Senate Bill No. 510
(By Senators Minard, Jones, Helmick, Blatnik,
Dittmar, Manchin, Sharpe, Felton, Wiedebusch, Bailey,
Wooton and Grubb)
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[Introduced March 22, 1993; referred to the Committee
on Banking and Insurance.]
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A BILL to amend and reenact sections one, two and four, article
six-c, chapter thirty-three of the code of West Virginia,
one thousand nine hundred thirty-one, as amended; to amend
article fifteen of said chapter by adding thereto a new
section, designated section one-a; to amend and reenact
sections two, three, four, five, six, seven, eight, nine,
ten and twelve, article sixteen-d of said chapter; and to
further amend said chapter by adding thereto a new article,
designated article sixteen-e, all relating to accident and
sickness insurance; excepting individual limited benefits
accident and sickness insurance policies and certificates
from optional guaranteed loss ratio provisions of article
six-c, chapter thirty-three of said code; establishing
requirements for rate increase requests after the first day
of July, one thousand nine hundred ninety-four, for insurers
issuing individual accident and sickness insurance policies;
revising certain definitions and eliminating others relating
to marketing and rate practices for small employer accident
and sickness insurance policies; substituting the term
"carrier" for "insurer" throughout article sixteen-d,
chapter thirty-three; applying the provisions of article
sixteen-d of said chapter to any health benefit plan
described therein that covers one or more employees of a
small employer situate in West Virginia; specifying
additional premium rating restrictions; eliminating
provisions on the insurance commissioner conducting a public
hearing before increasing the anticipated loss ratio for a
small employer carrier; eliminating enumerated rule-making
mandates; granting permissive rule-making authority to the
insurance commissioner; requiring disclosure of preexisting
conditions limitations in such health benefit plans;
requiring certification of compliance with statutory premium
rating provisions; creating a new article sixteen-e, chapter
thirty-three on limited benefits accident and sickness
insurance policies and certificates; defining terms used in
said article; establishing loss ratio standards and premium
refund requirements for such limited benefits policies and
certificates; requiring sixty days' notice of cancellation
or nonrenewal of such policies or certificates; prohibiting
preexisting conditions limitations, waiting periods and the
like upon replacement of such policies and certificates;providing for extraterritorial jurisdiction of the insurance
commissioner over certain policies; specifying severability
of provisions of article sixteen-e, chapter thirty-three;
and making technical corrections.
Be it enacted by the Legislature of West Virginia:
That sections one, two and four, article six-c, chapter
thirty-three of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, be amended and reenacted; that
article fifteen of said chapter be amended by adding thereto a
new section, designated section one-a; that sections two, three,
four, five, six, seven, eight, nine, ten and twelve, article
sixteen-d of said chapter be amended and reenacted; and that said
chapter be further amended by adding thereto a new article,
designated article sixteen-e, all to read as follows:
ARTICLE 6C. GUARANTEED LOSS RATIOS AS APPLIED TO INDIVIDUAL
SICKNESS AND ACCIDENT INSURANCE POLICIES.
§33-6C-1. Loss ratio guarantees; definitions.
As used in this article:
(a) "Commissioner" means the insurance commissioner of West
Virginia;
(b) "Experience period" means, for any given rate filing for
which a loss ratio guarantee is made, the period beginning on the
first day of the calendar year during which the guaranteed rates
first take effect and ending on the last day of the calendar year
during which the insurer earns one million dollars in premiums on
the form in West Virginia or, if the annual premium earned on theform in West Virginia is less than one million dollars, earns
nationally;
(c) "Form" means individual sickness and accident policy
forms of any insurer offering such benefits,
other than a form
for a limited benefits policy or certificate as defined in
section one, article sixteen-e of this chapter;
(d) "Loss ratio" means the ratio of incurred claims to
earned premium; and
(e) "Successive experience period" means the experience
period beginning on the first day following the end of the
preceding experience period.
§33-6C-2. Insurance commissioner to establish guaranteed loss
ratios; minimum rates; participation by insurer; calculation
of ratios; minimum rate; application.
