Report Title:

Group Health Insurers; Small Business; Part-time Employees

 

Description:

Requires insurers to offer continuation of coverage to employees who lose coverage due to termination or reduction of hours.  Requires insurers that offer health care coverage to the regular employees of any group or association to offer the same coverage to part-time employees working a certain amount of hours per week and for a minimum length of time.  Requires the insurance commissioner to submit a cost-benefit report to the legislature.  Part I effective upon approval.  Part II effective 01/01/20.  Part I sunsets 07/01/11.  Part II sunsets 07/01/14.  (SD2)

 


HOUSE OF REPRESENTATIVES

H.B. NO.

690

TWENTY-FIFTH LEGISLATURE, 2009

H.D. 2

STATE OF HAWAII

S.D. 2

 

 

 

 

 

A BILL FOR AN ACT


 

 

RELATING TO INSURANCE.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


PART I

     SECTION 1.  Chapter 431, Hawaii Revised Statutes, is amended by adding a new article to be appropriately designated and to read as follows:

"ARTICLE

GROUP HEALTH INSURANCE CONTINUATION OF COVERAGE

     §431:  ‑101  Scope and purpose.  (a)  This article shall apply to all persons offering coverage for dental services pursuant to chapter 423, insurers governed by chapter 431, mutual benefit societies governed by chapter 432:1, fraternal benefit societies governed by chapter 432:2, and health maintenance organizations governed by chapter 432D.

     (b)  This article shall not apply if continuation of coverage benefits is available to covered persons or qualified beneficiaries pursuant to section 4980B of the Internal Revenue Code, chapter 18 of the Employee Retirement Income Security Act, 29 United States Code section 1161 et seq., or chapter 6A of the Public Health Service Act, 42 United States Code section 300bb-1 et seq.

     §431:  ‑102  Definitions.  As used in this article:

     "Applicable premium" means the premium charged by a group health insurer for a period of coverage for persons covered under a group health plan, regardless of who pays the premium.

     "Beneficiary" means any person who is insured under the group health plan by virtue of relationship to covered person.

     "Continuation of coverage" means coverage under a group health plan that meets the requirements of this article.

     "Covered person" means an employee who is or was provided coverage under a group health plan.

     "Group health insurer" means all persons offering a dental plan or group health plan to any employer pursuant to title 24, but shall not include those persons offering benefits exempted from Title I of the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191, under sections 732(c) and 733(c) of the Employee Retirement Income Security Act of 1974, 42 United States Code sections 1191a(c) and 1191b(c), and section 2791(c) of the Public Health Service Act, 42 United States Code section 300gg-91.

     "Group health plan" means a plan maintained by an employer to provide health care to individuals and their families who have an employment related connection to the employer.

     "Qualified beneficiary" means any person who, on the day before a qualifying event, is insured under a group health plan by virtue of relationship to a covered person.

     "Qualifying event" means the termination or reduction of hours of the covered person's employment resulting in the loss of coverage under a prepaid health care plan pursuant to chapter 393.

     §431:  -103  Continuation of coverage under group health plans.  (a)  A group health plan shall provide that each covered person or qualified beneficiary who would lose coverage under the group health plan because of a qualifying event is entitled to elect continuation of coverage pursuant to this article without providing evidence of insurability.  A covered person or qualified beneficiary who elects continuation of coverage is entitled to all the benefits and is subject to all the terms and conditions applicable to the group health plan.

