SB-0460,As Passed House,Jun 5, 2003
HOUSE SUBSTITUTE FOR
SENATE BILL NO. 460
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 3406q (MCL 500.3406q), as added by 2002 PA
538, and by adding chapter 37.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 3406q. (1) An expense-incurred hospital, medical, or
2 surgical policy or certificate delivered, issued for delivery, or
3 renewed in this state that provides pharmaceutical coverage and a
4 health maintenance organization contract that provides
5 pharmaceutical coverage shall provide coverage for an off-label
6 use of a federal food and drug administration approved drug and
7 the reasonable cost of supplies medically necessary to administer
8 the drug.
9 (2) Coverage for a drug under subsection (1) applies if all
10 of the following conditions are met:
1 (a) The drug is approved by the federal food and drug
2 administration.
3 (b) The drug is prescribed by an allopathic or osteopathic
4 physician for the treatment of either of the following:
5 (i) A life-threatening condition so long as the drug is
6 medically necessary to treat that condition and the drug is on
7 the plan formulary or accessible through the health plan's
8 formulary procedures.
9 (ii) A chronic and seriously debilitating condition so long
10 as the drug is medically necessary to treat that condition and
11 the drug is on the plan formulary or accessible through the
12 health plan's formulary procedures.
13 (c) The drug has been recognized for treatment for the
14 condition for which it is prescribed by 1 of the following:
15 (i) The American medical association drug evaluations.
16 (ii) The American hospital formulary service drug
17 information.
18 (iii) The United States pharmacopoeia dispensing information,
19 volume 1, "drug information for the health care professional".
20 (iv) Two articles from major peer-reviewed medical journals
21 that present data supporting the proposed off-label use or uses
22 as generally safe and effective unless there is clear and
23 convincing contradictory evidence presented in a major
24 peer-reviewed medical journal.
25 (3) Upon request, the prescribing allopathic or osteopathic
26 physician shall supply to the insurer or health maintenance
27 organization documentation supporting compliance with subsection
1 (2).
2 (4) This section does not prohibit the use of a copayment,
3 deductible, sanction, or a mechanism for appropriately
4 controlling the utilization of a drug that is prescribed for a
5 use different from the use for which the drug has been approved
6 by the food and drug administration. This may include prior
7 approval or a drug utilization review program. Any copayment,
8 deductible, sanction, prior approval, drug utilization review
9 program, or mechanism described in this subsection shall not be
10 more restrictive than for prescription coverage generally.
11 (5) As used in this section:
12 (a) "Chronic and seriously debilitating" means a disease or
13 condition that requires ongoing treatment to maintain remission
14 or prevent deterioration and that causes significant long-term
15 morbidity.
16 (b) "Life-threatening" means a disease or condition where the
17 likelihood of death is high unless the course of the disease is
18 interrupted or that has a potentially fatal outcome where the end
19 point of clinical intervention is survival.
20 (c) "Off-label" means the use of a drug for clinical
21 indications other than those stated in the labeling approved by
22 the federal food and drug administration.
23 CHAPTER 37
24 SMALL EMPLOYER GROUP HEALTH COVERAGE
25 Sec. 3701. As used in this chapter:
26 (a) "Actuarial certification" means a written statement by a
27 member of the American academy of actuaries or another individual
1 acceptable to the commissioner that a small employer carrier is
2 in compliance with the provisions of section 3705, based upon the
3 person's examination, including a review of the appropriate
4 records and the actuarial assumptions and methods used by the
5 carrier in establishing premiums for applicable health benefit
6 plans.
7 (b) "Affiliation period" means a period of time required by a
8 small employer carrier that must expire before health coverage
9 becomes effective.
10 (c) "Base premium" means the lowest premium charged or that
11 could be charged for a rating period under a rating system by a
12 small group carrier to small employers for a health benefit plan
13 in a geographic area.
14 (d) "Carrier" means a person that provides health benefits,
15 coverage, or insurance in this state. For the purposes of this
16 chapter, carrier includes a health insurance company authorized
17 to do business in this state, a nonprofit health care
18 corporation, a health maintenance organization, a multiple
19 employer welfare arrangement, or any other person providing a
20 plan of health benefits, coverage, or insurance subject to state
21 insurance regulation.
22 (e) "COBRA" means the consolidated omnibus budget
23 reconciliation act of 1985, Public Law 99-272, 100 Stat. 82.
24 (f) "Creditable coverage" means, with respect to an
25 individual, health benefits, coverage, or insurance provided
26 under any of the following:
27 (i) A group health plan.
1 (ii) A health benefit plan.
2 (iii) Part A or part B of title XVIII of the social security
3 act, chapter 531, 49 Stat. 620, 42 U.S.C. 1395c to 1395i and
4 1395i-2 to 1395i-5, and 42 U.S.C. 1395j to 1395t, 1395u to 1395w,
5 and 1395w-2 to 1395w-4.