(a) The insurance commissioner shall establish a guaranteed
loss ratio which may be implemented by any insurer offering
individual sickness and accident insurance policies
other than
limited benefits accident and sickness insurance policies or
certificates, which are subject to loss ratio requirements set
forth in section three, article sixteen-e of this chapter. The
loss ratios shall be calculated by the commissioner and each
individual insurer and shall be based upon studies and relevant
information collected from various sources, including, but not
limited to, the health care cost review authority and the
national association of insurance
commissioner's commissioners'
rate filing guidelines:
Provided, That the guaranteed loss ratioshall not be less than fifty-five percent. The guaranteed loss
ratio for each insurer shall be published by the insurance
commissioner in the register maintained by the secretary of
state.
(b) The guaranteed loss ratio shall be based upon experience
periods during which the insurer earns one million dollars in
premium in West Virginia:
Provided, That if the annual earned
premium volume in West Virginia is less than one million dollars,
the loss ratio guarantee shall be based on such other actuarially
sound methods as the commissioner may determine are appropriate,
including, but not limited to, the actual nationwide loss ratios:
Provided, however, That if the aggregate earned premium for all
states is less than one million dollars, the experience period
will be extended until the end of the calendar year in which one
million dollars of earned premium is attained.
(c) Any insurer may apply to the commissioner to operate on
a guaranteed loss ratio basis. The insurance commissioner shall
review each application and, in his or her discretion, approve or
reject the same. Any insurer approved by the commissioner shall
be exempt from filing rate increase applications as required by
the commissioner and other provisions of this chapter.
§33-6C-4. Form of guarantee; requirements.
(a) Individual sickness and accident policy benefits under
a policy form
other than a limited benefits policy form or
certificate shall be deemed reasonable in relation to the premium
charged, as required by paragraph (e), section nine, article sixof this chapter, if the premium rates are filed pursuant to a
loss ratio guarantee which meets the requirements of this
article. The insurance commissioner shall not withdraw approval
of a form on the grounds that benefits are unreasonable in
relation to premiums charged so long as the insurer complies with
the terms of the loss ratio guarantee.
(b) Each insurer of individual sickness and accident policy
benefits
other than benefits under limited benefits policy forms
or certificates shall execute and deliver to the insurance
commissioner a loss ratio guarantee, to be provided by the
commissioner, which guarantee shall be signed by an officer of
the insurer.
(c) Each loss ratio guarantee shall contain, at a minimum,
the following:
(1) A recitation of the anticipated lifetime and durational
target loss ratios contained in the original actuarial memorandum
filed with the policy form when it was originally approved;
(2) A guarantee that the actual West Virginia loss ratios
for the experience period in which the new rates take effect, and
for each experience period thereafter until new rates are filed,
will meet or exceed the anticipated lifetime and durational
target loss ratios contained in the original actuarial memorandum
noted above;
(3) A guarantee that the actual West Virginia, or, if
applicable, national, loss ratio results for the experience
period at issue will be independently audited at the insurer'sexpense; that such audit will be completed in the second quarter
of the year following the end of the experience period; and that
the results of such audit will be reported to the insurance
commissioner not later than the thirtieth day of June following
the end of the experience period;
(4) A guarantee that if the actual loss ratio during an
experience period is less than the anticipated loss ratio for
that period, then West Virginia policyholders will receive a
proportional refund based on premium earned, which refunds shall
be calculated and paid pursuant to section thirty-nine of this
article; and
(5) A guarantee that the insurer does not engage in any
discriminatory practices prohibited by section four, article
eleven of this chapter or any such practice which discriminates
against any individual on the basis of his or her legal
occupation, race, religion or residence.
ARTICLE 15. ACCIDENT AND SICKNESS INSURANCE.
§33-15-1a. Premium rate increase requests; loss ratio
requirement.
To be eligible to make a premium rate increase request after
the first day of July, one thousand nine hundred ninety-four, any
insurer issuing accident and sickness insurance policies which
are subject to the provisions of this article shall have a
minimum anticipated loss ratio of sixty-five percent.
