Senate Bill 1294c2

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    Florida Senate - 1999                    CS for CS for SB 1294

    By the Committees on Banking and Insurance; Commerce and
    Economic Opportunities; and Senator Holzendorf




    311-2090A-99

  1                      A bill to be entitled

  2         An act relating to the Employee Health Care

  3         Access Act; amending s. 627.6699, F.S.;

  4         modifying definitions; requiring small employer

  5         carriers to begin to offer and issue all small

  6         employer benefit plans on a specified date;

  7         deleting the requirement that basic and

  8         standard small employer health benefit plans be

  9         issued; providing additional requirements for

10         determining premium rates for benefit plans;

11         providing for applicability of the act to plans

12         provided by small employer carriers that are

13         insurers or health maintenance organizations

14         notwithstanding the provisions of certain other

15         specified statutes under specified conditions;

16         providing an effective date.

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18  Be It Enacted by the Legislature of the State of Florida:

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20         Section 1.  Paragraph (n) of subsection (3), paragraph

21  (c) of subsection (5), and paragraphs (b) and (d) of

22  subsection (6) of section 627.6699, Florida Statutes, 1998

23  Supplement, are amended to read:

24         627.6699  Employee Health Care Access Act.--

25         (n)  "Modified community rating" means a method used to

26  develop carrier premiums which spreads financial risk across a

27  large population and allows adjustments for age, gender,

28  family composition, tobacco usage, and geographic area as

29  determined under paragraph (5)(j), claims experience, health

30  status, or duration of coverage as permitted under

31  subparagraph (6)(b)5. and for administrative and acquisition

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    Florida Senate - 1999                    CS for CS for SB 1294
    311-2090A-99




  1  expenses as permitted under subparagraph (6)(b)6. paragraph

  2  (5)(k).

  3         (5)  AVAILABILITY OF COVERAGE.--

  4         (c)  Every small employer carrier must, as a condition

  5  of transacting business in this state:

  6         1.  Beginning July 1, 1999, January 1, 1994, offer and

  7  issue all small employer health benefit plans on a

  8  guaranteed-issue basis to every eligible small employer, with

  9  2 3 to 50 eligible employees, that elects to be covered under

10  such plan, agrees to make the required premium payments, and

11  satisfies the other provisions of the plan. A rider for

12  additional or increased benefits may be medically underwritten

13  and may only be added to the standard health benefit plan.

14  The increased rate charged for the additional or increased

15  benefit must be rated in accordance with this section.

16         2.  Beginning August 1, 1999, April 15, 1994, offer and

17  issue basic and standard small employer health benefit plans

18  on a guaranteed-issue basis during a 31-day open enrollment

19  period of August 1 through August 31 of each year, to every

20  eligible small employer, with less than one or two eligible

21  employees, which small employer is not formed primarily for

22  the purposes of buying health insurance and which elects to be

23  covered under such plan, agrees to make the required premium

24  payments, and satisfies the other provisions of the plan.

25  Coverage provided pursuant to this subparagraph shall begin on

26  October 1 of the same year as the date of enrollment, unless

27  the small employer carrier and the small employer agree to a

28  different date. A rider for additional or increased benefits

29  may be medically underwritten and may only be added to the

30  standard health benefit plan.  The increased rate charged for

31  the additional or increased benefit must be rated in

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    Florida Senate - 1999                    CS for CS for SB 1294
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  1  accordance with this section. For purposes of this

  2  subparagraph, a person, his or her spouse, and his or her

  3  dependent children shall constitute a single eligible employee

  4  if such person and spouse are employed by the same small

  5  employer.

  6         3.  Offer to eligible small employers the standard and

  7  basic health benefit plans.

  8

  9  This paragraph subparagraph does not limit a carrier's ability

10  to offer other health benefit plans to small employers if the

11  standard and basic health benefit plans are offered and

12  rejected.

13         (6)  RESTRICTIONS RELATING TO PREMIUM RATES.--

14         (b)  For all small employer health benefit plans that

15  are subject to this section and are issued by small employer

16  carriers on or after January 1, 1994, premium rates for health

17  benefit plans subject to this section are subject to the

18  following:

19         1.  Small employer carriers must use a modified

20  community rating methodology in which the premium for each

21  small employer must be determined solely on the basis of the

22  eligible employee's and eligible dependent's gender, age,

23  family composition, tobacco use, or geographic area as

24  determined under paragraph (5)(j) and in which the premium may

25  be adjusted as permitted by subparagraphs 6. and 7 paragraph

26  (5)(k).

27         2.  Rating factors related to age, gender, family

28  composition, tobacco use, or geographic location may be

29  developed by each carrier to reflect the carrier's experience.

30  The factors used by carriers are subject to department review

31  and approval.

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    Florida Senate - 1999                    CS for CS for SB 1294
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  1         3.  Small employer carriers may not modify the rate for

  2  a small employer for 12 months from the initial issue date or

  3  renewal date, unless the composition of the group changes or

  4  benefits are changed.

  5         4.  Carriers participating in the alliance program, in

  6  accordance with ss. 408.700-408.707, may apply a different

  7  community rate to business written in that program.

