibility criterion is applied uniformly among all of the employer's

employees and without regard to any health status-related factor. The term

includes a self-employed individual, a sole proprietor, a partner of a

partnership, and may include an independent contractor, if the self-employed

individual, sole proprietor, partner, or independent contractor is included as

an employee under a health benefit plan of a small employer, but does not

include an employee who works on a temporary or substitute basis or who works

less than seventeen and one-half (17.5) hours per week. Any retiree under

contract with any independently incorporated fire district is also included in

the definition of eligible employee, as well as any former employee of an

employer who retired before normal retirement age, as defined by 42 U.S.C.

18002(a)(2)(c) while the employer participates in the early retiree reinsurance

program defined by that chapter. Persons covered under a health benefit plan

pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 shall

not be considered "eligible employees" for purposes of minimum participation

requirements pursuant to § 27-50-7(d)(9).

   (n) "Enrollment date" means the first day of coverage or, if

there is a waiting period, the first day of the waiting period, whichever is


   (o) "Established geographic service area" means a geographic

area, as approved by the director and based on the carrier's certificate of

authority to transact insurance in this state, within which the carrier is

authorized to provide coverage.

   (p) "Family composition" means:

   (1) Enrollee;

   (2) Enrollee, spouse and children;

   (3) Enrollee and spouse; or

   (4) Enrollee and children.

   (q) "Genetic information" means information about genes, gene

products, and inherited characteristics that may derive from the individual or

a family member. This includes information regarding carrier status and

information derived from laboratory tests that identify mutations in specific

genes or chromosomes, physical medical examinations, family histories, and

direct analysis of genes or chromosomes.

   (r) "Governmental plan" has the meaning given the term under

§ 3(32) of the Employee Retirement Income Security Act of 1974, 29 U.S.C.

§ 1002(32), and any federal governmental plan.

   (s)(1) "Group health plan" means an employee welfare benefit

plan as defined in § 3(1) of the Employee Retirement Income Security Act

of 1974, 29 U.S.C. § 1002(1), to the extent that the plan provides medical

care, as defined in subsection (y) of this section, and including items and

services paid for as medical care to employees or their dependents as defined

under the terms of the plan directly or through insurance, reimbursement, or


   (2) For purposes of this chapter:

   (i) Any plan, fund, or program that would not be, but for

PHSA Section 2721(e), 42 U.S.C. § 300gg(e), as added by P.L. 104-191, an

employee welfare benefit plan and that is established or maintained by a

partnership, to the extent that the plan, fund or program provides medical

care, including items and services paid for as medical care, to present or

former partners in the partnership, or to their dependents, as defined under

the terms of the plan, fund or program, directly or through insurance,

reimbursement or otherwise, shall be treated, subject to paragraph (ii) of this

subdivision, as an employee welfare benefit plan that is a group health plan;

   (ii) In the case of a group health plan, the term "employer"

also includes the partnership in relation to any partner; and

   (iii) In the case of a group health plan, the term

"participant" also includes an individual who is, or may become, eligible to

receive a benefit under the plan, or the individual's beneficiary who is, or

may become, eligible to receive a benefit under the plan, if:

   (A) In connection with a group health plan maintained by a

partnership, the individual is a partner in relation to the partnership; or

   (B) In connection with a group health plan maintained by a

self-employed individual, under which one or more employees are participants,

the individual is the self-employed individual.

   (t)(1) "Health benefit plan" means any hospital or medical

policy or certificate, major medical expense insurance, hospital or medical

service corporation subscriber contract, or health maintenance organization

subscriber contract. Health benefit plan includes short-term and catastrophic

health insurance policies, and a policy that pays on a cost-incurred basis,

except as otherwise specifically exempted in this definition.

   (2) "Health benefit plan" does not include one or more, or

any combination of, the following:

   (i) Coverage only for accident or disability income

insurance, or any combination of those;

   (ii) Coverage issued as a supplement to liability insurance;

   (iii) Liability insurance, including general liability

insurance and automobile liability insurance;

   (iv) Workers' compensation or similar insurance;

   (v) Automobile medical payment insurance;

   (vi) Credit-only insurance;

   (vii) Coverage for on-site medical clinics; and

   (viii) Other similar insurance coverage, specified in federal

regulations issued pursuant to Pub. L. No. 104-191, under which benefits for

medical care are secondary or incidental to other insurance benefits.

   (3) "Health benefit plan" does not include the following

benefits if they are provided under a separate policy, certificate, or contract

of insurance or are otherwise not an integral part of the plan:

   (i) Limited scope dental or vision benefits;

   (ii) Benefits for long-term care, nursing home care, home

health care, community-based care, or any combination of those; or

   (iii) Other similar, limited benefits specified in federal

regulations issued pursuant to Pub. L. No. 104-191.

