74th OREGON LEGISLATIVE ASSEMBLY--2007 Regular Session
Enrolled
House Bill 2002
Sponsored by Representatives ROBLAN, C EDWARDS; Representatives
BARKER, BARNHART, CANNON, CLEM, COWAN, DINGFELDER, GELSER,
KOTEK, READ, ROSENBAUM, SHIELDS, WITT
CHAPTER ................
AN ACT
Relating to insurance; creating new provisions; amending ORS
743.730, 743.733, 743.734 and 743.737; and declaring an
emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 743.730 is amended to read:
743.730. { - As used in - } { + For purposes of + } ORS
743.730 to 743.773:
(1) 'Actuarial certification' means a written statement by a
member of the American Academy of Actuaries or other individual
acceptable to the Director of the Department of Consumer and
Business Services that a carrier is in compliance with the
provisions of ORS 743.736, 743.760 or 743.761, based upon the
person's examination, including a review of the appropriate
records and of the actuarial assumptions and methods used by the
carrier in establishing premium rates for small employer and
portability health benefit plans.
(2) 'Affiliate' of, or person 'affiliated' with, a specified
person means any carrier who, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under
common control with a specified person. For purposes of this
definition, 'control' has the meaning given that term in ORS
732.548.
(3) 'Affiliation period' means, under the terms of a group
health benefit plan issued by a health care service contractor, a
period:
(a) That is applied uniformly and without regard to any health
status related factors to an enrollee or late enrollee in lieu of
a preexisting conditions provision;
(b) That must expire before any coverage becomes effective
under the plan for the enrollee or late enrollee;
(c) During which no premium shall be charged to the enrollee or
late enrollee; and
(d) That begins on the enrollee's or late enrollee's first date
of eligibility for coverage and runs concurrently with any
eligibility waiting period under the plan.
(4) 'Basic health benefit plan' means a health benefit plan for
small employers that is required to be offered by all small
employer carriers and approved by the Director of the Department
of Consumer and Business Services in accordance with ORS 743.736.
Enrolled House Bill 2002 (HB 2002-A) Page 1
(5) 'Bona fide association' means an association that meets the
requirements of 42 U.S.C. 300gg-11 as amended and in effect on
July 1, 1997.
(6) 'Carrier' means any person who provides health benefit
plans in this state, including a licensed insurance company, a
health care service contractor, a health maintenance
organization, an association or group of employers that provides
benefits by means of a multiple employer welfare arrangement or
any other person or corporation responsible for the payment of
benefits or provision of services.
(7) 'Committee' means the Health Insurance Reform Advisory
Committee created under ORS 743.745.
(8) 'Creditable coverage' means prior health care coverage as
defined in 42 U.S.C. 300gg as amended and in effect on July 1,
1997, and includes coverage remaining in force at the time the
enrollee obtains new coverage.
(9) 'Department' means the Department of Consumer and Business
Services.
(10) 'Dependent' means the spouse or child of an eligible
employee, subject to applicable terms of the health benefit plan
covering the employee.
(11) 'Director' means the Director of the Department of
Consumer and Business Services.
(12) 'Eligible employee' means an employee of a small employer
who works on a regularly scheduled basis, with a normal work week
of 17.5 or more hours. The employer may determine hours worked
for eligibility between 17.5 and 40 hours per week subject to
rules of the carrier. 'Eligible employee' { - includes sole
proprietors, partners of a partnership, leased workers as defined
in ORS 743.522 or independent contractors if they are included as
employees under a health benefit plan of a small employer but - }
does not include employees who work on a temporary, seasonal or
substitute basis. Employees who have been employed by the small
employer for fewer than 90 days are not eligible employees unless
the small employer so allows.
{ + (13) 'Employee' means any individual employed by an
employer. + }
{ - (13) - } { + (14) + } 'Enrollee' means an employee,
dependent of the employee or an individual otherwise eligible for
a group, individual or portability health benefit plan who has
enrolled for coverage under the terms of the plan.
{ - (14) - } { + (15) + } 'Exclusion period' means a period
during which specified treatments or services are excluded from
coverage.
{ - (15) - } { + (16) + } 'Financially impaired' means a
member that is not insolvent and is:
(a) Considered by the Director of the Department of Consumer
and Business Services to be potentially unable to fulfill its
contractual obligations; or
(b) Placed under an order of rehabilitation or conservation by
a court of competent jurisdiction.
{ - (16)(a) - } { + (17)(a) + } 'Geographic average rate'
means the arithmetical average of the lowest premium and the
corresponding highest premium to be charged by a carrier in a
geographic area established by the director for the carrier's:
(A) Small employer group health benefit plans;
(B) Individual health benefit plans; or
(C) Portability health benefit plans.
Enrolled House Bill 2002 (HB 2002-A) Page 2
(b) 'Geographic average rate' does not include premium
differences that are due to differences in benefit design or
family composition.
{ - (17) - } { + (18) + } 'Group eligibility waiting
period' means, with respect to a group health benefit plan, the
period of employment or membership with the group that a
prospective enrollee must complete before plan coverage begins.
{ - (18)(a) - } { + (19)(a) + } 'Health benefit plan' means
any hospital expense, medical expense or hospital or medical
expense policy or certificate, health care service contractor or
health maintenance organization subscriber contract, any plan
provided by a multiple employer welfare arrangement or by another
benefit arrangement defined in the federal Employee Retirement
Income Security Act of 1974, as amended.