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
insurer 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
insurer 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
insurer carrier to small
employers with similar case characteristics for health benefit
plans
within with the same or similar coverage.
(c) "Carrier" means any person who provides accident and
sickness insurance in this state. For purposes of this article,
carrier includes a licensed insurance company; a hospital service
corporation, medical service corporation or health service
corporation organized pursuant to article twenty-four of this
chapter; a health care corporation organized pursuant to article
twenty-five of this chapter; a health maintenance organization
organized pursuant to article twenty-five-a of this chapter; a
multiple-employer trust or multiple-employer welfare arrangement;
or any other person providing a plan of accident and sicknessinsurance subject to state insurance regulation.
(c) (d) "Case characteristics" mean demographic or other
relevant characteristics of a small employer, as determined by a
small employer
insurer carrier, which are considered by the
insurer carrier in the determination of premium rates for the
small employer. Claim experience, health status and duration of
coverage since issue
shall not be are not case characteristics
for the purposes of this article.
(d) (e) "Class of business" means all or any distinct
grouping of small employers as shown on the records of the small
employer
insurer carrier.
(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 an association with membership of
not less than two small employers which has been formed for
purposes other than obtaining insurance; 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) ofsection 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.
(e) (f) "Commissioner" means the insurance commissioner of
West Virginia.
(f) (g) "Department" means the department of insurance.
(g) "Duration rating" means the practice of rating a policy
or a group of policies by the length of time they have been in
force.
(h) "Health benefit plan" means any hospital or medical
expense incurred policy; health, hospital or medical service
corporation contract; plan provided by a multiple-employer trust
or a multiple-employer welfare arrangement; health maintenance
organization contract offered by an employer; or any other policy
or plan issued by
an insurer a carrier which provides health
related benefits to small employers:
Provided, That for purposes
of this article, a health benefit plan shall not include accident
only, credit, dental, disability income insurance; coverage
issued as a supplement to liability insurance; insurance arisingout 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 which is statutorily
required to be contained in any liability insurance policy or
equivalent self-insurance.
(i) "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.
(j) "Insurer" or "carrier" means any entity which holds a
valid certificate of authority from the commissioner and which
offers or sells health benefit plans to small employers situate
in the state of West Virginia, regardless of where the policy or
plan is drafted, issued or mailed, including, but not limited to,
any insurance company authorized to transact accident and
sickness insurance; a hospital service corporation, medical
service corporation or health service corporation organized
pursuant to article twenty-four of this chapter; a health care
corporation organized pursuant to article twenty-five of this
chapter; a health maintenance organization organized pursuant to
article twenty-five-a of this chapter; or any multiple-employer
trust or multiple-employer welfare arrangement.
(k) "Multiple-employer trust" means an insured health
benefit plan organized as a trust which offers benefits to small
employers and is partially or fully insured by an insurer, which
such underwriting insurer shall be deemed to be transactinginsurance as defined in section four, article one of this
chapter, and is subject to this article regardless of where the
policy or plan is delivered, issued for delivery, renewed or
continued.
(l) "Multiple-employer welfare arrangement" means an
employee welfare benefit plan, or any other arrangement which is
not fully insured and which is established or maintained for the
purpose of offering or providing any insurance or other benefit
to employees of two or more employers, and may include multiple
employer trusts as defined in subsection (k) herein: Provided,
That such term does not include any such plan or other
arrangement which is established or maintained under or pursuant
to one or more agreements found, under federal law, to be
collective bargaining agreements, or by a rural electric
cooperative, and is subject to this article regardless of where
the policy or plan is delivered, issued for delivery, renewed or
continued.
(m) (j) "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
insurer carrier to small employers
with similar case characteristics for newly issued health benefit
plans with the same or similar coverage.
(n) (k) "Rating period" means the calendar period
of at
least twelve months for which premium rates established by a
small employer
insurer carrier are assumed to be in effect, as
determined by the small employer
insurer carrier.
