HB 1278 Revises health insurance provisions to make them compliant with HIPAA and creates premium tax on certain policies
Current Bill Summary
- Prepared by Senate Research -

SCS/HCS/HB 1278 - This act modifies several provisions of law relating to health insurance. Many of the provisions are modified so that the state of Missouri will be in compliance with the Health Insurance Portability and Accountability Act (HIPAA).

DEDUCTIBLE PLANS BY HMOS - PREMIUM TAX - Under this act, any HMO may offer as an option, one or more health benefit plans which contain deductibles, coinsurance, coinsurance differentials, or variable copayments, as agreed to by the group or individual policy holder. Health benefit plans which contain deductibles may be combined with health savings accounts (HSAs), as described in the Medicare Reform Act. HMOs that offer such policies are not exempted from providing or covering the various mandated health insurance benefits required by Chapter 376, RSMo. Coverage and benefits provided by such policies for the various mandated health insurance benefits required by Chapter 376, RSMo, shall be subject to the dollar limits and copayments as prescribed in Chapter 376, RSMo.

HMOs that issue the optional health benefit plans shall pay a 2% premium tax on such plans. The moneys generated from this tax shall be credited to the Missouri Health Insurance Pool which is created by this act (Sections 376.381 and 376.963).

GROUP HEALTH INSURANCE (HIPAA COMPLIANCE)- The act amends several provisions of law relating to group health insurance. Under the provisions of the act, an insurer may only exclude or limit coverage on persons if the insurer complies with Sections 376.450 to 376.452 (Sections 376.421, 376.424, and 376.426). Sections 376.450 to 376.452 attempt to make Missouri "HIPAA" compliant for purposes of federal law. HIPA is the Health Insurance Portability Act which, amongst other things, relates to the crediting of prior health coverage for purposes of reducing preexisting condition exclusion periods. The new provisions define the terms "pre-existing condition exclusions" and "waiting period". The act prohibits group health insurance issuers from establishing enrollment eligibility requirements based on health status-related factors, which include medical history and genetic information (Section 376.451). Health insurance issuers, that offer group health insurance coverage, are prohibited from requiring any individual, as a condition of enrollment, to pay a premium or other contribution that is greater than that made by other similarly situated individuals enrolled in the plan on the basis of health status-related factors. The act requires health insurance issuers offering large group health plan coverage to renew or continue coverage in force at the option of the plan sponsor (Section 376.452). The health insurance issuer may nonrenew or discontinue health insurance coverage in connection with a group health plan if the plan sponsor fails to pay premiums, the plan sponsor has committed fraud or misrepresented facts in connection to the coverage, fails to comply with employer contribution requirements, or in the case of network plan, no enrollees in the group live, work or reside in the service area of the health insurance issuer.

Under the act, a health insurance issuer may not discontinue offering a particular type of group health insurance coverage offered in the large group market unless:

(1) The issuer provides notice to each plan sponsor and participant at least 90 days prior to the date of the discontinuation of coverage;

(2) The issuer offers to each plan sponsor the option to purchase any other health insurance coverage currently being offered in the market; and

(3) The issuer acts uniformly without regard to claims experience of the plan sponsors or health-status related factors of it participants.

The act also provides that a health insurance issuer may not discontinue in the large group market unless it provides 180 day notice and all health insurance issued in Missouri is discontinued. A health insurance issuer discontinuing coverage pursuant to this provision may not issue health insurance coverage in the large group market for five years.

The act provides similar guidelines regarding the nonrenwal and discontinuance of health insurance coverage to the individual market (Section 376.771).

HEALTH INSURANCE COVERAGE FOR ADOPTED CHILDREN - This act changes the definition of the term "placement" as it pertains to coverage of adopted children. Under current law, health insurance coverage for adopted children is effective from the date of placement. Currently, placement means that the child is in the physical custody of the adoptive parent. The act changes the definition of "placement" to mean the assumption and retention by the insured of a legal obligation for total or partial support of a child in anticipation of adoption (Section 376.816).

MENTAL HEALTH AND CHEMICAL DEPENDENCY INSURANCE ACT - This act extends the sunset date upon the Mental Health and Chemical Dependency Insurance Act to January 1, 2010 (Section 376.841).

SMALL EMPLOYER HEALTH INSURANCE - The act amends several provisions regarding the Small Employer Health Insurance Availability Act (Sections 379.930 - 379.952). The act adds the terms "creditable coverage," "excepted benefits", "health status-related factor", and "medical care" as they relate to the Small Employer Health Insurance Availability Act. The act modifies the definition of "small employer" as it pertains to a group health plan to include political subdivisions. A small employer is one who employs two to 50 eligible employees. Under current law, a small employer has three to 25 employees (Section 379.930).

The act modifies conditions under which small employer health benefit plans are not renewable (Section 379.938). The act modifies the conditions (notice, offering of other coverage, acting uniformly without regard to claims experience, etc.) under which small employer carriers can discontinue a particular type of small group health benefit plan and discontinue all small employer health insurance coverage (Section 379.938). The act allows small employer carriers offering coverage through a network plan not to offer coverage to an eligible person who no longer lives or works in the service area or to a small employer who no longer has an enrollee in the plan who lives or works in the service area. This act requires small employer carriers to offer all health benefit plans they actively market to small employers in the state. Current law requires small employer carriers to offer at least two health benefit plans: a basic and a standard health benefit plan (Section 379.940).

The act prohibits small employer carriers from imposing preexisting condition exclusions in certain cases. For example, the act specifies that a pregnancy existing on the effective date of coverage is not considered a pre-existing condition. The act also prohibits imposing a preexisting condition exclusion on adopted children before attaining the age of 18 and who, as of the last day of the thirty-day period beginning on the date of adoption or placement for adoption, is covered under creditable coverage.

ABOLISHMENT OF THE MISSOURI SMALL EMPLOYER HEALTH REINSURANCE PROGRAM - This act abolishes the Missouri Small Employer Reinsurance Program on December 31, 2005 (Section 379.942). The program will not take on any risk after October 1, 2004 (Section 376.943.13). Moneys and assets which are part of the Missouri Small Employer Health Reinsurance Program shall be transferred to the high risk pool (Section 376.943.14 and .15).

MARKETING OF HEALTH INSURANCE BY SMALL EMPLOYER CARRIERS - The act deletes the provision of law which currently provides that if a small employer denies coverage to a small employer on the basis of the health status or claims experience of the small employer and employees, the small employer carrier must offer the small employer the opportunity to purchase other basic health benefit plans (Section 379.952).

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