(b) 'Health benefit plan' does not include coverage for
accident only, specific disease or condition only, credit,
disability income, coverage of Medicare services pursuant to
contracts with the federal government, Medicare supplement
insurance policies, coverage of CHAMPUS services pursuant to
contracts with the federal government, benefits delivered through
a flexible spending arrangement established pursuant to section
125 of the Internal Revenue Code of 1986, as amended, when the
benefits are provided in addition to a group health benefit plan,
long term care insurance, hospital indemnity only, short term
health insurance policies (the duration of which does not exceed
six months including renewals), student accident and health
insurance policies, dental only, vision only, a policy of
stop-loss coverage that meets the requirements of ORS 742.065,
coverage issued as a supplement to liability insurance, insurance
arising out of a workers' compensation or similar law, automobile
medical payment insurance or insurance under which benefits are
payable with or without regard to fault and that is statutorily
required to be contained in any liability insurance policy or
equivalent self-insurance.
(c) Nothing in this subsection shall be construed to regulate
any employee welfare benefit plan that is exempt from state
regulation because of the federal Employee Retirement Income
Security Act of 1974, as amended.
{ - (19) - } { + (20) + } 'Health statement' means any
information that is intended to inform the carrier or insurance
producer of the health status of an enrollee or prospective
enrollee in a health benefit plan. 'Health statement' includes
the standard health statement developed by the Health Insurance
Reform Advisory Committee.
{ - (20) - } { + (21) + } 'Implementation of chapter 836,
Oregon Laws 1989' means that the Health Services Commission has
prepared a priority list, the Legislative Assembly has enacted
funding of the list and all necessary federal approval, including
waivers, has been obtained.
{ - (21) - } { + (22) + } 'Individual coverage waiting
period' means a period in an individual health benefit plan
during which no premiums may be collected and health benefit plan
coverage issued is not effective.
{ - (22) - } { + (23) + } 'Initial enrollment period' means
a period of at least 30 days following commencement of the first
eligibility period for an individual.
{ - (23) - } { + (24) + } 'Late enrollee' means an
individual who enrolls in a group health benefit plan subsequent
to the initial enrollment period during which the individual was
Enrolled House Bill 2002 (HB 2002-A) Page 3
eligible for coverage but declined to enroll. However, an
eligible individual shall not be considered a late enrollee if:
(a) The individual qualifies for a special enrollment period in
accordance with 42 U.S.C. 300gg as amended and in effect on July
1, 1997;
(b) The individual applies for coverage during an open
enrollment period;
(c) A court has ordered that coverage be provided for a spouse
or minor child under a covered employee's health benefit plan and
request for enrollment is made within 30 days after issuance of
the court order;
(d) The individual is employed by an employer who offers
multiple health benefit plans and the individual elects a
different health benefit plan during an open enrollment period;
or
(e) The individual's coverage under Medicaid, Medicare,
CHAMPUS, Indian Health Service or a publicly sponsored or
subsidized health plan, including but not limited to the Oregon
Health Plan, has been involuntarily terminated within 63 days of
applying for coverage in a group health benefit plan.
{ - (24) - } { + (25) + } 'Multiple employer welfare
arrangement' means a multiple employer welfare arrangement as
defined in section 3 of the federal Employee Retirement Income
Security Act of 1974, as amended, 29 U.S.C. 1002, that is subject
to ORS 750.301 to 750.341.
{ - (25) - } { + (26) + } 'Oregon Medical Insurance Pool'
means the pool created under ORS 735.610.
{ - (26) - } { + (27) + } 'Preexisting conditions
provision' means a health benefit plan provision applicable to an
enrollee or late enrollee that excludes coverage for services,
charges or expenses incurred during a specified period
immediately following enrollment for a condition for which
medical advice, diagnosis, care or treatment was recommended or
received during a specified period immediately preceding
enrollment. For purposes of ORS 743.730 to 743.773:
(a) Pregnancy does not constitute a preexisting condition
except as provided in ORS 743.766;
(b) Genetic information does not constitute a preexisting
condition in the absence of a diagnosis of the condition related
to such information; and
(c) A preexisting conditions provision shall not be applied to
a newborn child or adopted child who obtains coverage in
accordance with ORS 743.707.
{ - (27) - } { + (28) + } 'Premium' includes insurance
premiums or other fees charged for a health benefit plan,
including the costs of benefits paid or reimbursements made to or
on behalf of enrollees covered by the plan.
{ - (28) - } { + (29) + } 'Rating period' means the
12-month calendar period for which premium rates established by a
carrier are in effect, as determined by the carrier.
{ - (29) - } { + (30)(a) + } 'Small employer' means
{ - any person, firm, corporation, partnership or association
actively engaged in business that, on at least 50 percent of its
working days during the preceding year, employed no more than 25
eligible employees and no fewer than two eligible employees - }
{ + an employer that employed an average of at least two but
not more than 50 employees on business days during the preceding
calendar year + }, the majority of whom are employed within this
state, and { - in which a bona fide partnership, independent
contractor or employer-employee relationship exists. 'Small
Enrolled House Bill 2002 (HB 2002-A) Page 4
employer' includes companies that are eligible to file a
consolidated tax return pursuant to ORS 317.715. - } { + that
employs at least two eligible employees on the date on which
coverage takes effect under a health benefit plan issued by a
small employer carrier.
(b) Any person that is 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 for
purposes of this subsection.
(c) The determination of whether an employer that was not in
existence throughout the preceding calendar year is a small
employer shall be based on the average number of employees that
it is reasonably expected the employer will employ on business
days in the current calendar year. + }
{ - (30) - } { + (31) + } 'Small employer carrier' means
any carrier that offers health benefit plans covering eligible
employees of one or more small employers. A fully insured
multiple employer welfare arrangement otherwise exempt under ORS
750.303 (4) may elect to be a small employer carrier governed by
the provisions of ORS 743.733 to 743.737.
