PA 10-4—sHB 5002

Insurance and Real Estate Committee

AN ACT CONCERNING PREMIUM QUOTES AND INFORMATION FOR SMALL EMPLOYER HEALTH INSURANCE COVERAGE

SUMMARY: This act establishes the Connecticut Clearinghouse, from which individuals and small employers (i. e. , employers with 50 and fewer employees) may obtain information about health insurance policies and health care available in Connecticut. It requires the Health Reinsurance Association to administer the clearinghouse within available appropriations.

The act makes changes in the laws related to small employer health insurance plans. It redefines “small employer” and “eligible employee. ” 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. For the purposes of determining if an employer is a small employer, the act prohibits the employer from counting a person working fewer than 30 hours a week as an eligible employee.

The act 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 act also makes technical and conforming changes.

EFFECTIVE DATE: July 1, 2010 for the Connecticut Clearinghouse and January 1, 2011 for the small employer provisions.

CONNECTICUT CLEARINGHOUSE

The act establishes the Connecticut Clearinghouse, from which people and small employers may get information about health insurance policies and health care plans available in Connecticut. These include Medicaid, HUSKY, state-administered general assistance (SAGA), Charter Oak, the Municipal Employee Health Insurance Plan (MEHIP), and any individual or small employer health insurance policies or health care plans an insurer, HMO, or other entity chooses to list with the clearinghouse.

It requires the Health Reinsurance Association (HRA) to (1) administer the clearinghouse and (2) in consultation with the insurance commissioner and healthcare advocate and within available appropriations, develop an interactive web site, telephone number, or other method for giving information on available plans that, based on a consumer's responses, may be appropriate for his or her circumstances (see BACKGROUND).

The act requires the commissioner to establish procedures for HRA to confirm with the Insurance Department that (1) a policy or plan listed with the clearinghouse is approved for sale in Connecticut and (2) the entity offering it is authorized to do business here. The procedures must require updating the list at least every 90 days.

SMALL EMPLOYER HEALTH INSURANCE

Small Employer

The act 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.

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 (see BACKGROUND).

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. The act prohibits an employer from counting a person who works fewer than 30 hours a week when determining if it is a small employer. By law, an employer already 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, continuation of benefits requirements, or other applicable laws.

Eligible Employee

Certain laws apply to a small employer's eligible employees. The act 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. Prior law included only full-time employees working at least 30 hours a week.

By law, and unchanged by the act, an eligible employee cannot be a temporary or substitute employee; but may be a sole proprietor, partner, or independent contractor, provided he or she is included as an employee under a small employer's health care plan; or a person not actively at work but covered under the employer's health insurance plan through workers' compensation, continuation of benefits requirements, or other applicable law.

The act 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. These laws include guaranteed renewability, coverage eligibility requirements, the Connecticut Small Employer Health Reinsurance Pool, and special health care plans (see BACKGROUND).

Premium Quote

The act 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.

It specifies that a small employer that requests a premium quote for employees working fewer than 30 hours a week is not required to accept the quote or purchase coverage in lieu of premium quotes or coverage for 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.

BACKGROUND

Health Reinsurance Association

By law, HRA provides comprehensive health insurance to people who cannot obtain insurance from commercial insurers (i. e. , the high risk pool). By law, all Connecticut health insurers and HMOs are (1) HRA members and (2) assessed for its losses.

HRA also serves as the state's acceptable alternative mechanism for complying with the guaranteed issue option in the individual market required under federal law (the Health Insurance Portability and Accountability Act). The law requires HRA to offer special health care plans to low-income individuals and certain small employers.

Small Employer

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 MEHIP;

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

By law, an HMO may 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 it from offering coverage, for 90 days from the refusal, to a new employer group with more than 25 eligible employees (CGS 38a-568(c)).

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 (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 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).

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