§ 27-50-7 - Availability of coverage.
SECTION 27-50-7
§ 27-50-7 Availability of coverage. –(a) Until October 1, 2004, for purposes of this section, "small employer"includes any person, firm, corporation, partnership, association, or politicalsubdivision that is actively engaged in business that on at least fifty percent(50%) of its working days during the preceding calendar quarter, employed acombination of no more than fifty (50) and no less than two (2) eligibleemployees and part-time employees, the majority of whom were employed withinthis state, and is not formed primarily for purposes of buying health insuranceand in which a bona fide employer-employee relationship exists. After October1, 2004, for the purposes of this section, "small employer" has the meaningused in § 27-50-3(kk).
(b) Every small employer carrier shall, as a condition oftransacting business in this state with small employers, actively offer tosmall employers all health benefit plans it actively markets to small employersin this state including a wellness health benefit plan. A small employercarrier shall be considered to be actively marketing a health benefit plan ifit offers that plan to any small employer not currently receiving a healthbenefit plan from the small employer carrier.
(2) Subject to subdivision (1) of this subsection, a smallemployer carrier shall issue any health benefit plan to any eligible smallemployer that applies for that plan and agrees to make the required premiumpayments and to satisfy the other reasonable provisions of the health benefitplan not inconsistent with this chapter. However, no carrier is required toissue a health benefit plan to any self-employed individual who is covered by,or is eligible for coverage under, a health benefit plan offered by an employer.
(c) A small employer carrier shall file with the director, ina format and manner prescribed by the director, the health benefit plans to beused by the carrier. A health benefit plan filed pursuant to this subdivisionmay be used by a small employer carrier beginning thirty (30) days after it isfiled unless the director disapproves its use.
(2) The director may at any time may, after providing noticeand an opportunity for a hearing to the small employer carrier, disapprove thecontinued use by a small employer carrier of a health benefit plan on thegrounds that the plan does not meet the requirements of this chapter.
(d) Health benefit plans covering small employers shallcomply with the following provisions:
(1) A health benefit plan shall not deny, exclude, or limitbenefits for a covered individual for losses incurred more than six (6) monthsfollowing the enrollment date of the individual's coverage due to a preexistingcondition, or the first date of the waiting period for enrollment if that dateis earlier than the enrollment date. A health benefit plan shall not define apreexisting condition more restrictively than as defined in § 27-50-3.
(2) Except as provided in subdivision (3) of this subsection,a small employer carrier shall reduce the period of any preexisting conditionexclusion by the aggregate of the periods of creditable coverage without regardto the specific benefits covered during the period of creditable coverage,provided that the last period of creditable coverage ended on a date not morethan ninety (90) days prior to the enrollment date of new coverage.
(ii) The aggregate period of creditable coverage does notinclude any waiting period or affiliation period for the effective date of thenew coverage applied by the employer or the carrier, or for the normalapplication and enrollment process following employment or other triggeringevent for eligibility.
(iii) A carrier that does not use preexisting conditionlimitations in any of its health benefit plans may impose an affiliation periodthat:
(A) Does not exceed sixty (60) days for new entrants and notto exceed ninety (90) days for late enrollees;
(B) During which the carrier charges no premiums and thecoverage issued is not effective; and
(C) Is applied uniformly, without regard to any healthstatus-related factor.
(iv) This section does not preclude application of anywaiting period applicable to all new enrollees under the health benefit plan,provided that any carrier-imposed waiting period is no longer than sixty (60)days.
(3) Instead of as provided in paragraph (2)(i) of thissubsection, a small employer carrier may elect to reduce the period of anypreexisting condition exclusion based on coverage of benefits within each ofseveral classes or categories of benefits specified in federal regulations.
(ii) A small employer electing to reduce the period of anypreexisting condition exclusion using the alternative method described inparagraph (i) of this subdivision shall:
(A) Make the election on a uniform basis for all enrollees;and
(B) Count a period of creditable coverage with respect to anyclass or category of benefits if any level of benefits is covered within theclass or category.
(iii) A small employer carrier electing to reduce the periodof any preexisting condition exclusion using the alternative method describedunder paragraph (i) of this subdivision shall:
(A) Prominently state that the election has been made in anydisclosure statements concerning coverage under the health benefit plan to eachenrollee at the time of enrollment under the plan and to each small employer atthe time of the offer or sale of the coverage; and
(B) Include in the disclosure statements the effect of theelection.
