Chapter 72. Small Employer Health Insurance
TITLE 18
Insurance Code
Insurance
CHAPTER 72. SMALL EMPLOYER HEALTH INSURANCE
§ 7201. Purpose.
The purpose and intent of this chapter are to promote the availability of health insurance coverage to small employers regardless of their health status or claims experience, to prevent abusive rating practices, to require disclosure of rating practices to purchasers, to establish rules regarding renewability of coverage, to establish limitations on the use of preexisting condition exclusions, to provide for development of "basic" and "standard" health benefit plans to be offered to all small employers, to provide for establishment of a reinsurance program, and to improve the overall fairness and efficiency of the small group health insurance market.
This chapter is not intended to provide a comprehensive solution to the problem of affordability of health care or health insurance.
68 Del. Laws, c. 175, § 1; 68 Del. Laws, c. 340, § 1.;
§ 7202. Definitions.
As used in this chapter:
(1) "Actuarial certification" means a written statement by a member of the American Academy of Actuaries, or other individual acceptable to the Commissioner, that a small employer carrier is in compliance with the provisions of § 7205 of this title, based upon an 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.
(2) "Affiliation period" means a period of time not to exceed 2 months (3 months for late enrollees) during which a health maintenance organization does not collect premiums and coverage issued is not effective.
(3) "Affiliate" or "affiliated" means any entity or person who directly or indirectly through 1 or more intermediaries, controls or is controlled by, or is under common control with, a specified entity or person.
(4) "Base premium rate" means, for each class of business as to a rating period, the lowest premium rate charged or that could have been charged under a rating system for that class of business by the small employer carrier to small employers with similar case characteristics for health benefit plans with the same or similar coverage.
(5) "Basic health benefit plan" means a lower cost health benefit plan developed pursuant to § 7211 of this title.
(6) "Board" means the board of directors of the program established pursuant to § 7210 of this title [repealed].
(7) "Bona fide association" means, with respect to health insurance coverage offered in Delaware, an association which:
a. Has been actively in existence for at least 5 years;
b. Has been formed and maintained in good faith for purposes other than obtaining insurance and does not condition membership on the purchase of association-sponsored insurance;
c. 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) and clearly so states in all membership and application materials;
d. Makes health insurance coverage offered through the association available to all members regardless of any health status-related factor relating to such members (or individuals eligible for coverage through a member) and clearly so states in all marketing and application materials;
e. Does not make health insurance coverage offered through the association available other than in connection with a member of the association and clearly so states in all marketing and application materials; and
f. Provides and annually updates information necessary for the Commissioner to determine whether or not an association meets the definition of a bona fide association before qualifying as a bona fide association for the purposes of this chapter.
(8) "Carrier" means any entity that provides health insurance in this State. For the purposes of this chapter, carrier includes an insurance company, health service corporation, health maintenance organization and any other entity providing a plan of health insurance or health benefits subject to state insurance regulation.
(9) "Case characteristics" means demographic or other objective characteristics of a small employer that are considered by the small employer carrier in the determination of premium rates for the small employer, provided that claim experience, health status and duration of coverage shall not be case characteristics for the purposes of this chapter. The small employer carrier shall not use case characteristics other than age, industry (subject to § 7205(6) of this title), geographic area, family composition, unhealthy lifestyle choices and group size without prior approval of the Commissioner.
(10) "Class of business" means all of a carrier's business unless more than 1 class is established pursuant to § 7204 of this title.
(11) "Commissioner" means the Insurance Commissioner of this State.
(12) "Committee" means the Health Benefit Plan Committee created pursuant to § 7211 of this title.
(13) "Control" shall be defined in the same manner as in § 5002 of this title.
(14) "Creditable coverage" means, with respect to an individual, health benefits or coverage provided under any of the following:
a. A group health benefit plan;
b. An individual health benefit plan or individual insurance coverage;
c. Part A or Part B of Title XVIII of the Social Security Act [42 U.S.C. § 1395 et seq. or 42 U.S.C. § 1395j et seq.];
d. Title XIX of the Social Security Act [42 U.S.C. § 1396 et seq.], other than coverage consisting solely of benefits under § 1928 [42 U.S.C. § 1396s];
e. Chapter 55 of Title 10, United States Code [10 U.S.C. § 1071 et seq.];
f. A medical care program of the Indian Health Service or of a tribal organization;
g. A state health benefits risk pool;
h. A health plan offered under Chapter 89 of Title 5, United States Code [5 U.S.C. § 8901 et seq.];
i. A public health plan as defined in federal regulations;
j. A health benefit plan under § 5(e) of the Peace Corps Act [22 U.S.C. § 2504(e)].
(15) "Dependent" means a spouse, an unmarried child under the age of 18 years, an unmarried child who is a full-time student under the age of 25 years and who is financially dependent upon the parent, and an unmarried child of any age who is medically certified as totally disabled and dependent upon the parent.
