Bill Text: PA SB1271 | 2009-2010 | Regular Session | Introduced


Bill Title: Imposing restrictions relating to premium rates for small employer group health benefit plans; providing for renewability and availability of coverage; establishing standards to assure fair marketing; providing for powers and duties of the Insurance Commissioner; and repealing provisions of the Accident and Health Filing Reform Act.

Spectrum: Slight Partisan Bill (Republican 5-2)

Status: (Introduced - Dead) 2010-03-11 - Referred to BANKING AND INSURANCE [SB1271 Detail]

Download: Pennsylvania-2009-SB1271-Introduced.html

  

 

    

PRINTER'S NO.  1760

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

SENATE BILL

 

No.

1271

Session of

2010

  

  

INTRODUCED BY McILHINNEY, RAFFERTY, ARGALL, LOGAN, ALLOWAY AND O'PAKE, MARCH 11, 2010

  

  

REFERRED TO BANKING AND INSURANCE, MARCH 11, 2010  

  

  

  

AN ACT

  

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Imposing restrictions relating to premium rates for small

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employer group health benefit plans; providing for

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renewability and availability of coverage; establishing

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standards to assure fair marketing; providing for powers and

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duties of the Insurance Commissioner; and repealing

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provisions of the Accident and Health Filing Reform Act.

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The General Assembly of the Commonwealth of Pennsylvania

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hereby enacts as follows:

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Section 1.  Short title.

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This act shall be known and may be cited as the Pennsylvania

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Health Care Security Act.

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Section 2.  Purpose.

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The purpose and intent of this act is to promote the

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availability of health insurance coverage to small employers

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regardless of their health status in order to prevent abusive

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rating practices, to spread health insurance risk more broadly,

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to establish rules regarding renewability of coverage and to

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establish limitations on the use of preexisting condition

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exclusions.

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Section 3.  Definitions.

 


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The following words and phrases when used in this act shall

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have the meanings given to them in this section unless the

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context clearly indicates otherwise:

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"Carrier."  A health insurance entity subject to the act of

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May 17, 1921 (P.L.682, No.284), known as The Insurance Company

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Law of 1921, insurance laws and regulations of this Commonwealth

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or subject to the jurisdiction of the Insurance Commissioner

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that contracts or offers to contract to provide, deliver,

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arrange for, pay for or reimburse any of the costs of health

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care services, including a sickness and accident insurance

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company, a health maintenance organization as defined in the act

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of December 29, 1972 (P.L.1701, No.364), known as the Health

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Maintenance Organization Act, a hospital plan corporation as

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defined in 40 Pa.C.S. Ch. 61 (relating to hospital plan

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corporations), a professional health service plan corporation as

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defined in 40 Pa.C.S. Ch. 63 (relating to professional health

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services plan corporations), a fraternal benefit society

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organized and operating under Article XXIV of The Insurance

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Company Law of 1921, or any other entity providing a plan of

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health insurance, health benefits or health services.

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"Commissioner."  The Insurance Commissioner of the

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Commonwealth.

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"Creditable coverage."  With respect to an individual, health

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benefits or coverage provided under any of the following:

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(1)  A group health plan.

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(2)  A health plan.

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(3)  Medicare under Part A or Part B of Title XVIII of

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the Social Security Act (49 Stat. 620, 42 U.S.C. § 301 et

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seq.).

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(4)  Medicaid under Title XIX of the Social Security Act

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(49 Stat. 620, 42 U.S.C. § 301 et seq.), other than coverage

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consisting solely of benefits under section 1928 of that act.

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(5)  CHAMPUS, under 10 U.S.C. Ch. 55 (relating to medical

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and dental care), where "uniformed services" means the armed

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forces and the Commissioned Corps of the National Oceanic and

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Atmospheric Administration and of the Public Health Services.

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(6)  A health plan offered under 5 U.S.C. Ch. 89

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(relating to Federal employees group health insurance).

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(7)  A health insurance program administered by the

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Insurance Department.

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"Department."  The Insurance Department of the Commonwealth.

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"Dependent."  Subject to applicable terms of a health

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benefits plan:

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(1)  the spouse of an eligible employee; or

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(2)  an unmarried child who is under 19 years of age of

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an eligible employee.

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"Eligible employee."  An employee who works on a full-time

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basis with a normal work week of 30 or more hours, except that

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at the employer's sole discretion, the term shall also include

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an employee who works on a full-time basis with a normal work

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week of anywhere between at least 17.5 and 30 hours, as long as

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this eligibility criterion is applied uniformly among all of the

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employer's employees and without regard to any health status-

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related factor. The term shall include a self-employed

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individual, a sole proprietor, a partner of a partnership and an

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independent contractor if the self-employed individual, sole

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proprietor, partner or independent contractor is included as an

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employee under a health benefit plan of a small employer. The

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term does not include an employee who works on a temporary or

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substitute basis or who works less than 17.5 hours per week.

