You asked:

1. can small employer health plans exclude applicants because of preexisting medical conditions;

2. how many employees must an employer employ in order to establish a small employer plan and whether plans are available to very small employers;

3. how many nonprofit organizations participate in the state employee health plan and are they rated the same;

4. what are medical savings account; and

5. how many mandated benefits are required in individual and group health plans issued in Connecticut.

SUMMARY

Small employers can exclude preexisting medical conditions but generally do not for group plans.

Groups consisting of one member are eligible for small employer coverage in Connecticut.

Forty-five nonprofit organizations participate in a health plan similar to the state employee plan. It is underwritten and rated differently than the state employee plan.

Medical savings accounts are tax-preferred funds used to pay current and future medical expenses after a large deductible is satisfied.

Connecticut requires group plans to cover approximately 40 mandated benefits.

SMALL EMPLOYER PLANS

While small employer insurers are not prohibited from imposing a preexisting medical condition exclusion, most group insurers do not, according to Mary Ellen Breault, Life and Health Division Director, Connecticut Insurance Department. A group health plan or insurance issuer may impose a preexisting condition exclusion only if it relates to a condition for which advice, diagnosis, care, or treatment was recommended or received within the six-month period ending on the date of enrollment. When imposed, the exclusion period: (1) is limited to 12 months and (2) must be reduced by any period of creditable coverage. Creditable coverage is the time the insured was covered by a prior health plan that is (1) counted toward decreasing preexisting condition exclusion periods in the group market or (2) used as a condition of eligibility in the individual market. A lapse in coverage of no more than 63 days is permitted before prior coverage is no longer "creditable" (CGS § 38a-476(b)(1) and (c)). Creditable coverage includes prior coverage under:

1. a group health plan, including church and government plans;

2. health insurance coverage, either group or individual insurance;

3. Medicare and Medicaid;

4. Civilian Health and Medical Program of the Uniformed Services (CHAMPUS);

5. a program of the Indian Health Services;

6. a state health benefits risk pool;

7. the Federal Employees Health Benefits Plan;

8. a public health plan; and

9. a health benefit plan under the Peace Corps Act.

Eligibility

While federal law defines small employer groups as those consisting of from 2 to 50 employees (P. L. 104-191, HR 3103), Connecticut defines them as consisting of from 1 to 50 employees (P. A. 01-174). Connecticut also requires small group insurers to offer health plans to the self-employed (P. A. 00-218).

State and federal law require small employer plans to be issued on a guaranteed basis, meaning that all health insurers that offer small group coverage must accept every small employer that applies, unless it would result in some form of financial impairment. State law requires guaranteed issuance unless the insurance commissioner determines that it would impair an insurer's financial condition. Federal law requires guaranteed issuance unless the insurer demonstrates that it does not have the financial reserves necessary to underwrite the coverage (CGS § 38a-567(10), P. A. 01-174 and P. L. 104-191(HR 3103)).

NONPROFIT ORGANIZATIONS

According to Steve Weinberger from the Comptroller's Office, 45 nonprofit groups currently participate in the state employee health plan.

The law authorizing the comptroller to arrange and procure a health care plan for nonprofit organizations specifies that (1) rates the state pays for its employees may not be adversely affected, (2) administrative costs of the plan must be paid by participating nonprofit organizations at no cost to the state, and (3) the comptroller may arrange or procure an alternative health care plan for employees of nonprofit organizations (P. A. 01-30). Pursuant to this authority, the comptrollers has established a separate pool for employees of nonprofit organizations who are underwritten and rated differently than state employees.

MEDICAL SAVINGS ACCOUNTS

Medical savings accounts (MSAs) are tax-preferred funds established by individuals to pay current out-of-pocket medical costs and to accumulate funds for future medical expenses. Only individuals enrolled in health insurance plans that offer to cover a patient's costs after the patient pays a high deductible (of at least $ 1,500) and who are self-employed or covered by a small employer (fewer than 50 employees) plan, are eligible to establish an MSA.

MANDATED BENEFITS

Connecticut requires group health insurance plans delivered, issued for delivery, renewed, or continued in the state to cover the following 40 mandated benefits:

1. preexisting medical condition,

2. mental illness,

3. mentally or physically handicapped children,

4. newborn infants,

5. early intervention services,

6. accidental ingestion of a controlled drug,

7. hypodermic needles and syringes,

8. cancer drugs,

9. prescription foods,

10. diabetes,

11. home health care,

12. comprehensive rehabilitation services,

13. occupational therapy,

14. ambulance services,

15. emergency services and care,

16. nurse practitioner services,

17. substance abuse,

18. veterans,

19. mammography,

20. people with breast cancer histories,

21. direct access to OB GYNs

22. maternity and postpartum care,

23. mastectomy of lymph node dissection,

24. preventive pediatric care,

25. dependent and employee,

26. tumors and leukemia and breast implant removal and reconstruction,

27. chiropractic services,

28. continuation, extension and conversion rights,

29. maternity benefit continuation,

30. prospective adoptive children,

31. prescription birth control,

32. diabetes self-management training,

33. lyme disease,

34. prostate cancer screening,

35. in-hospital dental services,

36. ostomy,

37. pain management

38. cancer clinical trials,

39. colon cancer screening,

40. hearing aids

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