(16) "Eligible employee" means an employee who works on a full-time basis and has a normal work week of 30 or more hours. The term includes a sole proprietor, a partner of a partnership and an independent contractor, if the 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 part-time, temporary or substitute basis.
(17) "Established geographic service area" means a geographic area, as approved by the Commissioner and based on the carrier's certificate of authority to transact insurance in this State, within which the carrier is authorized to provide coverage.
(18) "Health benefit plan" means any hospital or medical expense policy or certificate, hospital or medical service corporation contract, health maintenance organization or health service corporation subscriber contract or any other similar health contract, including a high deductible medical expense policy used in conjunction with a medical savings account, subject to the jurisdiction of the Commissioner available for use, offered or sold to an individual in the State of Delaware. This term includes a bona fide association plan if such plan provides coverage to 1 or more eligible employees of a small employer in Delaware.
"Health benefit plan" does not include: accident only; credit; dental; vision; Medicare supplement; benefits for long-term care, home health care, community-based care or any combination thereof; disability income insurance; liability insurance including general liability insurance and automobile liability insurance; coverage for on-site medical clinics; coverage issued as a supplement to liability insurance, worker's compensation or similar insurance; or automobile medical payment insurance. The term also excludes specified disease, hospital confinement indemnity or limited benefit health insurance if such types of coverage do not provide coordination of benefits and are provided under separate policies or certificates; provided, that the carrier offering such policies or certificates complies with the following:
a. The carrier files on or before March 1 of each year a certification with the Commissioner that contains the statement and information described in subparagraph b. of this paragraph.
b. The certification shall contain the following:
1. 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.
2. 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 these policies and certificates in this State.
c. 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 1, 1997, the carrier files with the Commissioner the information and statement required in subparagraph b. of this paragraph at least 30 days prior to the date the policy or certificate is issued or delivered in this State.
(19) "Health status-related factor" means any of the following factors:
a. Health status;
b. Medical condition, including both physical and mental illnesses;
c. Claims experience;
d. Receipt of health care;
e. Medical history;
f. Genetic information, as defined in § 2317 of this title;
g. Evidence of insurability, including conditions arising out of acts of domestic violence;
h. Disability.
(20) "Index rate" means, for each class of business as to a rating period for small employers, the arithmetic average of the applicable base premium rate and the corresponding highest premium rate.
(21) "Late enrollee" means an eligible employee or dependent who requests enrollment in a group health benefit plan following the initial enrollment period during which such individual is entitled to enroll under the terms of the health benefit plan, if such initial enrollment period is a period of at least 30 days. An eligible employee or dependent shall not be considered a late enrollee if:
a. The individual:
1. Was covered under other creditable coverage at the time of the initial enrollment period and, if required by the employer, policyholder, carrier or issuer, the employee stated at the time of initial enrollment that this was the reason for declining enrollment;
2. Lost coverage under the other creditable coverage as a result of termination of employment or eligibility, reduction in the number of hours of employment, the involuntary termination of the creditable coverage, death of a spouse, legal separation or divorce or employer contributions towards such coverage was terminated; and
3. Requests enrollment within 30 days after termination of the other creditable coverage;
b. The individual is employed by an employer that offers multiple health benefit plans and elects a different plan during an open enrollment period;
c. A court has ordered that coverage be provided for a dependent under a covered employee's health benefit plan and the request for enrollment is made within 30 days after issuance of such court order; or
d. A person becomes a dependent of a covered person through marriage, birth, adoption or placement for adoption and requests enrollment no later than 30 days after becoming such a dependent. In such case, coverage shall commence on the date the person becomes a dependent if a request for enrollment is received in a timely fashion before such date.
(22) "Medical care" means amounts paid for:
a. The diagnosis, cure, mitigation, treatment or prevention of disease or amounts paid for the purpose of affecting any structure or function of the body;
b. Transportation primarily for and essential to medical care referred to in subparagraph a. of this paragraph; and
c. Insurance covering medical care referred to in subparagraphs a. and b. of this paragraph.
(23) "New business premium rate" means, for each class of business as to a rating period, the lowest premium rate charged or offered or which could have been charged or offered by the small employer carrier to small employers with similar case characteristics for newly issued health benefit plans with the same or similar coverage.
(24) "Unhealthy lifestyle choices" means smoking or maintaining excessive weight, blood pressure or cholesterol, other than due to organic causes that are being treated by a physician, as those conditions or actions may be more fully defined by regulation by the Commissioner.
(25) "Plan of operation" means the plan of operation of the program established pursuant to § 7210 of this title [repealed].
(26) "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.
(27) "Producer" means agent and/or broker.
(28) "Program" means the Delaware Small Employer Reinsurance Program created by § 7210 of this title [repealed].
