HB 1592-FN – AS AMENDED BY THE HOUSE
07Mar2006… 1048h
2006 SESSION
01/09
HOUSE BILL 1592-FN
AN ACT making certain changes in the insurance laws.
SPONSORS: Rep. S. Francoeur, Rock 15; Rep. Langley, Rock 18; Sen. Flanders, Dist 7; Sen. Hassan, Dist 23; Sen. Martel, Dist 18
This bill clarifies certain continuation of coverage and termination of coverage procedures.
This bill was requested by the insurance department.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
07Mar2006… 1048h
06-2342
01/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Six
AN ACT making certain changes in the insurance laws.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Life Insurance; Policy Contract. Amend RSA 408:9 to read as follows:
408:9 Policy Contract. Every policy of life insurance and every individual annuity policy issued or delivered within this state [by any life insurance corporation doing business within the state], together with the application therefor, a copy of which application shall be endorsed upon or attached to the policy and made a part thereof, shall constitute the entire contract between the parties.
2 Accident and Health Insurance; Group or Blanket Provisions. Amend the section heading of RSA 415:18 to read as follows:
415:18 General Group or Blanket Policy Provisions.
3 Accident and Health Insurance; Group Insurance. Amend RSA 415:18, V to read as follows:
V. The coverage of any dependent of any employee or member of the group insured by such policy, pursuant to paragraph IV, who is mentally or physically incapable of earning his own living on the date as of which such dependent’s status as a covered family member would otherwise expire because of age, shall continue under such policy while such policy remains in force or is replaced by another group or blanket policy as long as such incapacity continues and as long as said dependent remains chiefly financially dependent on the employee or member of the group or the employee or his or her estate is chargeable for the care of said dependent, provided that due proof of such incapacity is received by the insurer within 31 days of such expiration date. [If such coverage is continued in accordance with this paragraph, such dependent shall be entitled upon the termination of such incapacity to a converted policy in accordance with and subject to the terms and conditions of the conversion privilege clause if such privilege is afforded by the policy, provided that such dependent has not attained the limiting age if any for coverage of adults specified in the policy.]
4 Group Insurance. Amend the introductory paragraph of RSA 415:18, XII(c) to read as follows:
(c) Once a group or blanket policy has been issued, the insurer shall provide the group with an annual open enrollment period for late enrollees. During the open enrollment period, any late enrollee shall be permitted to enroll without submitting any evidence of insurability based on medical conditions. For late enrollees in a large employer group only, the pre-existing condition provisions shall apply for 18 months from the date of enrollment. However, an eligible employee or dependent shall not be considered a late enrollee if the individual:
5 New Paragraphs; Continuation of Coverage; Termination of Coverage. Amend RSA 415:18 by inserting after paragraph XIV the following new paragraphs:
XV. In paragraphs XVI and XVII:
(a) “Carrier” means an entity that offers or provides a policy, contract, or certificate of insurance coverage in this state. “Carrier” shall include an insurer, a health maintenance organization, or any other entity providing a policy, contract, or certificate of insurance coverage subject to state insurance regulation.
(b) “Cancellation” means the circumstance when the employer/employee relationship ceases to exist.
(c) “Individual” means any person covered under a group health plan, including but not limited to, the covered employee, the spouse of the covered employee, whether surviving, dependent, former dependent, or legally separated; or the dependent child of the employee, and any other person including a child born or placed for adoption with the covered employee, who is covered under a group health plan through the employment relationship.
(d) “Health insurance” means all group hospital and medical expense policies subject to RSA 415, group health service plan contracts pursuant to RSA 420-A, and health maintenance organization policies and plans issued pursuant to RSA 420-B, and all other plans that are additionally subject to RSA 420-G, except for small employers of size one defined pursuant to RSA 420-G:2, XVI.
(e) “Entire group termination” means that circumstance when all health insurance coverage to the group ends.
XVI. Continuation of Coverage.
(a) Carriers shall provide continuation of coverage when an individual covered by a plan of group health insurance that provides medical, hospital, and/or surgical expense benefits, except short-term student insurance where the policyholder is the school, loses coverage under the plan, coverage shall be provided in accordance with the procedures described in this section.
