900 Kar 10:020. Khbe Small Business Health Options Program

Link to law: http://www.lrc.ky.gov/kar/900/010/020.htm
Published: 2015

      900 KAR 10:020. KHBE

Small Business Health Options Program.

 

      RELATES TO: KRS 194A.050(1), 42 U.S.C.

18031, 45 C.F.R. Parts 155, 156

      STATUTORY AUTHORITY: KRS 194A.050(1)

      NECESSITY, FUNCTION, AND CONFORMITY: The

Cabinet for Health and Family Services, Kentucky Office of Health Benefit and

Information Exchange, has responsibility to administer the state-based American

Health Benefit Exchange. KRS 194A.050(1) requires the secretary of the cabinet

to promulgate administrative regulations necessary to protect, develop, and

maintain the health, personal dignity, integrity, and sufficiency of the

individual citizens of the Commonwealth; to operate the programs and fulfill

the responsibilities vested in the cabinet; and to implement programs mandated

by federal law or to qualify for the receipt of federal funds. This

administrative regulation establishes the policies and procedures relating to

the operation of a Small Business Health Options Program in accordance with 42

U.S.C. 18031 and 45 C.F.R. parts 155 and 156.

 

      Section 1. Definitions. (1)

"Agent" is defined by KRS 304.9-020(1).

      (2) "Annual open enrollment

period" is defined by 45 C.F.R. 155.410(e).

      (3) "Annual renewal date" means

the date following twelve (12) months from the first day of the first coverage

month and every twelve (12) months thereafter.

      (4) "Children’s Health Insurance

Program" or "CHIP" is defined by 42 C.F.R. 457.10.

      (5) "COBRA" means continuation

of coverage under 29 U.S.C. Part 6.

      (6) "Department of Health and Human

Services" or "HHS" means the U.S. Department of Health and Human

Services.

      (7) "Employer identification

number" means a unique numerical identifier which is used to identify a

business, partnership, or other entity.

      (8) "Full-time employee" is

defined by 45 C.F.R. 155.20.

      (9) "Full-time equivalent

employee" means the number of employees determined by using the method set

forth in section 4980H(c)(2) of the Internal Revenue Code, 26 U.S.C.

4980H(c)(2).

      (10) "Group participation rate"

means the minimum percentage of all eligible individuals or employees of an

employer that is required to be enrolled.

      (11) "Health plan" is defined

by 42 U.S.C. 18021(b)(1).

      (12) "Indian" is defined by 25

U.S.C. 450b(d).

      (13) "Initial open enrollment

period" means the enrollment period in which a qualified employer first

enrolls in coverage through the Small Business Health Options Program (SHOP).

      (14) "Kentucky Health Benefit

Exchange" or "KHBE" means the Kentucky state-based exchange

approved by HHS pursuant to 45 C.F.R. 155.105 to offer a QHP or stand-alone

dental plan (SADP), that includes an:

      (a) Individual exchange; and

      (b) Small Business Health Options

Program.

      (15) "Kentucky Health Insurance

Premium Payment Program" or "KHIPP" means a Kentucky Medicaid

program that pays the costs of some or all of the employee portion of

employer-sponsored health insurance premiums.

      (16) "Kentucky Office of Health

Benefit and Information Exchange", "KOHBIE", or

"office" means the office created to administer the Kentucky Health

Benefit Exchange.

      (17) "Medicaid" means coverage

in accordance with Title XIX of the Social Security Act, 42 U.S.C. sections

1396 et seq. as amended.

      (18) "Metal level of coverage"

means health care coverage provided within plus or minus two (2) percentage

points of the full actuarial value as follows:

      (a) Bronze level with an actuarial value

of sixty (60) percent;

      (b) Silver level with an actuarial value

of seventy (70) percent;

      (c) Gold level with an actuarial value of

eighty (80) percent; and

      (d) Platinum level with an actuarial

value of ninety (90) percent.

      (19) "Minimum essential

coverage" is defined by 26 C.F.R. 1.5000A-2.

      (20) "Newly qualified employee"

means an employee who becomes eligible to participate in the employer’s group

health plan outside of a qualified employer’s initial or annual enrollment

period.

