SB 1039 Modifies health insurance provisions for small employers with respect to rates/renewability/preexisting conditions
LR Number:4556S.01I Fiscal Note:4556-01
Committee:Insurance and Housing
Last Action:02/28/00 - Referred S Insurance & Housing Committee Journal page:S335
Effective Date:August 28, 2000
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Current Bill Summary

SB 1039 - This act modifies the small employer health insurance availability act by imposing an adjusted community rating standard on premium rates. This act also includes language to bring current law into compliance with the Health Insurance Portability and Accountability Act (HIPPA).


Premium rates for health plans provided to large employers must comply with Section 376.936.1, RSMo, - adjusted community rating standards. Health carriers offering plans to large employers must provide written certification to employees who lose coverage

This act redefines small employer as an employer having an average of at least two but not more than 50 employees (current law 3-25).

ADJUSTED COMMUNITY RATING - Small group carriers shall base their rates on an adjusted community rate and may vary the adjusted community rate for geographic area, family composition and age. Carriers may not use age brackets smaller than 5 years and shall range from 30 to 65 years of age. Carriers may charge the lowest allowable adult rate for child only coverage. Carriers are permitted to develop rates for individuals 65 or older. The permitted rates for any age group shall not be more than 400% of the lowest rate of the all adult age groups for the first two years and no more than 300% after two years after the effective date of this act. Rate adjustments shall not be more than 200% of the lowest adult age group five years after the effective date of this act.

Premiums may not be adjusted more frequently than annually except the rates may be changed to reflect changes in enrollment of the small employer, changes in the family composition of the employer or changes to the health benefit plan.

RENEWABILITY - Small employer health benefit plans are renewable except when the employer fails to pay premiums, has committed fraud or when the small employer carrier has discontinued offering all of its plans to small employers in this state.

A health plan shall not be renewable if the Director of Insurance finds that the product form is obsolete and is being replaced with comparable coverage and the carrier is discontinuing that type of plan in the market. The carrier may discontinue the plan if it provides notice to the insurance supervisory official in the state in which it is licensed, the small employers and its enrollees and dependents and to the insurance supervisory official in each state in which an affected individual is known to reside. This notice must be provided at least 180 days prior to the nonrenewal of the plan. The carrier must also offer each small employer the option to purchase other health plans. The carriers decision to discontinue a plan and offer a new one shall not be based the small employers' claims experience or any health status-related factor of an enrollee.

A small employer health insurance plan made available through a bona fide association shall not be renewable if the employer's membership in that association ceases. Coverage may not be terminated due to an individual's health status-related factor.

Health plans made available through a network plan are not renewable if there is no longer an employee of the small employer living, working or residing with the carrier's established geographic service area.

FILING REQUIREMENTS - Small employer carriers must file their basic health benefit and standard health benefit plans with the Director of Insurance. Plans are subject to approval by the Director of Insurance.

PLAN REQUIREMENTS - A small employer health benefit plan shall not deny coverage for a loss due to a preexisting condition incurred more than 12 months following the effective date of the policy or the first date of the waiting period for such enrollment if that date is earlier than the effective date.

The period of any preexisting condition exclusion must be reduced by the aggregate period of creditable coverage so long as there was not more than a 63-day gap between the old and new coverage

A health benefit plan may exclude coverage for late enrollees for preexisting conditions for a period not to exceed 18 months.

SPECIAL ENROLLMENT PERIOD - Carriers shall allow employee or dependent to enroll during special enrollment period if the employee was covered under a plan at the time coverage was originally offered; the reason for not enrolling was because the employee had coverage under another plan; the coverage under such plan has been exhausted or terminated; and the employee requests enrollment not later than 30 days after the exhaustion or termination of coverage.

Small employer carriers shall require a minimum participation level greater than 100% of eligible employees working for groups of 3 or less employees and 75% of eligible employees working for groups with more than 3 employees.

Small employer carriers shall not be required to provide coverage to small employers for any period of time for which the Director determines that the carrier does not have the financial reserves to underwrite such additional coverage and the carrier is providing coverage to all small employers without regard to the particular claims experience of a small employer. A small employer carrier will not be able to offer coverage until the later of 180 days after the date the coverage is denied or until the Director determines that the carrier has sufficient financial reserves to underwrite the coverage.

A small employer carrier will not be required to provide coverage to small employers if the carrier elects not to offer new coverage to small employers. The carrier, however, may maintain, existing policies in the state. If the carrier elects not to offer new coverage, it must provide notice to the Director and the carrier will be barred from offering new coverage in the state for a period of five years.

Small employer carriers must provide written certification of creditable coverage to individuals at the time the individual ceases to be covered under the health plan or under the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA). The certificate of creditable coverage shall contain the period of coverage under the health plan, any applicable coverage under COBRA and the waiting period imposed upon the individual.