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SENATE BILL NO. 1454
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S1454.......................................by COMMERCE AND HUMAN RESOURCES
SMALL EMPLOYER HEALTH INSURANCE - Amends existing law to add a definition
of "plan year" and to amend the definition of "small employer."
02/13 Senate intro - 1st rdg - to printing
02/16 Rpt prt - to Com/HuRes
02/20 Rpt out - rec d/p - to 2nd rdg
02/23 2nd rdg - to 3rd rdg
02/26 3rd rdg - PASSED - 35-0-0
AYES -- Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Crow, Danielson, Darrington, Diede, Dunklin, Frasure, Geddes, Hansen,
Hawkins, Ingram, Ipsen, Keough, King, Lee, McLaughlin, Noh, Parry,
Richardson, Riggs, Risch, Sandy, Schroeder, Sorensen, Stennett,
Sweeney, Thorne, Twiggs, Wheeler, Whitworth
NAYS -- None
Absent and excused -- None
Floor Sponsor - Andreason
Title apvd - to House
02/27 House intro - 1st rdg - to Bus
03/12 Rpt out - rec d/p - to 2nd rdg
03/13 2nd rdg - to 3rd rdg
03/16 3rd rdg - PASSED - 70-0-0
AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Bivens,
Black(15), Black(23), Boe, Bruneel, Callister, Campbell, Chase,
Clark, Crane, Crow, Cuddy, Deal, Denney, Ellsworth, Field(13),
Field(20), Gagner, Geddes, Gould, Hadley, Hansen, Henbest, Hornbeck,
Jaquet, Jones(9) Jones(22), Jones(20), Judd, Kellogg, Kempton,
Kendell, Kjellander, Kunz, Lake, Linford, Loertscher, Mader, Marley,
McKague, Meyer, Miller, Mortensen, Newcomb, Pischner, Pomeroy,
Reynolds, Richman, Ridinger, Robison, Sali, Schaefer, Stevenson,
Stoicheff, Stone, Stubbs, Taylor, Tilman, Tippets, Trail, Watson,
Wheeler, Wood, Zimmermann, Mr. Speaker.
NAYS -- None
Absent and excused -- None
Floor Sponsor - Chase
Title apvd - to Senate
03/16 To enrol
03/18 Rpt enrol - Pres signed
03/19 To Governor
03/20 Governor signed
Session Law Chapter 143
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fourth Legislature Second Regular Session - 1998
IN THE SENATE
SENATE BILL NO. 1454
BY COMMERCE AND HUMAN RESOURCES COMMITTEE
1 AN ACT
2 RELATING TO THE SMALL EMPLOYER HEALTH INSURANCE AVAILABILITY ACT; AMENDING
3 SECTION 41-4703, IDAHO CODE, TO ADD A DEFINITION OF "PLAN YEAR" AND TO
4 AMEND THE DEFINITION OF "SMALL EMPLOYER"; AMENDING SECTION 41-4707, IDAHO
5 CODE, TO PROVIDE A CORRECT CODE REFERENCE; AND AMENDING SECTION 41-4708,
6 IDAHO CODE, TO PROVIDE A CROSS-REFERENCE TO THE DEFINITION OF SMALL
7 EMPLOYER AND TO PROVIDE CORRECT CODE REFERENCES.
8 Be It Enacted by the Legislature of the State of Idaho:
9 SECTION 1. That Section 41-4703, Idaho Code, be, and the same is hereby
10 amended to read as follows:
11 41-4703. DEFINITIONS. As used in this chapter:
12 (1) "Actuarial certification" means a written statement by a member of
13 the American academy of actuaries or other individual acceptable to the direc-
14 tor that a small employer carrier is in compliance with the provisions of sec-
15 tion 41-4706, Idaho Code, based upon the person's examination and including a
16 review of the appropriate records and the actuarial assumptions and methods
17 used by the small employer carrier in establishing premium rates for applica-
18 ble health benefit plans.
19 (2) "Affiliate" or "affiliated" means any entity or person who directly
20 or indirectly through one (1) or more intermediaries, controls or is con-
21 trolled by, or is under common control with, a specified entity or person.
