S 257 Session 112 (1997-1998)
S 0257 General Bill, By McConnell
Similar(S 288, H 3413)
A BILL TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION
38-41-45, TO AMEND ARTICLE 3, CHAPTER 71, TITLE 38, RELATING TO INDIVIDUAL
ACCIDENT AND HEALTH INSURANCE POLICIES BY ADDING SUBARTICLE 7; TO AMEND
ARTICLE 5, CHAPTER 71, TITLE 38, RELATING TO GROUP ACCIDENT AND HEALTH
INSURANCE BY ADDING SUBARTICLE 2; TO AMEND SECTION 38-71-135, RELATING TO
MINIMUM POSTPARTUM HOSPITALIZATION SERVICES FOR MOTHERS AND NEWBORNS; TO AMEND
SECTION 38-71-335, AS AMENDED, RELATING TO CANCELLATION AND RENEWAL POLICIES
FOR ACCIDENT AND HEALTH INSURANCE; TO AMEND SECTION 38-71-730, AS AMENDED,
RELATING TO REQUIREMENTS FOR GROUP ACCIDENT AND HEALTH POLICIES; TO AMEND
SECTION 38-71-737, RELATING TO REQUIREMENTS OF COVERAGE FOR PSYCHIATRIC
CONDITIONS IN GROUP HEALTH INSURANCE POLICIES; TO AMEND SECTION 38-71-920, AS
AMENDED, RELATING TO DEFINITIONS USED IN CONNECTION WITH SMALL GROUP HEALTH
INSURANCE; TO AMEND SECTION 38-71-960, RELATING TO REQUIRED DISCLOSURE IN
SOLICITATION AND SALES MATERIAL FOR SMALL GROUP HEALTH INSURANCE; TO AMEND
SECTION 38-71-1330, RELATING TO DEFINITIONS USED IN CONNECTION WITH SMALL
EMPLOYER HEALTH INSURANCE AVAILABILITY; TO AMEND SECTION 38-71-1360, RELATING
TO THE REQUIREMENT THAT INSURERS MARKET TWO PLANS FOR SMALL EMPLOYERS; TO
AMEND SECTION 38-71-1370, RELATING TO THE APPLICABILITY OF CERTAIN CODE
SECTIONS TO INSURANCE PLANS REQUIRED TO BE OFFERED BY SMALL EMPLOYER INSURERS
AND PREEXISTING CONDITION COVERAGE FOR LATE ENROLLEES; TO AMEND SECTION
38-71-1410 RELATING TO THE SOUTH CAROLINA SMALL EMPLOYER INSURER REINSURANCE
PROGRAM; TO AMEND SECTION 38-71-1440, RELATING TO REQUIREMENTS FOR SMALL
EMPLOYER INSURERS, ALL SO AS TO COMPLY WITH CERTAIN REQUIREMENTS OF THE
FEDERAL HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996, INCLUDING
GUARANTEED AVAILABILITY IN THE SMALL GROUP MARKET, GUARANTEED RENEWABILITY IN
THE LARGE GROUP MARKET, THE SMALL GROUP MARKET, THE INDIVIDUAL MARKET, AND FOR
MULTIPLE EMPLOYER WELFARE ARRANGEMENTS; REVISIONS TO REQUIRED HOSPITALIZATION
SERVICES FOR MOT
01/28/97 Senate Introduced and read first time SJ-1
01/28/97 Senate Referred to Committee on Banking and Insurance SJ-1
A BILL
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA,
1976, BY ADDING SECTION 38-41-45, TO AMEND ARTICLE 3,
CHAPTER 71, TITLE 38, RELATING TO INDIVIDUAL
ACCIDENT AND HEALTH INSURANCE POLICIES BY
ADDING SUBARTICLE 7; TO AMEND ARTICLE 5, CHAPTER
71, TITLE 38, RELATING TO GROUP ACCIDENT AND
HEALTH INSURANCE BY ADDING SUBARTICLE 2; TO
AMEND SECTION 38-71-135, RELATING TO MINIMUM
POSTPARTUM HOSPITALIZATION SERVICES FOR MOTHERS
AND NEWBORNS, TO AMEND SECTION 38-71-335, AS
AMENDED, RELATING TO CANCELLATION AND RENEWAL
POLICIES FOR ACCIDENT AND HEALTH INSURANCE; TO
AMEND SECTION 38-71-730, AS AMENDED, RELATING TO
REQUIREMENTS FOR GROUP ACCIDENT AND HEALTH
POLICIES; TO AMEND SECTION 38-71-737, RELATING TO
REQUIREMENTS OF COVERAGE FOR PSYCHIATRIC
CONDITIONS IN GROUP HEALTH INSURANCE POLICIES; TO
AMEND SECTION 38-71-920, AS AMENDED, RELATING TO
DEFINITIONS USED IN CONNECTION WITH SMALL GROUP
HEALTH INSURANCE; TO AMEND SECTION 38-71-960,
RELATING TO REQUIRED DISCLOSURE IN SOLICITATION
AND SALES MATERIAL FOR SMALL GROUP HEALTH
INSURANCE; TO AMEND SECTION 38-71-1330, RELATING TO
DEFINITIONS USED IN CONNECTION WITH SMALL
EMPLOYER HEALTH INSURANCE AVAILABILITY; TO
AMEND SECTION 38-71-1360, RELATING TO THE
REQUIREMENT THAT INSURERS MARKET TWO PLANS FOR
SMALL EMPLOYERS; TO AMEND SECTION 38-71-1370,
RELATING TO THE APPLICABILITY OF CERTAIN CODE
SECTIONS TO INSURANCE PLANS REQUIRED TO BE
OFFERED BY SMALL EMPLOYER INSURERS AND
PREEXISTING CONDITION COVERAGE FOR LATE
ENROLLEES; TO AMEND SECTION 38-71-1410 RELATING TO
THE SOUTH CAROLINA SMALL EMPLOYER INSURER
REINSURANCE PROGRAM; TO AMEND SECTION 38-71-1440,
RELATING TO REQUIREMENTS FOR SMALL EMPLOYER
INSURERS, ALL SO AS TO COMPLY WITH CERTAIN
REQUIREMENTS OF THE FEDERAL HEALTH INSURANCE
PORTABILITY AND ACCOUNTABILITY ACT OF 1996,
INCLUDING GUARANTEED AVAILABILITY IN THE SMALL
GROUP MARKET, GUARANTEED RENEWABILITY IN THE
LARGE GROUP MARKET, THE SMALL GROUP MARKET,
THE INDIVIDUAL MARKET, AND FOR MULTIPLE
EMPLOYER WELFARE ARRANGEMENTS; REVISIONS TO
REQUIRED HOSPITALIZATION SERVICES FOR MOTHERS
AND NEWBORNS; EQUALITY IN THE APPLICATION OF
CERTAIN LIMITS TO MENTAL HEALTH BENEFITS,
ANTIDISCRIMINATION REQUIREMENTS IN THE LARGE
AND SMALL GROUP MARKETS, AND LIMITATIONS ON
PREEXISTING CONDITION EXCLUSIONS IN THE LARGE
AND SMALL GROUP MARKETS; AND TO REPEAL SECTION
38-71-950, RELATING TO RENEWABILITY AND NOTICE OF
NONRENEWAL OF SMALL GROUP HEALTH INSURANCE.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. The 1976 Code is amended by adding:
"Section 38-41-45. (A) For purposes of this section:
(1) 'Group health plan' means an employee welfare benefit plan
to the extent that the plan provides medical care, including items and
services paid for as medical care to employees or their dependents as
defined under the terms of the plan, directly or through insurance,
reimbursement, or otherwise.
(2) 'Medical care' means amounts paid for:
(a) the diagnosis, cure, mitigation, treatment, or prevention
of disease or amounts paid for the purpose of affecting any 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).
(3) 'Network plan' means health insurance coverage offered by
a health insurance issuer 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 issuer.
(4) 'Health insurance coverage' means benefits consisting of
medical care provided directly, through insurance or reimbursement,
or otherwise and including items and services paid for as medical
care under any hospital or medical service policy or certificate,
hospital or medical service plan contract, or health maintenance
organization contract offered by an issuer, except:
(a) coverage only for accident or disability income insurance
or any combination of these;
(b) coverage issued as a supplement to liability insurance;
(c) liability insurance, including general liability insurance
and automobile liability insurance;
(d) workers' compensation or similar insurance;
(e) automobile medical payment insurance;
(f) credit-only insurance;
(g) coverage for on-site medical clinics;
(h) other similar insurance coverage, specified in regulations,
under which benefits for medical care are secondary or incidental to
other insurance benefits;
(i) if offered separately:
(i) limited scope dental or vision benefits;
(ii) benefits for long-term care, nursing home care, home
health care, community-based care, or any combination of these;
(iii) such other similar, limited benefits as are specified in
regulations;
(j) if offered as independent, noncoordinated benefits:
(i) coverage only for specified disease or illness;
(ii) hospital indemnity or other fixed indemnity insurance;
(k) if offered as a separate insurance policy:
(i) Medicare supplement health insurance, as defined
under Section 1882(g)(1) of the Social Security Act;
(ii) coverage supplemental to the coverage provided under
Chapter 55, Title 10 of the United States Code;
(iii) similar supplemental coverage provided to coverage
under a group health plan.