      (21) "Plan year" means a

consecutive twelve (12) month period during which a health plan provides

coverage for health benefits.

      (22) "Premium" is defined by

KRS 304.14-030.

      (23) "Qualified employee" means

an individual employed by a qualified employer who has been offered health

insurance coverage by the qualified employer through the SHOP.

      (24) "Qualified employer" means

an employer that elects to make, at a minimum, all full-time employees of the

employer eligible for one (1) or more QHPs in the small group market offered

through the SHOP.

      (25) "Qualified Health Plan" or

"QHP" means a health plan that meets the standards described in 45

C.F.R. 156 Subpart C and that has in effect a certification issued by the

office.

      (26) "Qualifying event" means

an event that triggers a special enrollment period for an individual to enroll

in health insurance coverage.

      (27) "Reference plan" means a

single health plan on which an employer will base its employee premium

contribution and an employee is then able to select the reference plan, or if

the employee selects another health plan, the employee shall pay the premium

differential between the selected health plan and the reference plan.

      (28) "SHOP" means a Small Business

Health Options Program operated by the KHBE through which a qualified employer

can provide a qualified employee and the employee's dependents with access to

one (1) or more QHPs or SADPs.

      (29) "Small employer" means for

a plan year beginning:

      (a) Before January 1, 2016, an employer

who employed an average of fifty (50) or fewer full-time employees on business

days during the preceding calendar year; or

      (b) On or after January 1, 2016, an

employer who employed an average of at least one (1) but no more than 100

full-time equivalent employees on business days during the preceding calendar

year and who employs at least one (1) employee on the first day of the plan

year.

      (30) "Special enrollment

period" means a period during which a qualified employee who experiences

certain qualifying events may enroll in, or change enrollment in, a QHP through

the KHBE outside the initial and annual open enrollment periods.

      (31) "Stand-alone dental plan"

or "SADP" means a dental plan as described by 45 C.F.R. 155.1065 that

has been certified by the office to provide a limited scope of dental benefits

as defined in 26 U.S.C. 9832(c)(2)(A), including a pediatric dental essential

health benefit.

      (32) "TRICARE" means the

Department of Defense administered health care program serving active uniformed

service members, retirees, and their families.

      (33) "Waiting period" means the

period before coverage for an employee or dependent who is otherwise eligible

to enroll under the terms of a group health plan can become effective.

 

      Section 2. Employer Eligibility. (1) An

employer shall be a qualified employer and eligible to purchase coverage

through SHOP if the employer:

      (a) Meets the eligibility requirements

established in 45 C.F.R. 155.710(b);

      (b) Has a valid federal employer

identification number;

      (c) Has at least one (1) common law

employee that shall not include an individual described in 29 C.F.R.

2510.3-3(c); and

      (d) Except as provided in 45 C.F.R.

147.104(b)(1)(i) and subsection (2) of this section:

      1. Meets a group participation rate of at

least seventy-five (75) percent that shall be calculated in accordance with

subsection (6) of this section; and

      2. Contributes a minimum of fifty (50)

percent toward the QHP premium of any qualified employee in accordance with

Section 6 of this administrative regulation.

      (2) A small employer may elect to offer

SADP coverage to only its full-time employees.

      (3) A small employer participating in

more than one (1) SHOP and meeting the criteria in subsection (1) of this

section shall offer coverage to its full-time employees whose primary work site

is in Kentucky.

      (4) An employer shall apply to enroll in

a QHP or SADP:

      (a) Via the internet at

www.kynect.ky.gov;

      (b) By telephone by contacting the office

contact center at 1-800-459-6328; or

      (c) In person.

      (5) If the information submitted by a

small employer is inconsistent with the eligibility standards in this section,

the employer shall have thirty (30) days after a notification of the

inconsistency to present documentation to support the employer’s application or

resolve the inconsistency.

      (6) An employee participation rate shall

be calculated:

      (a) As the number of qualified employees

accepting medical coverage under the employer’s group health plan plus the

number of qualified employees enrolled in other medical coverage as described

in subsection (7) of this section divided by the number of qualified employees

offered medical coverage; and

      (b) At the time the employer submits the

SHOP group enrollment.