22 (3) "Agent" means an agent as defined in section 41-1021, Idaho Code, or
23 a broker as defined in section 41-1024, Idaho Code.
24 (4) "Base premium rate" means, for each class of business as to a rating
25 period, the lowest premium rate charged or that could have been charged under
26 a rating system for that class of business by the small employer carrier to
27 small employers with similar case characteristics for health benefit plans
28 with the same or similar coverage.
29 (5) "Basic health benefit plan" means a lower cost health benefit plan
30 developed pursuant to section 41-4712, Idaho Code.
31 (6) "Board" means the board of directors of the program established pur-
32 suant to section 41-4711, Idaho Code.
33 (7) "Carrier" means any entity that provides health insurance in this
34 state. For the purposes of this chapter, carrier includes an insurance com-
35 pany, a hospital or professional service corporation, a fraternal benefit
36 society, a health maintenance organization, any entity providing health
37 insurance coverage or benefits to residents of this state as certificate hold-
38 ers under a group policy issued or delivered outside of this state, and any
39 other entity providing a plan of health insurance or health benefits subject
40 to state insurance regulation.
41 (8) "Case characteristics" means demographic or other objective charac-
42 teristics of a small employer that are considered by the small employer car-
43 rier in the determination of premium rates for the small employer, provided
1 that claim experience, health status and duration of coverage shall not be
2 case characteristics for the purposes of this chapter.
3 (9) "Catastrophic health benefit plan" means a higher limit health bene-
4 fit plan developed pursuant to section 41-4712, Idaho Code.
5 (10) "Class of business" means all or a separate grouping of small employ-
6 ers established pursuant to section 41-4705, Idaho Code.
7 (11) "Committee" means the health benefit plan committee created pursuant
8 to section 41-4712, Idaho Code.
9 (12) "Control" shall be defined in the same manner as in section
10 41-3801(2), Idaho Code.
11 (13) "Dependent" means a spouse, and unmarried child under the age of
12 nineteen (19) years, and unmarried child who is a full-time student under the
13 age of twenty-three (23) years and who is financially dependent upon the par-
14 ent, and an unmarried child of any age who is medically certified as disabled
15 and dependent upon the parent.
16 (14) "Director" means the director of the department of insurance of the
17 state of Idaho.
18 (15) "Eligible employee" means an employee who works on a full-time basis
19 and has a normal work week of thirty (30) or more hours or, by agreement
20 between the employer and the carrier, an employee who works between twenty
21 (20) and thirty (30) hours per week. The term includes a sole proprietor, a
22 partner of a partnership, and an independent contractor, if the sole propri-
23 etor, partner or independent contractor is included as an employee under a
24 health benefit plan of a small employer, but does not include an employee who
25 works on a part-time, temporary, seasonal or substitute basis. The term eligi-
26 ble employee may include public officers and public employees without regard
27 to the number of hours worked when designated by a small employer.
28 (16) "Established geographic service area" means a geographic area, as
29 approved by the director and based on the carrier's certificate of authority
30 to transact insurance in this state, within which the carrier is authorized to
31 provide coverage.
32 (17) "Health benefit plan" means any hospital or medical policy or certif-
33 icate, any subscriber contract provided by a hospital or professional service
34 corporation, or health maintenance organization subscriber contract. Health
35 benefit plan does not include policies or certificates of insurance for spe-
36 cific disease, hospital confinement indemnity, accident-only, credit, dental,
37 vision, medicare supplement, long-term care, or disability income insurance,
38 student health benefits only coverage issued as a supplement to liability
39 insurance, worker's compensation or similar insurance, automobile medical pay-
40 ment insurance or nonrenewable short-term coverage issues for a period of
41 twelve (12) months or less.