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"Health benefit plan."  A hospital or medical expense

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insurance policy offered by a carrier for medical care delivered

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or issued for delivery for a subscriber. The term does not

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include one or more or any combination of the following:

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(1)  Coverage only for accident or disability income

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insurance or any combination thereof.

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(2)  Coverage issued as a supplement to liability

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insurance.

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(3)  Liability insurance, including general liability

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insurance and automobile liability insurance.

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(4)  Stop-loss or excess-risk insurance.

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(5)  Workers' compensation or similar insurance.

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(6)  Automobile medical payment insurance.

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(7)  Credit-only insurance.

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(8)  Other similar insurance coverage as specified in

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Federal regulations under which benefits for medical care are

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secondary or incidental to other insurance benefits.

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The term shall not include Medicare supplemental health

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insurance as defined under section 1882(g)(1) of the Social

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Security Act (49 Stat. 620, 42 U.S.C. § 1395ss(g)(1)).

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"Health status-related."  Any of the following factors:

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(1)  Health status.

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(2)  Medical condition, including both physical and

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mental illness.

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(3)  Substance abuse.

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(4)  Claims experience.

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(5)  Receipt of health care.

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(6)  Medical history.

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(7)  Genetic information.

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(8)  Evidence of insurability, including conditions

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arising out of acts of domestic violence.

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(9)  Disability.

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"Modified demographic rating."  A rating method used to

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develop a carrier's premium that spreads financial risk across

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the carrier's small group population, which results in a small

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group premium rate that may be modified based on rate class

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factors such as age, gender, family composition, industry and

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geographic area. The geographic area for small group policies

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shall have counties as the smallest permissible rating

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territory.

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"Preexisting condition."  A condition, regardless of the

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cause of the condition, for which medical advice, diagnosis,

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care or treatment was recommended or received during the six

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months immediately preceding the enrollment date of coverage.

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"Restricted network provision."  Any provision of a health

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benefit plan that conditions the payment of benefits, in whole

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or in part, on the use of health care providers that have

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entered into a contractual arrangement with the carrier to

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provide health care services to covered individuals.

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"Significant break in coverage."  A period of 63 consecutive

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days during which an individual does not have any creditable

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coverage, excluding any waiting period or affiliation period.

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"Small employer."  A person, firm, corporation, partnership

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or political subdivision that is located in this Commonwealth

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and is actively engaged in business that on at least 50% of its

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working days during the preceding calendar quarter, employed a

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combination of no more than 50 eligible employees and is not

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formed primarily for the purposes of buying health insurance and

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in which a bona fide employer-employee relationship exists.

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"Small group carrier."  A carrier that provides small group

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health benefit plans.

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"Small group health benefit plan."  A health benefit plan for

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groups of two to 50 eligible persons, whether issued directly to

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small employers or made available to small employers through

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membership in an association.

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Section 4.  Restrictions relating to premium rates.

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(a)  Applicability.--This section shall apply to all small

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group health benefit plans that are issued, made effective,

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delivered or renewed in this Commonwealth after the effective

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date of this section.

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(b)  Premium rates.--

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(1)  An insurer shall establish a geographic average rate

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for plans and shall file the geographic average rates with

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the department as required by law. The geographic average

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rate may not be changed more frequently than once every 12

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months. An insurer may adjust its geographic average rates

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for age only.

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(2)  An insurer shall apply the risk adjustment factor

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under paragraph (1) consistently with respect to all plans

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subject to this section.

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(3)  An insurer shall not charge a rate that is more than

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33% above or below the geographic average rate as permitted

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under paragraph (1). Additional adjustments may be made to

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reflect the inclusion of additional benefits as specified and

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differences in family composition.

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(4)  The premium for a small group health benefit plan

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shall not be adjusted by an insurer more than once each year,

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except that rates may be changed more frequently to reflect:

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(i)  Changes to the enrollment of the small employer

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group.

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(ii)  Changes to a small group health benefit plan

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that have been requested by the small employer.

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(iii)  Changes pursuant to a government order or

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judicial proceeding.

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(5)  No form of medical underwriting is permitted,

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including use of any of the following factors:

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(i)  Medical condition or health status-related

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factors including both physical and mental illness and

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the use of group or individual medical questionnaires.

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(ii)  Claims experience.

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(iii)  Genetic information.

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(iv)  Evidence of insurability, including conditions

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arising out of acts of domestic violence.

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(v)  Disability.

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(c)  Base rates.--Rating factors for small group health

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benefit plans shall produce base rates for identical groups

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which differ only in the amounts attributable to plan design.

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(d)  Construction.--For the purposes of this section, a small

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group health benefit plan that contains a restricted network

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provision or operates in a limited service area shall not be

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construed as having similar coverage as a small group health

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benefit plan that does not contain such a provision.

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(e)  Filing requirements.--All carriers offering small group

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health benefit plans shall place on file with the department all

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small group base rates and modifying factors. Rates for a

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specific group may not deviate by more than 15% from the rate

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developed utilizing the filed small group base rates or base

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rate formulas and modifying factors, unless the specific group

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rates are placed on file with the department. All filings

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required by this section shall be made no less than 45 days

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prior to their effective dates. Filings made under this

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subsection shall be deemed approved at the expiration of 45 days

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after filing unless earlier approved or disapproved by the

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commissioner. The commissioner, by written notice to the

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insurer, may within the 45-day period extend the period for

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approval or disapproval for an additional 45 days.

