Health benefit plans covering small employers shall be subject to the following provisions:
(1) A preexisting conditions provision in a small employer health benefit plan shall apply only to a condition for which medical advice, diagnosis, care or treatment was recommended or received during the six-month period immediately preceding the enrollment date of an enrollee or late enrollee. As used in this section, the enrollment date of an enrollee shall be the earlier of the effective date of coverage or the first day of any required group eligibility waiting period and the enrollment date of a late enrollee shall be the effective date of coverage.
(2) A preexisting conditions provision in a small employer health benefit plan shall terminate its effect as follows:
(a) For an enrollee, not later than the first of the following dates:
(A) Six months following the enrollee’s effective date of coverage; or
(B) Ten months following the start of any required group eligibility waiting period.
(b) For a late enrollee, not later than 12 months following the late enrollee’s effective date of coverage.
(3) In applying a preexisting conditions provision to an enrollee or late enrollee, except as provided in this subsection, all small employer health benefit plans shall reduce the duration of the provision by an amount equal to the enrollee’s or late enrollee’s aggregate periods of creditable coverage if the most recent period of creditable coverage is ongoing or ended within 63 days of the enrollment date in the new small employer health benefit plan. The crediting of prior coverage in accordance with this subsection shall be applied without regard to the specific benefits covered during the prior period. This subsection does not preclude, within a small employer health benefit plan, application of:
(a) An affiliation period that does not exceed two months for an enrollee or three months for a late enrollee; or
(b) An exclusion period for specified covered services, as established by the Health Insurance Reform Advisory Committee, applicable to all individuals enrolling for the first time in the small employer health benefit plan.
(4) Late enrollees may be excluded from coverage for up to 12 months or may be subjected to a preexisting conditions provision for up to 12 months. If both an exclusion from coverage period and a preexisting conditions provision are applicable to a late enrollee, the combined period shall not exceed 12 months.
(5) Each small employer health benefit plan shall be renewable with respect to all eligible enrollees at the option of the policyholder, small employer or contract holder except:
(a) For nonpayment of the required premiums by the policyholder, small employer or contract holder.
(b) For fraud or misrepresentation of the policyholder, small employer or contract holder or, with respect to coverage of individual enrollees, the enrollees or their representatives.
(c) When the number of enrollees covered under the plan is less than the number or percentage of enrollees required by participation requirements under the plan.
(d) For noncompliance with the small employer carrier’s employer contribution requirements under the health benefit plan.
(e) When the carrier discontinues offering or renewing, or offering and renewing, all of its small employer health benefit plans in this state or in a specified service area within this state. In order to discontinue plans under this paragraph, the carrier:
(A) Must give notice of the decision to the Director of the Department of Consumer and Business Services and to all policyholders covered by the plans;
(B) May not cancel coverage under the plans for 180 days after the date of the notice required under subparagraph (A) of this paragraph if coverage is discontinued in the entire state or, except as provided in subparagraph (C) of this paragraph, in a specified service area;
(C) May not cancel coverage under the plans for 90 days after the date of the notice required under subparagraph (A) of this paragraph if coverage is discontinued in a specified service area because of an inability to reach an agreement with the health care providers or organization of health care providers to provide services under the plans within the service area; and
(D) Must discontinue offering or renewing, or offering and renewing, all health benefit plans issued by the carrier in the small employer market in this state or in the specified service area.
(f) When the carrier discontinues offering and renewing a small employer health benefit plan in a specified service area within this state because of an inability to reach an agreement with the health care providers or organization of health care providers to provide services under the plan within the service area. In order to discontinue a plan under this paragraph, the carrier:
(A) Must give notice to the director and to all policyholders covered by the plan;
(B) May not cancel coverage under the plan for 90 days after the date of the notice required under subparagraph (A) of this paragraph; and
(C) Must offer in writing to each small employer covered by the plan, all other small employer health benefit plans that the carrier offers in the specified service area. The carrier shall issue any such plans pursuant to the provisions of ORS 743.733 to 743.737. The carrier shall offer the plans at least 90 days prior to discontinuation.
(g) When the carrier discontinues offering or renewing, or offering and renewing, a health benefit plan for all small employers in this state or in a specified service area within this state, other than a plan discontinued under paragraph (f) of this subsection. With respect to plans that are being discontinued, the carrier must:
(A) Offer in writing to each small employer covered by the plan, all health benefit plans that the carrier offers in the specified service area.