42 (18) "Index rate" means, for each class of business as to a rating period
43 for small employers with similar case characteristics, the arithmetic average
44 of the applicable base premium rate and the corresponding highest premium
46 (19) "Late enrollee" means an eligible employee or dependent who requests
47 enrollment in a health benefit plan of a small employer following the initial
48 enrollment period during which the individual is entitled to enroll under the
49 terms of the health benefit plan, provided that the initial enrollment period
50 is a period of at least thirty (30) days. However, an eligible employee or
51 dependent shall not be considered a late enrollee if:
52 (a) The individual meets each of the following:
53 (i) The individual was covered under qualifying previous coverage
54 at the time of the initial enrollment;
55 (ii) The individual lost coverage under qualifying previous coverage
1 as a result of termination of employment or eligibility, the involun-
2 tary termination of the qualifying previous coverage; and
3 (iii) The individual requests enrollment within thirty (30) days
4 after termination of the qualifying previous coverage.
5 (b) The individual is employed by an employer which offers multiple
6 health benefit plans and the individual elects a different plan during an
7 open enrollment period.
8 (c) A court has ordered coverage be provided for a spouse or minor or
9 dependent child under a covered employee's health benefit plan and request
10 for enrollment is made within thirty (30) days after issuance of the court
12 (d) The individual first becomes eligible.
13 (e) If an individual seeks to enroll a dependent during the first sixty
14 (60) days of eligibility, the coverage of the dependent shall become
16 (i) In the case of marriage, not later than the first day of the
17 first month beginning after the date the completed request for
18 enrollment is received;
19 (ii) In the case of a dependent's birth, as of the date of such
20 birth; or
21 (iii) In the case of a dependent's adoption or placement for adop-
22 tion, the date of such adoption or placement for adoption.
23 (20) "New business premium rate" means, for each class of business as to a
24 rating period, the lowest premium rate charged or offered or which could have
25 been charged or offered by the small employer carrier to small employers with
26 similar case characteristics for newly issued health benefit plans with the
27 same or similar coverage.
28 (21) "Plan of operation" means the plan of operation of the program estab-
29 lished pursuant to section 41-4711, Idaho Code.
30 (22) "Plan year" means the year that is designated as the plan year
31 in the plan document of a group health benefit plan, except that if the plan
32 document does not designate a plan year or if there is no plan document, the
33 year plan is:
34 (a) The deductible/limit year used under the plan;
35 (b) If the plan does not impose deductibles or limits on a yearly basis,
36 then the plan year is the policy year;
37 (c) If the plan does not impose deductibles or limits on a yearly basis
38 or the insurance policy is not renewed on an annual basis, then the plan
39 year is the employer's taxable year; or
40 (d) In any other case, the plan year is the calendar year.
41 (23) "Premium" means all moneys paid by a small employer and eligi-
42 ble employees as a condition of receiving coverage from a small employer car-
43 rier, including any fees or other contributions associated with the health
44 benefit plan.
45 (2 3 4 ) "Program" means the Idaho small employer
46 reinsurance program created in section 41-4711, Idaho Code.
47 (2 4 5 ) "Qualifying previous coverage" and
48 "qualifying existing coverage" means benefits or coverage provided under:
49 (a) Medicare or medicaid, civilian health and medical program for
50 uniformed services (CHAMPUS), the Indian health service program, a state
51 health benefit risk pool or any other similar publicly sponsored program;
53 (b) Any other group or individual health insurance policy or health bene-
54 fit arrangement whether or not subject to the state insurance laws,
55 including coverage provided by a health maintenance organization, hospital
1 or professional service corporation, or a fraternal benefit society, that
2 provides benefits similar to or exceeding benefits provided under the
3 basic health benefit plan.
4 (2 5 6 ) "Rating period" means the calendar period
5 for which premium rates established by a small employer carrier are assumed to
6 be in effect.
7 (2 6 7 ) "Reinsuring carrier" means a small
8 employer carrier participating in the reinsurance program pursuant to section
9 41-4711, Idaho Code.
10 (2 7 8 ) "Restricted network provision" means any
11 provision of a health benefit plan that conditions the payment of benefits, in
12 whole or in part, on the use of health care providers that have entered into a
13 contractual arrangement with the carrier to provide health care services to
14 covered individuals.
15 (2 8 9 ) "Risk-assuming carrier" means a small
16 employer carrier whose application is approved by the director pursuant to
17 section 41-4710, Idaho Code.