(b) Continuation coverage shall be identical to the coverage provided to other similarly situated members of the group that are still covered by the plan. The policy shall not be changed, except that normal premium rate increases or decreases upon renewal affecting the group plan may also affect the continuation premium rate. The effective date of continuation coverage shall be the date the individual’s coverage under the group plan ceased.
(c) Periods of coverage shall be as follows:
(1) Eighteen month period – When any individual loses coverage under a group health insurance plan for any reason except dismissal from employment for gross misconduct or carrier termination, coverage shall continue subject to this section for a period of 18 months, unless the individual is eligible for coverage under subparagraph (2), (3), (4), or (5).
(2) Thirty-nine week period (entire group insurance termination) – Whenever the entire group is terminated, coverage shall continue subject to this section for a period of 39 weeks. Where an individual has continuation coverage, coverage shall continue until it would have expired had the plan not been terminated or for 39 weeks, whichever occurs first.
(3) Twenty-nine month period (disability) – An individual who is determined to be disabled within the first 60 days of the date such individual loses coverage shall be entitled to 29 months of continuation coverage. Determination of disability shall be under Title II or XVI of the federal Social Security Act or any future Act that has the same purpose.
(4) Thirty-six month period – Subject to subparagraph (e), coverage shall continue subject to this section for a period of 36 months if any individual loses coverage under a group health insurance plan for one of the following reasons:
(A) Death of a covered employee;
(B) The divorce or the legal separation of the covered employee;
(C) A substantial loss of coverage by retirees and dependents within one year of the employer filing for protection under the bankruptcy provisions of Title 11 of the United States Code; or
(D) A dependent child ceasing to be a dependent child.
(5) Eligible for Medicare – When the surviving spouse, divorced spouse, or legally separated spouse is 55 years of age or older and loses coverage because of the death, divorce, or legal separation of the covered employee, coverage shall continue subject to this section until such time as the spouse becomes eligible for participation in another employer-based group plan or becomes eligible for Medicare.
(d) Premium Payments:
(1) Determination. When an individual’s coverage has ended, the amount of the premium charged to the individual electing continuation coverage shall not exceed 102 percent of the group premium amount.
(2) Responsibilities:
(A) It shall be the responsibility of the employer to notify the carrier when an individual loses coverage under the employer’s plan, and it shall be the responsibility of the carrier to notify the individual of the right to elect continuation coverage.
(B) It shall be the responsibility of the individual electing continuation coverage to make timely premium payments. Failure to make a timely remittance of the premium shall be grounds for cancellation.
(C) Where the premium is submitted to the carrier through the employer or plan administrator, it shall be the responsibility of the employer or plan administrator to promptly forward payments received from the individual to the carrier.
(3) Liabilities:
(A) If the employer or plan administrator responsible fails to forward the premium payment and the individual’s continuation coverage is terminated as a result, the employer or plan administrator shall be liable for benefits to the same extent that the carrier would have been if coverage had not been terminated.
(B) Whenever a carrier fails to notify an individual that his or her coverage will not continue unless the individual so elects, the carrier shall be liable, in accordance with the terms of the policy, for claims accrued until such notice is made, except that any carrier that in good faith mailed a notice to the last known address of the individual shall not be held liable. Such carrier’s liability shall in no way diminish the liability of the employer.
(4) Notice Requirements and Procedures.
(A) A carrier shall notify the employer or individual of the discontinuance or termination of a policy as follows:
(i) Notice of the right to continue coverage shall be set forth in each master policy and individual certificate of coverage.
(ii) When coverage for an individual will cease under the group policy, the carrier shall notify the individual of the individual’s right to continue, the amount of the premium required to continue coverage, and the procedure for electing continuation coverage. The notice of continuation shall specify the election period that shall not be less than 31 days after the date of the notice and shall be mailed to the last known address of the individual provided by the employer or plan administrator.
