70th OREGON LEGISLATIVE ASSEMBLY--1999 Regular Session

NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .

LC 624

                         Senate Bill 282

Printed pursuant to Senate Interim Rule 213.28 by order of the
  President of the Senate in conformance with presession filing
  rules, indicating neither advocacy nor opposition on the part
  of the President (at the request of Department of Consumer and
  Business Services)


                             SUMMARY

The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.

  Expands scope of definition of group health insurance in
Insurance Code to include policies issued to bona fide
associations, multiple employer welfare arrangements, employee
and worker leasing companies and health insurance purchasing
cooperatives. Limits application of small employer health
insurance requirements to policies issued to single employer
groups. Establishes standard requirements for group health
insurance benefit policies issued to groups other than single
employer groups.

                        A BILL FOR AN ACT
Relating to terms of group health insurance policies issued to
  multiple member groups; amending ORS 743.522, 743.526, 743.734,
  743.736 and 743.752.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. ORS 743.522 is amended to read:
  743.522. 'Group health insurance' means that form of health
insurance covering groups of persons as defined in this section,
with or without one or more members of their families or one or
more of their dependents, or covering one or more members of the
families or one or more dependents of such groups of persons, and
issued upon one of the following bases:
  (1) Under a policy issued to an employer or trustees of a fund
established by an employer, who shall be deemed the policyholder,
insuring employees of such employer for the benefit of persons
other than the employer. The term 'employees' as used in this
subsection shall be deemed to include the officers, managers, and
employees of the employer, the individual proprietor or partners
if the employer is an individual proprietor or partnership, the
officers, managers, and employees of subsidiary or affiliated
corporations, the individual proprietors, partners and employees
of individuals and firms, if the business of the employer and
such individual or firm is under common control through stock
ownership, contract, or otherwise. The term ' employees' as used
in this subsection may include retired employees. A policy issued
to insure employees of a public body may provide that the term
'employees' shall include elected or appointed officials. The
policy may provide that the term ' employees' shall include the
trustees or their employees, or both, if their duties are
principally connected with such trusteeship.
  (2) Under a policy issued to an association, including a labor
union, which has an active existence for at least one year, which
has a constitution and bylaws and which has been organized and is
maintained in good faith primarily for purposes other than that
of obtaining insurance, which shall be deemed the policyholder,
insuring members, employees, or employees of members of the
association for the benefit of persons other than the association
or its officers or trustees. The term 'employees' as used in this
subsection may include retired employees.
   { +  (3) Under a policy issued to a bona fide association as
defined in ORS 743.730. + }
    { - (3) - }   { + (4) + } Under a policy issued to the
trustees of a fund established by two or more employers in the
same or related industry or by one or more labor unions or by one
or more employers and one or more labor unions or by an
association as defined in subsection (2) of this section,
insuring employees of the employers or members of the unions or
of such association, or employees of members of such association
for the benefit of persons other than the employers or the unions
or such association. The term 'employees' as used in this
subsection may include the officers, managers and employees of
the employer, and the individual proprietor or partners if the
employer is an individual proprietor or partnership. The term
'employees' as used in this subsection may include retired
employees. The policy may provide that the term 'employees' shall
include the trustees or their employees, or both, if their duties
are principally connected with such trusteeship.
   { +  (5) Under a policy issued to a multiple employer welfare
arrangement, as defined in section 3(4) of the federal Employee
Retirement Income Security Act of 1974, 29 U.S.C. 1002(4), as
amended and in effect on the effective date of this 1999 Act, or
to the trustees of a fund established by such a multiple employer
welfare arrangement. + }
    { - (4) - }   { + (6) + } Under a policy issued to any person
or organization to which a policy of group life insurance may be
issued or delivered in this state, to insure any class or classes
of individuals that could be insured under such group life
policy.
    { - (5) - }   { + (7) + } Under a policy issued to cover any
other substantially similar group which, in the discretion of the
Director of the Department of Consumer and Business Services, may
be subject to the issuance of a group health insurance policy.
   { +  (8) Under a policy issued to a professional employee
organization or worker leasing company, as defined in ORS
656.850, or to the trustees of a fund established by such an
organization or company.
  (9) Under a policy issued to a health insurance purchasing
cooperative, or to the trustees of a fund established by such a
cooperative, if the cooperative is:
  (a) Established and maintained by a private or public sponsor
other than an insurer or agent for the purpose of making health
insurance coverage available to individuals or groups who qualify
to participate in the cooperative; and
  (b) Governed by representatives of the participating
individuals or groups. + }
  SECTION 2. ORS 743.526 is amended to read:
  743.526. (1) An insurer shall not offer a policy of group
health insurance described in ORS 743.522   { - (3) - }
 { + (4) + } that insures persons in this state or offer coverage
under such a policy, whether the policy is to be issued in this
or another state, unless the Director of the Department of
Consumer and Business Services determines that the requirements