(5) 'Health insurance issuer' or 'issuer' means an entity that
provides health insurance coverage in this State. For purposes of this
section, issuer includes an insurance company, a health maintenance
organization, and any other entity providing health insurance
coverage which is licensed to engage in the business of insurance in
this State and which is subject to state insurance regulation.
(6) 'Health status-related factor' means any of the following
factors: health status; medical condition, including both physical and
mental illnesses; claims experience; receipt of health care; medical
history; genetic information; evidence of insurability, including
conditions arising out of acts of domestic violence; or disability.
(B) A group health plan which is a multiple employer self-insured
health plan may not deny an employer whose employees are covered
under such a plan continued access to the same or different coverage
under the terms of such a plan, other than:
(1) for nonpayment of contributions;
(2) for fraud or other intentional misrepresentation of material
fact by the employer;
(3) for noncompliance with material plan provisions;
(4) because the plan is ceasing to offer any coverage in a
geographic area;
(5) in the case of a plan that offers benefits through a network
plan, there is no longer any individual enrolled through the employer
who lives, resides, or works in the service area of the network plan
and the plan applies this item uniformly without regard to the claims
experience of employers or any health status-related factor in relation
to such individuals or their dependents; and
(6) for failure to meet the terms of an applicable collective
bargaining agreement, to renew a collective bargaining or other
agreement requiring or authorizing contributions to the plan, or to
employ employees covered by such an agreement."
SECTION 2. Article 3, Chapter 71, Title 38 of the 1976 Code is
amended by adding:
"Subarticle 7
Requirements for Issuers and Individual Health Insurance
Coverage under the Health Insurance Portability and
Accountability Act of 1996
Section 38-71-670. As used in this subarticle:
(1) 'Bona fide association' means, with respect to health
insurance coverage offered in the State, an association which:
(a) has been actively in existence for at least 5 years;
(b) has been formed and maintained in good faith for
purposes other than obtaining insurance;
(c) does not condition membership in the association on any
health status-related factor relating to an individual, including an
employee of an employer or a dependent of an employee;
(d) makes health insurance coverage offered through the
association available to all members regardless of any health
status-related factor relating to the members, or individuals eligible
for coverage through a member;
(e) does not make health insurance coverage offered through
the association available other than in connection with a member of
the association; and
(f) meets such additional requirements as may be imposed
under state law.
(2) 'Director of Insurance' or 'director' means the person who
is appointed by the Governor upon the advice and consent of the
Senate and who is responsible for the operation and management of
the Department of Insurance, including all of its divisions. The
director may appoint or designate the person or persons who shall
serve at the pleasure of the director to carry out the objectives or
duties of the department as provided by law. 'Director' also includes
a designee or deputy director upon whom the director has bestowed
any duty or function required of the director by the director in
managing or supervising the Department of Insurance.
(3) 'Employee' has the meaning given the term under Section
3(6) of the Employee Retirement Income Security Act of 1974.
(4) 'Employer' has the meaning given the term under Section
3(5) of the Employee Retirement Income Security Act of 1974,
except that the term shall include only employers of two or more
employees.
(5) 'Group health plan' means an employee welfare benefit plan,
as defined in Section 3(1) of the Employee Retirement Income
Security Act of 1974, to the extent that the plan provides medical
care, including items and services paid for as medical care, to
employees or their dependents, as defined under the terms of the plan,
directly or through insurance, reimbursement, or otherwise.
(6) 'Health insurance coverage' means benefits consisting of
medical care provided directly, through insurance or reimbursement,
or otherwise and including items and services paid for as medical
care under any hospital or medical service policy or certificate,
hospital or medical service plan contract, or health maintenance
organization contract offered by a health insurance issuer, except:
(a) coverage only for accident or disability income insurance
or any combination of these;
(b) coverage issued as a supplement to liability insurance;
(c) liability insurance, including general liability insurance
and automobile liability insurance;
(d) workers' compensation or similar insurance;
(e) automobile medical payment insurance;
(f) credit-only insurance;
(g) coverage for on-site medical clinics;
(h) other similar insurance coverage, specified in regulations,
under which benefits for medical care are secondary or incidental to
other insurance benefits;
(i) if offered separately:
(i) limited scope dental or vision benefits;
(ii) benefits for long-term care, nursing home care, home
health care, community-based care, or any combination of these;
(iii) other similar, limited benefits as are specified in
regulations;
(j) if offered as independent, noncoordinated benefits:
(i) coverage only for a specified disease or illness;
(ii) hospital indemnity or other fixed indemnity insurance;
(k) if offered as a separate insurance policy:
(i) Medicare supplemental health insurance, as defined
under Section 1882(g)(1) of the Social Security Act;
(ii) coverage supplemental to the coverage provided under
Chapter 55 of Title 10 of the United States Code; and
(iii) similar supplemental coverage under a group health
plan.
(7) 'Health insurance issuer' or 'issuer' means any entity that
provides health insurance coverage in this State. For purposes of this
subarticle, 'issuer' includes an insurance company, a health
maintenance organization, and any other entity providing health
insurance coverage which is licensed to engage in the business of
insurance in this State and which is subject to state insurance
regulation.
(8) 'Health maintenance organization' means an organization as
defined in Section 38-33-20(7).
(9) 'Health status-related factor' means any of the following
factors in relation to the individual or a dependent of the individual:
health status; medical condition, including both physical and mental
illnesses; claims experience; receipt of health care; medical history;
genetic information; evidence of insurability, including conditions
arising out of acts of domestic violence; or disability.
(10) 'Individual health insurance coverage' means health
insurance coverage offered to individuals in the individual market,
but does not include short-term limited duration insurance.
(11) 'Individual market' means the market for health insurance
coverage offered to individuals other than in connection with a group
health plan. The term includes coverage offered in connection with
a group health plan that has fewer than two participants as current
employees on the first day of the plan year unless the State elects to
regulate the coverage as coverage issued to small employers, as
defined in Section 38-71-1330.
(12) 'Large group market' means the health insurance market
under which individuals obtain health insurance coverage, directly or
through any arrangement, on behalf of themselves and their
dependents through a group health plan maintained by an employer
that is not a small employer, as defined in Section 38-71-1330.
(13) 'Medical care' means amounts paid for:
(a) the diagnosis, cure, mitigation, treatment, or prevention
of disease or amounts paid for the purpose of affecting any 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).
(14) 'Network plan' means health insurance coverage of a health
insurance issuer 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 issuer.
(15) 'Participant' has the meaning given the term under Section
3(7) of the Employee Retirement Income Security Act of 1974.
(16) 'Small group market' means the health insurance market
under which individuals obtain health insurance coverage, directly or
through any arrangement, on behalf of themselves and their
dependents through a group health plan maintained by a small
employer, as defined in Section 38-71-1330.
Section 38-71-675. (A) Except as provided in this section, a
health insurance issuer that provides individual health insurance
coverage to an individual shall renew or continue in force such
coverage at the option of the individual.
(B) A health insurance issuer may nonrenew or discontinue health
insurance coverage of an individual in the individual market based
only on one or more of the following:
(1) the individual has failed to pay premiums or contributions
in accordance with the terms of the health insurance coverage or the
issuer has not received timely premium payments;
(2) the individual has performed an act or practice that
constitutes fraud or made an intentional misrepresentation of material
fact under the terms of the coverage;
(3) the issuer is ceasing to offer coverage in the individual
market in accordance with subsection (C) and applicable state law;
(4) with the approval of the director or his designee, in the case
of a health insurance issuer that offers health insurance coverage in
the market through a network plan, the individual no longer resides,
lives, or works in the service area or in an area for which the issuer
is authorized to do business but only if the coverage is terminated
under this item uniformly without regard to any health status-related
factor of covered individuals;
(5) with the approval of the director or his designee, in the case
of health insurance coverage that is made available in the individual
market only through one or more bona fide associations, the
membership of the individual in the association, on the basis of which
the coverage is provided, ceases but only if the coverage is
terminated under this item uniformly without regard to any health
status-related factor of covered individuals.
(C)(1) In any case in which an issuer decides to discontinue
offering a particular type of health insurance coverage offered in the
individual market, coverage of such type may be discontinued by the
issuer only if the issuer:
(a) provides notice to each covered individual provided
coverage of this type in the market of the discontinuation at least
ninety days before the date of the discontinuation of the coverage;
(b) offers to each individual in the individual market provided
coverage of this type, the option to purchase any other individual
health insurance coverage currently being offered by the issuer for
individuals in such market; and
(c) in exercising the option to discontinue coverage of this
type and in offering the option of coverage under subitem (b), the
issuer acts uniformly without regard to any health status-related
factor of enrolled individuals or individuals who may become eligible
for the coverage.
(2)(a) Subject to subitem (c), in any case in which a health
insurance issuer elects to discontinue offering all health insurance
coverage in the individual market in this State, health insurance
coverage may be discontinued by the issuer only if:
(i) the issuer provides notice to the director and to each
individual of the discontinuation at least one hundred eighty days
before the date of the expiration of the coverage; and
(ii) all health insurance issued or delivered for issuance in
the State in the market is discontinued and coverage under the health
insurance coverage in the market is not renewed.
(b) In the case of a discontinuation under subitem (a) in the
individual market, the issuer may not provide for the issuance of any
health insurance coverage in the market and this State during the
five-year period beginning on the date of the discontinuation of the
last health insurance coverage not so renewed.
(D) At the time of coverage renewal, a health insurance issuer may
modify the health insurance coverage for a policy form offered to
individuals in the individual market so long as the modification is
consistent with state law and effective on a uniform basis among all
individuals with that policy form.
