Section 1 PURPOSE
The purpose of this regulation is to set forth the rules for
registration of small group carriers, requirements for the sale of individual
insurance and the standards and process for approval of common health care
plans.
Section 2 AUTHORITY
This regulation is issued pursuant to the authority vested in
the Commissioner of the Department of Banking, Insurance and Securities
("Commissioner") by Title
8 V.S.A., Section
4080a.
Section 3 REGISTRATION
No person may offer a small group plan unless such person is
a registered small group carrier as defined by
8 V.S.A. Section
4080a(a)(4). Pursuant to 8
V.S.A. 4080a(c) the following are the minimum requirements for registration as
a small group carrier:
1. The carrier
must apply to the Commissioner to be a registered small group
carrier.
2. The carrier must be
licensed or authorized to provide health insurance in Vermont.
3. The carrier shall have all small group
rates, common health care plans and forms approved by the Department of
Banking, Insurance and Securities ("Department") prior to their use in
Vermont.
4. The carrier must have
licensed or employee sales representatives in Vermont.
5. The carrier must designate, in writing,
the name and address of a representative responsible for answering questions
and responding to complaints about underwriting and claims.
6. The carrier must provide insureds with a
toll free number for claims handling and customer service.
7. All advertising material about small group
insurance must clearly identify the product advertised as a "Small Group Health
Insurance Plan." All advertising material must be filed with the Department of
Banking, Insurance and Securities prior to use.
8. The carrier must provide access to prior
group experience, including gross premium (gross premium means written direct
premium) earned premium and incurred claims, if collected, upon written request
from any group policyholder.
9. The
carrier must file annually the following information with the Department for
the preceding calendar year no later than April 1:
a. the number of employers covered under each
small group plan;
b. the number of
employees and an estimate of the number of lives covered under each small group
plan;
c. the gross premium for each
small group plan;
d. the earned
premium for each small group plan;
e. the incurred claims for each small group
plan;
f. the number of employers
with rates deviating above and below the community rate for each small group
plan;
g. the amount of gross
premium above, below and at the community rate for each small group plan;
and
h. the same information
required in lines a-g must be provided for any business underwritten with or
through an association or trust, to include the name and address of each
association or trust.
10.
A carrier who intends to withdraw from the small group market must notify the
Commissioner in writing at least six (6) months prior to canceling or
nonrenewing any coverage. This notice must include the following information:
a. a description of the plans offered by the
carrier;
b. the number of employers
and the total number of lives insured under each contract; and
c. the planned termination date(s).
11. A registered carrier who
qualifies under the provisions of Section
6(c),
1991, Act 52 must certify in writing by April 1 of each year that it continues
to qualify and that in the preceding calendar year it has not written more than
$ 100,000.00 in annual gross premium for small group business covering
individuals residing in this state.
Section 4 INDIVIDUAL INSURANCE
This section sets forth the standards and process for the
sale of individual insurance as required by 8 V.S.A. 4080a(m).
1. No person may sell, offer or provide a
health care benefit plan or insurance policy to individual employees or members
of a small group as a means of circumventing the requirements of 8 V.S.A.
4080a.
2. No person may replace,
offer or solicit the replacement of an existing group contract offered by an
employer by selling or offering to sell or provide individual policies to
employees of that employer.
3. Any
person offering to sell or provide individual insurance must satisfy the
following requirements:
a. Obtain a written
statement from each individual that the purchase of individual health insurance
coverage was not initiated, sponsored or subsidized by the individual's
employer or any affiliate or agent of the employer.
b. Obtain a written statement from each agent
or broker selling an individual policy that the sale was not made as a means of
circumventing small group health insurance and that the purchase was not
initiated, sponsored or subsidized by the individual's employer or any
affiliate or agent of the employer.
c. Retain, and make available for the
Department's inspection, all documentation required in sub sections
3(a) and
(b) for at least three (3) years.
d. Provide to the Department no later than
April 1, of each year the following information for the preceding calendar
year:
i. the number of individuals covered
under all policies;
ii. the total
gross premium for all policies;
iii. the total earned premium;
iv. the total incurred claims;
v. the percentage increase or decrease in new
policies issued and existing policies renewed; and
vi. the total number of policies
issued.
Section
5 Common Health Care Plans
This section sets forth the standards and process for
approval of common health care plans as required by 8 V.S.A. 4080a(e).
1. Standards and Criteria.
The following standards and criteria shall be considered by
the Commissioner in approving common health care plans. The standards and
criteria are to be used as guidelines. They are not intended to establish
minimum benefit levels or outlines of policy coverage that must be included in
a common health care plan.
a.
Comparable - a common health care plan shall permit comparison of the costs and
relative benefits of all plans available to consumers.
b. Affordable - a common health care plan
shall balance specific benefits and benefit levels with their impact on the
plan cost. Cost containment features such as deductibles, co-insurance, and
managed care should be considered.
c. Style and terms of policy - a common
health care plan shall be easy for a consumer to read and understand. It shall
contain a clear description of benefits, exclusions and conditions. A carrier
may use its own format and style of type, subject to the Department's
approval.
d. Exceptions and
reductions- any exceptions or reductions of coverage shall be clearly labeled
as such in a separate section of the plan. Each specific exclusion shall be
listed and identified by number. Appropriate notice and explanation for each
reduction or exclusion shall be provided to certificate holders.
e. Managed benefits - the suitability of
requiring managed benefits shall be considered for each plan. Managed benefits
may include but are not limited to pre-admission certification, admission
certification of emergency admissions, concurrent review and individual case
management.
f. Preventative care -
each plan shall consider the use of preventative care benefits to promote the
general health of certificate holders.
g. Benefit component- each benefit plan shall
weigh the needs of Vermonters for the broadest benefit package possible,
considering the constraints imposed by the cost of each benefit on the overall
plan.
h. Feasibility - each plan
will be considered in light of the technical and logistical requirements
imposed on registered small group carriers.