(29) "Qualifying previous coverage" and "qualifying existing coverage" shall have the same meaning as the term "creditable coverage"; provided however, that for purposes of determining a participation requirement, "qualifying previous coverage" and "qualifying existing coverage" means benefits or coverage provided under:
a. Medicare or Medicaid;
b. An employer-based health insurance or health benefit arrangement that provides benefits similar to or exceeding benefits provided under the basic health benefit plan; or
c. An individual health insurance policy (including coverage issued by a health maintenance organization, health service organization and fraternal benefit society) that provides benefits similar to or exceeding the benefits provided under the basic health benefit plan; provided, that such policy has been in effect for 1 year.
(30) "Rating period" means the calendar period for which premium rates established by a small employer carrier are assumed to be in effect.
(31) "Reinsuring carrier" means a small employer carrier participating in the reinsurance program pursuant to § 7210 of this title [repealed].
(32) "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 Chapter 64 of this title or otherwise to provide health care services to covered individuals.
(33) "Risk-assuming carrier" means a small employer carrier whose application is approved by the Commissioner pursuant to § 7209 of this title.
(34) "Small employer" means any person, firm, corporation, partnership or association that is actively engaged in business that, on at least 50 percent of its working days during the preceding calendar quarter, employed no more than 50 eligible employees, the majority of whom were employed within this State. 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 state taxation, shall be considered 1 employer.
(35) "Small employer carrier" means a carrier that offers health benefit plans covering eligible employees of 1 or more small employers in this State.
a. Except as provided in subparagraph b. of this paragraph, for the purposes of this chapter, carriers that are affiliated companies or that are eligible to file a consolidated tax return shall be treated as 1 carrier and any restrictions or limitations imposed by this chapter shall apply as if all health benefit plans delivered or issued for delivery to small employers in this State by such affiliated carriers were issued by 1 carrier.
b. An affiliated carrier that is a health maintenance organization having a certificate of authority under Chapter 64 of this title may be considered to be a separate carrier for the purposes of this chapter.
c. Unless otherwise authorized by the Commissioner, a small employer carrier shall not enter into 1 or more ceding arrangements with respect to health benefit plans delivered or issued for delivery to small employers in this State if such arrangements would result in less than 50 percent of the insurance obligation or risk for such health benefit plans being retained by the ceding carrier. The provisions of §§ 910 and 4944 of this title shall apply if a small employer carrier cedes or assumes all of the insurance obligation or risk with respect to 1 or more health benefit plans delivered or issued for delivery to small employers in this State.
In the case of an employer that was not in existence throughout the preceding calendar quarter, the determination of whether such employer is a small or large employer shall be based on the average number of employees that is reasonably expected such employer will employ on business days in the current calendar year.
(36) "Standard health benefit plan" means a health benefit plan developed pursuant to § 7211 of this title.
(37) "Waiting period" means, with respect to a group health plan and an individual who is a potential participant in or beneficiary of the plan, the period that must pass with respect to the individual before the individual is eligible for benefits under the terms of the plan. For purposes of calculating periods of creditable coverage, a waiting period shall not be considered a gap in coverage.
68 Del. Laws, c. 175, § 1; 68 Del. Laws, c. 340, § 1; 69 Del. Laws, c. 323, § 1; 69 Del. Laws, c. 403, §§ 1, 2; 71 Del. Laws, c. 143, §§ 4, 5; 72 Del. Laws, c. 383, § 5.;
§ 7203. Applicability and scope.
This chapter shall apply to any health benefit plan provided by a small employer which provides coverage to the employees of such small employer in this State.
68 Del. Laws, c. 175, §§ 1, 3; 68 Del. Laws, c. 340, § 1.;
§ 7204. Establishment of classes of business.
(a) A small employer carrier may establish more than 1 class of business only to reflect substantial differences in expected claims experience or administrative costs related to the following reasons:
(1) The small employer carrier uses more than 1 type of system for the marketing and sale of health benefit plans to small employers;
(2) The small employer carrier has acquired a class of business from another small employer carrier; or
(3) The small employer carrier provides coverage to 1 or more association groups that meet the requirements of § 3506 of this title.
(b) A small employer carrier may establish no more than 9 classes of business under subsection (a) of this section, except as provided for in subsection (d) of this section.
(c) The Commissioner may establish regulations to provide for periods of transition in order for a small employer carrier to come into compliance with subsections (a) and (b) of this section in the instance of acquisition of a block of business from another small employer carrier.
(d) The Commissioner may approve the establishment of more than 9 classes of business upon a finding that such action would enhance the efficiency and fairness of the small employer marketplace.
(e) A small employer carrier shall not transfer a small employer involuntarily into or out of a class of business. A small employer carrier shall not offer to transfer a small employer into or out of a class of business unless such offer is made to transfer all small employers in the class of business without regard to case characteristics, claim experience, health status or duration of coverage since issue.
(f) [Expired.]
68 Del. Laws, c. 340, § 1.;
§ 7205. Restrictions relating to premium rates.
Premium rates for health benefit plans subject to this chapter shall be subject to the following provisions:
(1) The index rate for any class of business shall not exceed the index rate for similar coverage for any other class of business by more than 20 percent in any rating period.