of this section and ORS 743.522   { - (3) - }   { + (4) + } are
satisfied.
  (2) The director shall determine with respect to a policy
whether the trustees are the policyholder. If the director
determines that the trustees are the policyholder and if the
policy is issued or proposed to be issued in this state, the
policy is subject to the Insurance Code. If the director
determines that the trustees are not the policyholder, the
evidence of coverage that is issued or proposed to be issued in
this state to a participating employer, labor union or
association shall be deemed to be a group health insurance policy
subject to the provisions of the Insurance Code. The director may
determine that the trustees are not the policyholder if:
  (a) The evidence of coverage issued or proposed to be issued to
a participating employer, labor union or association is in fact
the primary statement of coverage for the employer, labor union
or association; and
  (b) The trust arrangement is under the actual control of the
insurer.
  (3) An insurer shall submit evidence to the director showing
that the requirements of subsection (2) of this section and ORS
743.522   { - (3) - }   { + (4) + } are satisfied. The director
shall review the evidence and may request additional evidence as
needed.
  (4) An insurer shall submit to the director any changes in the
evidence submitted under subsection (3) of this section.
  (5) The director may adopt rules to carry out this section.
  SECTION 3. ORS 743.734 is amended to read:
  743.734. (1) Every individual or 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) The provisions of ORS 742.005 shall not apply to individual
health insurance policies or contracts to the extent subject to
the provisions of ORS 743.733 to 743.737.
  (3) 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.
  (4) 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.
  (5) 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.
  (6) 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.
  (7) A small employer carrier may provide different health
benefit plans to different categories of employees of a small
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. Except as provided in ORS 743.736   { - (10) - }
 { +  (9) + }:
  (a) When a small employer carrier offers coverage to a small
employer, 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) 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 4. ORS 743.736 is amended to read:
  743.736. (1) In order to improve the availability and
affordability of health benefit coverage for small employers, the
Health Insurance Reform Advisory Committee created under ORS
743.745 shall submit to the Director of the Department of
Consumer and Business Services two basic health benefit plans
pursuant to ORS 743.745. One plan shall be in the form of
insurance and the second plan shall be consistent with the
requirements of the federal Health Maintenance Organization Act,
42 U.S.C. 300e et seq.
  (2)(a) The director shall approve the basic health benefit
plans following a determination that the plans provide for
maximum accessibility and affordability of needed health care
services and following a determination that the basic health
benefit plans substantially meet the social values that underlie
the ranking of benefits by the Health Services Commission and
that the basic health benefit plans are substantially similar to
the Medicaid reform program under chapter 836, Oregon Laws 1989,
funded by the Legislative Assembly.
  (b) The basic health benefit plans shall include benefits
mandated under ORS 743.556 until mental health, alcohol and
chemical dependency services are fully integrated into the Health
Services Commission's priority list, and as funded by the
Legislative Assembly, and chapter 836, Oregon Laws 1989, is
implemented.
  (c) The commission shall aid the director by reviewing the
basic health benefit plans and commenting on the extent to which
the plans meet these criteria.
  (3) After the director's approval of the basic health benefit
plans submitted by the committee pursuant to subsection (1) of
this section, each small employer carrier shall submit to the
director the policy form or forms containing its basic health
benefit plan. Each policy form must be submitted as prescribed by
the director and is subject to review and approval pursuant to
ORS 742.003.
  (4)(a) As a condition of transacting business in the small
employer health insurance market in this state, every small
employer carrier shall offer small employers an approved basic
health benefit plan and any other plans that have been submitted
by the small employer carrier for use in the small employer
market and approved by the director.

