You asked whether the adoption of a bill like HB 6277 is necessary in order for small employers to be able to purchase health insurance for their employees who work 20 or more hours a week for the small employer.

SUMMARY

Under current law, (1) only employees that work 30 hours or more are eligible for purposes of determining if an employer meets the definition of “small employer” under small employer health insurance laws, and (2) insurers are not required to offer to “small employers” group health insurance that covers employees who work fewer than 30 hours a week.

The law allows insurers to offer this insurance, but according to Beth Cook, counsel for the Insurance Department, many if not all insurers, have chosen not to include part-time workers in the small employer plans since they don't count towards eligibility and participation percentages. Reasons offered to Cook for this practice include: (1) reinsurers will not reinsure part-time employees, and (2) the insurance company's underwriting guidelines do not permit covering part-time workers in the same group as full-time workers because there is an underwriting assumption that workers who are part-time may have some adverse conditions prohibiting them from working full-time.

According to Cook, the Insurance Department believes that the way current law is written should allow an employer to decide if it wants to include its part-time employees in their medical group insurance. But it appears that the health insurers are following underwriting guidelines which do not permit them to accept these part-time employees and this does not violate current law.  

As you know, current law provides small employers who want to offer their employees group health insurance certain advantages such as (1) the insurer can not decide to not renew a policy because of the insurer's experience with a particular employer and (2) rates may not be based on the experience of the individual employer but instead must be based on the experience of all small employers.

Following is a detailed explanation of HB 6277, as amended by House Amendment “A. ”

SHB 6277 (AS AMENDED BY HOUSE “A”) AN ACT CONCERNING HEALTH INSURANCE COVERAGE FOR SMALL EMPLOYERS.

This bill changes the definition of “eligible employee” and “small employer” for the purpose of certain insurance statutes relating to small employer health insurance plans. By doing so, it broadens the scope of certain laws by including part-time employees working at least 20 hours a week and limits the laws by excluding seasonal employees. It prohibits an employer from counting as an eligible employee, for the purposes of determining if the employer is a small employer, a person working fewer than 30 hours a week.

The bill requires an insurer or producer marketing small employer group health insurance plans to offer a small employer, upon its request, a premium quote for covering employees working at least (1) 30 hours a week or (2) 20 hours a week.

The bill specifies that a small employer that requests a premium quote for employees working fewer than 30 hours a week is not required to (1) accept the quote or (2) purchase coverage for those employees or employees working 30 or more hours a week. It also specifies that a small employer that offers coverage to employees working 30 or more hours a week is not required to offer coverage to those working fewer than 30 hours a week.

The bill becomes effective January 1, 2010.

ELIGIBLE EMPLOYEE

The bill redefines “eligible employee” as an employee working a normal work week of at least 20 hours a week, including a part-time employee, but excluding a seasonal employee. Current law includes only full-time employees working at least 30 hours a week.

By law, and unchanged by the bill, eligible employee (1) excludes a temporary or substitute employee; (2) includes a sole proprietor, a partner, or an independent contractor, provided he or she is included as an employee under a small employer's health care plan; and (3) includes a person not actively at work but covered under the employer's health insurance plan through workers' compensation, continuation of benefits requirements (e. g. , COBRA), or other applicable law.

The bill, therefore, broadens the scope of certain laws by including part-time employees working at least 20 hours a week and limits the laws by excluding seasonal employees. Those laws include guaranteed renewability, coverage eligibility requirements, the Connecticut Small Employer Health Reinsurance Pool, and special health care plans (see BACKGROUND).

Additionally, the law lets a health care center (i. e. , HMO) refuse coverage to a small employer if the HMO's provider network is proven, to the insurance commissioner's satisfaction, inadequate to serve the small employer due to the HMO's obligations to existing customers. If an HMO refuses coverage for this reason, the law prohibits the HMO from offering coverage, for 90 days from the refusal, to a new employer group with more than 25 eligible employees (CGS § 38a-568(c)).

SMALL EMPLOYER

By law, a “small employer” is any person, firm, corporation, limited liability company, partnership, or association that:

1. is actively engaged in business or self-employed for at least three consecutive months and

2. on at least 50% of its working days during the preceding 12 months, employed no more than 50 “eligible employees,” the majority of whom were employed within Connecticut.

The bill changes how an employer counts its employees to determine if it is a small employer for purposes of laws applying to small employer insurance plans. Specifically, it prohibits an employer from counting a person who works fewer than 30 hours a week.

By law, and unchanged by the bill, when counting eligible employees to determine if an employer is a small employer, companies affiliated or eligible to file a combined tax return are considered one employer. And an employer cannot count an employee:

1. covered through the employer by a health insurance plan issued to, or in accordance with, a trust established under collective bargaining or

2. not actively at work but covered under the employer's health insurance plan under workers' compensation, federal continuation of benefits requirements, or other applicable laws.

The law specifies that a “small employer” does not include a:

1. municipality, association of personal care assistants, or community action agency purchasing health insurance through the Municipal Employee Health Insurance Program (MEHIP);

2. nonprofit organization purchasing health insurance through MEHIP, unless the secretary of the Office of Policy and Management and the state comptroller ask the insurance commissioner in writing to deem the organization a small employer for the purposes of the health insurance statutes; or

3. private school in Connecticut obtaining health insurance through a health insurance plan or an insurance arrangement that an association of private schools sponsors.

BACKGROUND

Guaranteed Renewable Coverage

By law, a health insurance plan issued to a small employer is “guaranteed renewable” with respect to eligible employees and their dependents. This means that coverage for the eligible employees and their dependents is renewable at the small employer's option, with some exceptions (e. g. , not paying premiums, fraud, material misrepresentation, and not meeting the insurer's participation rate required for coverage) (CGS 38a-567)(1)).

Coverage Eligibility

Except for a late enrollee who failed to provide evidence of insurability satisfactory to the insurer, a health insurance plan may not exclude an eligible employee or dependent based on an actual or expected health condition. And it may not exclude an eligible employee or dependent who, on the day before the initial effective date of the plan, was covered under the small employer's previous health insurance plan through workers' compensation, COBRA, or other applicable laws as long as the employee or dependent requests coverage under the new plan on a timely basis (CGS § 38a-567(2)).

Connecticut Small Employer Health Reinsurance Pool

By law, all health insurers must be members of the Connecticut Small Employer Health Reinsurance Pool (CSEHRP). Members may purchase reinsurance coverage for an entire small group or for certain eligible employees or dependents in a group, generally those the insurer believes are high risk (i. e. , likely to have high claim costs) (CGS § 38a-569).

Special Health Care Plans for Small Employers

A “special health care plan” is a health insurance plan for previously uninsured small employers. The law requires the CSEHRP board of directors to develop these plans as a lower-cost health insurance coverage option for uninsured small employers and submit them to the insurance commissioner for approval (CGS 38a-565(a)(1)).

A small employer can purchase a special health care plan if it did not maintain health insurance coverage for its employees at any time during the one-year period before applying for the plan. A small employer cannot purchase a special health care plan for more than three years (CGS § 38a-565(2)).

The law permits the Health Reinsurance Association (HRA) to issue special health care plans to small employers with 10 or fewer eligible employees, the majority of whom are low-income eligible employees (CGS § 38a-570).

By law, all Connecticut health insurers and HMOs are (1) HRA members and (2) assessed for HRA's losses. HRA is Connecticut's insurer of last resort for high-risk individuals (i. e. , the high-risk pool). It also serves as the state's acceptable alternative mechanism for complying with the guaranteed issue option in the individual market required under federal law.

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