(2) The premium rates for similar health benefit plans within a class of business shall not vary from the index rate by more than 35 percent, with:
a. An additional combined variation of no more than 10 percent for gender and geography; and
b. The actuarially justified adjustment for age and family composition,
provided, that the small employer carrier shall file a document as prescribed by the Commissioner setting out the age classes and family composition classes used pursuant to this paragraph, including actuarial certification of these classes.
(3) The percentage increase in the premium rate charged to a small employer for a new rating period may not exceed the sum of the following:
a. The percentage change in the new business premium rate calculated using premium rates on the first day of the prior rating period and the first day of the new rating period. In the case of a health benefit plan into which the small employer carrier is no longer enrolling new small employers, the small employer carrier shall use the percentage change in the new business premium rate for the most similar health benefit plan into which the small employer carrier is actively enrolling new small employers;
b. Any adjustment, not to exceed 15 percent annually and adjusted pro rata for rating periods of less than 1 year, due to the claim experience, health status or duration of coverage of the employees or dependents of the small employer as determined from the small employer carrier's rate manual for the class of business; and
c. Any adjustment due to change in coverage or change in the case characteristics of the small employer as determined from the small employer carrier's rate manual for the class of business.
(4) Adjustments in rates for claim experience, health status and duration of coverage shall not be charged to individual employees or dependents. Any such adjustment shall be applied uniformly to the rates charged for all employees and dependents of the small employer. This prohibition shall not be construed to prevent a carrier from establishing premium discounts or rebates or modifying otherwise applicable co-payments or deductibles in return for adherence to programs of health promotion and disease prevention, if otherwise allowed by law.
(5) Premium rates for health benefit plans shall comply with the requirements of this section notwithstanding any assessments paid or payable by small employer carriers pursuant to § 7210 of this title [repealed].
(6) A small employer carrier may utilize industry as a case characteristic in establishing premium rates, provided that the highest rate factor associated with any industry classification shall not exceed the lowest rate factor associated with any industry classification by more than 15 percent.
(7) In the case of health benefit plans delivered or issued for delivery prior to January 4, 1993, a premium rate for a rating period may exceed the ranges set forth in paragraphs (1) and (2) of this section for a period of 1 year following January 4, 1993. In such case, the percentage increase in the premium rate charged to a small employer for a new rating period shall not exceed the sum of the following:
a. The percentage change in the new business premium rate calculated using premium rates on the first day of the prior rating period and the first day of the new rating period. In the case of a health benefit plan into which the small employer carrier is no longer enrolling new small employers, the small employer carrier shall use the percentage change in the new business premium rate for the most similar health benefit plan into which the small employer carrier is actively enrolling new small employers.
b. Any adjustment due to change in coverage or change in the case characteristics of the small employer as determined from the carrier's rate manual for the class of business.
(8)a. Small employer carriers shall apply rating factors, including case characteristics, consistently with respect to all small employers in a class of business. Rating factors shall produce premiums for identical groups which differ only by the amounts attributable to plan design and do not reflect differences due to the nature of the groups assumed to select particular health benefit plans.
b. A small employer carrier shall treat all health benefit plans issued or renewed in the same calendar month as having the same rating period.
(9) For purposes of this subsection, a health benefit plan that utilizes a restricted provider network shall not be considered similar coverage to a health benefit plan that does not utilize such a network, provided that utilization of the restricted provider network results in substantial differences in claims costs.
68 Del. Laws, c. 175, § 1; 68 Del. Laws, c. 340, § 1; 71 Del. Laws, c. 143, § 6.;
§ 7206. Renewability of coverage.
(a) A health benefit plan subject to this chapter shall be renewable with respect to all eligible employees or dependents, at the option of the small employer, except in any of the following cases:
(1) Nonpayment of the required premiums;
(2) Fraud or misrepresentation of the small employer or, with respect to coverage of individual insureds, the insureds or their representatives;
(3) Noncompliance with the carrier's minimum participation requirements;
(4) Noncompliance with the carrier's employer contribution requirements;
(5) Repeated misuse of a provider network provision;
(6) The small employer carrier elects to nonrenew all of its health benefit plans delivered or issued for delivery to small employers in this State. In such a case the carrier shall:
a. Provide advance notice of its decision under this paragraph to the commissioner in each state in which it is licensed; and
b. Provide notice of the decision not to renew coverage to all affected small employers and to the commissioner in each state in which an affected insured individual is known to reside at least 180 days prior to the nonrenewal of any health benefit plans by the carrier. Notice to the commissioner under this subparagraph shall be provided at least 3 working days prior to the notice to the affected small employers;
(7) The Commissioner finds that the continuation of the coverage would:
a. Not be in the best interests of the policyholders or certificate holders;
b. Impair the carrier's ability to meet its contractual obligations.