(B) Issue any such plans pursuant to the provisions of ORS 743.733 to 743.737.
(C) Offer the plans at least 90 days prior to discontinuation.
(D) Act uniformly without regard to the claims experience of the affected policyholders or the health status of any current or prospective enrollee.
(h) When the director orders the carrier to discontinue coverage in accordance with procedures specified or approved by the director upon finding that the continuation of the coverage would:
(A) Not be in the best interests of the enrollees; or
(B) Impair the carrier’s ability to meet contractual obligations.
(i) When, in the case of a small employer health benefit plan that delivers covered services through a specified network of health care providers, there is no longer any enrollee who lives, resides or works in the service area of the provider network.
(j) When, in the case of a health benefit plan that is offered in the small employer market only through one or more bona fide associations, the membership of an employer in the association ceases and the termination of coverage is not related to the health status of any enrollee.
(k) For misuse of a provider network provision. As used in this paragraph, “misuse of a provider network provision” means a disruptive, unruly or abusive action taken by an enrollee that threatens the physical health or well-being of health care staff and seriously impairs the ability of the carrier or its participating providers to provide services to an enrollee. An enrollee under this paragraph retains the rights of an enrollee under ORS 743.804.
(L) A small employer carrier may modify a small employer health benefit plan at the time of coverage renewal. The modification is not a discontinuation of the plan under paragraphs (e) and (g) of this subsection.
(6) Notwithstanding any provision of subsection (5) of this section to the contrary, any small employer carrier health benefit plan subject to the provisions of ORS 743.733 to 743.737 may be rescinded by a small employer carrier for fraud, material misrepresentation or concealment by a small employer and the coverage of an enrollee may be rescinded for fraud, material misrepresentation or concealment by the enrollee.
(7) A small employer carrier may continue to enforce reasonable employer participation and contribution requirements on small employers applying for coverage. However, participation and contribution requirements shall be applied uniformly among all small employer groups with the same number of eligible employees applying for coverage or receiving coverage from the small employer carrier. In determining minimum participation requirements, a carrier shall count only those employees who are not covered by an existing group health benefit plan, Medicaid, Medicare, CHAMPUS, Indian Health Service or a publicly sponsored or subsidized health plan, including but not limited to the Oregon Health Plan.
(8) Premium rates for small employer health benefit plans shall be subject to the following provisions:
(a) Each small employer carrier issuing health benefit plans to small employers must file its geographic average rate for a rating period with the director at least once every 12 months.
(b)(A) The premium rates charged during a rating period for health benefit plans issued to small employers may not vary from the geographic average rate by more than 50 percent on or after January 1, 2008, except as provided in subparagraph (D) of this paragraph.
(B) The variations in premium rates described in subparagraph (A) of this paragraph shall be based solely on the factors specified in subparagraph (C) of this paragraph. A small employer carrier may elect which of the factors specified in subparagraph (C) of this paragraph apply to premium rates for small employers. The factors that are based on contributions or participation may vary with the size of the employer. All other factors must be applied in the same actuarially sound way to all small employers.
(C) The variations in premium rates described in subparagraph (A) of this paragraph may be based on one or more of the following factors:
(i) The ages of enrolled employees and their dependents;
(ii) The level at which the small employer contributes to the premiums payable for enrolled employees and their dependents;
(iii) The level at which eligible employees participate in the health benefit plan;
(iv) The level at which enrolled employees and their dependents engage in tobacco use;
(v) The level at which enrolled employees and their dependents engage in health promotion, disease prevention or wellness programs;
(vi) The period of time during which a small employer retains uninterrupted coverage in force with the same small employer carrier; and
(vii) Adjustments to reflect the provision of benefits not required to be covered by the basic health benefit plan and differences in family composition.
(D)(i) The premium rates determined in accordance with this paragraph may be further adjusted by a small employer carrier to reflect the expected claims experience of a small employer, but the extent of this adjustment may not exceed five percent of the annual premium rate otherwise payable by the small employer. The adjustment under this subparagraph may not be cumulative from year to year.
(ii) Except for small employers with 25 or fewer employees, the premium rates adjusted under this subparagraph are not subject to the provisions of subparagraph (A) of this paragraph.
(E) A small employer carrier shall apply the carrier’s schedule of premium rate variations as approved by the Director of the Department of Consumer and Business Services and in accordance with this paragraph. Except as otherwise provided in this section, the premium rate established for a health benefit plan by a small employer carrier shall apply uniformly to all employees of the small employer enrolled in that plan.