(iii) The carrier shall specify in each notice of continuation whether premium payments are to be remitted to the employer, plan administrator, or directly to the carrier.
(iv) If the employer or plan administrator to which the premium payments have been remitted fails to forward the premium payment and the individual’s continuation coverage is terminated as a result, the employer or plan administrator shall be liable for the benefits to the same extent that the carrier would have been if coverage had not been terminated.
(v) The carrier shall notify the individual of the right to continue coverage within 15 days of the date the coverage ceased. The additional period shall expire 31 days after the date of the notice.
(B) When the individual shall notify the carrier or the employer:
(i) An individual electing continuation coverage shall notify the carrier in writing with a copy of the notice provided to the employer or plan administrator when the election is made. Such election shall be made within 31 days of the date of notice.
(ii) Where the employee’s spouse is also covered by the group plan, and there is a divorce or legal separation, the employee shall notify the employer of the divorce or separation within 30 days, and shall provide the employer and carrier with the employee’s spouse’s mailing address. In case of a divorce or legal separation, the carrier shall provide a separate notice of the right to continue to the divorced or separated spouse. The divorced or separated spouse may elect to continue coverage by notifying the carrier within 31 days of the date of the notice and remitting the premium payment.
(C) Election and waiver:
(i) Election by the individual shall be made within 31 days of the date of the notice of the right to continue, by written notice to the carrier and the employer. The required premium payment, as specified in the notice of the right to continue, shall be remitted as required in the notice with the written notice of election.
(ii) Where an individual declines the right to continue coverage, waiver shall be made by an affirmative means of declination, including but not limited to written declination of continuation coverage or electronic contact to the employer or plan administrator.
(iii) Where proper notice has been given, and no response is made within 31 days, coverage may be deemed waived if the carrier has in good faith made reasonable efforts to contact the eligible individual. However, no carrier may deem any coverage waived if a notice does not fully comply with this section.
(iv) Where an individual has attempted to notify the carrier, employer, or plan administrator of election, and where the written election has not included a premium payment, the carrier, employer, or administrator shall allow the individual to fully comply by paying the full amount of the unpaid premiums within 31 days.
(v) Where more than one person covered by the group health insurance plan will lose coverage as a result of the covered employee’s termination from the group, each individual shall be provided with a notice and shall have the opportunity to elect or waive coverage. Where there is a choice among plans, each individual shall have the opportunity to choose a plan.
(e) End of continuation coverage. Nothing in this chapter shall require a carrier to continue coverage beyond:
(1) The first day of the month following the individual’s eligibility for a group plan through a different employer;
(2) In the case of an individual that is eligible for Medicare, the date of the first Medicare open enrollment period following the date the individual became ineligible for continued participation under the group plan;
(3) In the case of a period of extended coverage for a person who has been determined to be disabled during the first 60 days of continuation coverage, the month that begins more than 30 days after the date of a final determination that the person is no longer disabled;
(4) The date on which continuation coverage ceases because the individual has failed to pay the premium. The individual shall be given a 30-day grace period before coverage is cancelled, and shall be provided with a notice within 15 days of the date of termination that the coverage will be cancelled if the premium is not paid; or
(5) The date on which the group plan terminates subject to the continuation rights set forth in RSA 415:26.
XVII. Termination of Coverage.
(a) Whenever any group hospital, surgical, medical insurance plan, or health maintenance organization coverage terminates for any reason, the benefits of such plan shall be available at the same group rate to the covered members of the group plan, for an extension period of 39 weeks, or until such member of the group plan becomes eligible for benefits under another group plan, whichever occurs first.
(b) Written notice of the right to continue such group coverage upon termination shall be given by the carrier in each master policy, certificate, and group policy. The carrier shall send the notice within 15 days of the termination of the policy to the policyholder and each certificate holder under the policy.
(c) The member electing continuation of coverage under this subparagraph shall provide the carrier written notice of election together with the required premium contribution within 31 days of the date of the notice. The group rate shall be paid by the member directly to the carrier. The premium rate shall be that required for the coverage being continued and shall not exceed the applicable group rate, but a reasonable administrative fee not to exceed 2 percent of the monthly premium may be charged to offset billing and payment costs.