In such instance the Commissioner shall assist affected small employers in finding replacement coverage;
(8) With respect to a carrier that offers a health benefit plan through a managed care plan, there is no longer any enrollee in connection with such plan that lives, resides or works in the service area of the carrier;
(9) An employer is no longer actively engaged in the business in which it was engaged on the effective date of the plan; or
(10) With respect to coverage that is made available only through 1 or more bona fide associations, the membership of an employer ceases.
(b) A small employer carrier that elects not to renew a health benefit plan under subsection (a)(6) of this section shall be prohibited from writing new business in the small employer market in this State for a period of 5 years from the date of notice to the Commissioner.
(c) In the case of a small employer carrier doing business in 1 established geographic service area of the State, the rules set forth in this chapter shall apply only to the carrier's operations in that service area.
68 Del. Laws, c. 175, § 1; 68 Del. Laws, c. 340, § 1; 71 Del. Laws, c. 143, § 7.;
§ 7207. Availability of coverage; preexisting conditions; minimum participation.
(a)(1) Subject to paragraph (4) of this subsection, every small employer carrier shall, as a condition of transacting business in this State with small employers, actively offer to small employers at least 2 health benefit plans. One health benefit plan offered by each small employer carrier shall be a basic health benefit plan and 1 plan shall be a standard health benefit plan.
(2)a. A small employer carrier shall issue a basic health benefit plan or a standard health benefit plan to any small employer meeting the requirements of paragraph (3) of this subsection that applies to either such 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.
b. In the case of a small employer carrier that establishes more than 1 class of business pursuant to § 7204 of this title, the small employer carrier shall maintain and issue to such small employers at least 1 basic health benefit plan and at least 1 standard health benefit plan in each class of business so established. A small employer carrier may apply reasonable criteria in determining whether to accept a small employer into a class of business, provided that:
1. The criteria are not intended to discourage or prevent acceptance of small employers applying for a basic or standard health benefit plan;
2. The criteria are not related to the health status or claim experience of the small employer;
3. The criteria are applied consistently to all small employers applying for coverage in the class of business; and
4. The small employer carrier provides for the acceptance of all eligible small employers into 1 or more classes of business.
The provisions of this subparagraph shall not apply to a class of business into which the small employer carrier is no longer enrolling new small businesses.
(3) A small employer is eligible under paragraph (2) of this subsection if it employed at least 1 or more eligible employees within this State on at least 50 percent of its working days during the preceding calendar quarter.
(4) The provisions of this section shall be effective 180 days after the Commissioner's and Delaware Health Care Commission's approval of the basic health benefit plan and the standard health benefit plan developed pursuant to § 7211 of this title; provided, that if the Small Employer Health Reinsurance Program created pursuant to § 7210 of this title [repealed] is not yet operative on that date, the provisions of this paragraph shall be effective on the date that program begins operation.
(b)(1) A small employer carrier shall file with the Commissioner, in a format and manner prescribed by the Commissioner, the basic health benefit plans and the standard health benefit plans to be used by the carrier within 90 days after the Commissioner establishes the guidelines thereof. A health benefit plan filed pursuant to this paragraph may be used by a small employer carrier beginning 30 days after it is filed unless the Commissioner disapproves its use.
(2) The Commissioner 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 basic or standard health benefit plan on the grounds that the plan does not meet the requirements of this chapter.
(c) 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 due to a preexisting condition where such were incurred more than 12 months following the date of enrollment in such plan or, if earlier, the first day of the waiting period for such enrollment. A health benefit plan shall not define a preexisting condition more restrictively than a condition (whether physical or mental), regardless of the cause of the condition for which medical advice, diagnosis, care, or treatment was recommended or received within 6 months immediately preceding the effective date of coverage.
(2)a. A health benefit plan shall not impose any preexisting condition exclusion relating to pregnancy or in the case of a child who is adopted or placed for adoption before attaining 18 years of age and who, as of the last day of the 30-day period beginning on the date of the adoption or placement for adoption, is covered under creditable coverage. This subparagraph shall not apply to coverage before the date of such adoption or placement for adoption.
b. If a health maintenance organization does not utilize preexisting condition limitations in any health benefit plan, it may impose an affiliation period. An affiliation period shall run concurrently with any waiting period imposed. Such a health maintenance organization may, in lieu of an affiliation period, use an alternative method to address adverse selection with the prior approval of the Insurance Commissioner.
(3) A health benefit plan shall waive any time period applicable to a preexisting condition exclusion or limitation period with respect to particular services for the period of time an individual was previously covered by qualifying previous coverage that provided benefits with respect to such services provided, that the qualifying previous coverage was continuous to a date not more than 63 days prior to the effective date of the new coverage, excluding any waiting period applicable to the new plan. This paragraph does not preclude application of any waiting period applicable to all new enrollees under the health benefit plan.
(4) A health benefit plan may either exclude coverage for late enrollees for 18 months or contain an 18-month preexisting condition exclusion; provided, that if both a period of exclusion from coverage and a preexisting condition exclusion are applicable to a late enrollee, the combined period shall not exceed 18 months from the date the individual became eligible to enroll for coverage under the health benefit plan, except as provided in paragraph (1) of this subsection.