18 ( 29 30 ) "Small employer" means any person, firm,
19 corporation, partnership or association that is actively engaged in business
20 that, on at least fifty percent (50%) of its working days during the
21 preceding calendar year, employed an average of at least two (2)
22 eligible employees on the first day of the plan year, but no more than
23 fifty (50) eligible employees on business days during the preceding cal-
24 endar year and that employs at least two (2) but no more than fifty (50) eli-
25 gible employees on the first day of the plan year , the majority of whom
26 were and are employed within this state. In determining the num-
27 ber of eligible employees, companies that are affiliated companies, or that
28 are eligible to file a combined tax return for purposes of state taxation,
29 shall be considered one (1) employer.
30 (3 0 1 ) "Small employer carrier" means a carrier
31 that offers health benefit plans covering eligible employees of one (1) or
32 more small employers in this state.
33 (3 1 2 ) "Standard health benefit plan" means a
34 health benefit plan developed pursuant to section 41-4712, Idaho Code.
35 SECTION 2. That Section 41-4707, Idaho Code, be, and the same is hereby
36 amended to read as follows:
37 41-4707. RENEWABILITY OF COVERAGE. (1) A health benefit plan subject to
38 the provisions of this chapter shall be renewable with respect to all eligible
39 employees or dependents, at the option of the small employer, except in any of
40 the following cases:
41 (a) Nonpayment of the required premiums;
42 (b) Fraud or intentional misrepresentation of material fact by the small
44 (c) Noncompliance with the carrier's minimum participation requirements;
45 (d) Noncompliance with the carrier's employer contribution requirements;
46 (e) In the case of health benefit plans that are made available in the
47 small employer market only through one (1) or more associations as defined
48 in section 41-2202, Idaho Code, the membership of an employer in the asso-
49 ciation, on the basis of which the coverage is provided ceases, but only
50 if the coverage is terminated under this paragraph uniformly without
51 regard to any health status-related factor relating to any covered indi-
53 (f) The small employer no longer meets the requirements of section
1 41-4703( 28 30 ), Idaho Code;
2 (g) The small employer carrier elects to nonrenew all of its health bene-
3 fit plans delivered or issued for delivery to small employers in this
4 state. In such a case the carrier shall:
5 (i) Provide advance notice of its decision under this paragraph to
6 the director in each state in which it is licensed; and
7 (ii) Provide notice of the decision not to renew coverage to all
8 affected small employers and to the director at least one hundred
9 eighty (180) days prior to the nonrenewal of any health benefit plans
10 by the carrier. Notice to the director under the provisions of this
11 paragraph shall be provided at least three (3) working days prior to
12 the notice to the affected small employers; or
13 (h) The director finds that the continuation of the coverage would:
14 (i) Not be in the best interests of the policyholders or certifi-
15 cate holders; or
16 (ii) Impair the carrier's ability to meet its contractual obliga-
18 In such instance the director shall assist affected small employers in
19 finding replacement coverage.
20 (2) A small employer carrier that elects not to renew a health benefit
21 plan under the provisions of subsection (1)(g) of this section shall be pro-
22 hibited from writing new business in the small employer market in this state
23 for a period of five (5) years from the date of notice to the director.
24 (3) In the case of a small employer carrier doing business in one (1)
25 established geographic service area of the state, the rules set forth in this
26 subsection shall apply only to the carrier's operations in that service area.
27 SECTION 3. That Section 41-4708, Idaho Code, be, and the same is hereby
28 amended to read as follows:
29 41-4708. AVAILABILITY OF COVERAGE.
30 (1) (a) Every small employer carrier shall, as a condition of offering
31 health benefit plans in this state to small employers, actively offer to
32 small employers at least three (3) health benefit plans. One (1) health
33 benefit plan offered by each small employer carrier shall be a basic
34 health benefit plan, one (1) plan shall be a standard health benefit plan,
35 and one (1) plan shall be a catastrophic benefit plan.
36 (b) (i) A small employer carrier shall issue a basic, standard or
37 catastrophic health benefit plan to any eligible small employer that
38 applies for either such plan and agrees to make the required premium
39 payments and to satisfy the other reasonable provisions of the health
40 benefit plan not inconsistent with the provisions of this chapter.
