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A180, R189, S588
Sponsors: Senators McConnell, Lourie, Rankin, Land, Ritchie, Cromer and Ford
Document Path: l:\council\bills\dka\3244dw07.doc
Companion/Similar bill(s): 3751
Introduced in the Senate on March 20, 2007
Introduced in the House on May 16, 2007
Last Amended on February 5, 2008
Passed by the General Assembly on February 7, 2008
Governor's Action: February 19, 2008, Signed
Summary: Small employer health group cooperative
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number ------------------------------------------------------------------------------- 3/20/2007 Senate Introduced and read first time SJ-2 3/20/2007 Senate Referred to Committee on Banking and Insurance SJ-2 5/8/2007 Senate Polled out of committee Banking and Insurance SJ-8 5/8/2007 Senate Committee report: Favorable Banking and Insurance SJ-8 5/9/2007 Senate Read second time 5/15/2007 Senate Read third time and sent to House SJ-17 5/16/2007 House Introduced and read first time HJ-10 5/16/2007 House Referred to Committee on Labor, Commerce and Industry HJ-10 1/23/2008 House Committee report: Favorable Labor, Commerce and Industry HJ-2 1/29/2008 House Amended HJ-16 1/29/2008 House Read second time HJ-16 1/29/2008 House Roll call Yeas-105 Nays-0 HJ-18 1/30/2008 House Read third time and returned to Senate with amendments HJ-16 2/5/2008 Senate House amendment amended SJ-38 2/5/2008 Senate Returned to House with amendments SJ-38 2/6/2008 Scrivener's error corrected 2/7/2008 House Concurred in Senate amendment and enrolled HJ-37 2/13/2008 Ratified R 189 2/19/2008 Signed By Governor 2/21/2008 Copies available 2/21/2008 Effective date 02/19/08 2/25/2008 Act No. 180
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VERSIONS OF THIS BILL
(A180, R189, S588)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTIONS 38-71-1345, 38-71-1355, 38-71-1365, AND 38-71-1445 SO AS TO PROVIDE REQUIREMENTS, POWERS, DUTIES, AND RESTRICTIONS OF A SMALL EMPLOYER HEALTH GROUP COOPERATIVE, AND PROVIDE THAT THE SOUTH CAROLINA DEPARTMENT OF INSURANCE AND OFFICE OF RESEARCH AND STATISTICS OF THE STATE BUDGET AND CONTROL BOARD SHALL SUBMIT A REPORT TO THE OFFICE OF THE GOVERNOR AND THE GENERAL ASSEMBLY BY JANUARY 1, 2010, ON THE EFFECTIVENESS OF THE HEALTH GROUP COOPERATIVE IN EXPANDING THE AVAILABILITY OF HEALTH INSURANCE COVERAGE FOR SMALL EMPLOYERS; AND BY AMENDING SECTIONS 38-71-1320, 38-71-1330, 38-71-1340, AND 38-71-1350, RELATING TO SMALL EMPLOYER HEALTH INSURANCE AVAILABILITY, SO AS TO PROVIDE THAT SMALL EMPLOYERS MAY FORM A COOPERATIVE FOR THE PURPOSE OF PROVIDING HEALTH INSURANCE TO THEIR EMPLOYEES, REDEFINE "ELIGIBLE EMPLOYEE" AND PROVIDE FOR THE DEFINITION OF "HEALTH GROUP COOPERATIVE", AND PROVIDE FOR THE GROUP SIZE FOR A HEALTH GROUP COOPERATIVE.