     (b)  Continuation of coverage under the group health plan shall, at minimum, extend from the date of the qualifying event to the earliest of:

     (1)  Twenty-four months after the termination of a covered person or qualified beneficiary's benefits under a group health plan because of a qualifying event;

     (2)  The date of termination of coverage under a group health plan because of a failure to make timely payment of the applicable premium;

     (3)  The date a covered person or qualified beneficiary becomes covered under any other group health plan, if the covered person or qualified beneficiary will not be subject to any exclusion, waiting period, or limitation because of a preexisting condition;

     (4)  The date a covered person or qualified beneficiary is entitled to benefits under either part A or part B of Title XVIII of the Social Security Act, 42 United States Code section 1395c to 1395w-4; or

     (5)  The date on which an employer terminates coverage under a group health plan for all employees or members; provided that if the employer replaces the terminated group health plan by coverage under another group health plan, the covered person or qualified beneficiary shall have the right to become covered under the new group health plan for the balance of the period that the person would have remained covered under the terminated group health plan.

     (c)  A covered person or qualified beneficiary shall give written notice to the group health insurer not later than thirty days after a qualifying event.  The written notice shall identify the employer or specify the group health plan number, shall provide the name and address of the covered person or qualified beneficiary, and shall provide other information required under the terms of the group health plan or by the commissioner.  The written notice shall inform the group health insurer of the occurrence of a qualifying event; provided that in cases where a covered employee has been involuntarily discharged, the nature of the discharge need not be disclosed.

     (d)  Within fourteen days after the receipt of written notice under this section, the group health insurer shall send each covered person or qualified beneficiary an election and premium notice form, which shall provide for the covered person or qualified beneficiary's election or nonelection of continuation of coverage and the applicable premium amount.

     (e)  A covered person or qualified beneficiary who elects continuation of coverage shall pay the initial premium and elect continuation of coverage in writing to the group health insurer issuing the group health plan within thirty days after receiving notice from the group health insurer.  The group health insurer or its designee shall process all elections promptly and provide coverage retroactively to the date coverage would otherwise have terminated.  The premium due shall be for the period beginning on the date coverage would have otherwise terminated due to the qualifying event.  The first premium payment shall include coverage paid to the end of the month in which the first payment is made.  After election, the group health insurer shall bill the covered person or qualified beneficiary for premiums once each month, with a due date on the first of the month of coverage and allowing a thirty day grace period for payment.

     (f)  Except as otherwise specified in an election, any election by a covered person or qualified beneficiary shall be deemed to include an election of continuation of coverage on behalf of any other covered person or qualified beneficiary residing in the same household who would lose coverage under the group health plan by reason of a qualifying event.

     (g)  The premium paid for continuation of coverage shall not exceed one hundred fifty per cent of the applicable premium.

     (h)  If a group health insurer fails to comply with the notice requirements of this section and that noncompliance results in the failure of a covered person or qualified beneficiary to elect continuation of coverage under the group health plan, the covered person or qualified beneficiary shall be deemed to have timely elected continuation of coverage within the election period and shall be covered under the group health plan at the expense of the noncompliant group health insurer.  The liability exposure of a noncompliant group health insurer under this section shall be limited to the period from the effective date of coverage pursuant to an affirmative election through the date that the covered person or qualified beneficiary receives actual notice.  This subsection shall not apply where the failure of the group health insurer to comply with notice requirements was due to noncompliance with requirements for notice of a qualifying event by the covered person or qualified beneficiary.

     (i)  If a covered person or qualified beneficiary who is a member of the military reserve or National Guard has elected to continue coverage and is thereafter called to active duty and the coverage under the group plan is terminated due to enrollment in a health care program provided by the United States Department of Defense, the twenty-four month period for which the covered person or qualified beneficiary would otherwise be entitled to continue coverage is tolled during the time that the person is covered under the United States Department of Defense program.  Within thirty days after federal coverage terminates, the covered person or qualified beneficiary may elect to continue coverage under the group health plan, retroactively to the date coverage terminated under the United States Department of Defense program, for the remainder of the twenty-four month period.

     (j)  A covered person or qualified beneficiary who is disenrolled from continuation of coverage under this article for any reason, including but not limited to voluntary disenrollment or failure to timely submit premium payments, will be ineligible to re-enroll for continuation of coverage under the group health plan.