6 (iv) Title XIX of the social security act, chapter 531, 49
7 Stat. 620, 42 U.S.C. 1396 to 1396r-6 and 1396r-8 to 1396v, other
8 than coverage consisting solely of benefits under section 1929 of
9 title XIX of the social security act, 42 U.S.C. 1396t.
10 (v) Chapter 55 of title 10 of the United States Code, 10
11 U.S.C. 1071 to 1110. For purposes of chapter 55 of title 10 of
12 the United States Code, 10 U.S.C. 1071 to 1110, "uniformed
13 services" means the armed forces and the commissioned corps of
14 the national oceanic and atmospheric administration and of the
15 public health service.
16 (vi) A medical care program of the Indian health service or
17 of a tribal organization.
18 (vii) A state health benefits risk pool.
19 (viii) A health plan offered under the employees health
20 benefits program, chapter 89 of title 5 of the United States
21 Code, 5 U.S.C. 8901 to 8914.
22 (ix) A public health plan, which for purposes of this chapter
23 means a plan established or maintained by a state, county, or
24 other political subdivision of a state that provides health
25 insurance coverage to individuals enrolled in the plan.
26 (x) A health benefit plan under section 5(e) of title I of
27 the peace corps act, Public Law 87-293, 22 U.S.C. 2504.
1 (g) "Eligible employee" means an employee who works on a
2 full-time basis with a normal workweek of 30 or more hours.
3 Eligible employee includes an employee who works on a full-time
4 basis with a normal workweek of 20 to 30 hours, if an employer so
5 chooses and if this eligibility criterion is applied uniformly
6 among all of the employer's employees and without regard to
7 health status-related factors.
8 (h) "Geographic area" means an area in this state that
9 includes not less than 1 entire county, established by a carrier
10 pursuant to section 3705 and used for adjusting premiums for a
11 health benefit plan subject to this chapter. In addition, if the
12 geographic area includes 1 entire county and additional counties
13 or portions of counties, the counties or portions of counties
14 must be contiguous with at least 1 other county or portion of
15 another county in that geographic area.
16 (i) "Group health plan" means an employee welfare benefit
17 plan as defined in section 3(1) of subtitle A of title I of the
18 employee retirement income security act of 1974, Public Law
19 93-406, 29 U.S.C. 1002, to the extent that the plan provides
20 medical care, including items and services paid for as medical
21 care to employees or their dependents as defined under the terms
22 of the plan directly or through insurance, reimbursement, or
23 otherwise. As used in this chapter, all of the following apply
24 to the term group health plan:
25 (i) Any plan, fund, or program that would not be, but for
26 section 2721(e) of subpart 4 of part A of title XXVII of the
27 public health service act, chapter 373, 110 Stat. 1967, 42
1 U.S.C. 300gg-21, an employee welfare benefit plan and that is
2 established or maintained by a partnership, to the extent that
3 the plan, fund, or program provides medical care, including items
4 and services paid for as medical care, to present or former
5 partners in the partnership, or to their dependents, as defined
6 under the terms of the plan, fund, or program, directly or
7 through insurance, reimbursement or otherwise, shall be treated,
8 subject to subparagraph (ii), as an employee welfare benefit plan
9 that is a group health plan.
10 (ii) The term "employer" also includes the partnership in
11 relation to any partner.
12 (iii) The term "participant" also includes an individual who
13 is, or may become, eligible to receive a benefit under the plan,
14 or the individual's beneficiary who is, or may become, eligible
15 to receive a benefit under the plan. For a group health plan
16 maintained by a partnership, the individual is a partner in
17 relation to the partnership and for a group health plan
18 maintained by a self-employed individual, under which 1 or more
19 employees are participants, the individual is the self-employed
20 individual.
21 (j) "Health benefit plan" or "plan" means an expense-incurred
22 hospital, medical, or surgical policy or certificate, nonprofit
23 health care corporation certificate, or health maintenance
24 organization contract. Health benefit plan does not include
25 accident-only, credit, dental, or disability income insurance;
26 long-term care insurance; coverage issued as a supplement to
27 liability insurance; coverage only for a specified disease or
Senate Bill No. 460 (H-2) as amended June 5, 2003
1 illness; worker's compensation or similar insurance; or
2 automobile medical-payment insurance.
3 (k) "Index rate" means the arithmetic average during a rating
4 period of the base premium and the highest premium charged or
5 that could be charged for each health benefit plan offered by
6 each small employer carrier [to each small employer or sole proprietor]
in a geographic area.
7 (l) "Nonprofit health care corporation" means a nonprofit
8 health care corporation operating pursuant to the nonprofit
9 health care corporation reform act, 1980 PA 350, MCL 550.1101 to
10 550.1704.
11 (m) "Premium" means all money paid by a small employer, a
12 sole proprietor, eligible employees, or eligible persons as a
13 condition of receiving coverage from a small employer carrier,
14 including any fees or other contributions associated with the
15 health benefit plan.