      (7) Other medical coverage shall include:

      (a) Another employer’s plan;

      (b) Medicare;

      (c) Medicaid;

      (d) TRICARE;

      (e) Other coverage identified in 45

C.F.R. 156.602; or

      (f) Coverage recognized by HHS as meeting

the requirement for minimum essential coverage under 45 C.F.R. 156.604.

      (8) If a small employer’s group

participation rate falls below the requirement in subsection (1)(d) of this

section during a plan year, the qualified small employer shall be eligible to

participate in the SHOP through the remainder of the plan year.

      (9) A qualified employer who ceases to be

a small employer by reason of an increase in the number of employees shall be

eligible to participate in SHOP until the employer:

      (a) Fails to otherwise meet the

eligibility criteria of this section; or

      (b) Chooses to no longer purchase health

coverage through the SHOP.

 

      Section 3. Employee Eligibility. (1) An

employee shall be a qualified employee eligible to enroll in a QHP or SADP

through the SHOP if the employee receives an offer of coverage from a qualified

employer.

      (2) A qualified employee shall be

eligible to enroll a dependent or spouse in a QHP through SHOP if the offer of

coverage from a qualified employer includes an offer of dependent or spousal

coverage and the qualified employee is enrolled in the QHP.

      (3) A qualified employee shall be able to

enroll a dependent or spouse in an SADP if the offer of coverage from a

qualified employer includes an offer of dependent or spousal coverage in an

SADP; and

      (a) The qualified employee is enrolled in

an SADP; or

      (b) If the qualified employee is not

enrolled in an SADP, only a spouse or dependent of the qualified employee up to

twenty-one (21) years of age may enroll in an SADP.

      (4) A qualified employee who is enrolled

in an SADP shall enroll a dependent or spouse in an SADP if:

      (a) The offer of coverage from a

qualified employer includes an offer of dependent or spousal coverage in an

SADP; and

      (b) The dependent or spouse is three (3)

years of age up to twenty-one (21) years of age.

      (5) If the offer of coverage from a

qualified employer includes an offer of stand-alone dental coverage, a

qualified employee up to twenty-one (21) years of age who is not otherwise

enrolled in dental coverage shall enroll in an SADP.

      (6) An employee shall apply to enroll in

a QHP or SADP:

      (a) Via the internet at

www.kynect.ky.gov;

      (b) By contacting the office contact

center at 1-800-459-6328; or

      (c) In person.

      (7) If the information submitted by an

employee is inconsistent with the eligibility standards in this section, the

employee shall have thirty (30) days after a notification of the inconsistency

to present documentation to support the employee’s application or resolve the

inconsistency.

      (8) A qualified employee who does not

want to enroll in a QHP offered by a qualified employer shall waive coverage.

      (9) A qualified employee waiving coverage

shall:

      (a) Wait until the next annual open

enrollment period, pursuant to Section 10 of this administrative regulation, to

enroll in coverage; or

      (b) If the employee experiences a

qualifying event, enroll during a special enrollment period pursuant to Section

12 of this administrative regulation.

 

      Section 4. Employer Participation

Requirements. (1) A qualified employer shall submit the following information

to the SHOP:

      (a) An employee census that includes the

name, address, birth date, and social security number of a qualified employee;

      (b) If offering dependent or spousal

coverage, the name, address, and birth date of the dependent or spouse;

      (c) General employer information that

shall include the:

      1. Business legal name;

      2. Primary business address; and

      3. Federal employer identification

number;

      (d) The number of qualified employees and

the total number of employees employed by the qualified employer;

      (e) Whether the employer shall offer

dependent or spousal health coverage;

      (f) The name and primary phone number for

the primary contact for the qualified employer; and

      (g) Whether the employer has an agent or

kynector, and if so, the name of the agent or kynector.

      (2) A qualified employer shall provide

the SHOP:

      (a) A copy of its most recently filed

Employer's Quarterly Unemployment Wage and Tax Report, if applicable; or

      (b) If in business for less than three

(3) months, a copy of a business filing with the Kentucky Secretary of State.