SECTION 2. { + Section 3 of this 2007 Act is added to and made
a part of ORS 743.733 to 743.737. + }
SECTION 3. { + Subsequent to the issuance of a health benefit
plan to a small employer, a small employer carrier shall
determine annually the number of employees of the employer for
purposes of determining the employer's ongoing eligibility as a
small employer. The provisions of ORS 743.733 to 743.737 shall
continue to apply to a health benefit plan issued to a small
employer until the plan anniversary date following the date the
employer no longer meets the definition of a small employer. + }
SECTION 4. ORS 743.733 is amended to read:
743.733. { - (1) For purposes of this section, 'qualified
employees' means employees who work on a regularly scheduled
basis, with a normal workweek of 17.5 or more hours, but does not
include employees who work on a temporary, seasonal or substitute
basis. - }
{ - (2) - } { + (1) + } If an affiliated group of employers
{ - that is eligible to file a consolidated tax return pursuant
to ORS 317.715 includes one or more small employers, - } { + is
treated as a single employer under subsection (b), (c), (m) or
(o) of section 414 of the Internal Revenue Code of 1986, + } a
carrier may issue a { + single + } group health benefit plan to
the affiliated group on the basis of the number of employees in
the affiliated group if the group requests such coverage.
{ - (3) - } { + (2) + } { - Subsequent to the issuance of
a health benefit plan to an employer pursuant to the provisions
of ORS 743.733 to 743.737 and for the purposes of determining
eligibility, the number of employees of an employer shall be
determined annually by the small employer carrier. Except as
otherwise provided, the provisions of ORS 743.733 to 743.737 that
apply to an employer shall continue to apply until the plan
anniversary date following the date the employer no longer meets
the requirements of this section. - } { + If a small employer
carrier determines that an employer has more than 50 employees,
the carrier may provide a quote for a group health benefit plan
that is not subject to ORS 743.733 to 743.737. If the employer's
workforce consists of at least two but not more than 50 eligible
employees, the small group carrier shall inform the employer that
if coverage is limited to the eligible employees, the carrier
Enrolled House Bill 2002 (HB 2002-A) Page 5
must treat the employer as a small employer and shall provide a
separate quote on that basis. + }
{ - (4) A carrier that offers health benefit plans covering
employees of an employer who employed an average of at least two
but not more than 50 qualified employees on business days during
the preceding calendar year and who employs at least two
qualified employees on the first day of the plan year, in
accordance with 42 U.S.C. 300gg as amended and in effect on July
1, 1997, shall be considered a small employer carrier for
purposes of this section and ORS 743.736. A health benefit plan
issued to an employer described in this section, provided the
employer does not otherwise qualify as a small employer in
accordance with ORS 743.730, shall be considered a small employer
health benefit plan for purposes of ORS 743.737, except that the
plan or carrier shall not be required to comply with ORS 743.737
(7), (8), (10), (11) and (13). - }
SECTION 5. ORS 743.734 is amended to read:
743.734. (1) Every group health benefit plan shall be subject
to the provisions of ORS 743.733 to 743.737, if the plan provides
health benefits covering one or more employees of a small
employer and if any one of the following conditions is met:
(a) Any portion of the premium or benefits is paid by a small
employer or any eligible employee is reimbursed, whether through
wage adjustments or otherwise, by a small employer for any
portion of the health benefit plan premium; or
(b) The health benefit plan is treated by the employer or any
of the eligible employees as part of a plan or program for the
purposes of section 106, section 125 or section 162 of the
Internal Revenue Code of 1986, as amended.
(2) Except as provided in ORS 743.733 to 743.737, no law
requiring the coverage or the offer of coverage of a health care
service or benefit applies to the basic health benefit plans
offered or delivered to a small employer.
(3) Except as otherwise provided by law or ORS 743.733 to
743.737, no health benefit plan offered to a small employer
shall:
(a) Inhibit a small employer carrier from contracting with
providers or groups of providers with respect to health care
services or benefits; or
(b) Impose any restriction on the ability of a small employer
carrier to negotiate with providers regarding the level or method
of reimbursing care or services provided under health benefit
plans.
(4) Except to determine the application of a preexisting
conditions provision for a late enrollee, a small employer
carrier shall not use health statements when offering small
employer health benefit plans and shall not use any other method
to determine the actual or expected health status of eligible
enrollees. Nothing in this subsection shall prevent a carrier
from using health statements or other information after
enrollment for the purpose of providing services or arranging for
the provision of services under a health benefit plan.
(5) Except in the case of a late enrollee and as otherwise
provided in this section, a small employer carrier shall not
impose different terms or conditions on the coverage, premiums or
contributions of any eligible employee in a small employer group
that are based on the actual or expected health status of any
eligible employee.
(6) A small employer carrier may provide different health
benefit plans to different categories of employees of a small
Enrolled House Bill 2002 (HB 2002-A) Page 6
employer when the employer has chosen to establish different
categories of employees in a manner that does not relate to the
actual or expected health status of such employees or their
dependents. { + The categories must be based on bona fide
employment-based classifications that are consistent with the
employer's usual business practice. + } Except as provided in ORS
743.736 (10):
(a) When a small employer carrier offers coverage to a small
employer { + with no more than 25 eligible employees + }, the
small employer carrier shall offer coverage to all eligible
employees of the small employer, without regard to the actual or
expected health status of any eligible employee.
{ + (b) When a small employer carrier offers coverage to a
small employer with at least 26 but not more than 50 eligible
employees, the small employer carrier may limit coverage to the
categories of employees that the small employer has established
as eligible for coverage, provided that the categories are based
on bona fide employment-based classifications that are consistent
with the employer's usual business practice. + }
{ - (b) - } { + (c) + } If the small employer elects to
offer coverage to dependents of eligible employees, the small
employer carrier shall offer coverage to all dependents of
eligible employees, without regard to the actual or expected
health status of any eligible dependent.
SECTION 6. ORS 743.737 is amended to read:
743.737. Health benefit plans covering small employers shall be
subject to the following provisions:
(1) A preexisting conditions provision in a small employer
health benefit plan shall apply only to a condition for which
medical advice, diagnosis, care or treatment was recommended or
received during the six-month period immediately preceding the
enrollment date of an enrollee or late enrollee. As used in this
section, the enrollment date of an enrollee shall be the earlier
of the effective date of coverage or the first day of any
required group eligibility waiting period and the enrollment date
of a late enrollee shall be the effective date of coverage.
