§ 58-50-130. Required health care plan provisions.
§ 58‑50‑130. Required health care plan provisions.
(a) Health benefitplans covering small employers are subject to the following provisions:
(1) to (4) Repealed bySession Laws 1997‑259, s. 5, effective July 14, 1997.
(4a) A carrier maycontinue to enforce reasonable employer participation and contributionrequirements on small employers applying for coverage; however, participationand contribution requirements may vary among small employers only by the sizeof the small employer group and shall not differ because of the health benefitplan involved. In applying minimum participation requirements to a smallemployer, a small employer carrier shall not consider employees or dependentswho have qualifying existing coverage in determining whether an applicableparticipation level is met. "Qualifying existing coverage" meansbenefits or coverage provided under: (i) Medicare, Medicaid, and othergovernment funded programs; or (ii) an employer‑based health insurance orhealth benefit arrangement, including a self‑insured plan, that providesbenefits similar to or in excess of benefits provided under the basic healthcare plan.
(4b) Late enrollees mayonly be excluded from coverage for the greater of 18 months or an 18‑monthpreexisting‑condition exclusion; however, if both a period of exclusionfrom coverage and a preexisting‑condition exclusion are applicable to alate enrollee, the combined period shall not exceed 18 months. If a period ofexclusion from coverage is applied, a late enrollee shall be enrolled at theend of that period in the health benefit plan held at the time by the smallemployer.
(5) Notwithstanding anyother provision of this Chapter, no small employer carrier, insurer, subsidiaryof an insurer, or controlled individual of an insurance holding company shallact as an administrator or claims paying agent, as opposed to an insurer, onbehalf of small groups which, if they purchased insurance, would be subject tothis section. No small employer carrier, insurer, subsidiary of an insurer, orcontrolled individual of an insurance holding company shall provide stop loss,catastrophic, or reinsurance coverage to small employers that does not complywith the underwriting, rating, and other applicable standards in this Act.
(6) If a small employercarrier offers coverage to a small employer, the small employer carrier shalloffer coverage to all eligible employees of a small employer and theirdependents. A small employer carrier shall not offer coverage to only certainindividuals in a small employer group except in the case of late enrollees asprovided in G.S. 58‑50‑130(a)(4).
(7), (8) Repealed bySession Laws 1997‑259, s. 5.
(9) The health benefitplan must meet the applicable requirements of Article 68 of this Chapter.
(b) For all smallemployer health benefit plans that are subject to this section, the premiumrates are subject to all of the following provisions:
(1) Small employercarriers shall use an adjusted‑community rating methodology in which thepremium for each small employer can vary only on the basis of the eligibleemployee's or dependent's age as determined under subdivision (6) of thissubsection, the gender of the eligible employee or dependent, number of familymembers covered, or geographic area as determined under subdivision (7) of thissubsection, or industry as determined under subdivision (9) of this subsection.Premium rates charged during a rating period to small employers with similarcase characteristics for same coverage shall not vary from the adjustedcommunity rate by more than twenty‑five percent (25%) for any reason,including differences in administrative costs and claims experience.
(2) Rating factorsrelated to age, gender, number of family members covered, geographic location,or industry may be developed by each carrier to reflect the carrier'sexperience. The factors used by carriers are subject to the Commissioner'sreview.
(3) A small employercarrier shall not modify the premium rate charged to a small employer or asmall employer group member, including changes in rates related to theincreasing age of a group member, for 12 months from the initial issue date orrenewal date, unless the group is composite rated and composition of the groupchanged by twenty percent (20%) or more or benefits are changed. The percentageincrease in the premium rate charged to a small employer for a new ratingperiod shall not exceed the sum of all of the following:
a. The percentagechange in the adjusted community rate as measured from the first day of theprior rating period to the first day of the new rating period.
b. Any adjustment, notto exceed fifteen percent (15%) annually, due to claim experience, healthstatus, or duration of coverage of the employees or dependents of the smallemployer.
c. Any adjustmentbecause of change in coverage or change in case characteristics of the smallemployer group.
(4), (5) Repealed bySession Laws 1995, c. 238, s. 1.
(6) Unless the smallemployer carrier uses composite rating, the small employer carrier shall usethe following age brackets:
a. Younger than 15years;
b. 15 to 19 years;
c. 20 to 24 years;
d. 25 to 29 years;
e. 30 to 34 years;
f. 35 to 39 years;
g. 40 to 44 years;
h. 45 to 49 years;
i. 50 to 54 years;
j. 55 to 59 years;
k. 60 to 64 years;
l. 65 years.