  (b) Nothing in this subsection shall require a small employer
carrier to resubmit small employer health benefit plans that were
approved by the director prior to October 1, 1996, nor shall
small employer carriers be required to reinitiate new plan
selection procedures for currently enrolled small employers prior
to the small employer's next health benefit plan coverage
anniversary date.
  (c) A carrier that offers a health benefit plan in the small
employer market only through one or more bona fide associations
is not required to offer that health benefit plan to small
employers that are not members of the bona fide association.
  (5) A small employer carrier shall issue to a small employer
any small employer health benefit plan offered by the carrier if
the small employer applies for the plan and agrees to make the
required premium payments and to satisfy the other provisions of
the health benefit plan.
    { - (6) A multiple employer welfare arrangement, professional
or trade association or other similar arrangement established or
maintained to provide benefits to a particular trade, business,
profession or industry or their subsidiaries shall not issue
coverage to a group or individual that is not in the same trade,
business, profession or industry as that covered by the
arrangement. The arrangement shall accept all groups and
individuals in the same trade, business, profession or industry
or their subsidiaries that apply for coverage under the
arrangement and that meet the requirements for membership in the
arrangement.  For purposes of this subsection, the requirements
for membership in an arrangement shall not include any
requirements that relate to the actual or expected health status
of the prospective enrollee. - }
    { - (7) - }   { + (6) + } A small employer carrier shall,
pursuant to subsections (4) and (5) of this section, offer
coverage to or accept applications from a group covered under an
existing small employer health benefit plan whether or not a
prospective enrollee is excluded from coverage under the existing
plan because of late enrollment. When a small employer carrier
accepts an application for such a group, the carrier may continue
to exclude the prospective enrollee excluded from coverage by the
replaced plan until the prospective enrollee would have become
eligible for coverage under that replaced plan.
    { - (8) - }   { + (7) + } No small employer carrier shall be
required to offer coverage or accept applications pursuant to
subsections (4) and (5) of this section if the director finds
that acceptance of an application or applications would endanger
the carrier's ability to fulfill its contractual obligations or
result in financial impairment of the carrier.
    { - (9) - }   { + (8) + } Every small employer carrier shall
market fairly all small employer health benefit plans offered by
the carrier to small employers in the geographical areas in which
the carrier makes coverage available or provides benefits.
    { - (10)(a) - }  { +  (9)(a) + } No health maintenance
organization shall be required to offer coverage or accept
applications pursuant to subsections (4) and (5) of this section
in the case of any of the following:
  (A) To a small employer if the small employer is not physically
located in the health maintenance organization's approved service
area;
  (B) To an employee if the employee does not work or reside
within the health maintenance organization's approved service
areas; or
  (C) Within an area where the health maintenance organization
reasonably anticipates, and demonstrates to the satisfaction of
the director, that it will not have the capacity in its network
of providers to deliver services adequately to the enrollees of
those groups because of its obligations to existing group
contract holders and enrollees.
  (b) A health maintenance organization that does not offer
coverage pursuant to paragraph (a)(C) of this subsection shall
not offer coverage in the applicable service area to new employer
groups other than small employers until the small employer
carrier resumes enrolling groups of new small employers in the
applicable area.
    { - (11) - }   { + (10) + } For purposes of ORS 743.733 to
743.737, except as provided in this subsection, carriers that are
affiliated carriers or that are eligible to file a consolidated
tax return pursuant to ORS 317.715 shall be treated as one
carrier and any restrictions or limitations imposed by ORS
743.733 to 743.737 apply as if all health benefit plans delivered
or issued for delivery to small employers in this state by the
affiliated carriers were issued by one carrier. However, any
insurance company or health maintenance organization that is an
affiliate of a health care service contractor located in this
state, or any health maintenance organization located in this
state that is an affiliate of an insurance company or health care
service contractor, may treat the health maintenance organization
as a separate carrier and each health maintenance organization
that operates only one health maintenance organization in a
service area in this state may be considered a separate carrier.
    { - (12) - }   { + (11) + } Within two years of the
implementation of chapter 836, Oregon Laws 1989, and upon the
full integration of mental health and chemical dependency
services into the health care services ranked by the Health
Services Commission, the Health Insurance Reform Advisory
Committee shall recommend to the director a standard health
benefit plan.
    { - (13) - }   { + (12) + } The Legislative Assembly shall
determine whether the standard health benefit plan shall be
required to be offered by small employer carriers.
  SECTION 5. ORS 743.752 is amended to read:
  743.752. (1) Except in the case of a late enrollee and as
otherwise provided in this section, a carrier offering a group
health benefit plan to a group of two or more prospective
certificate holders shall not decline to offer coverage to any
eligible prospective enrollee and shall not impose different
terms or conditions on the coverage, premiums or contributions of
any enrollee in the group that are based on the actual or
expected health status of the enrollee.
  (2) Subsection (1) of this section applies only to group health
benefit plans that are not small employer health benefit plans.
  (3) Nothing in this section shall prohibit an employer from
providing different group health benefit plans to various
categories of employees as defined by the employer nor prohibit
an employer from providing health benefit plans through different
carriers so long as the employer's categories of employees are
established in a manner that does not relate to the actual or
expected health status of the employees or their dependents.
  (4)   { - A multiple employer welfare arrangement, professional
or trade association, or other similar arrangement established or
maintained to provide benefits to a particular trade, business,
profession or industry or their subsidiaries, shall not issue
coverage to a group or individual that is not in the same trade,
business, profession or industry or their subsidiaries as that
covered by the arrangement. The arrangement shall accept all
groups and individuals in the same trade, business, profession or
industry or their subsidiaries that apply for coverage under the
arrangement and that meet the requirements for membership in the
arrangement. For purposes of this subsection, the requirements
for membership in an arrangement shall not include any
requirements that relate to the actual or expected health status
of the prospective enrollee. - }  { +  A carrier that issues a
group health benefit plan to any group described in ORS 743.522,