(2) A preexisting conditions provision in a small employer
health benefit plan shall terminate its effect as follows:
(a) For an enrollee, not later than the first of the following
dates:
(A) Six months following the enrollee's effective date of
coverage; or
(B) Ten months following the start of any required group
eligibility waiting period.
(b) For a late enrollee, not later than 12 months following the
late enrollee's effective date of coverage.
(3) In applying a preexisting conditions provision to an
enrollee or late enrollee, except as provided in this subsection,
all small employer health benefit plans shall reduce the duration
of the provision by an amount equal to the enrollee's or late
enrollee's aggregate periods of creditable coverage if the most
recent period of creditable coverage is ongoing or ended within
63 days of the enrollment date in the new small employer health
benefit plan. The crediting of prior coverage in accordance with
this subsection shall be applied without regard to the specific
benefits covered during the prior period. This subsection does
not preclude, within a small employer health benefit plan,
application of:
(a) An affiliation period that does not exceed two months for
an enrollee or three months for a late enrollee; or
Enrolled House Bill 2002 (HB 2002-A) Page 7
(b) An exclusion period for specified covered services, as
established by the Health Insurance Reform Advisory Committee,
applicable to all individuals enrolling for the first time in the
small employer health benefit plan.
(4) Late enrollees may be excluded from coverage for up to 12
months or may be subjected to a preexisting conditions provision
for up to 12 months. If both an exclusion from coverage period
and a preexisting conditions provision are applicable to a late
enrollee, the combined period shall not exceed 12 months.
(5) Each small employer health benefit plan shall be renewable
with respect to all eligible enrollees at the option of the
policyholder, small employer or contract holder except:
(a) For nonpayment of the required premiums by the
policyholder, small employer or contract holder.
(b) For fraud or misrepresentation of the policyholder, small
employer or contract holder or, with respect to coverage of
individual enrollees, the enrollees or their representatives.
(c) When the number of enrollees covered under the plan is less
than the number or percentage of enrollees required by
participation requirements under the plan.
(d) For noncompliance with the small employer carrier's
employer contribution requirements under the health benefit plan.
(e) When the carrier discontinues offering or renewing, or
offering and renewing, all of its small employer health benefit
plans in this state or in a specified service area within this
state. In order to discontinue plans under this paragraph, the
carrier:
(A) Must give notice of the decision to the Director of the
Department of Consumer and Business Services and to all
policyholders covered by the plans;
(B) May not cancel coverage under the plans for 180 days after
the date of the notice required under subparagraph (A) of this
paragraph if coverage is discontinued in the entire state or,
except as provided in subparagraph (C) of this paragraph, in a
specified service area;
(C) May not cancel coverage under the plans for 90 days after
the date of the notice required under subparagraph (A) of this
paragraph if coverage is discontinued in a specified service area
because of an inability to reach an agreement with the health
care providers or organization of health care providers to
provide services under the plans within the service area; and
(D) Must discontinue offering or renewing, or offering and
renewing, all health benefit plans issued by the carrier in the
small employer market in this state or in the specified service
area.
(f) When the carrier discontinues offering and renewing a small
employer health benefit plan in a specified service area within
this state because of an inability to reach an agreement with the
health care providers or organization of health care providers to
provide services under the plan within the service area. In order
to discontinue a plan under this paragraph, the carrier:
(A) Must give notice to the director and to all policyholders
covered by the plan;
(B) May not cancel coverage under the plan for 90 days after
the date of the notice required under subparagraph (A) of this
paragraph; and
(C) Must offer in writing to each small employer covered by the
plan, all other small employer health benefit plans that the
carrier offers in the specified service area. The carrier shall
issue any such plans pursuant to the provisions of ORS 743.733 to
Enrolled House Bill 2002 (HB 2002-A) Page 8
743.737. The carrier shall offer the plans at least 90 days prior
to discontinuation.
(g) When the carrier discontinues offering or renewing, or
offering and renewing, a health benefit plan for all small
employers in this state or in a specified service area within
this state, other than a plan discontinued under paragraph (f) of
this subsection. With respect to plans that are being
discontinued, the carrier must:
(A) Offer in writing to each small employer covered by the
plan, all health benefit plans that the carrier offers in the
specified service area.
(B) Issue any such plans pursuant to the provisions of ORS
743.733 to 743.737.
(C) Offer the plans at least 90 days prior to discontinuation.
(D) Act uniformly without regard to the claims experience of
the affected policyholders or the health status of any current or
prospective enrollee.
(h) When the director orders the carrier to discontinue
coverage in accordance with procedures specified or approved by
the director upon finding that the continuation of the coverage
would:
(A) Not be in the best interests of the enrollees; or
(B) Impair the carrier's ability to meet contractual
obligations.
(i) When, in the case of a small employer health benefit plan
that delivers covered services through a specified network of
health care providers, there is no longer any enrollee who lives,
resides or works in the service area of the provider network.
(j) When, in the case of a health benefit plan that is offered
in the small employer market only through one or more bona fide
associations, the membership of an employer in the association
ceases and the termination of coverage is not related to the
health status of any enrollee.
(k) For misuse of a provider network provision. As used in this
paragraph, 'misuse of a provider network provision' means a
disruptive, unruly or abusive action taken by an enrollee that
threatens the physical health or well-being of health care staff
and seriously impairs the ability of the carrier or its
participating providers to provide services to an enrollee. An
enrollee under this paragraph retains the rights of an enrollee
under ORS 743.804.
(L) A small employer carrier may modify a small employer health
benefit plan at the time of coverage renewal. The modification is
not a discontinuation of the plan under paragraphs (e) and (g) of
this subsection.