Carriersmay combine, but shall not split, complete age brackets for the purposes ofdetermining rates under this subsection. Small employer carriers shall bepermitted to develop separate rates for individuals aged 65 years and older forcoverage for which Medicare is the primary payor and coverage for whichMedicare is not the primary payor.
(7) A carrier shalldefine geographic area to mean medical care system. Medical care system factorsshall reflect the relative differences in expected costs, shall produce ratesthat are not excessive, inadequate, or unfairly discriminatory in the medicalcare system areas, and shall be revenue neutral to the small employer carrier.
(8) The Department mayadopt rules to administer this subsection and to assure that rating practicesused by small employer carriers are consistent with the purposes of thissubsection. Those rules shall include consideration of differences based on allof the following:
a. Health benefit plansthat use different provider network arrangements may be considered separateplans for the purposes of determining the rating in subdivision (1) of thissubsection, provided that the different arrangements are expected to result insubstantial differences in claims costs.
b. Except as providedfor in sub‑subdivision a. of this subdivision, differences in ratescharged for different health benefit plans shall be reasonable and reflectobjective differences in plan design, but shall not permit differences inpremium rates because of the case characteristics of groups assumed to selectparticular health benefit plans.
c. Small employercarriers shall apply allowable rating factors consistently with respect to allsmall employers.
(9) In any case wherethe small employer carrier uses industry as a case characteristic inestablishing premium rates, the rate factor associated with any industryclassification divided by the lowest rate factor associated with any otherindustry classification shall not exceed 1.2.
(c) Repealed by SessionLaws 1993, c. 529, s. 3.7.
(d) In connection withthe offering for sale of any health benefit plan to a small employer, eachsmall employer carrier shall make a reasonable disclosure, as part of itssolicitation and sales materials, of the following and shall provide thisinformation to the small employer upon request:
(1) Repealed by SessionLaws 1993, c. 529, s. 3.7.
(2) Provisionsconcerning the small employer carrier's right to change premium rates and thefactors other than claims experience that affect changes in premium rates.
(3) Provisions relatingto renewability of policies and contracts.
(4) Provisions affectingany preexisting conditions provision.
(5) The benefitsavailable and premiums charged under all health benefit plans for which thesmall employer is eligible.
(e) Each small employercarrier shall maintain at its principal place of business a complete anddetailed description of its rating practices and renewal underwritingpractices, including information and documentation that demonstrate that itsrating methods and practices are based upon commonly accepted actuarialassumptions and are in accordance with sound actuarial principles.
(f) Each smallemployer carrier shall file with the Commissioner annually on or before March15 an actuarial certification certifying that it is in compliance with this Actand that its rating methods are actuarially sound. The small employer carriershall retain a copy of the certification at its principal place of business.
(g) A small employercarrier shall make the information and documentation described in subsection(e) of this section available to the Commissioner upon request. Except in casesof violations of this Act, the information is proprietary and trade secretinformation and is not subject to disclosure by the Commissioner to personsoutside of the Department except as agreed to by the small employer carrier oras ordered by a court of competent jurisdiction. Nothing in this sectionaffects the Commissioner's authority to approve rates before their use underG.S. 58‑65‑60(e) or G.S. 58‑67‑50(c).
(h) The provisions ofsubdivisions (a)(1), (3), and (5) and subsections (b) through (g) of thissection apply to health benefit plans delivered, issued for delivery, renewed,or continued in this State or covering persons residing in this State on orafter January 1, 1992. The provisions of subdivisions (a)(2) and (4) of thissection apply to health benefit plans delivered, issued for delivery, renewed,or continued in this State or covering persons residing in this State on orafter the date the plan becomes operational, as designated by the Commissioner.For purposes of this subsection, the date a health benefit plan is continued isthe anniversary date of the issuance of the health benefit plan. (1991, c. 630, s. 1; 1993, c.408, s. 6; c. 529, ss. 3.2, 3.7; 1993 (Reg. Sess., 1994), c. 569, ss. 7, 8; c.678, ss. 24, 25; 1995, c. 238, s. 1; c. 507, s. 23A.1(b); 1995 (Reg. Sess.,1996), c. 669, s. 1; 1997‑259, ss. 5, 6; 1998‑211, ss. 9.1, 10;1999‑132, s. 4.1; 2001‑334, ss. 3, 12.3; 2006‑154, s. 7.)