(4) A health benefit plan shall accept late enrollees, butmay exclude coverage for late enrollees for preexisting conditions for a periodnot to exceed twelve (12) months.
(ii) A small employer carrier shall reduce the period of anypreexisting condition exclusion pursuant to subdivision (2) or (3) of thissubsection.
(5) A small employer carrier shall not impose a preexistingcondition exclusion:
(i) Relating to pregnancy as a preexisting condition; or
(ii) With regard to a child who is covered under anycreditable coverage within thirty (30) days of birth, adoption, or placementfor adoption, provided that the child does not experience a significant breakin coverage, and provided that the child was adopted or placed for adoptionbefore attaining eighteen (18) years of age.
(6) A small employer carrier shall not impose a preexistingcondition exclusion in the case of a condition for which medical advice,diagnosis, care or treatment was recommended or received for the first timewhile the covered person held creditable coverage, and the medical advice,diagnosis, care or treatment was a covered benefit under the plan, providedthat the creditable coverage was continuous to a date not more than ninety (90)days prior to the enrollment date of the new coverage.
(7) A small employer carrier shall permit an employee or adependent of the employee, who is eligible, but not enrolled, to enroll forcoverage under the terms of the group health plan of the small employer duringa special enrollment period if:
(A) The employee or dependent was covered under a grouphealth plan or had coverage under a health benefit plan at the time coveragewas previously offered to the employee or dependent;
(B) The employee stated in writing at the time coverage waspreviously offered that coverage under a group health plan or other healthbenefit plan was the reason for declining enrollment, but only if the plansponsor or carrier, if applicable, required that statement at the time coveragewas previously offered and provided notice to the employee of the requirementand the consequences of the requirement at that time;
(C) The employee's or dependent's coverage described undersubparagraph (A) of this paragraph:
(I) Was under a COBRA continuation provision and the coverageunder this provision has been exhausted; or
(II) Was not under a COBRA continuation provision and thatother coverage has been terminated as a result of loss of eligibility forcoverage, including as a result of a legal separation, divorce, death,termination of employment, or reduction in the number of hours of employment oremployer contributions towards that other coverage have been terminated; and
(D) Under terms of the group health plan, the employeerequests enrollment not later than thirty (30) days after the date ofexhaustion of coverage described in item (C)(I) of this paragraph ortermination of coverage or employer contribution described in item (C)(II) ofthis paragraph.
(ii) If an employee requests enrollment pursuant tosubparagraph (i)(D) of this subdivision, the enrollment is effective not laterthan the first day of the first calendar month beginning after the date thecompleted request for enrollment is received.
(8) A small employer carrier that makes coverage availableunder a group health plan with respect to a dependent of an individual shallprovide for a dependent special enrollment period described in paragraph (ii)of this subdivision during which the person or, if not enrolled, the individualmay be enrolled under the group health plan as a dependent of the individualand, in the case of the birth or adoption of a child, the spouse of theindividual may be enrolled as a dependent of the individual if the spouse iseligible for coverage if:
(A) The individual is a participant under the health benefitplan or has met any waiting period applicable to becoming a participant underthe plan and is eligible to be enrolled under the plan, but for a failure toenroll during a previous enrollment period; and
(B) A person becomes a dependent of the individual throughmarriage, birth, or adoption or placement for adoption.
(ii) The special enrollment period for individuals that meetthe provisions of paragraph (i) of this subdivision is a period of not lessthan thirty (30) days and begins on the later of:
(A) The date dependent coverage is made available; or
(B) The date of the marriage, birth, or adoption or placementfor adoption described in subparagraph (i)(B) of this subdivision.
(iii) If an individual seeks to enroll a dependent during thefirst thirty (30) days of the dependent special enrollment period describedunder paragraph (ii) of this subdivision, the coverage of the dependent iseffective:
(A) In the case of marriage, not later than the first day ofthe first month beginning after the date the completed request for enrollmentis received;
(B) In the case of a dependent's birth, as of the date ofbirth; and
(C) In the case of a dependent's adoption or placement foradoption, the date of the adoption or placement for adoption.