16 (n) "Rating period" means the calendar period for which
17 premiums established by a small employer carrier are assumed to
18 be in effect, as determined by the small employer carrier.
19 (o) "Small employer" means any person, firm, corporation,
20 partnership, limited liability company, or association actively
21 engaged in business who, on at least 50% of its working days
22 during the preceding and current calendar years, employed at
23 least 2 but not more than 50 eligible employees. In determining
24 the number of eligible employees, companies that are affiliated
25 companies or that are eligible to file a combined tax return for
26 state taxation purposes shall be considered 1 employer.
27 (p) "Small employer carrier" means either of the following:
1 (i) A carrier that offers health benefit plans covering the
2 employees of a small employer.
3 (ii) A carrier under section 3703(3).
4 (q) "Sole proprietor" means an individual who is a sole
5 proprietor or sole shareholder in a trade or business through
6 which he or she earns at least 50% of his or her taxable income
7 as defined in section 30 of the income tax act of 1967, 1967 PA
8 281, MCL 206.30, excluding investment income, and for which he or
9 she has filed the appropriate internal revenue service form 1040,
10 schedule C or F, for the previous taxable year; who is a resident
11 of this state; and who is actively employed in the operation of
12 the business, working at least 30 hours per week in at least 40
13 weeks out of the calendar year.
14 (r) "Waiting period" means, with respect to a health benefit
15 plan and an individual who is a potential enrollee in the plan,
16 the period that must pass with respect to the individual before
17 the individual is eligible to be covered for benefits under the
18 terms of the plan. For purposes of calculating periods of
19 creditable coverage under this chapter, a waiting period shall
20 not be considered a gap in coverage.
21 Sec. 3703. (1) This chapter applies to any health benefit
22 plan that provides coverage to a small employer if either of the
23 following is met:
24 (a) Any portion of the premium or benefits is paid by or on
25 behalf of the small employer or through salary deductions by the
26 small employer.
27 (b) An eligible employee or dependent is reimbursed for any
Senate Bill 460 (H-2) as amended June 5, 2003 (1 of 2)
1 portion of the premium, through wage adjustments or otherwise, by
2 or on behalf of the small employer.
3 (2) Except as provided in subsection (1), this chapter does
4 not apply to individual health insurance policies that are
5 subject to policy form and premium approval by the commissioner.
6 (3) A nonprofit health care corporation shall make available
7 upon request a health benefit plan to a sole proprietor. This
8 chapter does apply to a nonprofit health care corporation
9 providing a health benefit plan to a sole proprietor and to any
10 other small employer carrier that elects to provide a health
11 benefit plan to a sole proprietor.
[Sec. 3704. Notwithstanding section 3501, a health maintenance organization is not required to offer basic health services as defined in section 3501 in a health benefit plan under this chapter. A health maintenance organization shall make available upon request a health benefit plan that covers at a minimum physician services, inpatient services, outpatient services, ambulance services, and diagnostic lab and x-ray services. All health benefit plans offered by a health maintenance organization shall include preventative health services.]
12 Sec. 3705. (1) For adjusting premiums for health benefit
13 plans subject to this chapter, a carrier may establish up to 10
14 geographic areas in this state. A nonprofit health care
15 corporation shall establish geographic areas that cover all
16 counties in this state.
17 [(2) Except as otherwise provided in subsection (3), the premiums for a
18 health benefit plan under this chapter are subject to the following:
19
20
21
22 ]
23 (a) For a nonprofit health care corporation, only industry
24 and age may be used for determining the premiums in a geographic
25 area for a small employer or sole proprietor located in that
26 geographic area and the premiums charged during a rating period
27 to small employers and sole proprietors located in that
Senate Bill No. 460 (H-2) as amended June 5, 2003
1 geographic area with the same or similar coverage shall not vary
2 from the index rate by more than 35% of the index rate.
3 (b) For a health maintenance organization, only industry,
4 age, gender, group size, and duration of coverage may be used for
5 determining the premiums in a geographic area for a small
6 employer or sole proprietor located in that geographic area and
7 the premiums charged during a rating period to small employers
8 and sole proprietors located in that geographic area with the
9 same or similar coverage shall not vary from the index rate by
10 more than 35% of the index rate.
11 (c) For a small employer carrier other than a nonprofit
12 health care corporation or health maintenance organization,
13 industry, age, gender, and group size may be used for determining
14 the premiums in a geographic area for a small employer or sole
15 proprietor located in that geographic area, except that,
16 effective March 1, 2008, the maximum premium differential for age
17 for a health benefit plan in a geographic area shall be 5 to 1.
18 In addition, claims experience, health status, and duration of
19 coverage may also be used for determining the premiums in a
20 geographic area, but the premiums charged during a rating period
21 to small employers and sole proprietors located in that
22 geographic area with the same or similar coverage for claims
23 experience, health status, and duration of coverage
24 characteristics shall not vary from the index rate by more than
25 35% of the index rate.