(5)a. Except as provided in subsection (d) of this section, 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, shall be applied uniformly among all small employers with the same number of eligible employees applying for coverage or receiving coverage from the small employer carrier.
b. A small employer carrier may vary the application of minimum participation requirements and minimum employer contribution requirements only by the size of the small employer group.
c. An employee who does not participate in the health benefit plan and who presents satisfactory evidence that the employee has coverage through a spouse or other qualifying existing coverage shall not be counted by a small employer carrier with respect to number or percent participation requirements.
d. A small employer carrier shall not increase any requirement for minimum employee participation or any requirement for minimum employer contribution applicable to a small employer at any time after the small employer has contracted for coverage.
(6)a. 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. A small employer carrier shall not offer coverage to only certain individuals in a small employer group or to only part of the group, except in the case of late enrollees as provided in paragraph (4) of this subsection.
b. A small employer carrier shall not modify a basic or standard 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 for certain diseases or medical conditions otherwise covered by the health benefit plan.
(d)(1) A small employer carrier shall not be required to offer coverage or accept applications pursuant to subsection (a) of this section in the case of the following:
a. To a small employer, where the small employer is not physically located in the carrier's established geographic service area;
b. To an employee, when the employee does not work or reside within the carrier's established geographic service area; or
c. Within an area where the small employer carrier reasonably anticipates, and demonstrates to the satisfaction of the Commissioner, that it will not have the capacity within its established geographic service area to deliver service adequately to the members of such groups because of its obligations to existing group policyholders and enrollees.
(2) A small employer carrier that cannot offer coverage pursuant to paragraph (1)c. of this subsection may not offer coverage in the applicable area to new cases of employer groups with more than 50 eligible employees or to any small employer groups until the later of 180 days following each such refusal or the date on which the carrier notifies the Commissioner that it has regained capacity to deliver services to small employer groups.
(e) A small employer carrier shall not be required to provide coverage to its employers pursuant to subsection (a) of this section for any period of time for which the Commissioner determines that requiring the acceptance of small employers in accordance with the provisions of subsection (a) of this section would place the small employer carrier in a financially impaired condition.
(f) Effective July 1, 1997, every small employer carrier shall also offer to small employers a choice of all the other small group plans the carrier markets in Delaware; except that this requirement shall not apply to:
(1) A health benefit plan offered by a carrier if such plan is made available in the small group market only through 1 or more bona fide association plans; or
(2) A business group of 1 where the business group of 1 does not meet the carrier's actuarially-based underwriting criteria.
(g) A health benefit plan shall not establish rules for eligibility for any individual to enroll under the plan based on any health status-related factors in relation to the individual or a dependent of the individual.
68 Del. Laws, c. 340, § 1; 69 Del. Laws, c. 403, §§ 3-5; 70 Del. Laws, c. 186, § 1; 71 Del. Laws, c. 143, §§ 8-12; 72 Del. Laws, c. 383, §§ 1, 2.;
§ 7208. Notice of intent to operate as a risk-assuming carrier.
(a)(1) Each small employer carrier desiring to operate as a risk-assuming carrier shall make application to the Commissioner within 30 days of January 4, 1993 to operate as a risk-assuming carrier, pursuant to § 7209 of this title.
(2) The Commissioner may permit a carrier to modify its status at any time for good cause shown.
(3) The Commissioner shall establish an application process for small employer carriers seeking to change their status under this subsection.
(b) A reinsuring carrier that applies and is approved to operate as a risk-assuming carrier shall not be permitted to continue to reinsure any health benefit plan with the Program. Such a carrier shall pay a prorated assessment based upon business issued as a reinsuring carrier for any portion of the year that the business was reinsured.
68 Del. Laws, c. 340, § 1.;
§ 7209. Application to become a risk-assuming carrier.
(a) A small employer carrier may apply to become a risk-assuming carrier by filing an application with the Commissioner in a form and manner prescribed by the Commissioner.
(b) The Commissioner shall consider the following factors in evaluating an application filed under subsection (a) of this section:
(1) The carrier's financial condition;
(2) The carrier's history of rating and underwriting small employer groups;
(3) The carrier's commitment to market fairly to all small employers in the State or its established geographic service area, as applicable;
(4) The carrier's experience with managing the risk of small employer groups; and
(5) The effect of approval and disapproval on the small employer insurance market and the Delaware Small Employer Health Reinsurance Program pursuant to § 7210 of this title [repealed].
(c) The Commissioner may rescind the approval granted to a risk-assuming carrier under this section if the Commissioner finds that:
(1) The carrier's financial condition will no longer support the assumption of risk from issuing coverage to small employers in compliance with § 7207 of this title without the protection afforded by the Program;
(2) The carrier has failed to market fairly to all small employers in the State or its established geographic service area, as applicable; or
(3) The carrier has failed to provide coverage to eligible small employers as required in § 7207 of this title.