(9) Except as provided in this subdivision, requirements usedby a small employer carrier in determining whether to provide coverage to asmall employer, including requirements for minimum participation of eligibleemployees and minimum employer contributions, shall be applied uniformly amongall small employers applying for coverage or receiving coverage from the smallemployer carrier.
(ii) For health benefit plans issued or renewed on or afterOctober 1, 2000, a small employer carrier shall not require a minimumparticipation level greater than seventy-five percent (75%) of eligibleemployees.
(iii) In applying minimum participation requirements withrespect to a small employer, a small employer carrier shall not consideremployees or dependents who have creditable coverage in determining whether theapplicable percentage of participation is met.
(iv) A small employer carrier shall not increase anyrequirement for minimum employee participation or modify any requirement forminimum employer contribution applicable to a small employer at any time afterthe small employer has been accepted for coverage.
(10) If a small employer carrier offers coverage to a smallemployer, the small employer carrier shall offer coverage to all of theeligible employees of a small employer and their dependents who apply forenrollment during the period in which the employee first becomes eligible toenroll under the terms of the plan. A small employer carrier shall not offercoverage to only certain individuals or dependents in a small employer group orto only part of the group.
(ii) A small employer carrier shall not place any restrictionin regard to any health status-related factor on an eligible employee ordependent with respect to enrollment or plan participation.
(iii) Except as permitted under subdivisions (1) and (4) ofthis subsection, a small employer carrier shall not modify a health benefitplan with respect to a small employer or any eligible employee or dependent,through riders, endorsements, or otherwise, to restrict or exclude coverage orbenefits for specific diseases, medical conditions, or services covered by theplan.
(e) Subject to subdivision (3) of this subsection, a smallemployer carrier is not required to offer coverage or accept applicationspursuant to subsection (b) of this section in the case of the following:
(i) To a small employer, where the small employer does nothave eligible individuals who live, work, or reside in the establishedgeographic service area for the network plan;
(ii) To an employee, when the employee does not live, work,or reside within the carrier's established geographic service area; or
(iii) Within an area where the small employer carrierreasonably anticipates, and demonstrates to the satisfaction of the director,that it will not have the capacity within its established geographic servicearea to deliver services adequately to enrollees of any additional groupsbecause of its obligations to existing group policyholders and enrollees.
(2) A small employer carrier that cannot offer coveragepursuant to paragraph (1)(iii) of this subsection may not offer coverage in theapplicable area to new cases of employer groups until the later of one hundredand eighty (180) days following each refusal or the date on which the carriernotifies the director that it has regained capacity to deliver services to newemployer groups.
(3) A small employer carrier shall apply the provisions ofthis subsection uniformly to all small employers without regard to the claimsexperience of a small employer and its employees and their dependents or anyhealth status-related factor relating to the employees and their dependents.
(f) A small employer carrier is not required to providecoverage to small employers pursuant to subsection (b) of this section if:
(i) For any period of time the director determines the smallemployer carrier does not have the financial reserves necessary to underwriteadditional coverage; and
(ii) The small employer carrier is applying this subsectionuniformly to all small employers in the small group market in this stateconsistent with applicable state law and without regard to the claimsexperience of a small employer and its employees and their dependents or anyhealth status-related factor relating to the employees and their dependents.
(2) A small employer carrier that denies coverage inaccordance with subdivision (1) of this subsection may not offer coverage inthe small group market for the later of:
(i) A period of one hundred and eighty (180) days after thedate the coverage is denied; or
(ii) Until the small employer has demonstrated to thedirector that it has sufficient financial reserves to underwrite additionalcoverage.
(g) A small employer carrier is not required to providecoverage to small employers pursuant to subsection (b) of this section if thesmall employer carrier elects not to offer new coverage to small employers inthis state.
(2) A small employer carrier that elects not to offer newcoverage to small employers under this subsection may be allowed, as determinedby the director, to maintain its existing policies in this state.
(3) A small employer carrier that elects not to offer newcoverage to small employers under subdivision (g)(1) shall provide at least onehundred and twenty (120) days notice of its election to the director and isprohibited from writing new business in the small employer market in this statefor a period of five (5) years beginning on the date the carrier ceasedoffering new coverage in this state.