(E) In applying this section in the case of health insurance
coverage that is made available by a health insurance issuer in the
individual market to individuals only through one or more
associations, a reference to an 'individual' is deemed to include a
reference to such an association of which the individual is a member.
Section 38-71-680. Section 38-71-850(D) applies to health
insurance coverage offered by a health insurance issuer in the
individual market in the same manner as it applies to health insurance
coverage offered by a health insurance issuer in connection with a
group health plan in the small or large group market."
SECTION 3. Article 5, Chapter 71, Title 38 of the 1976 Code is
amended by adding:
"Subarticle 2
Requirements for Issuers and Group
Health Insurance Coverage Under the Health Insurance
Portability and Accountability Act of 1996
Section 38-71-840. (A) As used in this subarticle:
(1) 'Affiliation period' means a period which, under the terms
of the health insurance coverage offered by a health maintenance
organization, must expire before the health insurance coverage
becomes effective. The organization is not required to provide health
care services or benefits during the period, and no premium may be
charged to the participant or beneficiary for any coverage during the
period. The period begins on the enrollment date and runs
concurrently with any waiting period under the plan.
(2) 'Beneficiary' has the meaning given the term under Section
3(8) of the Employee Retirement Income Security Act of 1974.
(3) 'Bona fide association' means, with respect to health
insurance coverage offered in the State, an association which:
(a) has been actively in existence for at least 5 years;
(b) has been formed and maintained in good faith for
purposes other than obtaining insurance;
(c) does not condition membership in the association on any
health status-related factor relating to an individual, including an
employee of an employer or a dependent of an employee;
(d) makes health insurance coverage offered through the
association available to all members regardless of any health
status-related factor relating to the members or individuals eligible
for coverage through a member;
(e) does not make health insurance coverage offered through
the association available other than in connection with a member of
the association; and
(f) meets additional requirements as may be imposed under
state law.
(4) 'COBRA continuation provision' means any of the
following:
(a) Part 6, Subtitle B, Title I of the Employee Retirement
Income Security Act of 1974 other than Section 609 of the act;
(b) Section 4908B of the Internal Revenue Code of 1986,
other than subsection (f)(1) of the section insofar as it relates to
pediatric vaccines; or
(c) Title XXII of the Public Health Service Act.
(5) 'Church plan' has the meaning given the term under Section
3(33) of the Employee Retirement Income Security Act of 1974.
(6) 'Director of Insurance' or 'director' means the person who
is appointed by the Governor upon the advice and consent of the
Senate and who is responsible for the operation and management of
the Department of Insurance, including all of its divisions. The
director may appoint or designate the person or persons who shall
serve at the pleasure of the director to carry out the objectives or
duties of the department as provided by law. 'Director' also includes
a designee or deputy director upon whom the director has bestowed
any duty or function required of the director by law in managing or
supervising the Department of Insurance.
(7) 'Employee' has the meaning given the term under Section
3(6) of the Employee Retirement Income Security Act of 1974.
(8) 'Employer' has the meaning given the term under Section
3(5) of the Employee Retirement Income Security Act of 1974,
except that the term includes only employers of two or more
employees.
(9) '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.
(10) 'Enrollment date' means, with respect to an individual
covered under a group health plan or health insurance coverage, the
date of enrollment of the individual in the plan or coverage or, if
earlier, the first day of the waiting period for the enrollment.
(11) 'Governmental plan' has the meaning given the term under
Section 3(32) of the Employee Retirement Income Security Act of
1974 and any governmental plan established or maintained for its
employees by the Government of the United States or by any agency
or instrumentality of the government.
(12) 'Group health insurance coverage' means, in connection
with a group health plan, health insurance coverage offered by a
health insurance issuer in connection with the plan.
(13) 'Group health plan' means an employee welfare benefit plan,
as defined in Section 3(1) of the Employee Retirement Income
Security Act of 1974, to the extent that the plan provides medical
care, including items and services paid for as medical care, to
employees or their dependents, as defined under the terms of the plan,
directly or through insurance, reimbursement, or otherwise.
(14) 'Health insurance coverage' means benefits consisting of
medical care provided directly, through insurance or reimbursement,
or otherwise and including items and services paid for as medical
care under any hospital or medical service policy or certificate,
hospital or medical service plan contract, or health maintenance
organization contract offered by a health insurance issuer, except:
(a) coverage only for accident, or disability income
insurance, or any combination of accident and disability income
insurance;
(b) coverage issued as a supplement to liability insurance;
(c) liability insurance, including general liability insurance
and automobile liability insurance;
(d) workers' compensation or similar insurance;
(e) automobile medical payment insurance;
(f) credit-only insurance;
(g) coverage for on-site medical clinics;
(h) other similar insurance coverage, specified in regulations,
under which benefits for medical care are secondary or incidental to
other insurance benefits;
(i) if offered separately:
(i) limited scope dental or vision benefits;
(ii) benefits for long-term care, nursing home care, home
health care, community-based care, or any combination of these;
(iii) other similar, limited benefits as are specified in
regulations;
(j) if offered as independent, noncoordinated benefits:
(i) coverage only for a specified disease or illness;
(ii) hospital indemnity or other fixed indemnity insurance;
(k) if offered as a separate insurance policy:
(i) Medicare supplemental health insurance as defined
under Section 1882(g)(1) of the Social Security Act;
(ii) coverage supplemental to the coverage provided under
Chapter 55, Title 10 of the United States Code; and
(iii) similar supplemental coverage under a group health
plan.
(15) '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 of number of eligible
individuals or employees of an employer.
(16) 'Health insurance issuer' or 'issuer' means any entity that
provides health insurance coverage in this State. For purposes of this
section, 'issuer' includes an insurance company, a health maintenance
organization, and any other entity providing health insurance
coverage which is licensed to engage in the business of insurance in
this State and which is subject to state insurance regulation.
(17) 'Health maintenance organization' means an organization as
defined in Section 38-33-20(7).
(18) 'Health status-related factor' means any of the following
factors in relation to the individual or a dependent of the individual:
health status; medical condition, including both physical and mental
illnesses; claims experience; receipt of health care; medical history;
genetic information; evidence of insurability, including conditions
arising out of acts of domestic violence; or disability.
(19) 'Individual health insurance coverage' means health
insurance coverage offered to individuals in the individual market but
does not include short-term limited duration insurance.
(20) 'Individual market' means the market for health insurance
coverage offered to individuals other than in connection with a group
health plan. The term includes coverage offered in connection with
a group health plan that has fewer than two participants as current
employees on the first day of the plan year unless the State elects to
regulate coverage as coverage issued to small employers as defined
in Section 38-71-1330.
(21) 'Large group market' means the health insurance market
under which individuals obtain health insurance coverage, directly or
through any arrangement, on behalf of themselves and their
dependents through a group health plan maintained by an employer
that is not a small employer, as defined in Section 38-71-1330.
(22) 'Late enrollee' means, with respect to coverage under a
group health plan, a participant or beneficiary who enrolls under the
plan other than during:
(a) the first period in which the individual is eligible to enroll
under the plan if the initial enrollment period is a period of at least
thirty days; or
(b) a special enrollment period under Section 38-71-850(E).
(23) 'Medical care' means amounts paid for:
(a) the diagnosis, cure, mitigation, treatment, or prevention
of disease or amounts paid for the purpose of affecting any 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).
(24) 'Network plan' means health insurance coverage of a health
insurance issuer 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 issuer.
(25) 'Participant' has the meaning given the term under Section
3(7) of the Employee Retirement Income Security Act of 1974.
(26) 'Placement' or being 'placed' for adoption, in connection
with any placement for adoption of a child with any person, means
the assumption and retention by the person of a legal obligation for
total or partial support of the child in anticipation of adoption of the
child. The child's placement with the person terminates upon the
termination of such legal obligation.
(27) 'Plan sponsor' has the meaning given the term under Section
3(16)(B) of the Employee Retirement Income Security Act of 1974.
(28) 'Preexisting condition exclusion' means, with respect to
coverage, a limitation or exclusion of benefits relating to a condition
based on the fact that the condition was present before the date of
enrollment for the coverage, whether or not any medical advice,
diagnosis, care, or treatment was recommended or received before the
date. Genetic information may not be treated as a preexisting
condition in the absence of a diagnosis of the condition related to the
information.
(29) 'Small group market' means the health insurance market
under which individuals obtain health insurance coverage, directly or
through any arrangement, on behalf of themselves and their
dependents through a group health plan maintained by a small
employer, as defined in Section 38-71-1330.
(30) 'Waiting period' means, with respect to a group health plan
and an individual who is a potential participant or beneficiary in the
plan, the period that must pass with respect to the individual before
the individual is eligible to be covered for benefits under the terms of
the plan.
Section 38-71-850. (A) Subject to subsection (C), a health
insurance issuer offering group health insurance coverage, may, with
respect to a participant or beneficiary, impose a preexisting condition
exclusion only if the:
(1) exclusion relates to a condition, whether physical or mental,
regardless of the cause of the condition, for which medical advice,
diagnosis, care, or treatment was recommended or received within the
six-month period ending on the enrollment date;
(2) exclusion extends for not more than twelve months, or
eighteen months in the case of a late enrollee, after the enrollment
date; and
(3) period of any preexisting condition exclusion is reduced by
the aggregate of the periods of creditable coverage if any, as defined
in item (B)(1), applicable to the participant or beneficiary as of the
enrollment date.