(6) Notwithstanding any provision of subsection (5) of this
section to the contrary, any small employer carrier health
benefit plan subject to the provisions of ORS 743.733 to 743.737
may be rescinded by a small employer carrier for fraud, material
misrepresentation or concealment by a small employer and the
coverage of an enrollee may be rescinded for fraud, material
misrepresentation or concealment by the enrollee.
(7) A small employer carrier may continue to enforce reasonable
employer participation and contribution requirements on small
employers applying for coverage. However, participation and
contribution requirements shall be applied uniformly among all
small employer groups with the same number of eligible employees
applying for coverage or receiving coverage from the small
employer carrier. In determining minimum participation
requirements, a carrier shall count only those employees who are
Enrolled House Bill 2002 (HB 2002-A) Page 9
not covered by an existing group health benefit plan, Medicaid,
Medicare, CHAMPUS, Indian Health Service or a publicly sponsored
or subsidized health plan, including but not limited to the
Oregon Health Plan.
(8) Premium rates for small employer health benefit plans
{ - subject to ORS 743.733 to 743.737 - } shall be subject to
the following provisions:
(a) Each small employer carrier issuing health benefit plans to
small employers must file its geographic average rate for a
rating period with the director { - on or before March 15 of
each year - } { + at least once every 12 months + }.
(b)(A) The premium rates charged during a rating period for
health benefit plans issued to small employers may not vary from
the geographic average rate by more than { + 50 percent on or
after the operative date specified in section 10 of this 2007
Act, except as provided in subparagraph (D) of this paragraph.
+ } { - the following: - }
{ - (i) 33 percent on or after October 1, 1999; and - }
{ - (ii) 43 percent on or after July 1, 2004. - }
(B) The variations in premium rates described in subparagraph
(A) of this paragraph shall be based solely on { - differences
in the ages of participating employees, except that the premium
rate may be adjusted to reflect the provision of benefits not
required to be covered by the basic health benefit plan and
differences in family composition. In addition: - }
{ - (i) A small employer carrier shall apply uniformly the
carrier's schedule of age adjustments for small employer groups
as approved by the director; and - }
{ - (ii) Except as otherwise provided in this section, the
premium rate established for a health benefit plan by a small
employer carrier shall apply uniformly to all employees of the
small employer enrolled in that plan. - } { + the factors
specified in subparagraph (C) of this paragraph. A small employer
carrier may elect which of the factors specified in subparagraph
(C) of this paragraph apply to premium rates for small employers.
The factors that are based on contributions or participation may
vary with the size of the employer. All other factors must be
applied in the same actuarially sound way to all small employers.
(C) The variations in premium rates described in subparagraph
(A) of this paragraph may be based on one or more of the
following factors:
(i) The ages of enrolled employees and their dependents;
(ii) The level at which the small employer contributes to the
premiums payable for enrolled employees and their dependents;
(iii) The level at which eligible employees participate in the
health benefit plan;
(iv) The level at which enrolled employees and their dependents
engage in tobacco use;
(v) The level at which enrolled employees and their dependents
engage in health promotion, disease prevention or wellness
programs;
(vi) The period of time during which a small employer retains
uninterrupted coverage in force with the same small employer
carrier; and
(vii) Adjustments to reflect the provision of benefits not
required to be covered by the basic health benefit plan and
differences in family composition.
(D)(i) The premium rates determined in accordance with this
paragraph may be further adjusted by a small employer carrier to
reflect the expected claims experience of a small employer, but
Enrolled House Bill 2002 (HB 2002-A) Page 10
the extent of this adjustment may not exceed five percent of the
annual premium rate otherwise payable by the small employer. The
adjustment under this subparagraph may not be cumulative from
year to year.
(ii) Except for small employers with 25 or fewer employees, the
premium rates adjusted under this subparagraph are not subject to
the provisions of subparagraph (A) of this paragraph.
(E) A small employer carrier shall apply the carrier's schedule
of premium rate variations as approved by the Director of the
Department of Consumer and Business Services and in accordance
with this paragraph. Except as otherwise provided in this
section, the premium rate established for a health benefit plan
by a small employer carrier shall apply uniformly to all
employees of the small employer enrolled in that plan. + }
(c) { + Except as provided in paragraph (b) of this
subsection, + } the variation in premium rates between different
small employer health benefit plans offered by a small employer
carrier must be based solely on objective differences in plan
design or coverage and must not include differences based on the
risk characteristics of groups assumed to select a particular
health benefit plan.
(d) A small employer carrier may not increase the rates of a
health benefit plan issued to a small employer more than once in
a 12-month period. Annual rate increases shall be effective on
the plan anniversary date of the health benefit plan issued to a
small employer. The percentage increase in the premium rate
charged to a small employer for a new rating period may not
exceed the sum of the following:
(A) The percentage change in the geographic average rate
measured from the first day of the prior rating period to the
first day of the new period; and
(B) Any adjustment attributable to changes in age, except an
additional adjustment may be made to reflect the provision of
benefits not required to be covered by the basic health benefit
plan and differences in family composition.
(e) Premium rates for health benefit plans shall comply with
the requirements of this section.
(f) A small employer carrier may apply a participation credit
of five percent to the rates determined under paragraph (b) of
this subsection for a small employer if all eligible employees
enroll in the health benefit plan. If a carrier applies a
participation credit under this paragraph, the carrier must apply
the credit to each small employer that qualifies.
(9) In connection with the offering for sale of any health
benefit plan to a small employer, each small employer carrier
shall make a reasonable disclosure as part of its solicitation
and sales materials of:
(a) The full array of health benefit plans that are offered to
small employers by the carrier;
(b) The authority of the carrier to adjust rates, and the
extent to which the carrier will consider age, family composition
and geographic factors in establishing and adjusting rates;
(c) Provisions relating to renewability of policies and
contracts; and
(d) Provisions affecting any preexisting conditions provision.