26 [(3) This subsection applies beginning on the effective date of this
27 chapter and continuing until the next renewal period for a health benefit
Senate Bill No. 460(H-2) as amended June 5, 2003
1 plan following February 29, 2008 at which time subsection (2) shall apply.] The
2 premiums for a plan described in this subsection are subject to
3 the following:
4 (a) For a nonprofit health care corporation, industry and age
5 may only be used if the result is to lower the premium in a
6 health benefit plan in a geographic area for a small employer or
7 sole proprietor located in that geographic area. This
8 subdivision only applies during a health benefit plan renewal
9 period that ends before March 1, 2005.
10 (b) For a renewal occurring on or after March 1, 2005 and
11 through February 28, 2006, as follows:
12 (i) For a nonprofit health care corporation, only industry
13 and age may be used for determining the premiums in a geographic
14 area for a small employer or sole proprietor located in that
15 geographic area and the premiums charged during a rating period
16 to small employers and sole proprietors located in that
17 geographic area with the same or similar coverage shall not be
18 higher than 10% above the index rate nor lower than 20% below the
19 index rate.
20 (ii) For a health maintenance organization, only industry,
21 age, gender, group size, and duration of coverage may be used for
22 determining the premiums in a geographic area for a small
23 employer or sole proprietor located in that geographic area and
24 the premiums charged during a rating period to small employers
25 and sole proprietors located in that geographic area with the
26 same or similar coverage shall not vary from the index rate by
27 more than 70% of the index rate.
1 (iii) For a small employer carrier other than a nonprofit
2 health care corporation or health maintenance organization,
3 industry, age, gender, and group size may be used for determining
4 the premiums in a geographic area for a small employer or sole
5 proprietor located in that geographic area. In addition, claim
6 experience, health status, and duration of coverage may also be
7 used for determining the premiums in a geographic area, but the
8 premiums charged during a rating period to small employers and
9 sole proprietors with the same or similar coverage for claims
10 experience, health status, and duration of coverage
11 characteristics shall not vary from the index rate by more than
12 70% of the index rate.
13 (c) For a renewal occurring on or after March 1, 2006 and
14 through February 28, 2007, as follows:
15 (i) For a nonprofit health care corporation, only industry
16 and age may be used for determining the premiums for a small
17 employer or sole proprietor located in that geographic area and
18 the premiums charged during a rating period to small employers
19 and sole proprietors located in that geographic area with the
20 same or similar coverage shall not be higher than 20% above the
21 index rate nor lower than 30% below the index rate.
22 (ii) For a health maintenance organization, only industry,
23 age, gender, group size, and duration of coverage may be used for
24 determining the premiums in a geographic area for a small
25 employer or sole proprietor located in that geographic area and
26 the premiums charged during a rating period to small employers
27 and sole proprietors located in that geographic area with the
1 same or similar coverage shall not vary from the index rate by
2 more than 60% of the index rate.
3 (iii) For a small employer carrier other than a nonprofit
4 health care corporation or health maintenance organization,
5 industry, age, gender, and group size may be used for determining
6 the premiums in a geographic area for a small employer or sole
7 proprietor located in that geographic area. In addition, claim
8 experience, health status, and duration of coverage may also be
9 used for determining the premiums in a geographic area, but the
10 premiums charged during a rating period to small employers and
11 sole proprietors with the same or similar coverage for claims
12 experience, health status, and duration of coverage
13 characteristics shall not vary from the index rate by more than
14 60% of the index rate.
15 (d) For a renewal occurring on or after March 1, 2007 and
16 through February 29, 2008, as follows:
17 (i) For a nonprofit health care corporation, only industry
18 and age may be used for determining the premiums in a geographic
19 area for a small employer or sole proprietor located in that
20 geographic area and the premiums charged during a rating period
21 to small employers and sole proprietors located in that
22 geographic area with the same or similar coverage shall not be
23 higher than 30% above the index rate nor lower than 35% below the
24 index rate.
25 (ii) For a health maintenance organization, only industry,
26 age, gender, group size, and duration of coverage may be used for
27 determining the premiums in a geographic area for a small
1 employer or sole proprietor located in that geographic area and
2 the premiums charged during a rating period to small employers
3 and sole proprietors located in that geographic area with the
4 same or similar coverage shall not vary from the index rate by
5 more than 50% of the index rate.
6 (iii) For a small employer carrier other than a nonprofit
7 health care corporation or health maintenance organization,
8 industry, age, gender, and group size may be used for determining
9 the premiums in a geographic area for a small employer or sole
10 proprietor located in that geographic area. In addition, claim
11 experience, health status, and duration of coverage may also be
12 used for determining the premiums in a geographic area, but the
13 premiums charged during a rating period to small employers and
14 sole proprietors with the same or similar coverage for claims
15 experience, health status, and duration of coverage
16 characteristics shall not vary from the index rate by more than
17 50% of the index rate.