(B)(1) For purposes of this subarticle, 'creditable coverage' means,
with respect to an individual, coverage of the individual under any of
the following:
(a) a group health plan;
(b) health insurance coverage;
(c) Part A or Part B, Title XVIII of the Social Security Act;
(d) Title XIX of the Social Security Act, other than coverage
consisting solely of benefits under Section 1928;
(e) Chapter 55, Title 10 of the United States Code;
(f) a medical care program of the Indian Health Service or of
a tribal organization;
(g) a state health benefits risk pool, including the South
Carolina Health Insurance Pool;
(h) a health plan offered under Chapter 89 of Title 5, United
States Code;
(i) a public health plan as defined in regulations;
(j) a health benefit plan under Section 5(e) of the Peace
Corps Act (22 U.S.C. 2504(e)).
The term does not include coverage consisting solely of those
benefits excepted from the definition of health insurance coverage.
(2)(a) A period of creditable coverage shall not be counted, with
respect to enrollment of an individual under a group health plan, if,
after the period and before the enrollment date, there was a
sixty-three-day period during all of which the individual was not
covered under any creditable coverage.
(b) For purposes of item (2)(a) and item (C)(4), any period
that an individual is in a waiting period for any coverage under a
group health plan or for group health insurance coverage or is in an
affiliation period, as defined in Section 38-71-840, shall not be taken
into account in determining the continuous period under subitem (a).
(3)(a) Except as otherwise provided under subitem (b), for
purposes of applying subitem (A)(3), a health insurance issuer
offering group health insurance coverage, shall count a period of
creditable coverage without regard to the specific benefits covered
during the period.
(b) A health insurance issuer offering group health insurance,
may elect to apply item (A)(3) based on coverage of benefits within
each of several classes or categories of benefits specified in
regulations rather than as provided under subitem (a). The election
must be made on a uniform basis for all participants and
beneficiaries. Under the election an issuer shall count a period of
creditable coverage with respect to any class or category of benefits
if any level of benefits is covered within the class or category.
(c) In the case of an election under subitem (b) with respect
to health insurance coverage offered by an issuer in the small or large
group market, the issuer:
(i) shall prominently state in any disclosure statements
concerning the coverage, and to each employer at the time of the
offer or sale of the coverage, that the issuer has made such election;
and
(ii) shall include in the statements a description of the
effect of the election.
(4) Periods of creditable coverage with respect to an individual
shall be established through presentation of certifications described
in subsection (D) or in such other manner as may be specified in
regulations.
(C)(1) Subject to item (4), a health insurance issuer offering group
health insurance coverage, may not impose any preexisting condition
exclusion in the case of an individual who, as of the last day of the
thirty-one-day period beginning with the date of birth, is covered
under creditable coverage.
(2) Subject to item (4), a health insurance issuer offering group
health insurance coverage, may not impose any preexisting condition
exclusion in the case of a child who is adopted or placed for adoption
before attaining eighteen years of age and who, as of the last day of
the thirty-one-day period beginning on the date of the adoption or
placement for adoption, is covered under creditable coverage. This
item does not apply to coverage before the date of such adoption or
placement for adoption.
(3) A health insurance issuer offering group health insurance
coverage, may not impose any preexisting condition exclusion
relating to pregnancy as a preexisting condition.
(4) Items (1) and (2) no longer apply to an individual after the
end of the first sixty-three-day period during all of which the
individual was not covered under any creditable coverage.
(D)(1)(a) A health insurance issuer offering group health insurance
coverage, shall provide the certification described in subitem (b):
(i) at the time an individual ceases to be covered under the
plan or otherwise becomes covered under a COBRA continuation
provision;
(ii) in the case of an individual becoming covered under
such a provision, at the time the individual ceases to be covered
under such provision; and
(iii) on the request on behalf of an individual made not later
than twenty-four months after the date of cessation of the coverage
described in subitem (a)(i) or (ii), whichever is later.
The certification under sub-subitem (i) may be provided, to the
extent practicable, at a time consistent with notices required under
any applicable COBRA continuation provision.
(b) The certification described in this subitem is a written
certification of:
(i) the period of creditable coverage of the individual
under the plan and the coverage, if any, under the COBRA
continuation provision; and
(ii) the waiting period, if any, and affiliation period, if
applicable, imposed with respect to the individual for any coverage
under the plan.
(2) In the case of an election described in subitem (B)(3)(b) by
a group health plan or health insurance issuer, if the plan or issuer
enrolls an individual for coverage under the plan and the individual
provides a certification of coverage of the individual under item (1):
(a) upon request of the plan or issuer, the issuer which issued
the certification provided by the individual shall promptly disclose to
the requesting plan or issuer information on coverage of classes and
categories of health benefits available under the entity's plan or
coverage; and
(b) the issuer may charge the requesting plan or issuer for the
reasonable cost of disclosing the information.
(3) The Director of Insurance shall establish rules to prevent an
issuer's failure to provide information under item (1) or (2) with
respect to previous coverage of an individual from adversely
affecting any subsequent coverage of the individual under another
group health plan or health insurance coverage.
(E)(1) A health insurance issuer offering group health insurance
coverage in connection with a group health plan, shall permit an
employee who is eligible, but not enrolled, for coverage under the
terms of the plan, or a dependent of the employee if the dependent is
eligible, but not enrolled, for coverage under such terms, to enroll for
coverage under the terms of the plan if each of the following
conditions is met:
(a) The employee or dependent was covered under a group
health plan or had health insurance coverage at the time coverage was
previously offered to the employee or dependent.
(b) The employee stated in writing at the time that coverage
under a group health plan or health insurance coverage was the
reason for declining enrollment, but only if the plan sponsor or issuer,
if applicable, required such a statement at the time and provided the
employee with notice of the requirement and the consequences of the
requirement at the time.
(c) The employee's or dependent's coverage described in
subitem (a):
(i) was under a COBRA continuation provision and the
coverage under the provision was exhausted; or
(ii) was not under such a provision and either the coverage
was terminated as a result of loss of eligibility for the coverage,
including as a result of legal separation, divorce, death, termination
of employment, or reduction in the number of hours of employment,
or employer contributions toward the coverage were terminated;
(iii) was one of multiple health insurance plans offered by
an employer and the employee elects a different plan during an open
enrollment period.
(d) Under the terms of the plan, the employee requests the
enrollment not later than thirty days after the date of exhaustion of
coverage described in subitem (c)(i) or termination of coverage or
employer contribution described in subitem (c)(ii).
(2)(a) If:
(i) a group health plan makes coverage available with
respect to a dependent of an individual;
(ii) the individual is a participant under the plan, or has met
any waiting period applicable to becoming a participant under the
plan and is eligible to be enrolled under the plan but for a failure to
enroll during a previous enrollment period; and
(iii) a person becomes a dependent of the individual through
marriage, birth, or adoption or placement for adoption, the health
insurance issuer offering health insurance coverage in connection
with the group health plan shall provide for a dependent special
enrollment period described in subitem (b) during which the person
or, if not otherwise enrolled, the individual may be enrolled under the
plan as a dependent of the individual, and in the case of the birth or
adoption of a child, the spouse of the individual may be enrolled as
a dependent of the individual if such spouse is otherwise eligible for
coverage.
(b) A dependent special enrollment period under this subitem
must be not less than thirty-one days and begins on the later of:
(i) the date dependent coverage is made available; or
(ii) the date of the marriage, birth, or adoption or placement
for adoption as the case may be described in subitem (a)(iii).
(c) If an individual seeks to enroll a dependent during the
first thirty-one days of a dependent special enrollment period, the
coverage of the dependent shall become effective:
(i) in the case of marriage, not later than the first day of
the first month beginning after the date the completed request for
enrollment is received;
(ii) in the case of a dependent's birth or a dependent's
adoption or placement for adoption within thirty-one days of birth, as
of the date of the birth; or
(iii) in the case of a dependent's adoption or placement for
adoption beyond thirty-one days from the date of birth, the date of the
adoption or placement for adoption.
(3) A health insurance issuer offering group health insurance
coverage in connection with a group health plan, shall permit a
dependent, spouse or minor or dependent child, of an employee, if
the dependent is eligible, but not enrolled for coverage, to enroll for
coverage under the terms of the plan if a court has ordered that
coverage be provided for the dependent under a covered employee's
health insurance plan and a request for enrollment is made within
thirty days after the issuance of the court order.
(F)(1) A health maintenance organization which offers health
insurance coverage in connection with a group health plan and which
does not impose any preexisting condition exclusion allowed under
subsection (A) with respect to any particular coverage option may
impose an affiliation period for such coverage option, but only if:
(a) the period is applied uniformly without regard to any
health status-related factors; and
(b) the period does not exceed two months, or three months
in the case of a late enrollee.
(2) A health maintenance organization described in subitem (1)
may use alternative methods, from those described in item (1), to
address adverse selection as approved by the Director of Insurance or
his designee.
(G)(1)(a)(i) Subject to subitem (a)(ii), no period before July 1,
1996, shall be taken into account in determining creditable coverage.
(ii) The Director of Insurance shall provide for a process
either by bulletin or by order whereby individuals who need to
establish creditable coverage for periods before July 1, 1996, and
who would have the coverage credited but for subitem (a)(i) may be
given credit for creditable coverage for the periods through the
presentation of documents or other means.