   (4) "Health benefit plan" does not include the following

benefits if the benefits are provided under a separate policy, certificate or

contract of insurance, there is no coordination between the provision of the

benefits and any exclusion of benefits under any group health plan maintained

by the same plan sponsor, and the benefits are paid with respect to an event

without regard to whether benefits are provided with respect to such an event

under any group health plan maintained by the same plan sponsor:

   (i) Coverage only for a specified disease or illness; or

   (ii) Hospital indemnity or other fixed indemnity insurance.

   (5) "Health benefit plan" does not include the following if

offered as a separate policy, certificate, or contract of insurance:

   (i) Medicare supplemental health insurance as defined under

§ 1882(g)(1) of the Social Security Act, 42 U.S.C. § 1395ss(g)(1);

   (ii) Coverage supplemental to the coverage provided under 10

U.S.C. § 1071 et seq.; or

   (iii) Similar supplemental coverage provided to coverage

under a group health plan.

   (6) A carrier offering policies or certificates of specified

disease, hospital confinement indemnity, or limited benefit health insurance

shall comply with the following:

   (i) The carrier files on or before March 1 of each year a

certification with the director that contains the statement and information

described in paragraph (ii) of this subdivision;

   (ii) The certification required in paragraph (i) of this

subdivision shall contain the following:

   (A) A statement from the carrier certifying that policies or

certificates described in this paragraph are being offered and marketed as

supplemental health insurance and not as a substitute for hospital or medical

expense insurance or major medical expense insurance; and

   (B) A summary description of each policy or certificate

described in this paragraph, including the average annual premium rates (or

range of premium rates in cases where premiums vary by age or other factors)

charged for those policies and certificates in this state; and

   (iii) In the case of a policy or certificate that is

described in this paragraph and that is offered for the first time in this

state on or after July 13, 2000, the carrier shall file with the director the

information and statement required in paragraph (ii) of this subdivision at

least thirty (30) days prior to the date the policy or certificate is issued or

delivered in this state.

   (u) "Health maintenance organization" or "HMO" means a health

maintenance organization licensed under chapter 41 of this title.

   (v) "Health status-related factor" means any of the following


   (1) Health status;

   (2) Medical condition, including both physical and mental


   (3) Claims experience;

   (4) Receipt of health care;

   (5) Medical history;

   (6) Genetic information;

   (7) Evidence of insurability, including conditions arising

out of acts of domestic violence; or

   (8) Disability.

   (w)(1) "Late enrollee" means an eligible employee or

dependent who requests enrollment in a health benefit plan of a small employer

following the initial enrollment period during which the individual is entitled

to enroll under the terms of the health benefit plan, provided that the initial

enrollment period is a period of at least thirty (30) days.

   (2) "Late enrollee" does not mean an eligible employee or


   (i) Who meets each of the following provisions:

   (A) The individual was covered under creditable coverage at

the time of the initial enrollment;

   (B) The individual lost creditable coverage as a result of

cessation of employer contribution, termination of employment or eligibility,

reduction in the number of hours of employment, involuntary termination of

creditable coverage, or death of a spouse, divorce or legal separation, or the

individual and/or dependents are determined to be eligible for RIteCare under

chapter 5.1 of title 40 or chapter 12.3 of title 42 or for RIteShare under

chapter 8.4 of title 40; and

   (C) The individual requests enrollment within thirty (30)

days after termination of the creditable coverage or the change in conditions

that gave rise to the termination of coverage;

   (ii) If, where provided for in contract or where otherwise

provided in state law, the individual enrolls during the specified bona fide

open enrollment period;

   (iii) If the individual is employed by an employer which

offers multiple health benefit plans and the individual elects a different plan

during an open enrollment period;

   (iv) If a court has ordered coverage be provided for a spouse

or minor or dependent child under a covered employee's health benefit plan and

a request for enrollment is made within thirty (30) days after issuance of the

court order;

   (v) If the individual changes status from not being an

eligible employee to becoming an eligible employee and requests enrollment

within thirty (30) days after the change in status;

   (vi) If the individual had coverage under a COBRA

continuation provision and the coverage under that provision has been

exhausted; or

   (vii) Who meets the requirements for special enrollment

pursuant to § 27-50-7 or 27-50-8.

   (x) "Limited benefit health insurance" means that form of

coverage that pays stated predetermined amounts for specific services or

treatments or pays a stated predetermined amount per day or confinement for one

or more named conditions, named diseases or accidental injury.

   (y) "Medical care" means amounts paid for:

   (1) The diagnosis, care, mitigation, treatment, or prevention

of disease, or amounts paid for the purpose of affecting any structure or

function of the body;

   (2) Transportation primarily for and essential to medical

care referred to in subdivision (1); and

   (3) Insurance covering medical care referred to in

subdivisions (1) and (2) of this subsection.

   (z) "Network plan" means a health benefit plan issued by a

carrier under which the financing and delivery of medical care, including items

and services paid for as medical care, are provided, in whole or in part,

through a defined set of providers under contract with the carrier.

