January 24, 2006, Introduced by Rep. Hildenbrand and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 3701 (MCL 500.3701), as added by 2003 PA 88,
and by adding section 3705a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 3701. As used in this chapter:
(a) "Actuarial certification" means a written statement by a
member of the American academy of actuaries or another individual
acceptable to the commissioner that a small employer carrier is in
compliance with the provisions of section 3705, based upon the
person's examination, including a review of the appropriate records
and the actuarial assumptions and methods used by the carrier in
establishing premiums for applicable health benefit plans.
(b) "Affiliation period" means a period of time required by a
small employer carrier that must expire before health coverage
becomes effective.
(c) "Base premium" means the lowest premium charged for a
rating period under a rating system by a small employer carrier to
small employers for a health benefit plan in a geographic area.
(d) "Carrier" means a person that provides health benefits,
coverage, or insurance in this state. For the purposes of this
chapter, carrier includes a health insurance company authorized to
do business in this state, a nonprofit health care corporation, a
health maintenance organization, a multiple employer welfare
arrangement, or any other person providing a plan of health
benefits, coverage, or insurance subject to state insurance
regulation.
(e) "COBRA" means the consolidated omnibus budget
reconciliation act of 1985, Public Law 99-272, 100 Stat. 82.
(f) "Commercial carrier" means a small employer carrier other
than a nonprofit health care corporation or health maintenance
organization.
(g) "Creditable coverage" means, with respect to an
individual, health benefits, coverage, or insurance provided under
any of the following:
(i) A group health plan.
(ii) A health benefit plan.
(iii) Part A or part B of title XVIII of the social security
act, chapter
531, 49 Stat. 620, 42 U.S.C. USC
1395c to 1395i
and
1395i-2 to 1395i-5, and 42 U.S.C. 1395j to 1395t, 1395u to
1395w,
and 1395w-2 to 1395w-4.
(iv) Title XIX of the social security act, chapter
531, 49
Stat.
620, 42 U.S.C. USC
1396 to 1396r-6 and 1396r-8 to 1396v,
other than coverage consisting solely of benefits under section
1929
of title XIX of the social security act, 42 U.S.C. USC
1396t.
(v) Chapter 55 of title 10 of the United States Code,
10
U.S.C.
USC 1071 to 1110. For purposes of chapter 55 of title 10
of
the
United States Code, 10 U.S.C. USC
1071 to 1110, "uniformed
services" means the armed forces and the commissioned corps of the
national oceanic and atmospheric administration and of the public
health service.
(vi) A medical care program of the Indian health service or of
a tribal organization.
(vii) A state health benefits risk pool.
(viii) A health plan offered under the employees health benefits
program,
chapter 89 of title 5 of the United States Code, 5 U.S.C.
USC 8901 to 8914.
(ix) A public health plan, which for purposes of this chapter
means a plan established or maintained by a state, county, or other
political subdivision of a state that provides health insurance
coverage to individuals enrolled in the plan.
(x) A health benefit plan under section 5(e) of title I of the
peace
corps act, Public Law 87-293, 22 U.S.C.
USC 2504.
(h) "Eligible employee" means an employee who works on a full-
time basis with a normal workweek of 30 or more hours. Eligible
employee includes an employee who works on a full-time basis with a
normal workweek of 17.5 to 30 hours, if an employer so chooses and
if this eligibility criterion is applied uniformly among all of the
employer's employees and without regard to health status-related
factors.
(i) "Geographic area" means an area in this state that
includes not less than 1 entire county, established by a carrier
pursuant to section 3705 and used for adjusting premiums for a
health benefit plan subject to this chapter. In addition, if the
geographic area includes 1 entire county and additional counties or
portions of counties, the counties or portions of counties must be
contiguous with at least 1 other county or portion of another
county in that geographic area.
(j) "Group health plan" means an employee welfare benefit plan
as defined in section 3(1) of subtitle A of title I of the employee
retirement
income security act of 1974, Public Law 93-406, 29
U.S.C.
USC 1002, to the extent that the plan provides medical
care, including items and services paid for as medical care to
employees or their dependents as defined under the terms of the
plan directly or through insurance, reimbursement, or otherwise. As
used in this chapter, all of the following apply to the term group
health plan:
(i) Any plan, fund, or program that would not be, but for
section 2721(e) of subpart 4 of part A of title XXVII of the public
health
service act, chapter 373, 110 Stat. 1967, 42 U.S.C.
USC
300gg-21, an employee welfare benefit plan and that is established
or maintained by a partnership, to the extent that the plan, fund,
or program provides medical care, including items and services paid
for as medical care, to present or former partners in the
partnership, or to their dependents, as defined under the terms of
the plan, fund, or program, directly or through insurance,
reimbursement or otherwise, shall be treated, subject to
subparagraph (ii), as an employee welfare benefit plan that is a
group health plan.
(ii) The term "employer" also includes the partnership in
relation to any partner.