(b)(i) Subject to subitems (b)(ii) and (iii), subsection (D)
applies to events occurring after June 30, 1996.
(ii) In no case is a certification required to be provided
under subsection (D) before June 1, 1997.
(iii) In the case of an event occurring after June 30, 1996,
and before October 1, 1996, a certification is not required to be
provided under subsection (D)unless an individual, with respect to
whom the certification is otherwise required to be made, requests the
certification in writing.
(c) In the case of an individual who seeks to establish
creditable coverage for any period for which certification is not
required because it relates to an event occurring before June 30,
1996:
(i) the individual may present other credible evidence of
the coverage in order to establish the period of creditable coverage;
and
(ii) a health insurance issuer shall not be subject to any
penalty or enforcement action with respect to the issuer's crediting or
not crediting the coverage if the issuer has sought to comply in good
faith with the applicable requirements under this section.
Section 38-71-860. (A)(1) Subject to item (2), a health insurance
issuer offering group health insurance coverage in connection with
a group health plan, may not establish rules for eligibility, including
continued eligibility, of any individual to enroll under the terms of
the plan based on any of the following health status-related factors in
relation to the individual or a dependent of the individual:
(a) health status;
(b) medical condition, including both physical and mental
illnesses;
(c) claims experience;
(d) receipt of health care;
(e) medical history;
(f) genetic information;
(g) evidence of insurability, including conditions arising out
of acts of domestic violence;
(h) disability.
(2) To the extent consistent with Sections 38-71-850 and
38-71-1360 and any other applicable state law, item (1) shall not be
construed:
(a) to require group health insurance coverage to provide
particular benefits other than those provided under the terms of such
coverage; or
(b) to prevent such a plan or coverage from establishing
limitations or restrictions on the amount, level, extent, or nature of
the benefits or coverage for similarly situated individuals enrolled in
the plan or coverage.
(3) For purposes of item (1), rules for eligibility to enroll under
a plan include rules defining any applicable waiting periods for the
enrollment.
(B)(1) A health insurance issuer offering health insurance coverage
in connection with a group health plan, may not require any
individual, as a condition of enrollment or continued enrollment
under the plan, to pay a premium or contribution which is greater
than the premium or contribution for a similarly situated individual
enrolled in the plan on the basis of any health status-related factor in
relation to the individual or to an individual enrolled under the plan
as a dependent of the individual.
(2) To the extent consistent with Sections 38-71-940,
38-71-200, and 38-55-50 and any other applicable state law, nothing
in item (1) shall be construed to:
(a) restrict the amount that an employer may be charged for
coverage under a group health plan under applicable state law; or
(b) prevent a group health plan, and a health insurance issuer
offering group health insurance coverage, from establishing premium
discounts or rebates or modifying otherwise applicable copayments
or deductibles in return for adherence to programs of health
promotion and disease prevention, in accordance with applicable state
law.
Section 38-71-870. (A) Except as provided in this section, if a
health insurance issuer offers health insurance coverage in the small
or large group market in connection with a group health plan, the
issuer must renew or continue in force such coverage for all eligible
employees and dependents at the option of the plan sponsor of the
plan.
(B) A health insurance issuer may nonrenew or discontinue health
insurance coverage offered in connection with a group health plan in
the small or large group market based only on one or more of the
following:
(1) The plan sponsor has failed to pay premiums or
contributions in accordance with the terms of the health insurance
coverage or the issuer has not received timely premium payments.
(2) The plan sponsor has performed an act or practice that
constitutes fraud or made an intentional misrepresentation of material
fact under the terms of the coverage or, with respect to coverage of
an insured individual, fraud, or intentional misrepresentation by the
insured individual or the individual's representative. If the fraud or
intentional misrepresentation is made by a person with respect to any
person's prior health condition, the insurer has the right also to deny
coverage to that person or to impose as a condition of continued
coverage the exclusion of the condition misrepresented.
(3) The plan sponsor has failed to comply with a material plan
provision relating to employer contribution or group participation
rules as permitted under Section 38-71-1360(A)(4) in the case of the
small group market or pursuant to applicable state law in the large
group market.
(4) The issuer is ceasing to offer coverage in such market in
accordance with subsection (C) and applicable state law.
(5) In the case of a health insurance issuer that offers health
insurance coverage in the market through a network plan, there is no
longer any enrollee in connection with such plan who lives, resides,
or works in the service area of the issuer or in the area for which the
issuer is authorized to do business and, in the case of the small group
market, the issuer would deny enrollment with respect to such plan
under Section 38-71-1360(C)(1).
(6) In the case of health insurance coverage that is made
available in the small or large group market only through one or more
bona fide associations, the membership of an employer in the
association, on the basis of which the coverage is provided, ceases
but only if such coverage is terminated under this item uniformly
without regard to any health status-related factor relating to any
covered individual.
(C)(1) In any case in which an issuer decides to discontinue
offering a particular type of group health insurance coverage offered
in the small or large group market, coverage of such type may be
discontinued by the issuer in accordance with applicable state law in
such market only if the issuer:
(a) provides notice to each plan sponsor provided coverage
of this type in such market, and participants and beneficiaries covered
under the coverage, of the discontinuation at least ninety days before
to the date of the discontinuation of the coverage;
(b) offers to each plan sponsor provided coverage of this type
in the market, the option to purchase all or, in the case of the large
group market, any other health insurance coverage currently being
offered by the issuer to a group health plan in such market; and
(c) in exercising the option to discontinue coverage of this
type and in offering the option of coverage under subitem (b), the
issuer acts uniformly without regard to the claims experience of those
sponsors or any health status-related factor relating to any
participants or beneficiaries covered or new participants or
beneficiaries who may become eligible for the coverage.
(2)(a) In any case in which a health insurance issuer elects to
discontinue offering all health insurance coverage in the small group
market or the large group market, or both markets, in this State,
health insurance coverage may be discontinued by the issuer only in
accordance with applicable state law and if:
(i) the issuer provides notice to the Director of Insurance
and to each plan sponsor, and participants and beneficiaries covered
under the coverage, of the discontinuation at least one hundred eighty
days before the date of the discontinuation of the coverage; and
(ii) all health insurance coverage issued or delivered for
issuance in the State in such market is discontinued and coverage
under the health insurance coverage in the market is not renewed.
(b) In the case of a discontinuation under subitem (a) in a
market, the issuer may not provide for the issuance of any health
insurance coverage in the market in this State during the five-year
period beginning on the date of the discontinuation of the last health
insurance coverage not so renewed.
(D) At the time of coverage renewal, a health insurance issuer may
modify the health insurance coverage for a product offered to a group
health plan in the:
(1) large group market; or
(2) small group market if, for coverage that is available in the
market other than only through one or more bona fide associations,
the modification is consistent with state law and effective on a
uniform basis among group health plans with that product.
(E) In applying this section in the case of health insurance
coverage that is made available by a health insurance issuer in the
small or large group market to employers only through one or more
associations, a reference to 'plan sponsor' is deemed, with respect to
coverage provided to an employer member of the association, to
include a reference to such employer.
Section 38-71-880. (A)(1) In the case of health insurance
coverage offered in connection with a group health plan that provides
both medical and surgical benefits and mental health benefits:
(a) if the coverage does not include an aggregate lifetime
limit on substantially all medical and surgical benefits, the coverage
may not impose any aggregate lifetime limit on mental health benefit;
(b) if the coverage includes an aggregate lifetime limit, also
referred to in this item as the 'applicable lifetime limit', on
substantially all medical and surgical benefits, the coverage shall
either:
(i) apply the applicable lifetime limit both to the medical
and surgical benefits to which it otherwise would apply and to mental
health benefits and not distinguish in the application of the limit
between the medical and surgical benefits and mental health benefits;
or
(ii) not include any aggregate lifetime limit on mental
health benefits that is less than the applicable lifetime limit.
(c) In the case of coverage that is not described in subitem (a)
or (b) and that includes no or different aggregate lifetime limits on
different categories of medical and surgical benefits, the Director of
Insurance shall promulgate regulations under which subitem (b) is
applied to the coverage with respect to mental health benefits by
substituting for the applicable lifetime limit an average aggregate
limit that is computed taking into account the weighted average of the
aggregate lifetime limits applicable to the categories.
(2) In the case of health insurance coverage offered in
connection with a group health plan that provides both medical and
surgical benefits and mental health benefits:
(a) if the coverage does not include an annual limit on
substantially all medical and surgical benefits, the coverage may not
impose any annual limit on mental health benefits;
(b) if the coverage includes an annual limit on substantially
all medical and surgical benefits, referred to as the 'applicable annual
limit', the coverage shall either:
(i) apply the applicable annual limit both to medical and
surgical benefits to which it otherwise would apply and to mental
health benefits and not distinguish in the application of such limit
between such medical and surgical benefits and mental health
benefits; or
(ii) not include any annual limit on mental health benefits
that is less than the applicable annual limit.
(c) In the case of coverage that is not described in subitem (a)
or (b) and that includes no or different annual limits on different
categories of medical and surgical benefits, the Director of Insurance
shall promulgate regulations under which subitem (b) is applied to
the coverage with respect to mental health benefits by substituting for
the applicable annual limit an average annual limit that is computed
taking into account the weighted average of the annual limits
applicable to the categories.
