Current Status Bill Number:258 Type of Legislation:General Bill GB Introducing Body:Senate Introduced Date:19970128 Primary Sponsor:McConnell All Sponsors:McConnell Drafted Document Number:gjk\23266ac.97 Residing Body:Senate Current Committee:Banking and Insurance Committee 02 SBI Subject:Health insurance, medical; individuals with prior group coverage, Federal Act of 1996, enrollment
Body Date Action Description Com Leg Involved
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Senate 19970128 Introduced, read first time, 02 SBI
referred to Committee
View additional legislative information at the LPITS web site.
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 38-71-685 SO AS TO IMPLEMENT GUARANTEED AVAILABILITY OF INDIVIDUAL HEALTH INSURANCE TO CERTAIN INDIVIDUALS WITH PRIOR GROUP COVERAGE AS MANDATED BY THE FEDERAL HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996 AND TO REQUIRE ISSUERS IN THE INDIVIDUAL MARKET TO OFFER AND ACCEPT ENROLLMENT OF ANY ELIGIBLE INDIVIDUAL WITHOUT THE IMPOSITION OF A PREEXISTING CONDITION EXCLUSION, TO DEFINE ELIGIBLE INDIVIDUAL AS ONE WHO HAS AN AGGREGATE OF EIGHTEEN MONTHS OF CREDITABLE COVERAGE, WHOSE MOST RECENT COVERAGE WAS UNDER A GROUP HEALTH PLAN, WHO IS NOT ELIGIBLE FOR COVERAGE UNDER ANOTHER GROUP HEALTH PLAN, MEDICARE, OR MEDICAID, WHOSE MOST RECENT PRIOR COVERAGE WAS NOT TERMINATED DUE TO NONPAYMENT OF PREMIUMS OR FRAUD, AND WHO HAS EXHAUSTED COBRA, IF ELIGIBLE, TO AUTHORIZE THE ISSUER TO LIMIT THE GUARANTEED ISSUE SO LONG AS IT OFFERS AT LEAST TWO DIFFERENT POLICY FORMS, AND TO PROVIDE FOR THESE FORMS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The 1976 Code is amended by adding:
"Section 38-71-685. (A) For purposes of this section:
(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 five 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) 'Creditable coverage' means, with respect to an individual, coverage of the individual under any of the following:
(a) group health plan;
(b) health insurance coverage;
(c) Part A or B of 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, Title 5 of the United States Code;
(i) a public health plan as defined in regulations; or
(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.
A period of creditable coverage shall not be counted 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; however, in determining whether there has been continuous coverage, no period shall be taken into account during which the 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.
Periods of creditable coverage with respect to an individual shall be established through presentation of certifications, as described in Section 38-71-850(D) or in a manner as may be specified in regulations.
(7) '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 by the director by law in managing or supervising the Department of Insurance
(8) 'Eligible individual' means an individual:
(a)(i) for whom, as of the date on which the individual seeks coverage under this section, the aggregate of the periods of creditable coverage is eighteen or more months; and
(ii) whose most recent prior creditable coverage was under a group health plan, governmental plan, or church plan, or health insurance coverage offered in connection with any such plan;
(b) who is not eligible for coverage under a group health plan, Part A or Part B of Title XVIII of the Social Security Act, or a state plan under Title XIX of the act, or any successor program, and does not have other health insurance coverage;
(c) with respect to whom the most recent coverage within the coverage period described in subitem (a)(i) was not terminated based on a factor relating to nonpayment of premiums or fraud;
(d) if the individual had been offered the option of continuation coverage under a COBRA continuation provision or under a similar state program, who elected the coverage; and
(e) who, if the individual elected such continuation coverage, has exhausted the continuation coverage under the provision or program.
(9) 'Employee' has the meaning given such term under Section 3(6) of the Employee Retirement Income Security Act of 1974.
(10) '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.
(11) '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.
(12) '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.
(13) '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.
(14) '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.
(15) '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 the following:
(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.
(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 the coverage as coverage issued to small employers as defined in Section 38-71-1330.
(21) 'Medical care' means amounts paid for:
(a) the diagnosis, cure, mitigation, treatment, or prevention of disease or amounts paid for the purpose of effecting 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).
(22) '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.
(23) 'Participant' has the meaning given the term under Section 3(7) of the Employee Retirement Income Security Act of 1974.
(24) 'Plan sponsor' has the meaning given the term under Section 3(16)(B) of the Employee Retirement Income Security Act of 1974.
(25) '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 such coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before such date. Genetic information may not be treated as a preexisting condition in the absence of a diagnosis of the condition related to such information.
(26) '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.
(B)(1) Subject to subsections (C) through (G), each health insurance issuer that offers health insurance coverage in the individual market in this State may not, with respect to an eligible individual desiring to enroll in individual health insurance coverage;
(a) decline to offer such coverage to, or deny enrollment of, such individual; or
(b) impose any preexisting condition exclusion with respect to such coverage.
(2) The requirement of subitem (1) shall not apply to health insurance coverage offered in the individual market in this State if the State is implementing an acceptable alternative mechanism as defined under Section 2744 of Title XXVII of the Public Health Service Act, as amended.