(d) A small employer carrier electing to be a risk-assuming carrier shall not be subject to the provisions of § 7210 of this title [repealed].
68 Del. Laws, c. 340, § 1; 69 Del. Laws, c. 403, § 6.;
§ 7210. Small Employer Health Reinsurance Program.
Repealed by 77 Del. Laws, c. 106, § 3, effective July 6, 2009.
§ 7211. Health benefit plan committee.
(a) The Commissioner shall appoint a Health Benefit Plan Committee. The Committee shall be composed of representatives of carriers, small employers and employees, health care providers and producers.
(b) The Committee shall recommend the form and level of coverages to be made available by small employer carriers pursuant to § 7207 of this title.
(c) The Committee shall recommend benefit levels, cost sharing levels, exclusions and limitations for the basic health benefit plan and the standard health benefit plan. The Committee shall also design a basic health benefit plan and a standard health benefit plan which contain benefit and cost sharing levels that are consistent with the basic method of operation and the benefit plans of health maintenance organizations, including any restrictions imposed by federal law.
(1) The plans recommended by the Committee may include cost containment features such as:
a. Utilization review of health care services, including review of medical necessity of hospital and physician services;
b. Case management;
c. Selective contracting with hospitals, physicians and other health care providers;
d. Reasonable benefit differentials applicable to providers that participate or do not participate in arrangements using restricted network provisions; and
e. Other managed care provisions.
(2) The Committee shall submit the health benefit plans described in paragraph (1) of this subsection to the Commissioner and the Delaware Health Care Commission for approval within 180 days after the appointment of the Committee.
68 Del. Laws, c. 340, § 1.;
§ 7212. Periodic market evaluation.
The board, in consultation with the Committee, shall study and report at least every 3 years to the Commissioner on the effectiveness of this chapter. The report shall analyze the effectiveness of the chapter in promoting rate stability, product availability and coverage affordability. The report may contain recommendations for actions to improve the overall effectiveness, efficiency and fairness of the small employer group health insurance marketplace. The report shall address whether carriers and producers are fairly and actively marketing or issuing health benefit plans to small employers in fulfillment of the purposes of the chapter. The report may contain recommendations for market conduct or other regulatory standards or action.
68 Del. Laws, c. 340, § 1.;
§ 7213. Waiver of certain state laws.
No law requiring the coverage of a health care service or benefit, or requiring the reimbursement, utilization or inclusion of a specific category of licensed health care practitioner, shall apply to a basic health benefit plan delivered or issued for delivery to small employers in this State pursuant to this chapter.
68 Del. Laws, c. 340, § 1.;
§ 7214. Administrative procedures.
The Commissioner shall issue regulations in accordance with § 314 of this title and Chapter 101 of Title 29, for the implementation and administration of this chapter.
68 Del. Laws, c. 340, § 1.;
§ 7215. Standards to assure fair marketing.
(a) Each small employer carrier shall actively market health benefit plan coverage, including the basic and standard health benefit plans, to eligible small employers in the State. If a small employer carrier denies coverage to a small employer on the basis of the health status or claims experience of the small employer or its employees or dependents, the small employer carrier shall offer the small employer the opportunity to purchase a basic health benefit plan and a standard health benefit plan.
(b)(1) Except as provided in paragraph (2) of this subsection, no small employer carrier or producer shall, directly or indirectly, engage in the following activities:
a. Encouraging or directing small employers to refrain from filing an application for coverage with the small employer carrier because of the health status, claims experience, industry, occupation or geographic location of the small employer.
b. Encouraging or directing small employers to seek coverage from another carrier because of the health status, claims experience, industry, occupation or geographic location of the small employer.
(2) The provision of paragraph (1) of this subsection shall not apply with respect to information provided by a small employer carrier or producer to a small employer regarding the established geographic service area or a restricted network provision of a small employer carrier.
(c) Except as provided in this section, no small employer carrier shall, directly or indirectly, enter into any contract, agreement or arrangement with a producer that provides for or results in the compensation paid to a producer for the sale of a health benefit plan to be varied because of the health status, claims experience, industry, occupation or geographic area of the small employer.
(d) A small employer carrier shall provide reasonable compensation, as provided under the plan of operation of the Program, to a producer, if any, for the sale of a basic or standard health benefit plan.
(e) No small employer carrier may terminate, fail to renew or limit its contract or agreement of representation with a producer for any reason related to the health status, claims experience, occupation or geographic location of the small employers placed by the producer with the small employer carrier.
(f) No small employer carrier or producer may induce or otherwise encourage a small employer to separate or otherwise exclude an employee from health coverage or benefits provided in connection with the employee's employment.
(g) Denial by a small employer carrier of an application for coverage from a small employer shall be in writing and shall state the reason or reasons for the denial.
(h) The Commissioner may establish regulations setting forth additional standards to provide for the fair marketing and broad availability of health benefit plans to small employers in this State.