(B) To the extent consistent with Section 38-71-737 and any other
applicable state law, nothing in this section shall be construed:
(1) as requiring health insurance coverage offered in connection
with a group health plan to provide any mental health benefits; or
(2) in the case of such coverage that provides such mental
health benefits, as affecting the terms and conditions, including cost
sharing, limits on number of visits or days of coverage, and
requirements relating to medical necessity, relating to the amount,
duration, or scope of mental health benefits under the coverage,
except as specifically provided in subsection (A) in regard to parity
in the imposition of aggregate lifetime limits and annual limits for
mental health benefits.
(C)(1)(a) This section shall not apply to any group health insurance
coverage offered in connection with a group health plan for any plan
year of a small employer.
(b) For purposes of subitem (a), 'small employer' means, in
connection with a group health plan with respect to a calendar year
and a plan year, an employer who employed an average of at least
two but not more than fifty employees on business days during the
preceding calendar year and who employs at least two employees on
the first day of the plan year.
(c) For purposes of this item:
(i) All persons treated as a single employer under
subsection (b), (c), (m), or (o) of Section 414 of the Internal Revenue
Code of 1986 shall be treated as one employer.
(ii) In the case of an employer which was not in existence
throughout the preceding calendar year, the determination of whether
such employer is a small employer shall be based on the average
number of employees that it is reasonably expected such employer
will employ on business days in the current calendar year.
(iii) Any reference in this item to an employer shall include
a reference to any predecessor of the employer.
(2) This section shall not apply with respect to health insurance
coverage offered in connection with a group health plan if the
application of this section to such coverage results in an increase in
the cost for such coverage of at least one percent.
(D) In the case of health insurance coverage offered in connection
with a group health plan that offers a participant or beneficiary two
or more benefit package options under the plan, subsections (A) and
(C)(2), shall be applied separately with respect to each such option.
(E) For purposes of this section:
(1) 'Aggregate lifetime limit' means, with respect to benefits
under health insurance coverage, a dollar limitation on the total
amount that may be paid with respect to the benefits under the health
insurance coverage with respect to an individual or other coverage
unit.
(2) 'Annual limit' means, with respect to benefits under health
insurance coverage, a dollar limitation on the total amount of benefits
that may be paid with respect to the benefits in a twelve-month period
under the health insurance coverage with respect to an individual or
other coverage unit.
(3) 'Medical or surgical benefits' means benefits with respect to
medical or surgical services, as defined under the terms of the plan,
but does not include mental health benefits.
(4) 'Mental health benefits' means benefits with respect to
mental health services, as defined under the terms of the plan, but
does not include benefits with respect to treatment of substance abuse
or chemical dependency.
(F) This section shall not apply to benefits for services furnished
on or after September 30, 2001."
SECTION 4. Section 38-71-135 of the 1976 Code, as added by
Act 335 of 1996, is amended to read:
"Section 38-71-135. All individual and group health insurance and
health maintenance organization policies providing coverage for the
hospitalization and attendant professional services of a mother and
her newborn child or children must, if at the discretion of the
attending physician it is medically necessary, provide for the
mother and her newborn child or children to remain in the hospital
for a period not to exceed the second postpartum day at
least forty-eight hours after a vaginal delivery, not including the
day of delivery, and the third post-operative day at least
ninety-six hours following a Cesarean Section, not including the
day of surgery. Nothing in this section shall be construed to prohibit
the attending physician, in consultation with the
mother, from requesting additional time for hospitalization or
from releasing the mother or her newborn child or children prior to
the expiration of time provided herein."
SECTION 5. Section 38-71-335(B) and (C) of the 1976 Code, as
last amended by Section 758 of Act 181 of 1993, is further amended
to read:
"(B) For individual or family accident, health, or accident and
health insurance policies, excluding individual health insurance
coverage as defined in Section 38-71-670, individual or family
accident, health, or accident and health insurance policies may not be
written on a optionally renewable basis. 'Optionally renewable'
means a contract of insurance in which the insurer reserves the right
to terminate the coverage at the policy anniversary date. Optionally
renewable does not include the following categories of policies as
defined by the department by regulation: (1) 'nonrenewable for stated
reasons only' and (2) 'conditionally renewable.' Term insurance is
not considered insurance written on an optionally renewable basis.
For individual health insurance coverage as defined in Section
38-71-670, Section 38-71-675 relating to guaranteed renewability of
individual health insurance coverage shall apply.
(C) An individual or family accident, health, or accident and health
insurance policy which may be nonrenewed, may be nonrenewed at
the policy anniversary date or premium due date. The insurer shall
give the insured at least thirty-one days' written notice of nonrenewal.
Nonrenewal by the insurer is without prejudice to any claims
originating before the effective date of nonrenewal. No written
notice shall be required for failure to pay premiums except as
provided in Section 38-71-110. For individual health insurance
coverage as defined in Section 38-71-670, the notification
requirements of Section 38-71-675(C) shall apply."
SECTION 6. Section 38-71-730(1)(b)(ii) of the 1976 Code, as last
amended by Act 339 of 1994, is further amended to read:
"(ii) It establishes requirements for membership. However, the
common group cannot exclude any small employer, which otherwise
meets the requirements for membership, on the basis of claim
experience or any health status status-related
factors, as defined in Section 38-71-840, in relation to the employee
or a dependent of the employee."
SECTION 7. Section 38-71-730(3) of the 1976 Code, as last
amended by Act 339 of 1994, is further amended to read:
"(3) For all groups, no evidence of individual insurability may be
required at the time the person first becomes eligible for insurance or
within thirty-one days thereafter. Nothing in this section precludes
the obtaining of medical information with respect to the members of
the group for use in determining the insurability of the group, but the
information may not be used to exclude an individual from coverage.
In addition, group health insurance coverage, as defined in
Section 38-71-840 must adhere to the requirements of Section
38-71-860 prohibiting discrimination against individual participants
and beneficiaries based on health status-related factors."
SECTION 8. Section 38-71-730(4) of the 1976 Code, as last
amended by Section 17, Act 435 of 1996, is further amended to read:
"(4) Except for group health insurance coverage as defined in
Section 38-71-840, the policies may contain a provision limiting
coverage for preexisting conditions. The preexisting conditions must
be covered no later than twelve months without medical care,
treatment, or supplies ending after the effective date of the coverage
or twelve months after the effective date of the coverage, whichever
occurs first. Policies of disability income insurance may exclude
coverage for disabilities beginning during the first twelve months
after the effective date of coverage which result from a preexisting
condition. Preexisting conditions are defined as those conditions for
which medical advice or treatment was received or recommended no
more than twelve months before the effective date of a person's
coverage. However, whenever a covered person moves from one
insured group to another, the insurer of the group to which the
covered person moves shall give credit for the satisfaction of the
preexisting condition period or portion thereof already served under
the prior plan if the coverage is selected when the person first
becomes eligible and the coverage is continuous to a date not more
than thirty days prior to the effective date of the new coverage.
Service under a probationary waiting period required by the employer
is not considered to interrupt continuous service. The
requirements with respect to limitations on preexisting condition
exclusions for group health insurance coverage are described in
Section 38-71-850."
SECTION 9. Section 38-71-737(B) of the 1976 Code, as added by
Act 377 of 1994, is amended to read:
"(B) The offer of an optional rider or endorsement for a group
health insurance policy must provide minimum benefits for
psychiatric conditions not less than two thousand dollars for each
member for each benefit year with a lifetime maximum benefit of ten
thousand dollars. In the case of group health insurance coverage,
as defined in Section 38-71-840, the requirements of Section
38-71-880 regarding parity in the application of certain limits to
mental health benefits shall apply to those benefits defined as mental
health benefits in Section 38-71-880(E). However, if group health
insurance coverage is exempted from the requirements of Section
38-71-880, then the requirements of this provision shall apply. In
addition, for group health insurance coverage, the requirements of
this provision shall apply to benefits for psychiatric conditions which
are not considered mental health benefits."
SECTION 10. Section 38-71-920 of the 1976 Code, as last amended
by Act 339 of 1994, is further amended to read:
"Section 38-71-920. As used in this subarticle:
(1) '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, or association,
or employer, as defined in Section 3(5) of the Employee
Retirement Income Security Act of 1974 that is actively engaged
in business who 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 which are affiliated companies, or which 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 must be
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
the employer is a small or large employer shall be based on the
average number of employees that it is reasonably expected to
employ on business days in the current calendar year; and
(c) Any reference in the subarticle to an employer
includes a reference to any predecessor of the employer.
(2) 'Insurer' means any person who provides health insurance in
this State. For the purposes of this subarticle, insurer includes a
licensed insurance company, a health maintenance organization, a
multiple employer welfare arrangement, or any other person
providing a plan of health insurance subject to state insurance
regulation.
(3) 'Health insurance plan' or 'plan' means any hospital or
medical expense incurred policy or certificate, major
medical expense insurance, hospital or medical service plan
contract, or health maintenance organization subscriber contract
which 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.
'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,; or disability-income
insurance; coverage issued as a supplement to liability or other
liability insurance, including general liability insurance
and automobile liability insurance; coverage designed solely 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; or 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.
(4) 'Small employer insurer' means an insurer which offers
health insurance plans covering the employees of a small employer.
(5) 'Case characteristics' means the following characteristics of a
small employer, as determined by a small employer insurer, which
are considered by the insurer in the determination of premium rates
for the small employer: age, gender, geographic area, industry, and
family composition. Geographic areas smaller than a county may not
be used without prior approval of the director or his designee. Claim
experience, health status, and duration of coverage since issue are not
case characteristics for the purposes of this subarticle.