 

      Section 5. Employer Selection of

Qualified Health Plans. (1) A qualified employer shall make available to a

qualified employee:

      (a) A single QHP;

      (b) All available QHPs at a single metal

level of coverage;

      (c) If metal levels are contiguous, one

(1) or more QHPs at more than one (1) metal level of coverage; or

      (d) All available QHPs from one (1) or

more issuer.

      (2) Unless each QHP offered to a

qualified employee has an embedded pediatric dental benefit, a qualified

employer shall make available to a qualified employee at least one (1)

pediatric stand-alone dental plan.

 

      Section 6. Minimum Contribution. (1) A

small employer who selects only one (1) QHP to offer to a qualified employee in

accordance with Section 5 of this administrative regulation shall:

      (a) Define a percentage contribution of

at least fifty (50) percent toward the premium for employee-only coverage under

the QHP, except as provided for in 45 C.F.R. 147.104(b)(1)(i); and

      (b) Apply the employer contribution determined

in paragraph (a) of this subsection toward the QHP selected by the employee.

      (2) A small employer who selects more

than one (1) QHP to offer to a qualified employee in accordance with Section 5

of this administrative regulation shall:

      (a) Apply the employer contribution

determined in accordance with subsection (1)(a) of this section to the QHP

selected by an employee; or

      (b) If a reference plan is selected by

the employer, make a percentage contribution of at least fifty (50) percent

toward the premium for employee-only coverage under the reference plan.

      (3) An employer who elects to provide

dependent or spousal coverage may make a contribution toward a premium for

dependent or spousal coverage.

      (4) An employer who elected to provide

coverage for an SADP may make a contribution toward a premium for:

      (a) Employee coverage; or

      (b) Employee coverage and dependent or

spousal coverage.

 

      Section 7. Employer Selection of Coverage

Period. (1) Subject to subsection (2) of this section, a qualified employer

shall elect to offer health insurance coverage through the SHOP for a qualified

employee at any time during the calendar year after:

      (a) Submitting the information required

in Section 4 of this administrative regulation;

      (b) Selecting a QHP or QHPs to offer to

qualified employees as provided in Section 5 of this administrative regulation;

and

      (c) Meeting the minimum contribution

requirement in Section 6 of this administrative regulation.

      (2) If a qualified employer fails to meet

the minimum participation rate specified in Section 2(1)(d) of this

administrative regulation or the minimum contribution requirement specified in

Section 6 of this administrative regulation, the qualified employer may elect

to offer coverage to a qualified employee during an enrollment period from

November 15 through December 15 of each year.

      (3) A qualified employer may apply for

coverage through the SHOP for its qualified employees at any time during the

year.

      (4) A qualified employer’s plan year

shall be a twelve (12) month period beginning on the coverage effective date

for its qualified employees.

      (5) A qualified employer shall not change

its offer of coverage to its qualified employees after a qualified employee has

made a QHP selection during an initial or annual open enrollment period.

 

      Section 8. Enrollment Periods for a

Qualified Employee. (1) A qualified employee shall enroll in a QHP or SADP or

change a QHP or SADP only during:

      (a) An initial open enrollment period

described in this section;

      (b) For a newly qualified employee, an

enrollment period described in Section 11 of this administrative regulation;

      (c) An annual open enrollment period

described in Section 10 of this administrative regulation; or

      (d) A special enrollment period described

in Section 12 of this administrative regulation.

      (2) An initial open enrollment period

shall:

      (a) Begin on a day chosen by the employer

if the employer has provided the information required in Section 4 of this

administrative regulation;

      (b) Be a minimum of ten (10) days; and

      (c) End on the tenth day of a calendar

month.

      (3) An effective date of coverage for a

qualified employee enrollment during an initial open enrollment period shall be

the first day of the month following the end of the open enrollment period.

      (4) Unless an employee

changes coverage due to a qualifying event, a premium shall not change until

the employer’s annual renewal date.