(10)(a) Each small employer carrier shall maintain at its
principal place of business a complete and detailed description
of its rating practices and renewal underwriting practices,
including information and documentation that demonstrate that its
rating methods and practices are based upon commonly accepted
Enrolled House Bill 2002 (HB 2002-A) Page 11
actuarial practices and are in accordance with sound actuarial
principles.
(b) Each small employer carrier shall file with the director
{ - annually on or before March 15 - } { + at least once
every 12 months + } an actuarial certification that the carrier
is in compliance with ORS 743.733 to 743.737 and that the rating
methods of the small employer carrier are actuarially sound. Each
such certification shall be in a uniform form and manner and
shall contain such information as specified by the director. A
copy of such certification shall be retained by the small
employer carrier at its principal place of business.
(c) A small employer carrier shall make the information and
documentation described in paragraph (a) of this subsection
available to the director upon request. Except in cases of
violations of ORS 743.733 to 743.737, the information shall be
considered proprietary and trade secret information and shall not
be subject to disclosure by the director to persons outside the
Department of Consumer and Business Services except as agreed to
by the small employer carrier or as ordered by a court of
competent jurisdiction.
(11) A small employer carrier shall not provide any financial
or other incentive to any insurance producer that would encourage
the insurance producer to market and sell health benefit plans of
the carrier to small employer groups based on a small employer
group's anticipated claims experience.
(12) For purposes of this section, the date a small employer
health benefit plan is continued shall be the anniversary date of
the first issuance of the health benefit plan.
(13) A small employer carrier must include a provision that
offers coverage to all eligible employees and to all dependents
to the extent the employer chooses to offer coverage to
dependents.
(14) All small employer health benefit plans shall contain
special enrollment periods during which eligible employees and
dependents may enroll for coverage, as provided in 42 U.S.C.
300gg as amended and in effect on July 1, 1997.
SECTION 7. ORS 743.737, as amended by section 6, chapter 599,
Oregon Laws 2003, is amended to read:
743.737. Health benefit plans covering small employers shall be
subject to the following provisions:
(1) A preexisting conditions provision in a small employer
health benefit plan shall apply only to a condition for which
medical advice, diagnosis, care or treatment was recommended or
received during the six-month period immediately preceding the
enrollment date of an enrollee or late enrollee. As used in this
section, the enrollment date of an enrollee shall be the earlier
of the effective date of coverage or the first day of any
required group eligibility waiting period and the enrollment date
of a late enrollee shall be the effective date of coverage.
(2) A preexisting conditions provision in a small employer
health benefit plan shall terminate its effect as follows:
(a) For an enrollee, not later than the first of the following
dates:
(A) Six months following the enrollee's effective date of
coverage; or
(B) Ten months following the start of any required group
eligibility waiting period.
(b) For a late enrollee, not later than 12 months following the
late enrollee's effective date of coverage.
Enrolled House Bill 2002 (HB 2002-A) Page 12
(3) In applying a preexisting conditions provision to an
enrollee or late enrollee, except as provided in this subsection,
all small employer health benefit plans shall reduce the duration
of the provision by an amount equal to the enrollee's or late
enrollee's aggregate periods of creditable coverage if the most
recent period of creditable coverage is ongoing or ended within
63 days of the enrollment date in the new small employer health
benefit plan. The crediting of prior coverage in accordance with
this subsection shall be applied without regard to the specific
benefits covered during the prior period. This subsection does
not preclude, within a small employer health benefit plan,
application of:
(a) An affiliation period that does not exceed two months for
an enrollee or three months for a late enrollee; or
(b) An exclusion period for specified covered services, as
established by the Health Insurance Reform Advisory Committee,
applicable to all individuals enrolling for the first time in the
small employer health benefit plan.
(4) Late enrollees may be excluded from coverage for up to 12
months or may be subjected to a preexisting conditions provision
for up to 12 months. If both an exclusion from coverage period
and a preexisting conditions provision are applicable to a late
enrollee, the combined period shall not exceed 12 months.
(5) Each small employer health benefit plan shall be renewable
with respect to all eligible enrollees at the option of the
policyholder, small employer or contract holder except:
(a) For nonpayment of the required premiums by the
policyholder, small employer or contract holder.
(b) For fraud or misrepresentation of the policyholder, small
employer or contract holder or, with respect to coverage of
individual enrollees, the enrollees or their representatives.
(c) When the number of enrollees covered under the plan is less
than the number or percentage of enrollees required by
participation requirements under the plan.
(d) For noncompliance with the small employer carrier's
employer contribution requirements under the health benefit plan.
(e) When the carrier discontinues offering or renewing, or
offering and renewing, all of its small employer health benefit
plans in this state or in a specified service area within this
state. In order to discontinue plans under this paragraph, the
carrier:
(A) Must give notice of the decision to the Director of the
Department of Consumer and Business Services and to all
policyholders covered by the plans;
(B) May not cancel coverage under the plans for 180 days after
the date of the notice required under subparagraph (A) of this
paragraph if coverage is discontinued in the entire state or,
except as provided in subparagraph (C) of this paragraph, in a
specified service area;
(C) May not cancel coverage under the plans for 90 days after
the date of the notice required under subparagraph (A) of this
paragraph if coverage is discontinued in a specified service area
because of an inability to reach an agreement with the health
care providers or organization of health care providers to
provide services under the plans within the service area; and
(D) Must discontinue offering or renewing, or offering and
renewing, all health benefit plans issued by the carrier in the
small employer market in this state or in the specified service
area.