Be it enacted by the General Assembly of the State of South Carolina:
Health group cooperative may be formed
SECTION 1. Article 13, Chapter 71, Title 38 of the 1976 Code is amended by adding:
"Section 38-71-1345. (A) A health group cooperative of small employers may be formed only for the purpose of obtaining insurance. A health group cooperative:
(1) shall contain at least one thousand eligible employees or must have at least ten participating employers;
(2) shall establish requirements for membership. A small employer's participation in a cooperative is voluntary, but an employer electing to participate in a cooperative shall commit to purchasing coverage through the cooperative for five years, unless allowed to terminate because of a financial hardship affecting the employer as determined by rules governing termination adopted by the director. The health group cooperative may not exclude a small employer, which otherwise meets the requirements for membership, on the basis of claim experience or a health status-related factor, as defined in Section 38-71-840, in relation to the employee or a dependent of the employee;
(3) shall hold an open enrollment period at least once a year during which new members may join the health group cooperative;
(4) shall allow eligible employees and their dependents, upon initial enrollment and during subsequent open enrollment periods, to choose among health insurance plans offered through the cooperative. A person covered by a health insurance plan offered through the cooperative, which requires an enrollment period in excess of one year, is eligible to choose among available plans upon the completion of the enrollment period;
(5) shall offer coverage under all plans offered through the cooperative to all eligible employees of member small employers and their dependents. Coverage must be offered to all employees of member small employers and their dependents except as provided in Section 38-71-1370(B);
(6) does not assume any risk or form self-insurance plans among its members unless it complies with the provisions of Chapter 41 of this title;
(7) has the option of using any type of rating arrangement with the health insurance plans and, at its discretion, premiums may be paid to the health insurance plans by the cooperative, by member small employers, or by eligible employees and their dependents. A health insurance plan offered through the health group cooperative that rates:
(a) each member small employer separately is subject to the laws governing small employer health insurance; and
(b) the entire group as a whole shall charge each insured person based on a community rate within the health group cooperative, adjusted for case characteristics as permitted by Section 38-71-940 and plan selection, and is subject to the laws governing group accident and health insurance.
(B)(1) The health group cooperative, before offering any health insurance plan through the cooperative, and annually after that time, shall register with the department and demonstrate continued compliance with the provisions of item (2).
(2) The health group cooperative:
(a) must be organized as a nonprofit corporation and have the rights and duties pursuant to the provisions of Chapter 31, Title 33 (South Carolina Nonprofit Corporations Act). On receipt of a certificate of incorporation from the South Carolina Secretary of State, the cooperative shall file written notification of the receipt of the certificate and a copy of the cooperative's organizational documents with the director. The board of directors shall file annually with the director a statement of all amounts collected and expenses incurred for the preceding year;
(b) or a member of the board of directors, the executive director, an employee, or an agent of a cooperative, is not liable for:
(i) an act performed in good faith in the execution of duties in connection with the cooperative; or
(ii) an independent action of a small employer insurer or a person who provides health care services under a health insurance plan; and
(c) or a member of the board of directors, the executive director, an employee, or an agent is not liable for failure to arrange for coverage of a particular illness, disease, or health condition.
(C) A small employer insurer may not form, or be a member of, a health group cooperative. An insurer may associate with a sponsoring entity, such as a business association, chamber of commerce, or other organization representing employers or serving an analogous function, to assist the sponsoring entity in forming a health group cooperative.
Section 38-71-1355. A health group cooperative:
(1) shall arrange for group health insurance plan coverage for small employers who are members of the cooperative by contracting with small employer insurers who meet the criteria established by this chapter for coverage under group health insurance plans;
(2) shall collect premiums to cover the cost of:
(a) group health insurance plan coverage purchased through the cooperative; and
(b) the cooperative's administrative expenses;
(3) may contract with agents to market coverage issued through the cooperative;
(4) shall establish administrative and accounting procedures for the operation of the cooperative;
(5) shall establish procedures under which an applicant for or participant in coverage issued through the cooperative may have a grievance reviewed by an impartial person;
(6) may contract with a small employer insurer or third-party administrator to provide administrative services to the cooperative;
(7) shall contract with small employer insurers for the provision of services to small employers covered through the cooperative;
(8) shall develop and implement a plan to maintain public awareness of the cooperative and publicize the eligibility requirements and the procedures for enrollment in coverage through the cooperative;
(9) may negotiate the premiums paid by its members; and
(10) may offer other ancillary products and services to its members as are customarily offered in conjunction with group health insurance plans.