 

      Section 9. Annual Employer Election

Period. (1) On an annual basis, a small employer shall have a thirty (30) day

period prior to the completion of the employer’s plan year and before the

annual open enrollment to change the employer’s participation in the SHOP for

the next plan year.

      (2) During the employer annual election

period, a small employer may change:

      (a) Its employer contribution towards the

premium of a qualified employee made in accordance with Section 6 of this

administrative regulation;

      (b) The QHP or QHPs offered to a

qualified employee in accordance with Section 5 of this administrative

regulation;

      (c) The SADP or SADPs offered to a

qualified employee in accordance with Section 5 of this administrative

regulation;

      (d) Its election to offer dependent or

spousal coverage; and

      (e) The waiting period for newly

qualified employees.

 

      Section 10. Annual Open Enrollment

Period. (1) A qualified employee shall select a QHP or change a QHP during an

annual open enrollment period that shall be:

      (a) No less than thirty (30) days; and

      (b) Prior to the end of the employer’s

plan year.

      (2) If a qualified employee enrolled in a

QHP remains eligible for coverage, the qualified employee shall remain enrolled

in the QHP selected the previous year unless:

      (a) The qualified employee enrolls in

another QHP; or

      (b) The QHP is no longer available to the

qualified employee.

 

      Section 11. Enrollment Period and

Coverage Effective Dates for a Newly Qualified Employee. (1) A newly qualified

employee shall be eligible for an enrollment period beginning on the first day

of becoming a newly qualified employee, regardless of whether the employee is

subject to a waiting period.

      (2) An enrollment period for a newly

qualified employee shall be at least thirty (30) days.

      (3) If a newly qualified employee is

subject to a waiting period in excess of forty-five (45) days, the duration of

the employee’s enrollment period shall extend until fifteen (15) days before

the conclusion of the waiting period.

      (4)(a) Except as provided in paragraph

(b) of this subsection, an effective date of coverage for a newly qualified

employee shall be:

      1. On the first day of the month; and

      2. Subject to an effective date of

coverage determined in accordance with subsection (5) of this section.

      (b) If subject to a waiting period

consistent with 45 C.F.R. 147.116, the effective date of coverage may be on the

first day of a later month if the effective date complies with 45 C.F.R.

147.116.

      (5) The effective date of coverage shall

be:

      (a) For a plan selection made between the

first and the fifteenth of any month, the first day of the following month; or

      (b) For a plan selection made between the

sixteenth and the last day of any month, the first day of the following second

month.

 

      Section 12. Special Enrollment Period.

(1) A qualified employee, dependent of a qualified employee, or spouse of a

qualified employee may enroll in a QHP or an SADP or a qualified employee,

dependent of a qualified employee, or spouse of qualified employee may change a

QHP or an SADP during a special enrollment period if:

      (a) The qualified employee or the spouse

or dependent of a qualified employee loses minimal essential coverage;

      (b) The qualified employee gains a spouse

or dependent through marriage, birth, adoption, or placement for adoption;

      (c) The qualified employee or the spouse

or dependent of the qualified employee enrolls or fails to enroll in a QHP due

to an error, misrepresentation, or inaction of an officer, employee, or agent

of the KHBE;

      (d) The qualified employee or the spouse

or dependent of the qualified employee demonstrates to the KHBE that the QHP in

which the qualified employee or the spouse or dependent of the qualified

employee is enrolled substantially violated a material provision of its

contract in relation to the enrollee;

      (e) The qualified employee or the spouse

or dependent of the qualified employee gains access to new QHPs as a result of

a permanent move;

      (f) The qualified employee or the spouse

or dependent of the qualified employee demonstrates that the qualified employee

or the spouse or dependent of an employee meets other exceptional circumstances;

      (g) The qualified employee is an Indian

who may change from one (1) QHP to another QHP one (1) time per month;

      (h) The qualified employee or the spouse

or dependent of the qualified employee loses eligibility for coverage under

Medicaid or CHIP; or

      (i) The qualified employee or the spouse

or dependent of a qualified employee becomes eligible for premium assistance

through KHIPP.