(d) If group members become entitled to the 39-week extension period due to termination of the policy, the carrier shall:
(1) Notify such person or member of the option to elect continuation of coverage for the extension period of 39 weeks and the conditions applicable to such coverage within 15 days of the date the plan terminates.
(2) If the carrier fails to notify the members of the termination of the group plan within 15 days of the date of termination of the group coverage, the members shall not be liable for any premiums that have not been paid prior to the date the notice was sent. In no event shall a person or member entitled to coverage for the extension period of 39 weeks be responsible for premiums accrued and unpaid prior to the date of the termination or cancellation of the coverage.
(3) Where coverage has ended as a result of an employer’s nonpayment of premiums, the member electing continuation coverage shall not be liable for any accrued and unpaid premium that was the employer’s responsibility under the policy, or any amount previously paid by the person for coverage under the policy that due to the employer’s actions was not paid to the carrier.
(e) If the carrier fails to comply with the applicable employee notification requirements, the carrier shall be liable for lost benefits payable under and according to the terms of the group policy or contract to the employee resulting from the termination of the employee’s benefit plan. Such liability shall extend only for the period of non-compliance beginning on the date notification of the employee was required and ending 31 days after the date notice was mailed.
6 Standards for Accident and Health Insurance. Amend RSA 415-A:4-b, V(b) to read as follows:
(b) A carrier or other licensed entity that offers group health plans or employee benefit plans shall file with the commissioner by April 1 of each year, a copy of its current grievance procedures, with all changes from the previous year annotated in the document, and a certificate of compliance [by, April 1 of each year], stating that the carrier or other licensed entity has established and maintained, for each of its health benefit plans, grievance procedures that fully comply with the provisions of this chapter. Material modifications to the procedure shall be filed with the commissioner prior to becoming effective.
7 Managed Care Law; Grievance Procedures. Amend the paragraph heading and the introductory paragraph of subparagraph (a) of RSA 420-J:5, V to read as follows:
V. Manner and Content of Notification of Determination on Appeal. The carrier or other licensed entity shall provide a claimant with a written determination of the appeal.
(a) [The carrier or other licensed entity shall provide a claimant with a written determination of the appeal that] Where a decision is made to uphold, in whole or in part, the denial of benefits, the written determination of appeal shall include:
8 Withholding of Wages; Insurance; Reference Change. Amend RSA 275:48, III to read as follows:
III. An insurer or plan administrator of a self-funded plan shall notify an employee in writing of termination of an employee benefit plan pursuant to the notification requirements of RSA [415:18, VII(g)(4)] 415:18, XVI or the Employee Retirement Income Security Act, as applicable.
9 Insurance; Applicable Statutes; Reference Change. Amend RSA 420-A:2 to read as follows:
420-A:2 Applicable Statutes. Every health service corporation shall be governed by this chapter and the relevant provisions of RSA 161-H, and shall be exempt from this title except for the provisions of RSA 400-A:39, RSA 401-B, RSA 402-C, RSA 404-F, RSA 415-A, RSA 415-F, RSA 415:6, II(4), RSA 415:6-g, RSA 415:6-k, RSA 415:18, V[, RSA 415:18, VII(g), RSA 415:18, VII-a], RSA 415:18-a, RSA 415:18-j, RSA 415:18-o, RSA 415:22, RSA 415:18, XVI, RSA 417, RSA 417-E, RSA 420-J, and all applicable provisions of title XXXVII wherein such corporations are specifically included. Every health service corporation and its agents shall be subject to the fees prescribed for health service corporations under RSA 400-A:29, VII.
10 Health Maintenance Organizations; Reference Change. Amend RSA 420-B:20, III to read as follows:
III. The requirements of RSA 400-A:39, RSA 401-B, RSA 402-C, RSA 404-F, RSA 415:6-g[, RSA 415:18, VII(g), RSA 415:18, VII-a], RSA 415:18-j, RSA 415:18, XVI, RSA 415-A, RSA 415-F, RSA 420-G, and RSA 420-J shall apply to health maintenance organizations.