(iii) The term "participant" also includes an individual who is,
or may become, eligible to receive a benefit under the plan, or the
individual's beneficiary who is, or may become, eligible to receive
a benefit under the plan. For a group health plan maintained by a
partnership, the individual is a partner in relation to the
partnership and for a group health plan maintained by a self-
employed individual, under which 1 or more employees are
participants, the individual is the self-employed individual.
(k) "Health benefit plan" or "plan" means an expense-incurred
hospital, medical, or surgical policy or certificate, nonprofit
health care corporation certificate, or health maintenance
organization contract. Health benefit plan does not include
accident-only, credit, dental, or disability income insurance;
long-term care insurance; coverage issued as a supplement to
liability insurance; coverage only for a specified disease or
illness; worker's compensation or similar insurance; or automobile
medical-payment insurance.
(l) "Index rate" means the arithmetic average during a rating
period of the base premium and the highest premium charged per
employee for each health benefit plan offered by each small
employer carrier to small employers and sole proprietors in a
geographic area.
(m) "Nonprofit health care corporation" means a nonprofit
health care corporation operating pursuant to the nonprofit health
care corporation reform act, 1980 PA 350, MCL 550.1101 to 550.1704.
(n) "Premium" means all money paid by a small employer, a sole
proprietor, eligible employees, or eligible persons as a condition
of receiving coverage from a small employer carrier, including any
fees or other contributions associated with the health benefit
plan.
(o) "Rating period" means the calendar period for which
premiums established by a small employer carrier are assumed to be
in effect, as determined by the small employer carrier.
(p) "Small employer" means any person, firm, corporation,
partnership, limited liability company, or association actively
engaged in business who, on at least 50% of its working days during
the preceding and current calendar years, employed at least 2 but
not more than 50 eligible employees. In determining the number of
eligible employees, companies that are affiliated companies or that
are eligible to file a combined tax return for state taxation
purposes shall be considered 1 employer.
(q) "Small employer carrier" means either of the following:
(i) A carrier that offers health benefit plans covering the
employees of a small employer.
(ii) A carrier under section 3703(3).
(r) "Sole proprietor" means an individual who is a sole
proprietor or sole shareholder in a trade or business through which
he or she earns at least 50% of his or her taxable income as
defined in section 30 of the income tax act of 1967, 1967 PA 281,
MCL 206.30, excluding investment income, and for which he or she
has filed the appropriate internal revenue service form 1040,
schedule C or F, for the previous taxable year; who is a resident
of this state; and who is actively employed in the operation of the
business, working at least 30 hours per week in at least 40 weeks
out of the calendar year.
(s) "State mandated health benefits" or "mandated benefits"
means coverage for specific health care services or benefits as
required under chapter 34 or 36 or part 4 of the nonprofit health
care corporation reform act, 1980 PA 350, MCL 550.1401 to 550.1439.
(t) (s) "Waiting period" means, with respect to a
health
benefit plan and an individual who is a potential enrollee in the
plan, the period that must pass with respect to the individual
before the individual is eligible to be covered for benefits under
the terms of the plan. For purposes of calculating periods of
creditable coverage under this chapter, a waiting period shall not
be considered a gap in coverage.
Sec. 3705a. (1) To increase health benefit plan options
available to small employers, the commissioner may approve
applications from carriers to offer health benefit plans that do
not include specific state mandated health benefits. A waiver for a
health benefit plan under this chapter shall not be granted by the
commissioner unless all of the following are met:
(a) The health benefit plan to be provided through the waiver
authority granted in this section clearly delineates to small
employers the health services included in the plan, the mandated
benefits included in the plan, and the mandated benefits that are
not included in the plan as a result of the waiver.
(b) The duration of the waiver does not exceed 5 years.
(c) The carrier receiving the waiver agrees to provide the
information requested by the commissioner that is needed to meet
the reporting requirements under subsection (5).
(2) The commissioner shall approve annually on or before
January 1 at least 2 waiver applications from carriers to the
extent that a carrier or carriers have submitted applications for
waivers that meet the requirements of this section.
(3) Upon approval of a waiver under this section, the carrier
shall submit to the commissioner for his or her approval all rates,
forms, policies, and contracts for the health benefit plan granted
the waiver. The premiums of a health benefit plan granted a waiver
under this section are exempt from section 3705 and shall be
reasonable in relation to the benefits provided.
(4) Upon approval of a waiver under this section, a carrier
shall actively offer and market to small employers the health
benefit plan granted the waiver.
(5) On or before November 1, 2008, the commissioner shall
prepare and provide to the senate and house of representatives
standing committees on health and insurance issues a report that
includes all of the following:
(a) A description of all health benefit plans granted waivers
under this section.
(b) The number of health benefit plans granted waivers under
this section that have been purchased by small employers.
(c) The impact, if any, upon the small group health insurance
market, including, but not limited to, information on newly
admitted carriers who are offering health benefit plans granted
waivers under this section, and any evidence of increased risk
segmentation in the small group market as a result of the offering
of health benefit plans granted waivers under this section.
(6) This section does not prohibit an employer from electing
to expand coverage under a health benefit plan.
(7) This section does not prohibit a carrier from electing to
expand coverage under a health benefit plan.