      (2) A qualified employee or the spouse or

dependent of a qualified employee shall have thirty (30) days from the date of

a triggering event described in subsection (1)(a) through (g) of this section

to select a QHP or SADP through the SHOP.

      (3) A qualified employee or the spouse or

dependent of a qualified employee shall have sixty (60) days from the date of a

triggering event described in subsection (1)(h) or (i) of this section to

select a QHP or SADP through the SHOP.

      (4) A spouse or dependent of a qualified

employee shall not be eligible for a special enrollment period if a small

employer does not offer coverage to a spouse or dependent.

      (5) Except as provided in subsection (6)

of this section, the effective date of coverage for an enrollment during a

special enrollment period shall be, if a qualified employee selects a QHP:

      (a) Between the first and the fifteenth

day of any month, the first day of the following month; or

      (b) Between the sixteenth and the last

day of any month, the first day of the second following month.

      (6)(a) For a birth, adoption, or

placement for adoption, the effective date of coverage shall be the date of

birth, adoption, or placement for adoption.

      (b) For a marriage, or if a qualified

employee loses minimum essential coverage as described in subsection (7) or (8)

of this section, the effective date of coverage shall be the first day of the

following month.

      (7) Loss of minimum essential coverage

shall include those circumstances described in 26 C.F.R. 54.9801–6(a)(3)(i)

through (iii).

      (8) Loss of minimum essential coverage

shall not include termination or loss due to:

      (a) Failure to pay premiums on a timely

basis, including premiums prior to expiration of COBRA coverage; or

      (b) A situation allowing for a rescission

as specified in 45 C.F.R. 147.128.

 

      Section 13. Effective Dates for

Cancellation of Coverage. (1) Except for the death of an employee or dependent

or spouse of an employee, the effective date for cancellation of coverage shall

be:

      (a) The last day of the month during

which an employer terminates an employee’s or dependent or spouse of an

employee’s coverage; or

      (b) The last day of the month in which an

employee requests to terminate the employee's own or the dependent’s or

spouse’s coverage.

      (2) The effective date for cancellation

of coverage for the death of an employee or dependent or spouse of an employee

shall be the date of death.

 

      Section 14. Employer Voluntary and

Involuntary Termination from SHOP. (1)(a) An employer may terminate its

participation in SHOP at any time and for any reason by providing written

notice to KHBE.

      (b) The earliest effective date of

termination shall be:

      1. The last day of any calendar month if

the employer has given notice to the SHOP on or before the fifteenth of any

month; or

      2. The last day of the following calendar

month if notice was given after the fifteenth of any month.

      (2) An employer may be terminated from

participation in SHOP if the employer:

      (a) Fails to meet the minimum

contribution requirements established in Section 4 of this administrative

regulation;

      (b) Fails to meet the employer

eligibility requirements established in Section 2 of this administrative

regulation;

      (c) Fails to pay the total premium due

within the grace period described in KRS 304.17A-243; or

      (d) Commits fraud or misrepresentation.

      (3) The effective date of employer

termination from participation in the SHOP shall be:

      (a) The date of notification of

termination for failure to meet minimum contribution requirements under

subsection (2)(a) of this section;

      (b) The last day of the plan year, if the

condition in subsection (2)(b) of this section is met;

      (c) The last day of the month in which

premiums were paid in full, if the condition in subsection (2)(c) of this

section is met; or

      (d) The last day of the calendar month

following the month in which an employer shall be notified of the termination

by the KHBE, if the condition in subsection (2)(d) of this section is met.

      (4) Coverage terminated under subsection

(2)(c) of this section for nonpayment of premium shall be reinstated upon

request of the employer one (1) time during a plan year if the employer:

      (a) Requests reinstatement by the end of

the month following the month of termination; and

      (b) Pays all premiums:

      1. From the month of termination through

the month reinstatement is requested; and

      2. For the month following the request

for reinstatement.

      (5) If coverage is reinstated pursuant to

subsection (4) of this section, there shall be no lapse in coverage. (40 Ky.R. 199; 868; eff.

12-10-2013; 41 Ky.R. 2658; 42 Ky.R. 301; eff. 9-4-2015.)
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