(o) (l) "Small employer" means any person, firm,
corporation, partnership or association actively engaged in
business in the state of West Virginia for at least one year who,
on at least fifty percent of its working days during the
preceding year, employed no more than
forty-nine seventy-five or
not
less fewer than two eligible employees:
Provided, That
companies which are affiliated companies or which are eligible
to file a combined tax return for state tax purposes shall be
considered one employer.
(p) (m) "Small employer
insurer carrier" means any
insurer
carrier which offers health benefit plans covering the employees
of a small employer situate within the state of West Virginia.
(q) "Tier rating" means the division of insureds to reflect
risk and the subsequent selection by the insurer of only those
groups which are financially attractive.
§33-16D-3. Health insurance plans subject to this article.
The provisions of this article apply to any health benefit
plan which provides coverage to
two one or more eligible
employees of a small employer situate in the state of West
Virginia:
Provided, That the provisions of this article shall
not apply to individual health insurance policies which are
subject to policy form and premium rate approval as required by
article sixteen-b of this chapter.
§33-16D-4. Discrimination in marketing prohibited; annual filing
with commissioner; violations and penalties.
(a) All
insurers carriers subject to this article arestrictly prohibited from marketing their product to a specific
group, legal occupation, locale, zip code, neighborhood, race,
religion, or any discriminatory group.
(b) All
insurers carriers subject to this article shall file
any marketing information upon request of the commissioner. The
commissioner shall review said information and shall have the
authority to take appropriate action to eliminate discriminatory
marketing practices, including imposing fines on violators of
this section of not more than ten thousand dollars. Upon a
second violation of this section, the commissioner shall have the
authority to revoke the violator's license to transact insurance.
§33-16D-5. Premium rates for small employers; classes; maximum
rates; eligibility for rate increases.
(a) Premium rates for health benefit plans subject to this
article shall be subject to the following provisions:
(1) The index rate for a rating period for any class of
business shall not exceed the index rate for any other class of
business by more than twenty percent:
Provided, That this
subdivision shall not apply to a class of business if all of the
following apply:
(A) The class of business is one for which the carrier does
not reject, and never has rejected, small employers included
within the definition of employers eligible for the class of
business or otherwise eligible employees and dependents who
enroll on a timely basis, based upon their claim experience or
health status;
(B) The carrier does not involuntarily transfer, and never
has involuntarily transferred, a health benefits plan into or out
of the class of business; and
(C) The class of business is currently available for
purchase.
(2) For a class of business, the premium rates charged
during a rating period to small employers with similar case
characteristics for the same or similar coverage, or the rates
which could be charged to such employers under the rating system
for that class of business, shall not vary from the index rate by
more than twenty-five percent of the index rate.
(3) 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 new business premium rate
measured from the first day of the prior rating period to the
first day of the new rating period. In the case of a class of
business for which the small employer carrier is not issuing new
policies, the carrier shall use the percentage change in the base
premium rate;
(B) An adjustment, not to exceed fifteen percent annually
and adjusted pro rata for rating periods of less than one year,
due to the claim experience, health status or duration of
coverage of the employees or dependents of the small employer as
determined from the carrier's rate manual for the class of
business; and
(C) Any adjustment due to change in coverage or change in
the case characteristics of the small employer as determined from
the carrier's rate manual for the class of business.
(4) In the case of health benefit plans issued prior to the
effective date of this article, a premium rate for a rating
period may exceed the ranges described in subdivision (1) or (2),
subsection (a) of this section for a period of five years
following the effective date of this article. In that case, the
percentage increase in the premium rate charged to a small
employer in such a class of business for a new rating period may
not exceed the sum of the following:
(A) The percentage change in the new business premium rate
measured from the first day of the prior rating period to the
first day of the new rating period. In the case of a class of
business for which the small employer carrier is not issuing new
policies, the carrier shall use the percentage change in the base
premium rate; and
(B) Any adjustment due to change in coverage or change in
the case characteristics of the small employer as determined from
the carrier's rate manual for the class of business.