2. Required Policy Provisions
Each common health care plan must satisfy the following
minimum policy provisions:
a.
Cancellation and Nonrenewal.
(a) A carrier
who cancels or nonrenews a group health insurance policy or subscriber contract
shall:
(1) notify the group policyholder or
other entity involved, and each of its employees or members covered under the
policy or subscriber contract of the date of termination of the policy or
contract. The notice shall advise the employees or members that, unless
otherwise provided for in the policy or contract, the carrier shall not be
liable for claims for losses incurred after the termination date and shall
direct employees or members to refer to their certificates or contracts in
order to determine their rights. The obligation to notify employees or members
shall not apply to associations, trusts, and groups other than employer groups
if the addresses of the employees and members are not reasonably available to
the carrier. A carrier is not obligated to provide notice to employees and
members if the termination of the policy or contract is due to replacement
coverage subject to the provisions of this subchapter.
(2) advise, in any instance in which the plan
involves employee contributions, that if the policyholder or other entity
continues to collect contributions for coverage beyond the date of termination,
the policyholder or other entity may be held solely liable for the benefits
with respect to which the contributions have been collected.
(b) Except for cases pursuant to
subsection (a) of this section, whenever the carrier is obligated to give any
notice to employees and members directly, the carrier shall prepare and furnish
to the policyholder or other entity a supply of notice forms to be distributed
to covered employees or members. The forms shall state the fact of termination
and the effective date of termination. The forms shall contain a statement
directing employees or members to refer to their certificates or contracts in
order to determine their rights. The notice forms shall be provided at the time
the carrier gives its notice of termination to the policyholder or other
entity.
b. Pre-existing
Conditions.
For a 12-month period from the effective date of coverage a
registered small group carrier may limit coverage for pre-existing conditions
which existed during the 12-month period preceding the effective date of
coverage except that a registered small group carrier shall waive any
pre-existing conditions for all new employees or members of a small group, and
their dependents, who produce evidence of continuous health benefit coverage
(whether group or non-group) during the previous nine months which is
substantially equivalent to the common health care plan of the carrier approved
by the Commissioner.
c.
Continuation and Conversion.
Any employee or member whose insurance under a group policy
would terminate because of the termination of employment or the death of a
covered employee shall be entitled to continue coverage under the policy as
provided in Chapter 107, Sub Chapter 2 of Title 8. In addition, such person
shall be entitled to have a converted policy as provided in Chapter 107,
Subchapter 2 of Title 8. The converted policy shall cover any person who was
covered by the continued group policy. At the option of the insurer, a
separate, converted policy may be issued to cover any dependant. Premiums
charged shall not exceed 102 percent (102%) of the group rate.
d. Termination and Replacement.
Carriers must comply with Title 8 V.S.A., Chapter 107,
Subchapter 3 for the termination and replacement of coverage.
e. Mandated Benefits.
Except as stated in the model plan, no policy can be issued
or delivered or advertised unless the following minimum benefits are
available:
i. Mental health care, with
the minimums stated in
8 V.S.A., Section 4089
must be offered as an option.
ii.
Dependent children coverage must be provided where coverage would otherwise end
for a child at a limiting age. There shall be no limit or coverage restriction
for a child who is incapable of employment and dependent on the employee or
member for support and maintenance. See 8 V.S.A., Section 4090.
iii. Newborn coverage must be provided
without notice or additional premiums for 31 days after birth. Coverage shall
include well baby care, injury, sickness, necessary care and treatment of
medically diagnosed congenital defects and birth abnormalities as provided at
8 V.S.A., Section
4092.
iv. Home health care coverage with the
minimums provided in
8 V.S.A., Section
4095 and
4096,
must be offered as an option.
v.
Alcoholism treatment must be provided for the necessary care and treatment of
alcohol dependency as required by 8 V.S.A., Section 4098.
vi. Coverage for screening by low-dose
mammography must be provided according to
8 V.S.A., Section
4100a.
vii. Maternity coverage must be provided and
shall be treated as any other sickness for all insureds covered by the policy
as required under Regulation 89-1.
f. Process for Approval of Common Health Care
Plans.
i. Advisory Committee.
(a) The Commissioner shall appoint at least
seven members to a small group health plan advisory committee. The committee
shall include individuals representing business, the general public, the
insurance industry, and the medical community. To the greatest extent possible,
committee members will have technical expertise in health care insurance or
regulation.
(b) The Commissioner
shall consult with the small group advisory committee in the development of
small group benefit plans, revision of existing plans and review of plan
suitability.
(c) The Committee will
review all proposed plans for compliance with the standards set forth in
Section
1.
ii. Review of suitability.
The Commissioner, in consultation with the advisory
committee, will annually review the suitability of all approved common health
care plans. This review will consider the number of polices sold during the
prior year, the cost of the plan(s) and the need for any amendments to the
plan(s). Any plan deemed unsuitable will be withdrawn, as required by the
Commissioner.
iii. Process
of approval.
(a) Upon approval of a common
health care plan, the Commissioner shall:
(1)
notify all registered small group carriers and supply a copy of the common
health care plan;
(2) prepare a
consumer guide to the benefit plan within six months of approval; and
(3) publish semi-annually the rates charged
by carriers for each common health care plan.
(b) A registered small group carrier shall
offer all approved common health care plan within six months of approval of the
plan by the Commissioner.
Statutory Authority:
8 V.S.A. §
4080