18 (4) For a sole proprietor, a small employer carrier may
19 charge an additional amount of up to 25% above the premiums in
20 subsections (2) and (3).
21 (5) Except as provided in subsection (3), the percentage
22 increase in the premium charged to a small employer for a new
23 rating period shall not exceed the sum of the following:
24 (a) The percentage change in the base premium for the health
25 benefit plan measured from the first day of the prior rating
26 period to the first day of the new rating period. For a health
27 benefit plan for which the small employer carrier is not issuing
Senate Bill No. 460 (H-2) as amended June 5, 2003
1 new policies, the carrier shall use the percentage change in the
2 base premium.
3 (b) An adjustment as follows:
4 (i) For a nonprofit health care corporation, an adjustment
5 not to exceed 35% annually, and adjusted pro rata for rating
6 periods of less than 1 year, due to industry and age of the small
7 employer's employees or the employees' dependents or of the sole
8 proprietor or the sole proprietor's dependents.
9 (ii) For a health maintenance organization, an adjustment not
10 to exceed 35% annually, and adjusted pro rata for rating periods
11 of less than 1 year, due to industry, age, gender, group size,
12 and duration of coverage of the small employer's employees or the
13 employees' dependents or of the sole proprietor or the sole
14 proprietor's dependents.
15 (iii) For a small employer carrier other than a nonprofit
16 health care corporation or health maintenance organization, [an adjustment not to exceed 35% annually, and adjusted pro rata for rating periods of less than 1 year, due to industry, age, gender, and group size of the small employer's employees or the employees' dependents or of the sole proprietor or the sole proprietor's dependents and] an
17 adjustment not to exceed 15% annually, and adjusted pro rata for
18 rating periods of less than 1 year, due to claims experience,
19 health status, and duration of coverage of the small employer's
20 employees or employees' dependents or of the sole proprietor or
21 the sole proprietor's dependents.
22 (c) Any adjustment due to change in coverage.
23 (6) Beginning 1 year after the effective date of this
24 chapter, if a small employer or sole proprietor had been
25 self-insured for health benefits immediately preceding
26 application for a health benefit plan subject to this chapter, a
27 carrier may charge an additional premium of up to 33% above the
1 premium in subsection (2) or (3) for no more than 2 years.
2 (7) Notwithstanding subsection (2) or (3), health benefit
3 plan options, number of family members covered, and medicare
4 eligibility may be used in establishing a small employer's or
5 sole proprietor's premium.
6 (8) A small employer carrier shall apply all rating factors
7 consistently with respect to all small employers and sole
8 proprietors in a geographic area. Except as provided in
9 subsection (7), a small employer carrier shall bill a small
10 employer group only with a composite rate and shall not bill so
11 that 1 or more employees in the small employer group are charged
12 a higher premium than another employee in that small employer
13 group.
14 Sec. 3706. (1) A small employer carrier may apply an open
15 enrollment period for sole proprietors. If a small employer
16 carrier applies an open enrollment period for sole proprietors,
17 the open enrollment period shall be offered at least annually and
18 shall be at least 1 month long.
19 (2) A small employer carrier is not required to offer or
20 provide to a sole proprietor all health benefit plans available
21 to small employers who are not sole proprietors. However, a
22 small employer carrier is required to offer to all sole
23 proprietors all health benefit plans in a geographic area that
24 are available to any sole proprietor in that geographic area.
25 (3) A small employer carrier may exclude or limit coverage
26 for a sole proprietor for a condition only if the exclusion or
27 limitation relates to a condition for which medical advice,
1 diagnosis, care, or treatment was recommended or received within
2 6 months before enrollment and the exclusion or limitation does
3 not extend for more than 6 months after the effective date of the
4 health benefit plan.
5 (4) A small employer carrier shall not impose a preexisting
6 condition exclusion for a sole proprietor that relates to
7 pregnancy as a preexisting condition or with regard to a child
8 who is covered under any creditable coverage within 30 days of
9 birth, adoption, or placement for adoption, provided that the
10 child does not experience a significant break in coverage and
11 provided that the child was adopted or placed for adoption before
12 attaining 18 years of age. A period of creditable coverage under
13 this subsection shall not be counted for enrollment of an
14 individual under a health benefit plan if, after this period and
15 before the enrollment date, there was a 63-day period during all
16 of which the individual was not covered under any creditable
17 coverage.
18 Sec. 3707. (1) As a condition of transacting business in
19 this state with small employers, every small employer carrier
20 shall make available to small employers all health benefit plans
21 it markets to small employers in this state. A small employer
22 carrier shall be considered to be marketing a health benefit plan
23 if it offers that plan to a small employer not currently
24 receiving a health benefit plan from that small employer
25 carrier. A small employer carrier shall issue any health benefit
26 plan to any small employer that applies for the plan and agrees
27 to make the required premium payments and to satisfy the other
1 reasonable provisions of the health benefit plan not inconsistent
2 with this chapter.