(b) Nothing in this section is intended to affect the use by
a small employer carrier of legitimate rating factors other than
claim experience, health status or duration of coverage in the
determination of premium rates. Small employer carriers shall
apply rating factors, including case characteristics,
consistently with respect to all small employers in a class ofbusiness.
(c) Adjustments in rates for claim experience, health status
and duration of coverage may not be charged to individual
employees or dependents. Any such adjustment shall be applied
uniformly to the rates charged for all employees and dependents
of the small employer.
(d) A small employer carrier may utilize industry as a case
characteristic in establishing premium rates: Provided, That the
highest rate factor associated with any industry classification
may not exceed the lowest rate factor associated with any
industry classification by more than fifteen percent.
(e) Small employer carriers shall apply rating factors,
including case characteristics, consistently with respect to all
small employers in a class of business. Rating factors shall
produce premiums for identical groups which differ only by
amounts attributable to plan design and do not reflect
differences due to the nature of the groups assumed to select
particular health benefit plans.
(c) (f) A small employer carrier
shall may not involuntarily
transfer a small employer into or out of a class of business. A
small employer carrier
shall may not offer to transfer a small
employer into or out of a class of business unless such offer is
made to transfer all small employers in the class of business
without regard to case characteristics, claim experience, health
status or duration since issue.
(d) (g) To be eligible to make a rate increase request afterthe first day of July, one thousand nine hundred
ninety-one, an
insurer must ninety-three, a carrier shall have a minimum
anticipated loss ratio of
sixty-five seventy-five percent.
(e) (h) All
insurers carriers subject to this article,
effective the first day of July, one thousand nine hundred
ninety-three, shall be prohibited from distinguishing more than
four classes of businesses within its small group insurance
coverage.
(f) Prior to any increase of the anticipated loss ratio, the
insurance commissioner must conduct a public hearing as required
by section thirteen, article two of this chapter.
(g) (i) If any health benefit plan is provided by
an insurer
a carrier through an association of small employers not in the
business of selling insurance and with not
less fewer than two
hundred cumulative employees, and if such association is rated on
the basis of the number of employees and not on the basis of the
individual small employers, such association or group is exempt
from the provisions of this article.
§33-16D-6. Insurance commissioner to promulgate rules.
(a) Pursuant to chapter twenty-nine-a of this code, the
insurance commissioner
shall may promulgate rules
and regulations
necessary to implement the provisions of this article.
(b) The rules and regulations promulgated by the
commissioner shall include, but not be limited to, the following:
(1) Rules and regulations regarding the regulation of
administrative costs incurred by the insurers;
(2) Rules and regulations regarding the commissioner's
authority to increase the anticipated loss ratio and for the
collection of data on which to base said increase, including, but
not limited to, information obtained from the health care cost
review authority and the national insurance commissioners
association;
(3) Rules and regulations setting forth the procedures for
filing rate applications; and
(4) Rules and regulations eliminating tier and duration
ratings of small group insurers which are used to create
artificial rates or unfair trade practices.
§33-16D-7. Renewability of coverage; exceptions.
(a) A health benefit plan subject to this article shall be
renewable to all eligible employees at the option of the small
employer:
Provided, That
an insurer a carrier may refuse to
renew a health benefit plan for any of the following reasons:
(1) Nonpayment of required premiums;
(2) Fraud or misrepresentation by the small employer or by
the insured individual;
(3) Noncompliance with plan provisions;
(4) The number of individuals covered under the plan is
less
fewer than the number or
less than the percentage of eligible
individuals necessary pursuant to the percentage requirements
under the plan; or
(5) The small employer is no longer actively engaged in the
business in which it was engaged on the effective date of theplan.
(b) A small employer
insurer carrier may cease to renew all
plans under a class of business. Upon the small employer's
election of nonrenewal, the
insurer carrier shall provide notice
of such election not to renew to all affected health benefit
plans and to the commissioner in each state in which an affected
insured individual is known to reside at least ninety days prior
to termination of coverage.