41 (ii) In the case of a small employer carrier that establishes more
42 than one (1) class of business pursuant to the provisions of section
43 41-4705, Idaho Code, the small employer carrier shall maintain and
44 issue to eligible small employers at least one (1) basic health bene-
45 fit plan, at least one (1) standard health benefit plan and at least
46 one (1) catastrophic benefit plan in each class of business so estab-
47 lished. A small employer carrier may apply reasonable criteria in
48 determining whether to accept a small employer into a class of busi-
49 ness, provided that:
50 (A) The criteria are not intended to discourage or prevent
51 acceptance of small employers applying for a basic, standard or
52 catastrophic health benefit plan;
53 (B) The criteria are not related to the health status or claim
1 experience of the small employer;
2 (C) The criteria are applied consistently to all small employ-
3 ers applying for coverage in the class of business; and
4 (D) The small employer carrier provides for the acceptance of
5 all eligible small employers into one (1) or more classes of
7 The provisions of this paragraph shall not apply to a class of busi-
8 ness into which the small employer carrier is no longer enrolling new
9 small businesses.
10 (c) A small employer is eligible under the provisions of paragraph (b) of
11 this section if it employed at least two (2) or more eligible
12 employees within this state on the first day of the plan year
13 satisfies the definition of "small employer" set forth in section
14 41-4703(30), Idaho Code .
15 (2) (a) A small employer carrier shall file with the director, in a
16 format and manner prescribed by the director, the basic, standard and cat-
17 astrophic health benefit plans to be used by the carrier. A health benefit
18 plan filed pursuant to the provisions of this paragraph may be used by a
19 small employer carrier beginning thirty (30) days after it is filed unless
20 the director disapproves its use.
21 (b) The director at any time may, after providing notice and an opportu-
22 nity for a hearing to the small employer carrier, disapprove the continued
23 use by a small employer carrier of a basic, standard or catastrophic
24 health benefit plan on the grounds that the plan does not meet the
25 requirements of this chapter.
26 (3) Health benefit plans covering small employers shall comply with the
27 following provisions:
28 (a) A health benefit plan shall not deny, exclude or limit benefits for a
29 covered individual for covered expenses incurred more than twelve (12)
30 months following the effective date of the individual's coverage due to a
31 preexisting condition. A health benefit plan shall not define a preexist-
32 ing condition more restrictively than a condition, whether physical or
33 mental, regardless of the cause of the condition, for which medical
34 advice, diagnosis, care or treatment was recommended or received during
35 the six (6) months immediately preceding the effective date of coverage.
36 (b) Genetic information shall not be considered as a condition described
37 in subsection (3)(a) of this section in the absence of a diagnosis of the
38 condition related to such information.
39 (c) A health benefit plan shall waive any time period applicable to a
40 preexisting condition exclusion or limitation period with respect to par-
41 ticular services for the period of time an individual was previously cov-
42 ered by qualifying previous coverage that provided benefits with respect
43 to such services, provided that the qualifying previous coverage was con-
44 tinuous to a date not more than sixty-three (63) days prior to the effec-
45 tive date of the new coverage. The period of continuous coverage shall not
46 include any waiting period for the effective date of the new coverage
47 applied by the employer or the carrier. This paragraph does not preclude
48 application of any waiting period applicable to all new enrollees under
49 the health benefit plan.
50 (d) A health benefit plan may exclude coverage for late enrollees for the
51 greater of twelve (12) months or for a twelve (12) month preexisting con-
52 dition exclusion; provided that if both a period of exclusion from cover-
53 age and a preexisting condition exclusion are applicable to a late
54 enrollee, the combined period shall not exceed twelve (12) months from the
55 date the individual enrolls for coverage under the health benefit plan.
1 (e) (i) Except as provided in subsection (3)( d e
2 )(iv) of this section, requirements used by a small employer
3 carrier in determining whether to provide coverage to a small
4 employer, including requirements for minimum participation of eligi-
5 ble employees and minimum employer contributions, shall be applied
6 uniformly among all small employers with the same number of eligible
7 employees applying for coverage or receiving coverage from the small
8 employer carrier.