3 (2) Except as otherwise provided in this subsection, a small
4 employer carrier shall not offer or sell to small employers a
5 health benefit plan that contains a waiting period applicable to
6 new enrollees or late enrollees. However, a small employer
7 carrier may offer or sell to small employers other than sole
8 proprietors a health benefit plan that provides for an
9 affiliation period of time that must expire before coverage
10 becomes effective for a new enrollee or a late enrollee if all of
11 the following are met:
12 (a) The affiliation period is applied uniformly to all new
13 and late enrollees and dependents of the new and late enrollees
14 of the small employer and without regard to any health
15 status-related factor.
16 (b) The affiliation period does not exceed 60 days for new
17 enrollees and does not exceed 90 days for late enrollees.
18 (c) The small employer carrier does not charge any premiums
19 for the enrollee during the affiliation period.
20 (d) The coverage issued is not effective for the enrollee
21 during the affiliation period.
22 Sec. 3708. (1) A health benefit plan offered to a small
23 employer by a small employer carrier shall provide for the
24 acceptance of late enrollees subject to this chapter.
25 (2) A small employer carrier shall permit an employee or a
26 dependent of the employee, who is eligible, but not enrolled, to
27 enroll for coverage under the terms of the small employer health
1 benefit plan during a special enrollment period if all of the
2 following apply:
3 (a) The employee or dependent was covered under a group
4 health plan or had coverage under a health benefit plan at the
5 time coverage was previously offered to the employee or
6 dependent.
7 (b) The employee stated in writing at the time coverage was
8 previously offered that coverage under a group health plan or
9 other health benefit plan was the reason for declining
10 enrollment, but only if the small employer or carrier, if
11 applicable, required such a statement at the time coverage was
12 previously offered and provided notice to the employee of the
13 requirement and the consequences of the requirement at that
14 time.
15 (c) The employee's or dependent's coverage described in
16 subdivision (a) was either under a COBRA continuation provision
17 and that coverage has been exhausted or was not under a COBRA
18 continuation provision and that other coverage has been
19 terminated as a result of loss of eligibility for coverage,
20 including because of a legal separation, divorce, death,
21 termination of employment, or reduction in the number of hours of
22 employment or employer contributions toward that other coverage
23 have been terminated. In either case, under the terms of the
24 health benefit plan, the employee must request enrollment not
25 later than 30 days after the date of exhaustion of coverage or
26 termination of coverage or employer contribution. If an employee
27 requests enrollment pursuant to this subdivision, the enrollment
1 is effective not later than the first day of the first calendar
2 month beginning after the date the completed request for
3 enrollment is received.
4 (3) A small employer carrier that makes dependent coverage
5 available under a health benefit plan shall provide for a
6 dependent special enrollment period during which the person may
7 be enrolled under the health benefit plan as a dependent of the
8 individual or, if not otherwise enrolled, the individual may be
9 enrolled under the health benefit plan. For a birth or adoption
10 of a child, the spouse of the individual may be enrolled as a
11 dependent of the individual if the spouse is otherwise eligible
12 for coverage. This subsection applies only if both of the
13 following occur:
14 (a) The individual is a participant under the health benefit
15 plan or has met any affiliation period applicable to becoming a
16 participant under the plan and is eligible to be enrolled under
17 the plan, but for a failure to enroll during a previous
18 enrollment period.
19 (b) The person becomes a dependent of the individual through
20 marriage, birth, or adoption or placement for adoption.
21 (4) The dependent special enrollment period under subsection
22 (3) for individuals shall be a period of not less than 30 days
23 and begins on the later of the date dependent coverage is made
24 available or the date of the marriage, birth, or adoption or
25 placement for adoption. If an individual seeks to enroll a
26 dependent during the first 30 days of the dependent special
27 enrollment period under subsection (3), the coverage of the
1 dependent shall be effective as follows:
2 (a) For marriage, not later than the first day of the first
3 month beginning after the date the completed request for
4 enrollment is received.
5 (b) For a dependent's birth, as of the date of birth.
6 (c) For a dependent's adoption or placement for adoption, the
7 date of the adoption or placement for adoption.
8 Sec. 3709. (1) Except as provided in this section,
9 requirements used by a small employer carrier in determining
10 whether to provide coverage to a small employer shall be applied
11 uniformly among all small employers applying for coverage or
12 receiving coverage from the small employer carrier. If a small
13 employer carrier waives a minimum participation rule for a small
14 employer, the carrier cannot later enforce that minimum
15 participation rule for that small employer.
16 (2) A small employer carrier may deny coverage to a small
17 employer if the small employer fails to enroll enough of its
18 employees to meet the minimum participation rules established by
19 the carrier pursuant to sound underwriting requirements. A
20 minimum participation rule may require a small employer to enroll
21 a certain number or percentage of employees with the small
22 employer carrier as a condition of coverage. A minimum
23 participation rule is subject to the following:
24 (a) For a small employer of 10 or fewer eligible employees,
25 may require enrollment of up to 100% of the small employer's
26 employees seeking health care coverage through the small
27 employer.