(c) Except as provided in paragraph (b) of this subsection, the variation in premium rates between different small employer health benefit plans offered by a small employer carrier must be based solely on objective differences in plan design or coverage and must not include differences based on the risk characteristics of groups assumed to select a particular health benefit plan.
(d) A small employer carrier may not increase the rates of a health benefit plan issued to a small employer more than once in a 12-month period. Annual rate increases shall be effective on the plan anniversary date of the health benefit plan issued to a small employer. The percentage increase in the premium rate charged to a small employer for a new rating period may not exceed the sum of the following:
(A) The percentage change in the geographic average rate measured from the first day of the prior rating period to the first day of the new period; and
(B) Any adjustment attributable to changes in age, except an additional adjustment may be made to reflect the provision of benefits not required to be covered by the basic health benefit plan and differences in family composition.
(e) Premium rates for health benefit plans shall comply with the requirements of this section.
(9) In connection with the offering for sale of any health benefit plan to a small employer, each small employer carrier shall make a reasonable disclosure as part of its solicitation and sales materials of:
(a) The full array of health benefit plans that are offered to small employers by the carrier;
(b) The authority of the carrier to adjust rates, and the extent to which the carrier will consider age, family composition and geographic factors in establishing and adjusting rates;
(c) Provisions relating to renewability of policies and contracts; and
(d) Provisions affecting any preexisting conditions provision.
(10)(a) Each small employer carrier shall maintain at its principal place of business a complete and detailed description of its rating practices and renewal underwriting practices, including information and documentation that demonstrate that its rating methods and practices are based upon commonly accepted actuarial practices and are in accordance with sound actuarial principles.
(b) Each small employer carrier shall file with the director at least once every 12 months an actuarial certification that the carrier is in compliance with ORS 743.733 to 743.737 and that the rating methods of the small employer carrier are actuarially sound. Each such certification shall be in a uniform form and manner and shall contain such information as specified by the director. A copy of such certification shall be retained by the small employer carrier at its principal place of business.
(c) A small employer carrier shall make the information and documentation described in paragraph (a) of this subsection available to the director upon request. Except as provided in ORS 743.018 and except in cases of violations of ORS 743.733 to 743.737, the information shall be considered proprietary and trade secret information and shall not be subject to disclosure by the director to persons outside the Department of Consumer and Business Services except as agreed to by the small employer carrier or as ordered by a court of competent jurisdiction.
(11) A small employer carrier shall not provide any financial or other incentive to any insurance producer that would encourage the insurance producer to market and sell health benefit plans of the carrier to small employer groups based on a small employer group’s anticipated claims experience.
(12) For purposes of this section, the date a small employer health benefit plan is continued shall be the anniversary date of the first issuance of the health benefit plan.
(13) A small employer carrier must include a provision that offers coverage to all eligible employees and to all dependents to the extent the employer chooses to offer coverage to dependents.
(14) All small employer health benefit plans shall contain special enrollment periods during which eligible employees and dependents may enroll for coverage, as provided in 42 U.S.C. 300gg as amended and in effect on July 1, 1997. [1991 c.916 §7; 1993 c.18 §161; 1993 c.649 §10; 1995 c.603 §§6,37; 1997 c.716 §§7,8; 1999 c.987 §10; 2001 c.943 §12; 2003 c.364 §113; 2003 c.599 §§4,6; 2003 c.748 §5; 2007 c.389 §§6,7; 2007 c.391 §2]
Note: Section 8, chapter 389, Oregon Laws 2007, provides:
Sec. 8. (1) The Director of the Department of Consumer and Business Services may take any action before the operative date specified in section 10 of this 2007 Act [January 1, 2008] to enable the director to exercise, on and after the operative date specified in section 10 of this 2007 Act, the duties, functions and powers conferred on the director by section 3 of this 2007 Act [743.733 (3)] and the amendments to ORS 743.730, 743.733, 743.734 and 743.737 by sections 1 and 4 to 7 of this 2007 Act.
(2) The director shall adopt rules prior to the operative date specified in section 10 of this 2007 Act to phase in the amendments to ORS 743.737 by sections 6 and 7 of this 2007 Act over a three-year period beginning on the operative date specified in section 10 of this 2007 Act. [2007 c.389 §8]
Section: Previous 743.730 743.731 743.732 743.733 743.734 743.735 743.736 743.737 743.738 743.739 743.740 743.741 743.742 743.743 743.744 NextLast modified: August 7, 2008