9 (ii) A small employer carrier may vary application of minimum par-
10 ticipation requirements and minimum employer contribution require-
11 ments only by the size of the small employer group.
12 (iii) In applying minimum participation requirements with respect to
13 a small employer, a small employer carrier shall not consider employ-
14 ees or dependents who have qualifying existing coverage in determin-
15 ing whether the applicable percentage of participation is met.
16 (iv) A small employer carrier shall not increase any requirement for
17 minimum employee participation or any requirement for minimum
18 employer contribution applicable to a small employer at any time
19 after the small employer has been accepted for coverage.
20 (f) (i) If a small employer carrier offers coverage to a small employer,
21 the small employer carrier shall offer coverage to all of the eligi-
22 ble employees of a small employer and their dependents. A small
23 employer carrier shall not offer coverage to only certain individuals
24 in a small employer group or to only part of the group, except in the
25 case of late enrollees as provided in paragraph ( c
26 d ) of this sub section.
27 (ii) A small employer carrier shall not modify a basic, standard or
28 catastrophic health benefit plan with respect to a small employer or
29 any eligible employee or dependent through riders, endorsements or
30 otherwise, to restrict or exclude coverage for certain diseases or
31 medical conditions otherwise covered by the health benefit plan.
32 (4) (a) A small employer carrier shall not be required to offer coverage
33 or accept applications pursuant to the provisions of subsection (1) of
34 this section in the case of the following:
35 (i) To a small employer, where the small employer is not physically
36 located in the carrier's established geographic service area;
37 (ii) To an employee, when the employee does not work or reside
38 within the carrier's established geographic service area; or
39 (iii) Within an area where the small employer carrier reasonably
40 anticipates, and demonstrates to the satisfaction of the director,
41 that it will not have the capacity within its established geographic
42 service area to deliver service adequately to the members of such
43 groups because of its obligations to existing group policyholders and
45 (b) A small employer carrier that cannot offer coverage pursuant to the
46 provisions of subsection (4)(a)(iii) of this section may not offer cover-
47 age in the applicable area to new cases of employer groups with more than
48 fifty (50) eligible employees or to any small employer groups until the
49 later of one hundred eighty (180) days following each such refusal or the
50 date on which the carrier notifies the director that it has regained
51 capacity to deliver services to small employer groups.
52 (5) A small employer carrier shall not be required to provide coverage to
53 small employers pursuant to the provisions of subsection (1) of this section
54 for any period of time for which the director determines that requiring the
55 acceptance of small employers in accordance with the provisions of subsection
1 (1) of this section would place the small employer carrier in a financially
2 impaired condition.
3 (6) A small employer carrier shall not be required to comply with the
4 provisions of this section until the director has approved or adopted the
5 revised plan of operation as provided in section 41-4711, Idaho Code.
STATEMENT OF PURPOSE
A new subsection defining "plan year" as that term is used in the definition of "small employer
' is proposed to be inserted at section 41-4703(22), Idaho Code, and subsequent subsections
are to be renumbered Section 41-4703(29), Idaho Code, currently defines "small employer".
This section was amended in 199?, however, the suggested changes to the definition were not
implemented apparently through mistake or inadvertence. The current definition is difficult to
understand. The proposed definition redesignated at section 41-4703(30), Idaho Code, is
similar to that proposed by the Department last year set forth in Senate Bill No. 1249 and is
consistent with the definition in HIPAA. Section 41 4707(1)(f), Idaho Code, is sought to be
amended to correct the citation reference to the subsection defining "small employer". Section
41 4708(1)(c), Idaho Code, is sought to be amended to make the eligibility requirement for
small employers consistent with the definition of "small employer'". Section 41-4708(3)(e)(i),
Idaho Code, should be amended to correct an incorrect reference to a latter subsection.
Section 41-4708(3)(f)(i), Idaho Code, should be amended to correct an incorrect reference to
a prior subsection.
Name: James M. Alcorn
Agency Department of Insurance
Statement of Purpose/Fiscal Impact