(6) 'Director' means the person who is appointed by the Governor
upon the advice and consent of the Senate and who is responsible for
the operation and management of the Department of Insurance,
including all of its divisions. The director may appoint or designate
the person or persons who shall serve at the pleasure of the director
to carry out the objectives or duties of the department as provided by
law. Furthermore, the director may bestow upon his
'Director' also includes a designee or deputy director
upon whom the director has bestowed any duty or function
required of him the director by law in managing or
supervising the Insurance Department of Insurance.
(7) 'Department' means the Department of Insurance.
(8) "Late enrollee" means an eligible employee or
dependent who requests enrollment in a health insurance plan of a
small employer following the initial enrollment period during which
the individual is entitled to enroll under the terms of the health
insurance plan, provided that the initial enrollment period is a period
of at least thirty days. However, an eligible employee or dependent
shall not be considered a late enrollee if:
(1) The individual meets each of the following:
(a) the individual was covered under qualifying
previous coverage at the time of the initial enrollment;
(b) the individual lost coverage under qualifying
previous coverage as a result of termination of employment or
eligibility, the involuntary termination of the qualifying previous
coverage, death of a spouse, or divorce; and
(c) the individual requests enrollment within thirty
days after termination of the qualifying previous coverage; or
(2) The individual is employed by an employer which
offers multiple health insurance plans and the individual elects a
different plan during an open enrollment period; or
(3) A court has ordered that coverage be provided for
a spouse or minor or dependent child under a covered employee's
health insurance plan and request for enrollment is made within thirty
days after issuance of the court order.
(9)(8) 'Actuarial base rate' means the current
estimated premium rate for a health insurance plan, based solely on
the claim experience for all small employers insured by the insurer,
on plan design, and without regard to the nature of the groups
assumed to select particular health insurance plans. The insurer must
be able to demonstrate a reasonable actuarial relationship between the
estimated premium rate and the plan design.
(10)(9) 'Class of business' means all or a distinct
grouping of small employers as shown on the records of the small
employer insurer.
(a) A distinct grouping may be established only by the small
employer insurer on the basis that the applicable health insurance
plans:
(i) are marketed and sold through individuals and
organizations which are not participating in the marketing or sale of
other distinct groupings of small employers for such small employer;
(ii) have been acquired from another small employer insurer
as a distinct grouping of plans;
(iii) are provided through an association with membership of
not less than fifty small employers which have been formed for
purposes other than obtaining insurance; or
(iv) are provided through a common group formed solely for
the purpose of obtaining insurance as permitted by Section
38-71-730(1)(b).
(b) A small employer insurer may establish no more than two
additional groupings on the basis of criteria, such as group size,
which are expected to produce substantial variation in administrative
and marketing costs.
(c) The director or his designee may approve the establishment
of additional distinct groupings upon application to the director or his
designee and a finding by the director or his designee that action
would enhance the efficiency and fairness of the small employer
insurance marketplace.
(11)(10) 'Actuarial certification' means a written
statement by a member of the American Academy of Actuaries or
other individual acceptable to the director or his designee that a small
employer insurer is in compliance with the provisions of Section
38-71-940, based upon the person's examination, including a review
of the appropriate records and of the actuarial assumptions and
methods utilized by the insurer in establishing premium rates for
applicable health insurance plans.
(12)(11) 'Rating period' means the calendar
period for which premium rates established by a small employer
insurer are assumed to be in effect, as determined by the small
employer insurer."
SECTION 11. Section 38-71-960 of the 1976 Code, as last amended
by Act 339 of 1994, is further amended by adding at the end:
"(5) The provisions relating to any preexisting condition exclusion;
and
(6) The benefits and premiums available under all health insurance
plans for which the employer is qualified.
Information under this section must be provided to small
employers in a manner determined to be understandable by the
average small employer and must be sufficient to reasonably inform
small employers of their rights and obligations under the health
insurance coverage.
An insurer is not required under this section to disclose any
information that is proprietary or trade secret information under
applicable law."
SECTION 12. Section 38-71-1330 of the 1976 Code, as added by
Act 339 of 1994, is amended to read:
"Section 38-71-1330. As used in this article:
(A)(1) 'Basic health insurance plan' means a lower
cost health insurance plan developed pursuant to Section 38-71-1420.
(B)(2) 'Board' means the board of directors of the
program established pursuant to Section 38-71-1410.
(C)(3) 'Commissioner' means the Chief Insurance
Commissioner of this State.
(D)(4) 'Committee' means the advisory committee
to the commissioner referred to in Section 38-71-1420.
(E)(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.
(F)(6) 'Eligible employee' means an employee as
defined in Section 38-71-710(1) or Section 38-71-840 of
the 1976 Code who works on a full-time basis and has a normal
work week 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.
(G)(9) '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
which 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.
'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,; or
disability income insurance,; coverage issued as a
supplement to liability or other liability insurance,
including general liability insurance and automobile liability
insurance,; coverage designed solely 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,; or 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.
(10)(H) 'Insurer' means any 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 Section 38-41-10, et seq.
(I) "Late enrollee" means an eligible employee or
dependent who requests enrollment in a health insurance plan of a
small employer following the initial enrollment period during which
the individual is entitled to enroll under the terms of the health
insurance plan, provided that the initial enrollment period is a period
of at least thirty days. However, an eligible employee or dependent
shall not be considered a late enrollee if the individual:
(1) meets each of the following:
(a) was covered under qualifying previous coverage
at the time of the initial enrollment;
(b) lost coverage under qualifying previous coverage
as a result of termination of employment or eligibility, the
involuntary termination of the qualifying previous coverage, death of
a spouse, or divorce; and
(c) requests enrollment within thirty days after
termination of the qualifying previous coverage; or
(2) is employed by an employer which offers multiple
health insurance plans and elects a different plan during an open
enrollment period; or
(3) a court has ordered that coverage be provided for a
spouse or minor or dependent child under a covered employee's
health insurance plan and request for enrollment is made within thirty
days after issuance of the court order.
(11) 'Medical care' means amounts paid for:
(a) the diagnosis, cure, mitigation, treatment, or prevention of
disease or amounts paid for the purpose of affecting any 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).
(12) '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.
(J)(13) 'Plan of operation' means the
plan of operation of the program established pursuant to Section
38-71-1410.
(K)(14) 'Program' means the South Carolina
Small Employer Insurer Reinsurance Program created by Section
38-71-1410.
(L) "Qualifying previous coverage" means benefits
or coverage provided under:
(1) Medicare or Medicaid;
(2) an employer-based health insurance or health benefit
arrangement that provides benefits similar to or exceeding benefits
provided under the basic health insurance plan; or
(3) an individual health insurance policy, including
coverage issued by a health maintenance organization, that provides
benefits similar to or exceeding the benefits provided under the basic
health insurance plan, provided that such policy has been in effect for
at least one year.
(M)(15) 'Reinsuring insurer' means a small
employer insurer participating in the reinsurance program pursuant
to Section 38-71-1410.
(N)(16) 'Risk-assuming insurer' means a small
employer insurer whose application is approved by the commissioner
pursuant to Section 38-71-1390.
(O)(17) '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,
or 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 50 employees on business days during the preceding calendar
year and who employs at least one employee on the first day of the
plan year.
(1) 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 shall be
considered one employer. ; and
(2) In the case of an employer which was not in existence
throughout the preceding calendar year, the determination of whether
such employer is a small or large employer shall be based on the
average number of employees that it is reasonably expected to
employ on business days in the current calendar year; and
(3) Any reference in this article to an employer includes a
reference to any predecessor of the employer.
(P)(18) 'Small employer insurer' means an
insurer that offers health insurance plans covering eligible employees
of one or more small employers in this State.
(Q)(19) 'Standard health insurance plan' means
a health insurance plan developed pursuant to Section 38-71-1420."
SECTION 13. Section 38-71-1360 of the 1976 Code, as added by
Act 339 of 1994, is amended to read:
"Section 38-71-1360. (A)(1) Every small employer insurer shall,
as a condition of transacting business in this State with small
employers, fairly market to small employers at least
two health insurance plans actively offer to small
employers all health insurance plans actively marketed to small
employers in this State, including at least two health insurance
plans. One health insurance plan offered by each small
employer insurer must be a basic health insurance plan and one plan
must be a standard health insurance plan.
(2) Coverage under the basic or standard such
health insurance plan must be offered to all every
eligible employees employee of a small employer
and their his or her dependents who apply for
enrollment during the period in which the employee first becomes
eligible to enroll under the terms of the health insurance plan and
may not place any restriction which is inconsistent with Section
38-71-860 on an eligible employee being a participant or
beneficiary. A small employer insurer may not offer coverage
only to certain individuals in a small employer group, or to only part
of the group, except as provided in Section 38-71-1370(B)
38-71-850 for late enrollees.
(3) Except with respect to applicable preexisting condition
limitation periods or late enrollees as provided in Section
38-71-1370(B) 38-71-850, a small employer insurer
shall not modify a health insurance plan with respect to a small
employer or any eligible employee or dependent through rider,
endorsement, or otherwise, to restrict or exclude coverage or benefits
for specific diseases, medical conditions or services otherwise
covered under the plan.