1 (b) For a small employer of 11 to 25 eligible employees, may
2 require enrollment of up to 75% of the small employer's employees
3 seeking health care coverage through the small employer.
4 (c) For a small employer of 26 to 40 eligible employees, may
5 require enrollment of up to 65% of the small employer's employees
6 seeking health care coverage through the small employer.
7 (d) For a small employer of 41 to 50 eligible employees, may
8 require enrollment of up to 50% of the small employer's employees
9 seeking health care coverage through the small employer.
10 Sec. 3711. (1) Except as provided in this section, a small
11 employer carrier that offers health coverage in the small
12 employer group market in connection with a health benefit plan
13 shall renew or continue in force that plan at the option of the
14 small employer or sole proprietor.
15 (2) Guaranteed renewal under subsection (1) is not required
16 in cases of: fraud or intentional misrepresentation of the small
17 employer or, for coverage of an insured individual, fraud or
18 misrepresentation by the insured individual or the individual's
19 representative; lack of payment; noncompliance with minimum
20 participation or employer contribution requirements; if the small
21 employer carrier no longer offers that particular type of
22 coverage in the market; or if the sole proprietor or small
23 employer moves outside the geographic area.
24 Sec. 3712. (1) If a small employer carrier decides to
25 discontinue offering all small employer health benefit plans in a
26 geographic area, all of the following apply:
27 (a) The small employer carrier shall provide notice to the
1 commissioner and to each small employer covered by the small
2 employer carrier in the geographic area of the discontinuation at
3 least 180 days prior to the date of the discontinuation of the
4 coverage.
5 (b) All small employer health benefit plans issued or
6 delivered for issuance in the geographic area are discontinued
7 and all current health benefit plans in the geographic area are
8 not renewed.
9 (c) The small employer carrier shall not issue or deliver for
10 issuance any small employer health benefit plans in the
11 geographic area for 5 years beginning on the date the last small
12 employer health benefit plan in the geographic area is not
13 renewed under subdivision (b).
14 (d) The small employer carrier shall not issue or deliver for
15 issuance for 5 years any small employer health benefit plans in
16 an area that was not a geographic area where the small employer
17 carrier was issuing or delivering for issuance small employer
18 health benefit plans on the date notice was given under
19 subdivision (a). The 5-year period under this subdivision begins
20 on the date notice was given under subdivision (a).
21 (2) A nonprofit health care corporation shall not cease to
22 renew all health benefit plans in a geographic area.
23 Sec. 3713. Each small employer carrier shall provide all of
24 the following to a small employer upon request and upon entering
25 into a contract with the small employer:
26 (a) The extent to which premiums for a specific small
27 employer are established or adjusted due to any permitted
1 characteristic and rating factors of the small employer's
2 employees and the employees' dependents.
3 (b) The provisions concerning the carrier's right to change
4 premiums, permitted characteristics, and any rating factors under
5 this chapter that affect changes in premiums.
6 (c) The provisions relating to renewability of coverage.
7 Sec. 3715. (1) Each small employer carrier shall maintain
8 at its principal place of business a complete and detailed
9 description of its rating practices and renewal underwriting
10 practices, including information and documentation that
11 demonstrate that its rating methods and practices are based upon
12 commonly accepted actuarial assumptions and are in accordance
13 with sound actuarial principles.
14 (2) Each small employer carrier shall file each March 1 with
15 the commissioner an actuarial certification that the carrier is
16 in compliance with this section and that the rating methods of
17 the carrier are actuarially sound. A copy of the actuarial
18 certification shall be retained by the carrier at its principal
19 place of business.
20 (3) A small employer carrier shall make the information and
21 documentation described in subsection (1) available to the
22 commissioner upon request. The information and documentation
23 described in subsection (1) are not subject to disclosure under
24 the freedom of information act, 1976 PA 442, MCL 15.231 to
25 15.246, to persons outside of the office of financial and
26 insurance services unless agreed to by the small employer carrier
27 or as ordered by a court of competent jurisdiction.
Senate Bill No. 460 (H-2) as amended June 5, 2003 (1 of 2)
1 (4) This section is in addition to, and not in substitution
2 of, the applicable filing provisions in this act and in the
3 nonprofit health care corporation reform act, 1980 PA 350, MCL
4 550.1101 to 550.1704.
[Sec. 3716. This chapter does not apply to a health benefit plan covering an employee of a small employer that is a high deductible plan, as defined in section 220 of the internal revenue code of 1986, issued in conjunction with an Archer medical savings account or with a health reimbursement arrangement.]