(C)(1) In the case of health insurance coverage offered in the individual market in this State, if the State is not implementing an acceptable alternative mechanism as defined under Section 2744 of Title XXVIII of the Public Health Service Act, as amended, the health insurance issuer may elect to limit the coverage offered under subsection (B) so long as it offers at least two different policy forms of health insurance coverage both of which:
(a) are designed for, made generally available to, and actively marketed to, and enroll both eligible and other individuals by the issuer; and
(b) meet the requirement of item (2) or (3), as elected by the issuer.
For purposes of this subsection, policy forms which have different cost-sharing arrangements or different riders shall be considered to be different policy forms.
(2) The requirement of this item is met, for health insurance coverage policy forms offered by an issuer in the individual market, if the issuer offers the policy forms for individual health insurance coverage with the largest, and next to largest, premium volume of all such policy forms offered by the issuer in the State or applicable marketing or service area, as may be prescribed in regulation, by the issuer in the individual market in the period involved.
(3)(a) The requirement of this item is met, for health insurance coverage policy forms offered by an issuer in the individual market, if the issuer offers a lower-level coverage policy form, as defined in subitem (b), and a higher-level coverage policy form, as defined in subitem (c), each of which includes benefits substantially similar to other individual health insurance coverage offered by the issuer in the State and each of which is covered under a method which provides for risk adjustment, risk spreading, or a risk spreading mechanism among issuers or policies of an issuer or otherwise provides for some financial subsidization for eligible individuals, including through assistance to participating issuers.
(b) A policy form is described in this subitem if the actuarial value of the benefits under the coverage is at least eight-five percent but not greater than one hundred percent of a weighted average, as described in subitem (d).
(c) A policy form is described in this subitem if:
(i) the actuarial value of the benefits under the coverage is at least fifteen percent greater than the actuarial value of the coverage described in subitem (b) offered by the issuer in the area involved; and
(ii) the actuarial value of the benefits under the coverage is at least one hundred percent but not greater than one hundred twenty percent of a weighted average, as described in subitem (d).
(d) For purposes of this item, the weighted average described in this subitem is the average actuarial value of the benefits provided by all the health insurance coverage issued, as elected by the issuer, either by that issuer or by all issuers in the State in the individual market during the previous year, not including coverage issued under this section, weighted by enrollment for the different coverage.
(4) The issuer elections under this subsection shall apply uniformly to all eligible individuals in the State for that issuer. Such an election shall be effective for policies offered during a period of not shorter than two years.
(5) For purposes of item (3), the actuarial value of benefits provided under individual health insurance coverage shall be calculated based on a standardized population and a set of standardized utilization and cost factors.
(D)(1) In the case of a health insurance issuer that offers health insurance coverage in the individual market through a network plan, the issuer may:
(a) limit the individuals who may be enrolled under such coverage to those who live, reside, or work within the service area for such network plan; and
(b) within the service area of such plan, deny such coverage to such individuals if the issuer has demonstrated, if required, to the director that:
(i) it will not have the capacity to deliver services adequately to additional individual enrollees because of its obligations to existing group contract holders and enrollees and individual enrollees; and
(ii) it is applying this item uniformly to individuals without regard to any health status-related factor of such individuals and without regard to whether the individuals are eligible individuals.
(2) An issuer, upon denying health insurance coverage in any service area in accordance with subitem (1)(b), may not offer coverage in the individual market within such service area for a period of one hundred eighty days after such coverage is denied.
(E)(1) A health insurance issuer may deny health insurance coverage in the individual market to an eligible individual if the issuer has demonstrated, if required, to the Director of Insurance that:
(a) it does not have the financial reserves necessary to underwrite additional coverage; and
(b) it is applying this item uniformly to all individuals in the individual market in the State consistent with applicable state law and without regard to any health status-related factor of such individuals and without regard to whether the individuals are eligible individuals.
(2) An issuer upon denying individual health insurance coverage in any service area in accordance with item (1) may not offer such coverage in the individual market within such service area for a period of one hundred eighty days after the date such coverage is denied or until the issuer has demonstrated, if required under applicable state law, to the director that the issuer has sufficient financial reserves to underwrite additional coverage, whichever is later. The State may provide for the application of this item on a service-area specific basis.
(F)(1) The provisions of subsection (B) shall not be construed to require that a health insurance issuer offering health insurance coverage only in connection with group health plans or through one or more bona fide associations, or both, offer such health insurance coverage in the individual market.
(2) A health insurance issuer offering health insurance coverage in connection with group health plans shall not be deemed to be a health insurance issuer offering individual health insurance coverage solely because such issuer offers a conversion policy.
(G) To the extent consistent with Sections 38-71-200, 38-71-310, 38-71-315, 38-71-325, 38-55-50 and any other applicable state law, nothing in this section shall be construed:
(1) to restrict the amount of the premium rates that an issuer may charge an individual for health insurance coverage provided in the individual market under applicable state law; or
(2) to prevent a health insurance issuer offering health insurance coverage in the individual market 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.
(H) The Director of the Department of Insurance may promulgate regulations as may be necessary or appropriate to carry out the provisions of this section."
SECTION 2. If any provision of this act or the application of such 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 3. This act applies with respect to health insurance coverage offered, sold, issued, renewed, in effect or operated in the individual market in this State and takes effect upon approval by the Governor or on July 1, 1997, if later, regardless of when a period of creditable coverage, as defined in this act, occurs.