other than a single employer as described in ORS 743.522 (1),
must:
  (a) Issue the policy to the group entity that is specified or
considered to be a group under ORS 743.522.
  (b) Issue the policy as a group health benefit plan that is not
a small employer health benefit plan, whether or not small
employers, as defined in ORS 743.730 or 42 U.S.C. 300gg-91, as
amended and in effect on the effective date of this 1999 Act, are
eligible to apply for coverage in accordance with paragraph (c)
of this subsection.
  (c) Accept all groups and individuals who apply for coverage
under the policy, if:
  (A) The applicants meet the requirements for membership in the
group entity and participation in the health benefit plan that
have been established by the policyholder and agreed to by the
carrier; and
  (B) The requirements for membership in the group entity and
participation in the health benefit plan do not include
requirements that relate to the actual or expected health status
of an applicant or any individual eligible for coverage through
an applicant.
  (d) Specify in the policy the requirements for membership in
the group entity and participation in the health benefit plan
that have been established by the policyholder and agreed to by
the carrier.
  (e) Establish premium rates for the policy on the basis of the
risk characteristics or claims experience, or both, of the group
entity as a whole and allocate those rates among participants in
a manner that is not based on the health status or claims
experience of any group or individual member of the group entity.
  (5) For purposes of subsection (4) of this section, the
employer clients of a professional employee organization or
worker leasing company are considered to be members of the group
entity. + }
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