  8         5.  Any adjustments in rates for claims experience,

  9  health status, and duration of coverage may not be charged to

10  individual employees or dependents. For a small employer's

11  policy, such adjustments may not result in a rate for the

12  small employer which deviates more than 15 percent from the

13  carrier's approved rate. Any such adjustment must be applied

14  uniformly to the rates charged for all employees and

15  dependents of the small employer. A small employer carrier may

16  make an adjustment to a small employer's renewal premium, not

17  to exceed 10 percent annually, due to the claims experience,

18  health status, or duration of coverage of the employees or

19  dependents of the small employer. A small employer carrier may

20  not make an adjustment to a small employer's renewal premium

21  which exceeds 5 percent due to health status. Semiannually

22  small group carriers shall report information on forms adopted

23  by rule by the department, to enable the department to monitor

24  the relationship of aggregate adjusted premiums actually

25  charged policyholders by each carrier to the premiums that

26  would have been charged by application of the carrier's

27  approved modified community rates. If the aggregate premium

28  resulting from the application of such adjustment exceeds the

29  premium that would have been charged by application of the

30  approved modified community rate by 5 percent for the current

31  reporting period, the carrier shall limit the application of

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    Florida Senate - 1999                    CS for CS for SB 1294
    311-2090A-99




  1  such adjustments to only minus adjustments beginning not more

  2  than 60 days after the report is sent to the department. For

  3  any subsequent reporting period, if the total aggregate

  4  adjusted premium actually charged does not exceed the premium

  5  that would have been charged by application of the approved

  6  modified community rate by 5 percent, the carrier may apply

  7  both plus and minus adjustments.

  8         6.  A small employer carrier may provide a credit to a

  9  small employer's premium based on administrative and

10  acquisition expense differences resulting from the size of the

11  group. Group size administrative and acquisition expense

12  factors may be developed by each carrier to reflect the

13  carrier's experience and are subject to department review and

14  approval.

15         7.  A small employer carrier rating methodology may

16  include separate rating categories for one dependent child,

17  for two dependent children, and for three or more dependent

18  children for family coverage of employees having a spouse and

19  dependent children or employees having dependent children

20  only. A small employer carrier may have fewer, but not

21  greater, numbers of categories for dependent children than

22  those specified in this subparagraph.

23         8.  Small employer carriers may not use a composite

24  rating methodology to rate a small employer with fewer than 10

25  employees. For the purposes of this subparagraph a "composite

26  rating methodology" means a rating methodology that averages

27  the impact of the rating factors for age and gender in the

28  premiums charged to all of the employees of a small employer.

29         (c)  For all small employer health benefit plans that

30  are subject to this section, that are issued by small employer

31  carriers before January 1, 1994, and that are renewed on or

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    Florida Senate - 1999                    CS for CS for SB 1294
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  1  after January 1, 1995, renewal rates must be based on the same

  2  modified community rating standard applied to new business.

  3         (d)  Notwithstanding s. 627.401(2), this section and

  4  ss. 627.410 and 627.411 apply to any health benefit plan

  5  provided by a small employer carrier that is an insurer, and

  6  this section and s. 641.31 apply to any health benefit

  7  provided by a small employer carrier that is a health

  8  maintenance organization that provides coverage to one or more

  9  employees of a small employer regardless of where the policy,

10  certificate, or contract is issued or delivered, if the health

11  benefit plan covers employees or their covered dependents who

12  are residents of this state.

13         Section 2.  This act shall take effect July 1, 1999.

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    Florida Senate - 1999                    CS for CS for SB 1294
    311-2090A-99




  1          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
  2                          CS for SB 1294

  3

  4  Deletes the provisions of the bill that change the definition
    of small employer, and retain the current definition.
  5
    Provides for an annual open enrollment period, in August of
  6  each year, for employers with one employee, sole proprietors,
    and self-employed individuals. Coverage would begin on October
  7  1, unless the insurer and the policyholder agree to a
    different date. Any such one-person small employer getting
  8  coverage must not be formed primarily for the purposes of
    buying health insurance and if an individual hires his or her
  9  spouse and dependent children as employees, the entire family
    unit would be considered a one-person group.
10
    Allows small group carriers to base rates on health factors,
11  but lowers the maximum percentage that a rate may deviate from
    the carrier's base rate from 25 percent to 15 percent, based
12  on factors related to health status, claims experience, and
    duration of coverage.
13
    Lowers the maximum annual percentage adjustment in a small
14  employer's rate from 15 percent to 10 percent, based on
    factors related to health status, claims experience, and
15  duration of coverage, not to exceed 5 percent annually due to
    health status alone.
16
    Requires small employer carriers to report information to the
17  department semiannually on the use of rating adjustments to
    the approved rate. If the aggregate actual premium exceeds the
18  premium that would have been charged under the approved rate
    by more than 5 percent, the carrier must use only minus
19  adjustments (credits), for a certain time period.

20  Specifies that a carrier may have 3 rate categories for
    dependent children (1 child, 2 children, and 3 or more
21  children), and that the carrier may have fewer, but not a
    greater number of rating categories for dependent children.
22
    Defines the term "composite rating" as used in the bill's
23  prohibition against an insurer using composite rating for
    small employers with fewer than 10 employees, defined as a
24  rating method that averages the impact of the rating factors
    for age and gender.
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    Allows small group carriers to provide a credit (rather than
26  an adjustment) to reflect the administrative and acquisition
    expense savings resulting from the size of the group.
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