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(f)  Regulations.--The commissioner shall establish

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regulations to implement the provisions of this section and to

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assure that rating practices used by small group carriers are

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consistent with the purposes of this act.

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Section 5.  Renewability of coverage.

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A small employer's health benefit plan subject to this act

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shall be renewable with respect to all eligible employees or

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dependents, at the option of the small employer, except in any

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of the following cases:

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(1)  The small employer has failed to pay premiums or

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contributions in accordance with the terms of the small group

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health benefit plan or the carrier has not received timely

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premium payments.

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(2)  The small employer has performed an act or practice

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that constitutes fraud or made an intentional

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misrepresentation of material fact.

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(3)  Noncompliance by the small employer with the

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carrier's minimum participation requirements.

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(4)  Noncompliance by the small employer with the

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carrier's employer contribution requirements.

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(5)  The carrier elects to discontinue offering some or

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all of its small group health benefit plans delivered or

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issued for delivery to small employers in this Commonwealth,

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if the carrier provides notice of the decision to:

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(i)  All affected small employers and covered

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employees.

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(ii)  The commissioner at least 90 days prior to the

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nonrenewal of any health benefit plans by the carrier.

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Section 6.  Availability of coverage.

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(a)  General rule.--As a condition of transacting business in

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this Commonwealth, a small group carrier shall actively offer to

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small employers all health benefit plans that it actively

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markets to small groups.

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(b)  Small groups.--A small group health benefit plan shall

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not deny, exclude or limit benefits for a covered individual for

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losses incurred more than 12 months following the enrollment day

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of the individual's coverage due to a preexisting condition or

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the first date of the waiting period for enrollment if that date

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is earlier than the enrollment date.

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Section 7.  Standards to assure fair marketing.

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(a)  General rule.--A small group carrier shall actively

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market all small group health benefit plans sold by the carrier

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to eligible small employers in this Commonwealth.

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(b)  Prohibited conduct.--Except as provided in subsection

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(c), no small group carrier or producer shall, directly or

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indirectly, engage in the following conduct:

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(1)  Encouraging or directing a group of small employers

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to refrain from filing an application for coverage with the

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small group carrier or producer because of any health status

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factor, industry, occupation or geographic location of a

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small employer.

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(2)  Encouraging or directing a small employer to seek

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coverage from another carrier because of any health status

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factor, industry, occupation or geographic location of the

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small employer.

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(c)  Exception.--The provisions of subsection (b) shall not

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apply with respect to information provided by a carrier or

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producer to a small employer regarding the established

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geographic service area or a restricted network provision of a

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carrier.

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(d)  Entrance into contracts.--No small group carrier shall,

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directly or indirectly, enter into any contract, agreement or

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arrangement with a producer that provides for or results in the

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compensation paid to a producer for the sale of a small group

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health benefit plan to be varied because of any initial or

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renewal health status-related factor, industry or occupation of

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the small employer.

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(e)  Termination of contracts.--No small group carrier may

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terminate, fail to renew or limit its contract or agreement of

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representation with a producer for any reason related to any

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initial or renewal health status-related factor or occupation of

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the small employer carrier.

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(f)  Separation or exclusion from coverage or benefits.--A

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small group carrier or producer may not induce or otherwise

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encourage a small employer to separate or otherwise exclude an

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employee or dependent from health coverage or benefits provided

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in connection with the employee's employment.

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Section 8.  Filing of certification.

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Each small group carrier shall file with the commissioner on

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or before March 1 of each year an actuarial certification that

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the carrier is in compliance with this act and that the rating

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methods of the carrier are actuarially sound. A copy of the

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certification shall be retained by the carrier at its principal

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place of business.

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Section 9.  Transition period.

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The commissioner may establish a phase-in period for renewal

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rates of no less than one year and no more than two years in

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duration for carriers to implement rate adjustments. Any

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transition period shall be applied uniformly to all carriers.

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Section 10.  Repeals.

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Repeals are as follows:

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(1)  The General Assembly finds that the repeals under

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paragraph (2) are necessary to effectuate this act.

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(2)  The following provisions of the act of December 18,

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1996 (P.L.1066, No.159), known as the Accident and Health

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Filing Reform Act, are repealed insofar as they provide for

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required rate filings, review procedures and related matters

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for small group health benefit plans or are otherwise

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inconsistent with the requirements of this act:

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(i)  Section 3(e)(1), (2), (3), (4), (5) and (6) and

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(f).

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(ii)  Section 4(a), (b), (c), (d), (e) and (f).

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(iii)  Section 5.

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(iv)  Section 6.

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(v)  Section 7.

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(vi)  Section 8(a), (c) and (e).

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Section 11.  Effective date.

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This act shall take effect in 180 days.

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