(i)(1) A violation of this section by a small employer carrier or a producer shall be an unfair trade practice under §§ 2303 and 2304 of this title.
(2) If a small employer carrier enters into a contract, agreement or other arrangement with a 3rd-party administrator to provide administrative, marketing or other services related to the offering of health benefit plans to small employers in this State, the 3rd-party administrator shall be subject to this section as if it were a small employer carrier.
68 Del. Laws, c. 340, § 1.;
§ 7216. Regulations; exceptions.
(a) The Commissioner may establish regulations to implement the provisions of this section and to assure that rating practices used by small employer carriers are consistent with the purposes of this chapter, including regulations that:
(1) Assure that differences in rates charged for health benefit plans by small employer carriers are reasonable and reflect objective differences in plan design (not including differences due to the nature of the groups assumed to select particular health benefit plans); and
(2) Prescribe the manner in which case characteristics may be used by small employer carriers.
(b) The Commissioner may suspend for a specified period the application of subsection (a)(1) of this section as to the premium rates applicable to 1 or more small employers included within a class of business of a small employer carrier for 1 or more rating periods upon a filing by the small employer carrier and a finding by the Commissioner either that the suspension is reasonable in light of the financial condition of the small employer carrier or that the suspension would enhance the efficiency and fairness of the marketplace for small employer health insurance.
68 Del. Laws, c. 175, § 1; 68 Del. Laws, c. 340, § 1.;
§ 7217. Disclosure of rating practices; certification of compliance.
(a) In connection with the offering for sale of any health benefit plan to a small employer, a small employer carrier shall make a reasonable disclosure, as part of its solicitation and sales materials, of all of the following:
(1) The extent to which premium rates for a specified small employer are established or adjusted based upon the actual or expected variation in claims costs or actual or expected variation in health status of the employees of the small employer and their dependents;
(2) The provisions of the health benefit plan concerning the small employer carrier's right to change premium rates and the factors, other than claim experience that affect changes in premium rates;
(3) The provisions relating to renewability of policies and contracts;
(4) The provisions relating to any preexisting condition provision; and
(5) The benefits available under all health benefit plans for which the employer is qualified.
(b) Each small employer carrier shall maintain at its principal place of business a complete and detailed description of its rating practices and renewal underwriting practices, including information and documentation that demonstrate that its rating methods and practices are based upon commonly accepted actuarial assumptions and are in accordance with sound actuarial principles.
(c) Each small employer carrier shall file with the Commissioner annually on or before March 15, an actuarial certification certifying that the carrier is in compliance with this chapter and that the rating methods of the small employer carrier are actuarially sound. Such certification shall be in a form and manner, and shall contain such information, as specified by the Commissioner. A copy of the certification shall be retained by the small employer carrier at its principal place of business.
(d) A small employer carrier shall make information and documentation described in subsection (b) of this section available to the Commissioner upon request. Except in cases of violations of this chapter, the information shall be considered proprietary and trade secret information and shall not be subject to disclosure by the Commissioner to persons outside of the Department except as agreed to by the small employer carrier or as ordered by a court of competent jurisdiction.
68 Del. Laws, c. 175, § 1; 68 Del. Laws, c. 340, § 1; 71 Del. Laws, c. 143, § 13.;
§ 7218. Factors for premium rates; premium rate variations; premium rate adjustments; "stop-loss" policies prohibited [Effective July 1, 2011]
(a) The only factors, other than plan design and family composition, that may be considered by a small employer carrier in setting premium rates for small employer health insurance are age, health status, and size of the group. "Health status" as used in this section means medical condition, including physical and mental illnesses; claims experience; receipt of health care; evidence of insurability; medical history; and unhealthy lifestyle choices as defined in § 7202(24) of this title.
(b) The maximum premium rate variation between high and low small employer health insurance risk groups of 2 to 50 employees is a ratio of 5 for the high risk groups to 1 for the low risk groups. The ratio of premium rate variation between high and low risk small employee groups of 2 to 50 employees must decrease by a factor of .5 for high risk groups annually on July 1, until the premium rate variation ratio is 3 for the high risk groups to 1 for the low risk groups.
(c) The maximum premium rate variation between high and low small employer health insurance risk groups of a single employee, known as "groups of one", is a ratio of 6 for the high risk groups to 1 for the low risk groups. The ratio of premium rate variation between high and low risk small employer groups of one must decrease by a factor of .5 for high risk groups of 1 annually on July 1, until the premium rate variation ratio is 4 for the high risk groups to 1 for the low risk groups. Nothing in this provision may be construed to create separate risk pools for groups of one and groups of 2 to 50.
(d) A group may not receive a premium rate adjustment for a change in the health status of the members of the group that exceeds 15%, whether higher or lower, from the prior year.
(e) A small employer health insurance carrier may not make available, issue, or renew a "stop-loss" policy to a small employer.
(f) Nothing herein shall apply to any company licensed under Chapter 69 of this title.
77 Del. Laws, c. 388, § 1, 2.;