Enrolled House Bill 2002 (HB 2002-A) Page 13
(f) When the carrier discontinues offering and renewing a small
employer health benefit plan in a specified service area within
this state because of an inability to reach an agreement with the
health care providers or organization of health care providers to
provide services under the plan within the service area. In order
to discontinue a plan under this paragraph, the carrier:
(A) Must give notice to the director and to all policyholders
covered by the plan;
(B) May not cancel coverage under the plan for 90 days after
the date of the notice required under subparagraph (A) of this
paragraph; and
(C) Must offer in writing to each small employer covered by the
plan, all other small employer health benefit plans that the
carrier offers in the specified service area. The carrier shall
issue any such plans pursuant to the provisions of ORS 743.733 to
743.737. The carrier shall offer the plans at least 90 days prior
to discontinuation.
(g) When the carrier discontinues offering or renewing, or
offering and renewing, a health benefit plan for all small
employers in this state or in a specified service area within
this state, other than a plan discontinued under paragraph (f) of
this subsection. With respect to plans that are being
discontinued, the carrier must:
(A) Offer in writing to each small employer covered by the
plan, all health benefit plans that the carrier offers in the
specified service area.
(B) Issue any such plans pursuant to the provisions of ORS
743.733 to 743.737.
(C) Offer the plans at least 90 days prior to discontinuation.
(D) Act uniformly without regard to the claims experience of
the affected policyholders or the health status of any current or
prospective enrollee.
(h) When the director orders the carrier to discontinue
coverage in accordance with procedures specified or approved by
the director upon finding that the continuation of the coverage
would:
(A) Not be in the best interests of the enrollees; or
(B) Impair the carrier's ability to meet contractual
obligations.
(i) When, in the case of a small employer health benefit plan
that delivers covered services through a specified network of
health care providers, there is no longer any enrollee who lives,
resides or works in the service area of the provider network.
(j) When, in the case of a health benefit plan that is offered
in the small employer market only through one or more bona fide
associations, the membership of an employer in the association
ceases and the termination of coverage is not related to the
health status of any enrollee.
(k) For misuse of a provider network provision. As used in this
paragraph, 'misuse of a provider network provision' means a
disruptive, unruly or abusive action taken by an enrollee that
threatens the physical health or well-being of health care staff
and seriously impairs the ability of the carrier or its
participating providers to provide services to an enrollee. An
enrollee under this paragraph retains the rights of an enrollee
under ORS 743.804.
(L) A small employer carrier may modify a small employer health
benefit plan at the time of coverage renewal. The modification is
not a discontinuation of the plan under paragraphs (e) and (g) of
this subsection.
Enrolled House Bill 2002 (HB 2002-A) Page 14
(6) Notwithstanding any provision of subsection (5) of this
section to the contrary, any small employer carrier health
benefit plan subject to the provisions of ORS 743.733 to 743.737
may be rescinded by a small employer carrier for fraud, material
misrepresentation or concealment by a small employer and the
coverage of an enrollee may be rescinded for fraud, material
misrepresentation or concealment by the enrollee.
(7) A small employer carrier may continue to enforce reasonable
employer participation and contribution requirements on small
employers applying for coverage. However, participation and
contribution requirements shall be applied uniformly among all
small employer groups with the same number of eligible employees
applying for coverage or receiving coverage from the small
employer carrier. In determining minimum participation
requirements, a carrier shall count only those employees who are
not covered by an existing group health benefit plan, Medicaid,
Medicare, CHAMPUS, Indian Health Service or a publicly sponsored
or subsidized health plan, including but not limited to the
Oregon Health Plan.
(8) Premium rates for small employer health benefit plans
{ - subject to ORS 743.733 to 743.737 - } shall be subject to
the following provisions:
(a) Each small employer carrier issuing health benefit plans to
small employers must file its geographic average rate for a
rating period with the director { - on or before March 15 of
each year. - } { + at least once every 12 months. + }
(b)(A) The premium rates charged during a rating period for
health benefit plans issued to small employers may not vary from
the geographic average rate by more than { + 50 percent on or
after the operative date specified in section 10 of this 2007
Act, except as provided in subparagraph (D) of this
paragraph. + } { - the following: - }
{ - (i) 50 percent on October 1, 1996; and - }
{ - (ii) 33 percent on October 1, 1999. - }
(B) The variations in premium rates described in subparagraph
(A) of this paragraph shall be based solely on { - differences
in the ages of participating employees, except that the premium
rate may be adjusted to reflect the provision of benefits not
required to be covered by the basic health benefit plan and
differences in family composition. In addition: - }
{ - (i) A small employer carrier shall apply uniformly the
carrier's schedule of age adjustments for small employer groups
as approved by the director; and - }
{ - (ii) Except as otherwise provided in this section, the
premium rate established for a health benefit plan by a small
employer carrier shall apply uniformly to all employees of the
small employer enrolled in that plan. - } { + the factors
specified in subparagraph (C) of this paragraph. A small employer
carrier may elect which of the factors specified in subparagraph
(C) of this paragraph apply to premium rates for small employers.
The factors that are based on contributions or participation may
vary with the size of the employer. All other factors must be
applied in the same actuarially sound way to all small employers.
(C) The variations in premium rates described in subparagraph
(A) of this paragraph may be based on one or more of the
following factors:
(i) The ages of enrolled employees and their dependents;
(ii) The level at which the small employer contributes to the
premiums payable for enrolled employees and their dependents;
Enrolled House Bill 2002 (HB 2002-A) Page 15
(iii) The level at which eligible employees participate in the
health benefit plan;
(iv) The level at which enrolled employees and their dependents
engage in tobacco use;
(v) The level at which enrolled employees and their dependents
engage in health promotion, disease prevention or wellness
programs;
(vi) The period of time during which a small employer retains
uninterrupted coverage in force with the same small employer
carrier; and
(vii) Adjustments to reflect the provision of benefits not
required to be covered by the basic health benefit plan and
differences in family composition.
(D)(i) The premium rates determined in accordance with this
paragraph may be further adjusted by a small employer carrier to
reflect the expected claims experience of a small employer, but
the extent of this adjustment may not exceed five percent of the
annual premium rate otherwise payable by the small employer. The
adjustment under this subparagraph may not be cumulative from
year to year.