Section 38-71-1365. (A) A health group cooperative shall contract only with a small employer insurer that demonstrates:
(1) that the insurer or health maintenance organization is licensed and in good standing with the Department of Insurance;
(2) the capacity to administer the group health insurance plans;
(3) the ability to monitor and evaluate the quality and cost effectiveness of care and applicable procedures;
(4) the ability to conduct utilization management and applicable procedures and policies;
(5) the ability to assure enrollees a sufficient number of health care providers, including specialty providers; and
(6) a satisfactory grievance procedure and the ability to respond to enrollees' calls, questions, and complaints.
(B) A health group cooperative shall comply with federal laws applicable to cooperatives and group health insurance plans issued through cooperatives, to the extent required by this title or regulations adopted under them.
Section 38-71-1445. The South Carolina Department of Insurance and Office of Research and Statistics of the State Budget and Control Board shall submit to the Office of the Governor and the General Assembly by January 1, 2010, a report on the effectiveness of the health group cooperative in expanding the availability of health insurance coverage for small employers."
SECTION 2. Sections 38-71-1320, 38-71-1330, 38-71-1340, and 38-71-1350 of the 1976 Code are amended to read:
"Section 38-71-1320. The purpose and intent of this article is to promote the availability of health insurance coverage to small employers, excluding individual health insurance plans, regardless of their health status or claims experience, to provide for development of 'basic' and 'standard' health insurance plans to be offered to all small employers, to provide for establishment of a reinsurance program, to improve the overall fairness and efficiency of the small group health insurance market, and to allow small employers to form cooperatives for the purpose of providing health insurance to their employees.
Section 38-71-1330. As used in this article:
(1) 'Basic health insurance plan' means a lower cost health insurance plan developed pursuant to Section 38-71-1420.
(2) 'Board' means the board of directors of the program established pursuant to Section 38-71-1410.
(3) 'Commissioner' means the Chief Insurance Commissioner of this State.
(4) 'Committee' means the advisory committee to the commissioner referred to in Section 38-71-1420.
(5) 'Dependent' means a spouse, an unmarried child under the age of nineteen years, an unmarried child who is a full-time student between the ages of nineteen and twenty-two and who is financially dependent upon the parent, and an unmarried child of any age who is medically certified as disabled and dependent upon the parent.
(6) 'Eligible employee' means an employee:
(a) as defined in Section 38-71-710(1) or Section 38-71-840(7);
(b) who is a licensed real estate person engaged in the sale, leasing, or rental of real estate for a licensed real estate broker on a straight commission basis, who has signed a valid independent contractor agreement with the broker; and
(c) who works on a full-time basis and has a normal workweek of thirty or more hours.
(7) 'Employer contribution rule' means a requirement relating to the minimum level or amount of employer contribution toward the premium for enrollment of participants and beneficiaries.
(8) 'Group participation rule' means a requirement relating to the minimum number of participants or beneficiaries that must be enrolled in relation to a specified percentage or number of eligible individuals or employees of an employer.
(9) 'Health group cooperative' or 'cooperative' means a private purchasing cooperative composed of small employers formed under this article.
(10)(a) 'Health insurance plan' or 'plan' means any hospital or medical policy or certificate, major medical expense insurance, hospital or medical service plan contract, or health maintenance organization subscriber contract that provides benefits consisting of medical care provided directly through insurance or reimbursement, or otherwise and including items and services paid for medical care. It includes the entire contract between the insurer and the insured, including the policy, riders, endorsements, and the application, if attached.