(c)
An insurer A carrier which exercises its right to cease
to renew all plans in a class of business
shall may not:
(1) Establish a new class of business for a period of five
years after the nonrenewal of the plans without prior approval of
the commissioner; or
(2) Transfer or otherwise provide coverage to any of the
employers from the nonrenewed class of business unless the
insurer carrier offers to transfer or provide coverage to all
affected employers and eligible employees without regard to case
characteristics, claim experience, health status or duration of
coverage.
§33-16D-8. Disclosure of rating practices and renewability
provisions.
(a) Each small employer
insurer carrier shall make
reasonable disclosure in solicitation and sales materials
provided to small employers of the following:
(1) The extent to which premium rates for a specific small
employer are established or adjusted due to the claim experience,health status or duration of coverage of the employees of the
small employer;
(2) The provisions concerning the
insurer's carrier's right
to change premium rates and the factors, including case
characteristics, which affect changes in premium rates;
(3) A description of the class of business in which the
small employer is or will be included, including the applicable
grouping of plans;
(4) The provisions relating to renewability of coverage;
and
(5) The provisions relating to any preexisting conditions
limitations; and
(5) (6) An explanation, if applicable, that the small
employer is purchasing a minimum benefits plan
issued pursuant to
article sixteen-c of this chapter.
(b) All disclosure statements shall be presented in clear
and understandable form and format and shall be separate from any
policy, certificate or evidence of coverage otherwise provided.
§33-16D-9. Maintenance of records.
(a) Each small employer
insurer 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 which
demonstrate that its rating methods and practices are based upon
commonly accepted actuarial principles.
(b) Each small employer
insurer carrier shall file each
first day of March with the commissioner an actuarialcertification that the
insurer carrier is in compliance with the
provisions of
section five of this article and that the rating
methods of the
insurer carrier are actuarially sound. A copy of
such certification shall be retained by the
insurer carrier at
its principal place of business.
(c) A small employer
insurer carrier shall make the
information and documentation described in subsection (a) of this
section available to the commissioner upon request.
§33-16D-10. Suspension of requirements.
The insurance commissioner may suspend all or part of the
requirements of this article applicable to one or more health
benefit plans for one or more rating periods upon a filing by the
small employer
insurer carrier and a finding by the commissioner
that either the suspension is reasonable in light of the
financial condition of the
insurer carrier or that the suspension
would enhance the efficiency and fairness of the marketplace for
small employer health insurance.
§33-16D-12. Equality of terms; pre-existing conditions;
continuous coverage restrictions.
Health benefit plans and, to the extent permitted by
the
federal Employee Retirement Income Security Act (ERISA), other
benefit arrangements covering small employers shall be subject to
the following provisions:
(a) Pre-existing conditions provisions
shall may not exclude
coverage for a period beyond twelve months following an
individual's effective date of coverage and may only relate toconditions which had, during the twelve months immediately
preceding the effective date of coverage, manifested themselves
in such a manner as would cause an ordinarily prudent person to
seek medical advice, diagnosis, care or treatment or for which
medical advice, diagnosis, care or treatment was recommended or
received, or as to a pregnancy existing on the effective date of
coverage.
(b) In determining whether a pre-existing condition
limitation provision applies to an eligible employee or
dependent, all health benefit plans shall credit the time such
person was covered under a previous employer-based health
benefit plan, a comparable individual health benefit plan, or a
self-insured plan if the previous coverage was continuous to a
date not more than thirty days prior to the effective date of
the new coverage, exclusive of any applicable waiting period
under such plan.
(c) Subject to subsections (a) and (b) of this section, when
a small group employer converts its health
insurance benefit plan
from one health
insurance benefit plan to another health
insurance benefit plan or from one
insurer carrier to another
insurer carrier, all eligible employees who at the time of
conversion are covered by the health benefit plan must be offered
health benefits coverage under the subsequent plan, and no
employee who at the time of conversion is covered by a health
benefit plan offered by said employer may be treated any
differently relative to other covered employees under the newhealth benefit plan than he
or she is treated under the current
health benefit plan.
ARTICLE 16E. LIMITED BENEFITS ACCIDENT AND SICKNESS INSURANCE
POLICIES AND CERTIFICATES.