(ii) Except for small employers with 25 or fewer employees, the
premium rates adjusted under this subparagraph are not subject to
the provisions of subparagraph (A) of this paragraph.
(E) A small employer carrier shall apply the carrier's schedule
of premium rate variations as approved by the Director of the
Department of Consumer and Business Services and in accordance
with this paragraph. Except as otherwise provided in this
section, the premium rate established for a health benefit plan
by a small employer carrier shall apply uniformly to all
employees of the small employer enrolled in that plan. + }
(c) { + Except as provided in paragraph (b) of this
subsection, + } the variation in premium rates between different
small employer health benefit plans offered by a small employer
carrier must be based solely on objective differences in plan
design or coverage and must not include differences based on the
risk characteristics of groups assumed to select a particular
health benefit plan.
(d) A small employer carrier may not increase the rates of a
health benefit plan issued to a small employer more than once in
a 12-month period. Annual rate increases shall be effective on
the plan anniversary date of the health benefit plan issued to a
small employer. The percentage increase in the premium rate
charged to a small employer for a new rating period may not
exceed the sum of the following:
(A) The percentage change in the geographic average rate
measured from the first day of the prior rating period to the
first day of the new period; and
(B) Any adjustment attributable to changes in age, except an
additional adjustment may be made to reflect the provision of
benefits not required to be covered by the basic health benefit
plan and differences in family composition.
(e) Premium rates for health benefit plans shall comply with
the requirements of this section.
(9) In connection with the offering for sale of any health
benefit plan to a small employer, each small employer carrier
shall make a reasonable disclosure as part of its solicitation
and sales materials of:
(a) The full array of health benefit plans that are offered to
small employers by the carrier;
Enrolled House Bill 2002 (HB 2002-A) Page 16
(b) The authority of the carrier to adjust rates, and the
extent to which the carrier will consider age, family composition
and geographic factors in establishing and adjusting rates;
(c) Provisions relating to renewability of policies and
contracts; and
(d) Provisions affecting any preexisting conditions provision.
(10)(a) Each small employer carrier shall maintain at its
principal place of business a complete and detailed description
of its rating practices and renewal underwriting practices,
including information and documentation that demonstrate that its
rating methods and practices are based upon commonly accepted
actuarial practices and are in accordance with sound actuarial
principles.
(b) Each small employer carrier shall file with the director
{ - annually on or before March 15 - } { + at least once
every 12 months + } an actuarial certification that the carrier
is in compliance with ORS 743.733 to 743.737 and that the rating
methods of the small employer carrier are actuarially sound. Each
such certification shall be in a uniform form and manner and
shall contain such information as specified by the director. A
copy of such certification shall be retained by the small
employer carrier at its principal place of business.
(c) A small employer carrier shall make the information and
documentation described in paragraph (a) of this subsection
available to the director upon request. Except in cases of
violations of ORS 743.733 to 743.737, the information shall be
considered proprietary and trade secret information and shall not
be subject to disclosure by the director to persons outside the
Department of Consumer and Business Services except as agreed to
by the small employer carrier or as ordered by a court of
competent jurisdiction.
(11) A small employer carrier shall not provide any financial
or other incentive to any insurance producer that would encourage
the insurance producer to market and sell health benefit plans of
the carrier to small employer groups based on a small employer
group's anticipated claims experience.
(12) For purposes of this section, the date a small employer
health benefit plan is continued shall be the anniversary date of
the first issuance of the health benefit plan.
(13) A small employer carrier must include a provision that
offers coverage to all eligible employees and to all dependents
to the extent the employer chooses to offer coverage to
dependents.
(14) All small employer health benefit plans shall contain
special enrollment periods during which eligible employees and
dependents may enroll for coverage, as provided in 42 U.S.C.
300gg as amended and in effect on July 1, 1997.
SECTION 8. { + (1) The Director of the Department of Consumer
and Business Services may take any action before the operative
date specified in section 10 of this 2007 Act to enable the
director to exercise, on and after the operative date specified
in section 10 of this 2007 Act, the duties, functions and powers
conferred on the director by section 3 of this 2007 Act and the
amendments to ORS 743.730, 743.733, 743.734 and 743.737 by
sections 1 and 4 to 7 of this 2007 Act.
(2) The director shall adopt rules prior to the operative date
specified in section 10 of this 2007 Act to phase in the
amendments to ORS 743.737 by sections 6 and 7 of this 2007 Act
over a three-year period beginning on the operative date
specified in section 10 of this 2007 Act. + }
Enrolled House Bill 2002 (HB 2002-A) Page 17
SECTION 9. { + Section 3 of this 2007 Act and the amendments
to ORS 743.730, 743.733, 743.734 and 743.737 by sections 1 and 4
to 7 of this 2007 Act apply to any policy or certificate of
insurance issued or renewed on or after the operative date
specified in section 10 of this 2007 Act. + }
SECTION 10. { + Except as provided in section 8 of this 2007
Act, section 3 of this 2007 Act and the amendments to ORS
743.730, 743.733, 743.734 and 743.737 by sections 1 and 4 to 7 of
this 2007 Act become operative on January 1, 2008. + }
SECTION 11. { + This 2007 Act being necessary for the
immediate preservation of the public peace, health and safety, an
emergency is declared to exist, and this 2007 Act takes effect on
its passage. + }
----------
Passed by House May 16, 2007
...........................................................
Chief Clerk of House
...........................................................
Speaker of House
Passed by Senate May 29, 2007
...........................................................
President of Senate
Enrolled House Bill 2002 (HB 2002-A) Page 18
Received by Governor:
......M.,............., 2007
Approved:
......M.,............., 2007
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2007
...........................................................
Secretary of State
Enrolled House Bill 2002 (HB 2002-A) Page 19