PA 08-33—sSB 310

Insurance and Real Estate Committee

AN ACT CLARIFYING THE SALE OF SPECIAL HEALTH CARE PLANS FOR SMALL EMPLOYERS

SUMMARY: This act makes several changes to insurance laws on the offer and sale of health insurance plans to small employers to resolve inconsistencies between state and federal law.

It eliminates the requirement that insurers offer “special health care plans. ” And it limits the employers to whom insurers must offer a small employer plan. Under prior law, insurers had a duty to offer a small employer plan to any small employer (50 or fewer employees, including a sole proprietor) for which it denied other coverage. The act limits the insurers' duty by applying it only to a sole proprietor. Thus, under the act, an insurer must promptly offer a sole proprietor the opportunity to purchase a small employer plan if (1) the insurer denies coverage that the sole proprietor requested or (2) the insurer or its producer does not offer, for any reason, coverage that the sole proprietor requested. (For example, a sole proprietor may have applied for, and been denied, coverage under an individual health insurance policy. At that time, the insurer would have to offer a small employer plan to him or her. ) By law, an insurer may require proof that the person has been self-employed for three consecutive months.

The act also makes technical and conforming changes.

EFFECTIVE DATE: Upon passage

BACKGROUND

Special Health Care Plans for Small Employers

By law, a “special health care plan” is a health insurance plan that the Health Reinsurance Association (HRA) or Connecticut Small Employer Health Reinsurance Pool board of directors (“the board”) establishes, in accordance with statutory requirements, for small employers with 10 or fewer employees, the majority of whom are low-income, that have not provided health insurance for their employees for one year. The law prohibits an employer from purchasing a special health care plan for more than three years. (The legislature created HRA to provide comprehensive health insurance to people who cannot obtain insurance from commercial insurers. )

Health care providers are prohibited from providing services in Connecticut unless they provide services, upon request, to people covered by special health care plans for the reimbursement rate the law specifies, which is 75% of what Medicare reimburses. For services or supplies that Medicare does not reimburse, the rate is 75% of what Medicare would reimburse if the benefit was payable under Medicare, which the board must determine and the commissioner must approve.

Federal Law

Federal law defines small employer as an employer with two to 50 employees. The federal Health Insurance Portability and Accountability Act (HIPAA) requires insurers that offer plans to small employers to (1) offer all small employers all their products approved for sale in the small group market that they are actively marketing and (2) accept each small employer that applies for the coverage and pays the premium. HIPAA also requires insurers to renew small employer's plans at the policyholder's election, except in limited cases (e. g. , nonpayment of premiums, fraud).

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