Senate Bill No. 497
(By Senators McCabe, Bailey, Wells and Jenkins)
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[Introduced January 30, 2008; referred to the Committee on
Banking and Insurance.]
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A BILL to amend and reenact §33-16D-2 of the Code of West Virginia,
1931, as amended, relating to marketing and rate practices for
small employer accident and sickness insurance policies.
Be it enacted by the Legislature of West Virginia:
That §33-16D-2 of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 16D. MARKETING AND RATE PRACTICES FOR SMALL EMPLOYER
ACCIDENT AND SICKNESS INSURANCE POLICIES.
§33-16D-2. Definitions.
As used in this article:
(a) "Actuarial certification" means a written statement by an
actuary, or other individual acceptable to the commissioner, that
a small employer carrier is in compliance with the provisions of
section five of this article, based upon that person's examination,
including a review of the appropriate records and of the actuarial assumptions and methods utilized by the carrier in establishing
premium rates for applicable health benefit plans.
(b) "Base premium rate" means, for each class of business as
to a rating period, the lowest premium rate charged or which could
have been charged under a rating system for that class of business
by the small employer carrier to small employers with similar case
characteristics for health benefit plans with the same or similar
coverage.
(c) "Bona fide association" has the meaning set forth in
section one-a, article sixteen of this chapter.
(d) "Case characteristics" mean demographic or other relevant
characteristics of a small employer, as determined by a small
employer carrier, which are considered by the carrier in the
determination of premium rates for the small employer. Claim
experience, health status and duration of coverage since issue are
not case characteristics for the purposes of this article.
(e) "Class of business" means all or any distinct grouping of
small employers as shown on the records of the small employer
carrier, which shall be subject to the following requirements:
(1) A distinct grouping may only be established by the small
employer carrier on the basis that the applicable health benefit
plans:
(A) Are marketed and sold through individuals and
organizations which are not participating in the marketing or sale of other distinct groupings of small employers for such small
employer carrier;
(B) Have been acquired from another small employer carrier as
a distinct grouping of plans;
(C) Are provided through a bona fide association; or
(D) Are in a class of business that meets the requirements for
exception to the restrictions related to premium rates provided in
paragraph (A), subdivision (1), subsection (a), section five of
this article.
(2) A small employer carrier may establish no more than two
additional groupings under subdivision (1) of this subsection on
the basis of underwriting criteria which are expected to produce
substantial variation in the health care costs.
(3) The commissioner may approve the establishment of
additional distinct groupings upon application to the commissioner
and a finding by the commissioner that such action would enhance
the efficiency and fairness of the small employer insurance
marketplace.
(f) "Commissioner" means the Insurance Commissioner of West
Virginia.
(g) "Creditable coverage" has the meaning set forth in section
one-a, article sixteen of this chapter.
(h) "Dependent" has the meaning set forth in section one-a,
article sixteen of this chapter.
(i) "Group health plan" has the meaning set forth in section
one-a, article sixteen of this chapter.
(j) "Health benefit plan" has the meaning set forth in section
one-a, article sixteen of this chapter.
(k) "Health status-related factor" has the meaning set forth
in section one-a, article sixteen of this chapter.
(l) "Index rate" means for each class of business for small
employers with similar case characteristics the arithmetic average
of the applicable base premium rate and the corresponding highest
premium rate.
(m) "Medical care" has the meaning set forth in section one-a,
article sixteen of this chapter.
(n) "Network plan" has the meaning set forth in section one-a,
article sixteen of this chapter.
(o) "New business premium rate" means, for each class of
business as to a rating period, the premium rate charged or offered
by the small employer carrier to small employers with similar case
characteristics for newly issued health benefit plans with the same
or similar coverage.
(p) "Preexisting condition exclusion" has the meaning set
forth in section one-a, article sixteen of this chapter.
(q) "Rating period" means the calendar period of at least
twelve months for which premium rates established by a small
employer carrier are assumed to be in effect, as determined by the small employer carrier.
(r) "Small employer" means any person, firm, corporation,
partnership or association actively engaged in business in the
State of West Virginia who, during the preceding calendar year,
employed an average of no more than fifty but not fewer than
two
one eligible
employees employee and employs at least
two employees
one employee on the first day of its group health plan year
:
Provided, That beginning on the first day of July, two thousand
eight, "small employer" shall also include a self-employed
individual who has a current business registration certificate
issued by the State Tax Commissioner, and who is engaged in the
conduct of a business for federal and state income tax purposes.
A new employer, not in existence for all of the preceding calendar
year, shall be considered a small employer if it is reasonably
expected to employ an average of no more than fifty but not fewer
than two eligible employees on business days in the current
calendar year. Companies which are affiliated companies or which
are eligible to file a combined tax return for state tax purposes
shall be considered one employer.
(s) "Small employer carrier" or "carrier" means any health
insurer, as defined in section one-a, article sixteen of this
chapter, which offers health benefit plans covering the employees
of a small employer situate within the State of West Virginia.
NOTE: The purpose of this bill is to expand the definition of
"small employer" to include sole proprietor.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.