5 Sec. 3717. [(1)] Upon a [request] for suspension by the small
6 employer carrier and a finding by the commissioner after
7 consulting with the attorney general that either the suspension
8 is reasonable in light of the financial condition of the carrier
9 or that the suspension would enhance the efficiency and fairness
10 of the marketplace for small employer health insurance, the
11 commissioner may suspend all or any part of section 3705 as to
12 The premiums applicable to 1 or more small employers for 1 or
13 more rating periods and may suspend section 3712(1)(c) or (d).
[(2) A small employer carrier that is not a nonprofit health care corporation or health maintenance organization and whose capital and surplus as concerns policyholders as of December 31, 2003 as shown on the annual financial statement filed with the commissioner is $8,000,000.00 or less may be exempt from this chapter, if the carrier files with the commissioner a written request for an exemption and the commissioner, after reviewing the carrier's request and annual financial statement, determines an exemption is warranted.
(3) An exemption granted under subsection (2) is effective for 3 years, so long as the carrier experiences no disproportionate growth in premium volume in business written, or changes in the carrier's pattern, location, or contours of that insurance business which indicate that the carrier is utilizing its exemption to take unfair competitive advantage of competing carriers who do not qualify for the exemption. A carrier that meets the requirements of subsections (2) to (5) may reapply every 3 years to the commissioner for a subsection (2) exemption. The commissioner shall determine whether the continuation of the exemption is warranted.
(4) The commissioner shall not grant an exemption under subsection (2) to any carrier that directly, or indirectly through 1 or more intermediaries, controls, is controlled by, or is under common control with a carrier whose surplus as concerns policyholders is in excess of the amount stated in subsection (2).
(5) A carrier admitted to do business in this state after January 1, 2004 is not eligible for an exemption under subsection (2).
(6) This chapter does not apply to a health benefit plan covering an employee of a small employer that is a high deductible plan, as defined in section 220 of the internal revenue code of 1986, issued in conjunction with an Archer medical savings account or with a health reimbursement arrangement.]
14 Sec. 3718. A nonprofit health care corporation is subject
15 to section 619 of the nonprofit health care corporation reform
16 act, 1980 PA 350, MCL 550.1619.
17 Sec. 3721. (1) By March 1, 2006 and by each March 1 after
18 2006, the commissioner shall make a determination as to whether a
19 reasonable degree of competition in the small employer carrier
20 health market exists on a statewide basis. If the commissioner
21 determines that a reasonable degree of competition in the small
22 employer carrier health market does not exist on a statewide
23 basis, the commissioner shall hold a public hearing and shall
24 issue a report delineating specific classifications and kinds or
25 types of insurance, if any, where competition does not exist and
26 any suggested statutory or other changes necessary to increase or
27 encourage competition. The report shall be based on relevant
1 economic tests, including, but not limited to, those in
2 subsection (3). The findings in the report shall not be based on
3 any single measure of competition, but appropriate weight shall
4 be given to all measures of competition.
5 (2) If the results of the report issued under subsection (1)
6 are disputed or if the commissioner determines that circumstances
7 that the report was based on have changed, the commissioner shall
8 issue a supplemental report to the report under subsection (1)
9 that includes a certification of whether or not a reasonable
10 degree of competition exists in the small employer carrier health
11 market. The supplemental report and certification shall be
12 issued not later than December 15 immediately following the
13 release of the report under subsection (1) that this report
14 supplements and shall be supported by substantial evidence.
15 (3) All of the following shall be considered by the
16 commissioner for purposes of subsections (1) and (2):
17 (a) The extent to which any carrier controls all or a portion
18 of the small employer carrier health benefit plan market.
19 (b) Whether the total number of carriers writing small
20 employer health benefit plan coverage in this state is sufficient
21 to provide multiple options to small employers.
22 (c) The disparity among small employer health benefit plan
23 premiums and classifications to the extent that those
24 classifications result in rate differentials.
25 (d) The availability of small employer health benefit plan
26 coverage to small employers in all geographic areas and all types
27 of business.
1 (e) The overall rate level that is not excessive, inadequate,
2 or unfairly discriminatory.
3 (f) Any other factors the commissioner considers relevant.
4 (4) The reports and certifications required under subsections
5 (1) and (2) shall be forwarded to the governor, the clerk of the
6 house, the secretary of the senate, and all the members of the
7 senate and house of representatives standing committees on
8 insurance and health issues.
9 Sec. 3723. The provisions of this chapter apply to each
10 health benefit plan for a small employer or sole proprietor that
11 is delivered, issued for delivery, renewed, or continued in this
12 state on or after the effective date of this chapter. For
13 purposes of this section, the date a health benefit plan is
14 continued is the first rating period that begins on or after the
15 effective date of this chapter.
16 Enacting section 1. This amendatory act does not take
17 effect unless Senate Bill No. 234 of the 92nd Legislature is
18 enacted into law.
19 Enacting section 2. This amendatory act takes effect 6
20 months after the date this amendatory act is enacted.