South Carolina General Assembly
109th Session, 1991-1992

Bill 3322


Indicates Matter Stricken
Indicates New Matter


                    Current Status

Introducing Body:               House
Bill Number:                    3322
Primary Sponsor:                Boan
Committee Number:               26
Type of Legislation:            GB
Subject:                        Health insurance policy rates
Residing Body:                  House
Current Committee:              Labor, Commerce and Industry
Companion Bill Number:          521
Computer Document Number:       CYY/18058.SD
Introduced Date:                Jan 24, 1991
Last History Body:              House
Last History Date:              Jan 24, 1991
Last History Type:              Introduced, read first time,
                                referred to Committee
Scope of Legislation:           Statewide
All Sponsors:                   Boan
                                McElveen
Type of Legislation:            General Bill



History


 Bill  Body    Date          Action Description              CMN
 ----  ------  ------------  ------------------------------  ---
 3322  House   Jan 24, 1991  Introduced, read first time,    26
                             referred to Committee

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(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

A BILL

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 38-71-725 SO AS TO REQUIRE THAT THE RATES FOR ANY HEALTH INSURANCE POLICY FORM PROPOSED TO BE USED FOR GROUPS FROM TWO TO TWENTY-FOUR MUST BE FIXED WITH REFERENCE TO THE COMBINED EXPERIENCE OF THE INSURER WITH RESPECT TO RELEVANT POLICIES, TO PROVIDE FOR THE APPLICATION OF CERTAIN RISK AND BENEFIT FACTORS, AND TO LIMIT THE EXTENT TO WHICH EXPERIENCE ADJUSTMENT AT ANY RENEWAL DATE CAN BE MADE FOR THESE POLICIES TO AN AMOUNT TWENTY PERCENT, GREATER OR LESS, THAN THE COMBINED RATE.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. The 1976 Code is amended by adding:

"Section 38-71-725. (A) As used in this section, `health insurance' means any hospital or medical expense incurred policy, hospital, or medical service plan contract or health maintenance organization subscriber contract and does not include accident only, credit, dental, or disability insurance coverage issued as a supplement to liability insurance, insurance arising out of a workers' compensation or similar provision of law, automobile medical-payment insurance, or insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.

(B) Health insurance premium rates for any group of from two to twenty-four persons, hereinafter referred to in this section as a small group, must be fixed with reference to the combined experience of the insurer computed as hereinafter specified, with adjustment for experience and other factors specified in this section. If any group initially written for more than twenty-four persons shall decline in membership to twenty-four or less persons, the group shall have the right to elect whether to be subject to this section.

(C) The claims experience of all small groups insured by each insurer must be fully combined for rating purposes. The claims experience of an individual group may not affect its rate, except as permitted in (G) below and to the extent that the claims experience of an individual group affects the overall combined experience of the insurer. The claims experience of an individual group may not be used in any manner as a reason for the termination of the individual group.

(D) The experience of the insurer to be combined shall include the experience generated by groups under health insurance contracts issued to:

(1) separate groups,

(2) trust,

(3) multiple employer trust,

(4) association groups or trusts to the extent specified in subsection (H) below, and any other group type health insurance arrangements.

Experience generated with respect to South Carolina residents under multiple employer trusts or arrangements through contracts issued in this State or otherwise sold or extended to residents of this State must be combined. Multiple employer trusts and arrangements shall include any group health insurance or group type health insurance coverage issued to a trust or association or to any other group policyholder where the contract provides coverage, primarily or incidentally for sole proprietors, employers, or both.

(E) Age, sex, area, industry, occupational and avocational factors may be considered in the initial and renewal rating of each small group.

(F) The actuarial value of the difference in benefits set out in the several policy forms of the insurer as specified in an opinion by a qualified actuary or other qualified person acceptable to the Commissioner must be determined by each insurer, reported not less often than once a year to the Commissioner and used in determining the permissible variation from the insurer's combined experience average specified in subsection (G).

(G) The total premium calculated for any individual small group may not deviate, plus or minus, after appropriate allowance for the factors set out in subsections (E) and (F), by an amount greater than twenty percent of the rate reflecting the combined experience of the insurer with respect to all policies required to be combined pursuant to this section.

(H) This section shall not apply to a policy issued to an association of governmental or public employees, an association of employees of a common employer, an association specified in a collective bargaining agreement, or an organization formed and operated in good faith for purposes other than that of procuring insurance and composed of members engaged in a common trade, business, or profession.

This section also shall not apply to a policy issued to an employer in another state which provides coverage for its employees residing in this State.

(I) This section shall apply, however, to any policy issued by an insurer to an association with subordinate groups of from two to twenty-four persons if more than seventy percent of its subordinate groups participating in its insurance program are composed of groups of from two to twenty-four persons. The insurer's experience with respect to the subordinate groups must be combined with its other experience as specified in this section, and the maximum permissible deviation specified in subsection (G) shall apply with respect to each subordinate group."

SECTION 2. This act takes effect upon approval by the Governor and applies to any policy first issued after the effective date of this act and upon the renewal date of any policy in effect on the effective date of this act.

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