§33-16E-1. Definitions.
For purposes of this article:
(a) (1) "Limited benefits policy or certificate" means, with
the exception of those types of policies enumerated in
subdivision (2) of this subsection, any individual or group
accident and sickness insurance policy that does not provide all
benefits mandated by provisions of this chapter. Such policies
include, but are not limited to, accident only, disability,
hospital indemnity, specified disease, and travel accident
insurance policies.
(2) The following types of policies and certificates are
excluded from the definition of "limited benefits policy or
certificate" for purposes of this article:
(A) Credit accident and sickness insurance;
(B) Long-term care insurance;
(C) Medicare supplement insurance; and
(D) Minimum benefits accident and sickness insurance issued
pursuant to section fifteen, article fifteen or article sixteen-c
of this chapter.
(b) "Experience period" means the period beginning on the
first day of the calendar year during which a premium rate first
takes effect and ending on the last day of the calendar yearduring which the insurer earns five hundred thousand dollars in
premiums on the form in West Virginia or, if the annual premium
earned on the form in West Virginia is less than five hundred
thousand dollars, earns nationally.
(c) "Successive experience period" means the experience
period beginning on the first day following the end of the
preceding experience period.
§33-16E-2. Applicability.
The provisions of this article shall apply to all limited
benefits policies and certificates in force on the effective date
of this article, as well as to any limited benefits policy or
certificate issued or delivered after the effective date hereof.
§33-16E-3. Loss ratio requirements.
(a) Beginning on the first day of January, one thousand nine
hundred ninety-four, limited benefits policy forms and
certificate forms shall be expected to return to policyholders in
the form of aggregate loss ratios under the policy forms or
certificate forms:
(1) At least seventy-five percent of the earned premiums in
the case of group policies; and
(2) At least sixty-five percent of the earned premiums in
the case of individual policies.
(b) For purposes of this section, limited benefits policies
and certificates issued as a result of solicitation of
individuals through the mail or mass media advertising, including
both print and broadcast advertising, shall be treated asindividual policies.
§33-16E-4. Premium refunds; calculation of refunds; payments.
(a) Refunds to West Virginia policyholders made pursuant to
loss ratio requirements in section three of this article and
based upon annual earned premium volume in West Virginia shall be
calculated by multiplying the anticipated loss ratio by the
applicable earned premium during the experience period and
subtracting from that result the actual incurred claims during
the experience period.
(b) Refunds to West Virginia policyholders made pursuant to
section three of this article and based upon national annual
earned premium volume shall be calculated by:
(1) Multiplying the anticipated loss ratio by the applicable
earned premium during the experience period and subtracting from
that result the actual incurred claims during the experience
period; and
(2) Multiplying the results of subdivision (1) by the total
earned premium during the experience period from all West
Virginia policyholders eligible for refunds;
(3) Dividing the results of subdivision (2) by the total
earned premium during that period in all states on the policy
form.
(c) Refunds must be made to all West Virginia policyholders
who are insured under the applicable policy form as of the last
day of the experience period. Such refund shall include
interest, at the current accident and health reserve interestrate established by the national association of insurance
commissioners, from the end of the experience period until the
date of payment. Payment shall be made during the third quarter
of the year following the experience period for which a refund is
determined to be due.
(d) Refunds for the experience period of one thousand nine
hundred ninety-four shall be based upon the aggregate five prior
years of experience in West Virginia for each applicable policy
form, using the refund calculation methodology specified in this
section.
(e) Refunds of less than ten dollars shall be aggregated and
held by the insurer in a policyholders's liability fund and shall
be used to offset any future rate increases.
§33-16E-5. Notice of cancellation or nonrenewal.
No insurer may cancel or nonrenew a limited benefits policy
or certificate unless written notice of such cancellation or
nonrenewal is forwarded to the policyholder or certificateholder
not less than sixty days prior to the expiration date of the
policy or certificate.
§33-16E-6. Prohibition against preexisting conditions, waiting
periods, elimination periods and probationary periods in
replacement policies or certificates.