11 Delta Dental Plan of New Hampshire; Scope of Chapter; Reference Change. Amend RSA 420-F:1, III to read as follows:
III. Delta shall be governed by this chapter and shall be exempt from this title, except for the provisions of RSA 400-A:39, RSA 402-C, RSA 404-F, RSA [415:18, VII(g)(1)] 415:18, XVI, relative to continuation of dental insurance, and 1961, 345; provided, however, if any of the provisions of 1961, 345 are inconsistent with this chapter the provisions of this chapter shall prevail. Delta and its agents shall be subject to the fees prescribed for health service corporations under RSA 400-A:29, VII.
12 Individual Health Insurance Market; Eligibility. Amend RSA 404-G:5-e, V(c) to read as follows:
(c) The individual’s premiums are paid for or reimbursed by the health care provider or the individual’s premiums are paid by any government sponsored program or government agency, except if the person is [an “eligible individual” as defined in section 2741(b) of the Public Health Service Act] eligible under RSA 404-G:5-e, I(d) or (e).
13 Individual Health Insurance Market; Reference Change. Amend RSA 404-G:5-f, II to read as follows:
II. The following provisions of title 37 shall apply to the pool to the extent applicable and not inconsistent with the express provisions of this chapter: RSA 415:5, 415:6, 415:6-a, 415:6-b, 415:6-c, 415:6-f, 415:6-g, 415: 6-h, 415:7, 415:9--415:13, 415:22, 415:22-a, 415:22-b, 415:23, RSA 415-A, RSA 417, RSA 420-B:8, 420-B:8-b, 420-B:8-d, 420-B:8-e, 420-B:8-ee, 420-B:8-f, 420-B:8-ff, 420-B:8-g, 420-B:8-gg, 420-B:8-h, 420-B:8-i, 420-B:8-j, 420-B:8-k, 420-B:8-m, 420-B:11-12, RSA 420-C, RSA 420-E:4, RSA 420-G:7, [420-G:8,] 420-G: 11, RSA 420-H, RSA 420-I, and RSA [420-J:3] 420-J. For the purposes of this chapter, the pool shall be deemed an insurer, pool coverage shall be deemed individual health insurance, and pool coverage contracts shall be deemed policies.
14 New Paragraph; Health Coverage; Enrollment. Amend RSA 420-G:8 by inserting after paragraph II the following new paragraph:
II-a. Notwithstanding the provisions of paragraph I-a and II, small employers who are self-employed individuals shall have 90 days from the date their business is first established to enroll in a plan. Health carriers shall make their plans available to such individuals for effective dates beginning on the first day of the month following enrollment.
15 Repeal. The following are repealed:
I. RSA 415:18, VII and VII-a, relative to continuation of coverage in certain circumstances.
II. RSA 415:18, X and XI, relative to conversion privilege.
16 Effective Date. This act shall take effect January 1, 2007.
LBAO
06-2342
11/10/05
HB 1592-FN - FISCAL NOTE
AN ACT making certain changes in the insurance laws.
FISCAL IMPACT:
The Insurance Department has determined this bill may minimally reduce state, county and local expenditures and state revenue in FY 2006 and each year thereafter. There will be no fiscal impact on county and local revenue.
METHODOLOGY:
The Department stated this bill eliminates the requirements for group health insurance carriers and stop-loss writers to provide an option to covered employees and their dependents to purchase an individual health insurance policy, called a conversion policy. The requirement to offer conversion coverage is an added cost to group coverage. Experience on conversion policies is, on average, far worse than comparable group or individual coverage. Moreover, carriers need additional administrative facilities to maintain such coverage. The elimination of such coverage, in theory, should make both group coverage and stop loss coverage a little less expensive, but the effect is expected to be minimal. The State is a purchaser of stop loss coverage. The cost of such coverage may go down. To the extent the cost for coverage across the State goes down, premium revenue may go down. Similarly, municipalities should be expected to pay less for their health insurance programs.