(b) 'Health insurance plan' does not include: accident only; blanket accident and sickness; specified disease or hospital indemnity or other fixed indemnity insurance if offered as independent noncoordinated benefits; credit; limited scope dental or vision if offered separately; Medicare supplement if offered as a separate policy; long-term care if offered separately; disability income insurance; coverage issued as a supplement to liability or other liability insurance, including general liability insurance and automobile liability insurance; coverage designed only to provide payments on a per diem, fixed indemnity, or nonexpense incurred basis; coverage for Medicare or Medicaid services pursuant to a contract with state or federal government; workers' compensation or similar insurance; automobile medical payment insurance; coverage for on-site medical clinics; or other similar coverage specified in regulations under which benefits for medical care are secondary or incidental to other insurance benefits.
(11) 'Insurer' means an entity that provides health insurance in this State. For the purposes of this article, insurer includes an insurance company, a health maintenance organization, and any other entity providing a plan of health insurance or health benefits subject to state insurance regulation, including multiple employer self-insured health plans licensed pursuant to the provisions of Chapter 41, Title 38.
(12) 'Medical care' means amounts paid for:
(a) the diagnosis, cure, mitigation, treatment, or prevention of disease or amounts paid for the purpose of affecting a structure or function of the body;
(b) amounts paid for transportation primarily for and essential to medical care referred to in subitem (a); and
(c) amounts paid for insurance covering medical care referred to in subitems (a) and (b).
(13) 'Network plan' means a health insurance plan issued by an insurer under which the financing and delivery of medical care, including items and services paid for as medical care, are provided, in whole or in part, through a defined set of providers under contract with the insurer.
(14) 'Plan of operation' means the plan of operation of the program established pursuant to Section 38-71-1410.
(15) 'Program' means the South Carolina Small Employer Insurer Reinsurance Program pursuant to Section 38-71-1410.
(16) 'Reinsuring insurer' means a small employer insurer participating in the reinsurance program pursuant to Section 38-71-1410.
(17) 'Risk-assuming insurer' means a small employer insurer whose application is approved by the commissioner pursuant to Section 38-71-1390.
(18) 'Small employer' means, in connection with a health insurance plan with respect to a calendar year and a plan year, any person, firm, corporation, partnership, association, or employer, as defined in Section 3(5) of the Employee Retirement Income Security Act of 1974, that is actively engaged in business that, on at least fifty percent of its working days during the preceding calendar year, employed no more than fifty eligible employees or employed an average of not more than fifty employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year.
(a) In determining the number of eligible employees, companies that are affiliated companies or that are eligible to file a combined tax return for purposes of state taxation or that are treated as a single employer under subsections (b), (c), (m), or (o) of Section 414 of the Internal Revenue Code of 1986 are considered one employer; and
(b) In the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether that employer is a small or large employer must be based on the average number of employees that it reasonably is expected to employ on business days in the current calendar year; and
(c) Any reference in this article to an employer includes a reference to any predecessor of the employer.
(19) 'Small employer insurer' means an insurer that offers health insurance plans covering eligible employees of one or more small employers in this State.
(20) 'Standard health insurance plan' means a health insurance plan developed pursuant to Section 38-71-1420.
Section 38-71-1340. (A) Except as provided in subsection (B), the provisions of this article apply to any health insurance plan that provides group coverage to groups of two to fifty.
(B) The provisions of this article do not apply to individual health insurance policies that are subject to policy form and premium rate approval as may be provided in this title.
(C) For health group cooperatives, the applicable group size is two to fifty. Health group cooperatives are permitted to attempt to obtain coverage for small employer groups that contain fewer than two eligible employees; however, such attempt to obtain coverage is subject to the medical underwriting requirements and policies of the small employer insurer.
Section 38-71-1350. (A) Except as provided in Section 38-71-1345(7)(b), premium rates for health insurance plans subject to this article are governed by the rating restrictions provided for in this chapter.
(B) Premium rates for health insurance plans must comply with the requirements of this section notwithstanding any reinsurance premiums or assessments paid or payable by small employer insurers pursuant to Section 38-71-1410."
SECTION 3. This act takes effect upon approval by the Governor.
Ratified the 13th day of February, 2008.
Approved the 19th day of February, 2008.
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