(a) If a limited benefits policy or certificate replaces
another limited benefits policy or certificate providing similar
coverage, the replacing insurer shall waive any time periods
applicable to preexisting conditions, waiting periods,elimination periods and probationary periods in the new limited
benefits policy or certificate to the extent that such time was
spent under the original policy or certificate.
(b) If a limited benefits policy or certificate replaces
another limited benefits policy or certificate providing similar
coverage that has been in effect for at least six months, the
replacing policy shall not provide any time periods applicable to
preexisting conditions, waiting periods, elimination periods and
probationary periods.
§33-16E-7. Extraterritorial jurisdiction.
(a) No limited benefits policy or certificate may be offered
to a resident of this state under a policy issued in another
state, unless this state or another state having statutory and
regulatory limited benefits policy or certificate requirements
substantially similar to those adopted in this state has made a
determination that such requirements have been met.
(b) Any such limited benefits policy form or certificate
form offered to a resident of this state under a policy issued in
another state shall be filed with the insurance commissioner.
§33-16E-8. Severability.
If any provision of this article or the application thereof
to any person or circumstance is for any reason held to be
invalid, the remainder of the article and application of such
provision to other persons or circumstances shall not be affected
thereby.
NOTE: This bill adds new Article 16E to Chapter 33 of the
West Virginia Code, to give the Insurance Commissioner greater
regulatory authority over limited benefits accident and sickness
insurance policies. Examples of such insurance include accident
only, disability, hospital indemnity, specified disease and
travel accident policies.
The new article created by the bill sets a 75% loss ratio
requirement for group limited benefits policies and a 65 percent
loss ratio requirement for such individual policies. Insurers
that fail to satisfy these mandates must make premium refunds to
policyholders.
The bill also requires a 60-day notice to an insured of
cancellation or nonrenewal of a limited benefits policy. It
prohibits preexisting conditions limitations, waiting periods and
the like for a policy that replaces a limited benefits policy
providing similar coverage. The bill also gives the Insurance
Commissioner extraterritorial jurisdiction over limited benefits
policies issued outside this sate but insuring West Virginia
residents. It specifies that provisions of new Article 16E apply
to limited benefits polices in force on the effective date of the
article, as well as to such policies issued or delivered
thereafter.
Regarding individual accident and sickness insurance other
than limited benefits policies, the bill requires that an insurer
issuing such policies must have a minimum anticipated loss ratio
of 65% to be eligible to request a premium rate increase after
July 1, 1994.
The bill also amends existing West Virginia Code Chapter 33,
Article 16D to track more closely the language in the National
Association of Insurance Commissioners' (NAIC) Model Act entitled
"Premium Rates and Renewability of Coverage for Health Insurance
Sold to Small Groups." The bill makes certain minor technical
corrections in the aforesaid article.
The bill eliminates provisions of existing West Virginia
Code Chapter 33, Article 16D that are not included in the NAIC
Model Act, such as specified rulemaking mandates in West virginia
Code §33-16D-6. It provides instead for permissive rulemaking by
the Insurance Commissioner.
The bill deletes the definition of "insurer" in West
virginia Code §33-16D-2 and substitutes "carrier" instead
throughout Chapter 33, Article 16D. It also eliminates the
definitions of "duration rating," "multiple-employer trust,"
"multiple-employer welfare arrangement" and "tier rating." The
bill expands the definition of "class of business," adopting the
wording of the NAIC Model Act. The bill increases from
forty-nine to seventy-five the number of employees which
qualifies an employer to be classified as a small employer.
The bill adds certain premium rating restrictions and
disclosure provisions that are favorable to policyholders in West
Virginia Code §§33-16D-5 and 33-16D-8. It also eliminates
existing statutory provisions on the Insurance Commissioner
conducting a public hearing before increasing the anticipatedloss ratio for a small employer carrier. These provisions are
being eliminated because they are inconsistent with existing West
Virginia Code §33-16D-10.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.
§33-15-1a and Chapter 33, Article 16E are new; therefore,
strike-throughs and underscoring have been omitted.
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