(4)(a) Except as provided in Sections 38-71-1360(C) and
(D), a small employer insurer shall issue a basic health
insurance plan or a standard these health insurance
plan plans to any eligible small employer that applies
for either any such plan and agrees to make the
required premium payments and to satisfy the other reasonable
provisions of the health insurance plan relating to employer
contribution rules and group participation rules and not
inconsistent with this article.
(b) In the case of a small employer insurer that establishes
more than one class of business pursuant to Section
38-71-920(11) of the 1976 Code of Laws, the small employer
insurer shall maintain and issue to eligible small employers these
health insurance plans in addition to at least one basic health
insurance plan and at least one standard health insurance plan in each
class of business so established. A small employer insurer may apply
reasonable criteria in determining whether to accept a small employer
into a class of business, provided that:
(i) the criteria are not intended to discourage or prevent
acceptance of small employers applying for a basic or standard health
insurance plan;
(ii) the criteria are not related to the health status or claim
experience of the small employer;
(iii) the criteria are applied consistently to all small
employers applying for coverage in the class of business; and
(iv) the small employer insurer provides for the acceptance
of all eligible small employers into one or more classes of business.
The requirement to offer at least two these health
insurance plans to small employers shall not apply to a class of
business into which the small employer insurer is no longer enrolling
new small businesses.
(5) The provisions of this subsection (A) of this section shall
be effective one hundred eighty days after the commissioner's
approval of the basic health insurance plan and the standard health
insurance plan developed pursuant to Section 38-71-1420; provided,
that if the Small Employer Insurer Reinsurance Program created
pursuant to Section 38-71-1410 is not yet operative on that date, the
provisions of this paragraph shall be effective on the date that the
program begins operation.
(B)(1) After the commissioner's approval of the basic health
insurance plan and the standard health insurance plan developed
pursuant to Section 38-71-1420, a small employer insurer shall file
with the commissioner, in the form and manner prescribed by the
commissioner, the basic and standard health insurance plans to be
used by the insurer. The insurer shall certify to the commissioner
that the plans as filed are in substantial compliance with the
provisions as approved by the commissioner. Upon the
commissioner's receipt of the certification, the insurer may use the
certified plans unless their use is disapproved by the commissioner.
(2) The commissioner may, at any time, after providing notice
and an opportunity for hearing, disapprove the continued use by a
small employer insurer of a basic or standard health insurance plan
on the grounds that the plan does not meet the requirements of this
article.
(C)(1) A health maintenance organization shall not be required
to offer coverage or accept applications pursuant to subsection (A) in
the case of the following In the case of a small employer
insurer that offers health insurance coverage through a network plan,
the small employer insurer may:
(a) to a small employer, where the small employer is not
physically located in the health maintenance organization's
established geographic service area; limit the employers that
may apply for such coverage to those with eligible employees who
live, work, or reside in the service area for such network plan; and
(b) to an employee, where the employee does not
work or reside within the health maintenance organization's
established geographic service area; or
(c) within an area where the health
maintenance organization reasonably anticipates, and demonstrates
to the satisfaction of the commissioner, that it will not have the
capacity within its established geographic service area to deliver
adequately to the members of such groups because of its
obligations to existing group policyholders and enrollees.
within the service area of any such plan, deny such coverage to
such employers if such insurer has demonstrated to the satisfaction
of the commissioner that:
(i) it will not have the capacity to deliver services
adequately to members of any additional groups because of its
obligations to existing group contract holders and enrollees, and
(ii) it is applying this item uniformly to all
employers without regard to claims experience of those employers
and their employees and their dependents or any health status-related
factors relating to such employees and dependents.
(2) A health maintenance organization small
employer insurer that offers health insurance coverage through a
network plan that cannot offer coverage pursuant to
paragraph item(1)(c)(b) may not
offer coverage in the applicable area to new cases of employer groups
with more than fifty eligible employees or to any small employer
groups until the later of one hundred eighty days following each such
refusal or the date on which the health maintenance
organization the insurer notifies the commissioner that
it has regained capacity to deliver services to small employer groups.
(D)(1) A small employer insurer may not be required
to provide coverage to small employers pursuant to subsection
(A) deny health insurance coverage to small employers
for any period of time for which the commissioner determines that
requiring the acceptance of small employers in accordance with the
provisions of subsection (A) would place the small employer insurer
in a financially impaired condition or if the small employer
insurer has demonstrated to the commissioner that it:
(a) does not have the financial reserves necessary
to underwrite additional coverage; and
(b) is applying this item uniformly to all small
employers in the State without regard to claims experience of those
employers and their employees and their dependents or any health
status-related factor relating to such employees and dependents.
(2) A small employer insurer that denies coverage to a
small employer pursuant to item (1) may not offer coverage in the
State to new cases of employer groups with more than fifty eligible
employees or to any small employer groups until the later of one
hundred eighty days following each such refusal or the date on which
the small employer insurer demonstrates to the commissioner that it
has sufficient financial reserves to underwrite additional coverage.
The commissioner may provide for the application of this subsection
on a service-area-specific basis."
SECTION 14. Section 38-71-1370 of the 1976 Code, as added by
Act 339 of 1994, is amended to read:
"Section 38-71-1370. (A) Except to the extent
inconsistent with specific provisions of this article, all provisions of
Article 5, of Chapter 71 of Title 38 of the 1976
Code of Laws are applicable to the basic and standard
health any insurance plans required to be offered by
small employer insurers.
(B) Late enrollees may be excluded from coverage for the
greater of eighteen months or an eighteen-month preexisting
condition exclusion; provided that if both a period of exclusion from
coverage and a preexisting condition exclusion are applicable to a
late enrollee, the combined period shall not exceed eighteen
months."
SECTION 15. Section 38-71-1410(H) of the 1976 Code, as added
by Act 339 of 1994, is amended to read:
"(H) A reinsuring insurer may reinsure with the program as
provided for in this subsection:
(1) with respect to a basic health insurance plan or a
standard any health insurance plan offered by the
small employer insurer to small employers, the program shall
reinsure the level of coverage provided as defined in the
plan of operation.;
(2) a small employer insurer may reinsure an entire employer
group within sixty days of the commencement of the group's
coverage under a health insurance plan.;
(3) a reinsuring insurer may reinsure an eligible employee or
dependent within a period of sixty days following the commencement
of the coverage with the small employer. A newly-eligible employee
or dependent of the reinsured small employer may be reinsured
within sixty days of the commencement of his
coverage.;
(4)(a) the program shall not reimburse a reinsuring insurer with
respect to the claims of a reinsured employee or dependent until the
insurer has incurred an initial level of claims for such employee or
dependent of five thousand dollars in a calendar year for benefits
covered by the program. In addition, the reinsuring insurer shall be
responsible for ten percent of the next fifty thousand dollars of
benefit payments during a calendar year and the program shall
reinsure the remainder. A reinsuring insurers' liability under this
subparagraph shall not exceed a maximum limit of ten thousand
dollars in any one calendar year with respect to any reinsured
individual.;
(b) the board annually shall may adjust the
initial level of claims, the coinsurance percentage, and the
maximum limit to be retained by the insurer to reflect increases
in costs and utilization within the standard market for health
insurance plans within the State. The adjustment shall not be less than
the annual change in the medical component of the "Consumer Price
Index for All Urban Consumers" of the Department of Labor, Bureau
of Labor Statistics, unless the board proposes and the commissioner
approves a lower adjustment factor with the approval of the
commissioner.
(5) a small employer insurer may terminate reinsurance
with the program for one or more of the reinsured employees or
dependents of a small employer on any anniversary of the health
insurance plan.;
(6) a reinsuring insurer shall apply all managed care and claims
handling techniques, including utilization review, individual case
management, preferred provider provisions, and other managed care
provisions or methods of operation consistently with respect to
reinsured and nonreinsured business."
SECTION 16. Section 38-71-1440(A) of the 1976 Code, as added
by Act 339 of 1994, is amended to read:
"(A) Each small employer insurer shall fairly market health
insurance plan coverage, including the basic and standard health
insurance plans, to eligible small employers in the State. If a small
employer insurer denies coverage to a small employer on the basis of
health status or claims experience of the small employer or its
employees or dependents, the small employer insurer shall offer the
small employer the opportunity to purchase a basic health plan and
a standard health insurance plan. A small employer insurer shall
not deny coverage to a small employer based solely on the
employer's occupation."
SECTION 17. No enforcement action shall be taken, pursuant to the
amendments made by this act, against a health insurance issuer with
respect to a violation of a requirement imposed by such amendments
before January 1, 1998, if the issuer has sought to comply in good
faith with the requirements.
SECTION 18. The Director of Insurance may promulgate
regulations as may be necessary or appropriate to carry out the
provisions of this act.
SECTION 19. If any provision of this act or the application of the
provision to any person or circumstance is held to be
unconstitutional, the remainder of this act and the application of the
provisions of such to any person or circumstance shall not be affected
thereby.
SECTION 20. Section 38-71-950 of the 1976 Code is repealed.
SECTION 21. This act applies with respect to health insurance
coverage offered, sold, issued, renewed, in effect or operated in the
individual and the group markets in this State and shall take effect
upon approval by the Governor or on July 1, 1997, if later, regardless
of when a period of creditable coverage, as defined in Section 3 of
this act, occurs. Section 38-71-880 of the 1976 Code, as added by
Section 3 of this act and the amendments to Section 38-71-135 of the
1976 Code, as contained in Section 4 of this act, apply with respect
to plan years beginning after January 1, 1998, or upon the signature
of the Governor, whichever is later.
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