   (aa) "Person" means an individual, a corporation, a

partnership, an association, a joint venture, a joint stock company, a trust,

an unincorporated organization, any similar entity, or any combination of the


   (bb) "Plan sponsor" has the meaning given this term under

§ 3(16)(B) of the Employee Retirement Income Security Act of 1974, 29

U.S.C. § 1002(16)(B).

   (cc)(1) "Preexisting condition" means a condition, regardless

of the cause of the condition, for which medical advice, diagnosis, care, or

treatment was recommended or received during the six (6) months immediately

preceding the enrollment date of the coverage.

   (2) "Preexisting condition" does not mean 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 that

was a covered benefit under the health benefit plan, provided that the prior

creditable coverage was continuous to a date not more than ninety (90) days

prior to the enrollment date of the new coverage.

   (3) Genetic information shall not be treated as a condition

under subdivision (1) of this subsection for which a preexisting condition

exclusion may be imposed in the absence of a diagnosis of the condition related

to the information.

   (dd) "Premium" means all moneys paid by a small employer and

eligible employees as a condition of receiving coverage from a small employer

carrier, including any fees or other contributions associated with the health

benefit plan.

   (ee) "Producer" means any insurance producer licensed under

chapter 2.4 of this title.

   (ff) "Rating period" means the calendar period for which

premium rates established by a small employer carrier are assumed to be in


   (gg) "Restricted network provision" means 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 pursuant to provide health care services to

covered individuals.

   (hh) "Risk adjustment mechanism" means the mechanism

established pursuant to § 27-50-16.

   (ii) "Self-employed individual" means an individual or sole

proprietor who derives a substantial portion of his or her income from a trade

or business through which the individual or sole proprietor has attempted to

earn taxable income and for which he or she has filed the appropriate Internal

Revenue Service Form 1040, Schedule C or F, for the previous taxable year.

   (jj) "Significant break in coverage" means a period of ninety

(90) consecutive days during all of which the individual does not have any

creditable coverage, except that neither a waiting period nor an affiliation

period is taken into account in determining a significant break in coverage.

   (kk) "Small employer" means, except for its use in §

27-50-7, any person, firm, corporation, partnership, association, political

subdivision, or self-employed individual that is actively engaged in business

including, but not limited to, a business or a corporation organized under the

Rhode Island Non-Profit Corporation Act, chapter 6 of title 7, or a similar act

of another state that, on at least fifty percent (50%) of its working days

during the preceding calendar quarter, employed no more than fifty (50)

eligible employees, with a normal work week of thirty (30) or more hours, 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. In determining the number of eligible

employees, companies that are affiliated companies, or that are eligible to

file a combined tax return for purposes of taxation by this state, shall be

considered one employer. Subsequent to the issuance of a health benefit plan to

a small employer and for the purpose of determining continued eligibility, the

size of a small employer shall be determined annually. Except as otherwise

specifically provided, provisions of this chapter that apply to a small

employer shall continue to apply at least until the plan anniversary following

the date the small employer no longer meets the requirements of this

definition. The term small employer includes a self-employed individual.

   (ll ) "Waiting period" means, with respect to a group health

plan and an individual who is a potential enrollee in the plan, the period that

must pass with respect to the individual before the individual is eligible to

be covered for benefits under the terms of the plan. For purposes of

calculating periods of creditable coverage pursuant to subsection (j)(2) of

this section, a waiting period shall not be considered a gap in coverage.

   (mm) "Wellness health benefit plan" means a plan developed

pursuant to § 27-50-10.

   (nn) "Health insurance commissioner" or "commissioner" means

that individual appointed pursuant to § 42-14.5-1 of the general laws and

afforded those powers and duties as set forth in §§ 42-14.5-2 and

42-14.5-3 of title 42.

   (oo) "Low-wage firm" means those with average wages that fall

within the bottom quartile of all Rhode Island employers.

   (pp) "Wellness health benefit plan" means the health benefit

plan offered by each small employer carrier pursuant to § 27-50-7.

   (qq) "Commissioner" means the health insurance commissioner.

History of Section.

(P.L. 2000, ch. 200, § 9; P.L. 2000, ch. 229, § 10; P.L. 2002, ch.

292, § 90; P.L. 2003, ch. 119, § 1; P.L. 2003, ch. 120, § 1;

P.L. 2003, ch. 286, § 1; P.L. 2003, ch. 375, § 1; P.L. 2004, ch. 269,

§ 1; P.L. 2006, ch. 258, § 2; P.L. 2006, ch. 273, § 5; P.L.

2006, ch. 296, § 2; P.L. 2006, ch. 297, § 5; P.L. 2006, ch. 377,

§ 6; P.L. 2006, ch. 469, § 6; P.L. 2007, ch. 164, § 1; P.L.

2007, ch. 221, § 1; P.L. 2011, ch. 131, § 1; P.L. 2011, ch. 146,

§ 1; P.L. 2012, ch. 256, § 11; P.L. 2012, ch. 262, §


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