     §431:  -104  Notice required.  (a)  At the time of the first renewal of the policy after January 1, 2010, a group health insurer shall include notification of the right to continuation of coverage pursuant to this article and notification of the procedures for requesting continuation of coverage in each policy, contract, certificate of coverage, and plan guide to benefits.  The notification shall contain all information necessary for a covered person or qualified beneficiary to comply with the notice requirements of this article.  Forms for use by the covered person or qualified beneficiary shall be made available by the group health insurer.  The notice required by this subsection shall also be posted on the group health insurer's corporate website in a manner that allows the group health insurer's members to view that information.

     (b)  The commissioner shall display on the commissioner's official website notification of the right to continuation of coverage pursuant to this article and notification of the procedures for requesting continuation of coverage.  The notice required by this article shall be continuously available to the general public through the commissioner's website."

     SECTION 2.  Section 432:1-102, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  Article 2, article 2D, article 13, [and] article 14G, and article     of chapter 431, and the powers there granted to the commissioner, shall apply to managed care plans, health maintenance organizations, or medical indemnity or hospital service associations, which are owned or controlled by mutual benefit societies, so long as the application in any particular case is in compliance with and is not preempted by applicable federal statutes and regulations."

     SECTION 3.  Section 432D-19, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

     "(d)  Article 2, article 13, [and] article 14G, and article    of chapter 431, and the power there granted to the commissioner, shall apply to health maintenance organizations, so long as the application in any particular case is in compliance with and is not preempted by applicable federal statutes and regulations."

PART II

     SECTION 4.  Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 10A to be appropriately designated and to read as follows:

     "§431:10A-    Group health care coverage; part-time employees.  (a)  An insurer that provides health care coverage in this State to the regular employees of any group or association shall offer the same coverage to part-time employees of that group or association.  If the group or association offers family coverage as defined in section 431:10A-103 to its regular employees, it shall offer the same family coverage to part-time employees.  The group or association shall not be required by this section to pay any part of the premium for coverage of part-time employees.  The group or association shall be responsible for any administrative duties required for the enrollment of part-time employees such as monitoring eligibility, collecting premiums, and transmitting payment to the insurer.

     (b)  A group health insurer may limit periods of enrollment for part-time employees to a minimum of thirty calendar days; provided that:

     (1)  Part-time employees who experience a qualifying event shall enroll with a group health insurer within thirty days of the qualifying event; and

     (2)  Group health insurers shall be allowed to impose a one-year waiting period against part-time employees who terminate coverage for any reason.  If a part-time employee terminates coverage and a one-year waiting period is imposed against the employee, a group health insurer need not reenroll the employee until the period of enrollment following the one-year waiting period.

     For the purposes of this section:

     "Group or association" shall not include any state or political subdivision of any state, or instrumentality thereof.

     "Health care" includes hospitalization, surgery, medical or nursing care, drugs, or restorative appliances.

     "Part-time employee" means a person employed by a single employer for at least fifteen, but less than twenty hours per week and for a continuous period of at least eighteen months. 

     "Qualifying event" means the date on which the part-time employee has been continuously employed by a single employer for a period of eighteen months or the date on which a dependent of the part-time employee becomes eligible for coverage through loss of other health care coverage, marriage, birth, or adoption.

     "Regular employee" means a person employed by a single employer for at least twenty hours per week."

     SECTION 5.  Chapter 432, Hawaii Revised Statutes, is amended by adding a new section to article 1 to be appropriately designated and to read as follows:

     "§432:1-    Group health care coverage; part-time employees.  (a)  A mutual benefit society in this State whose hospital and medical service corporation contract provides health care coverage for the regular employees of any group or association shall offer the same coverage to part-time employees of that group or association.  If the group or association offers family coverage as defined in section 431:10A-103 to its regular employees, it shall offer the same family coverage to part-time employees.  The group or association shall not be required by this section to pay any part of the premium for coverage of part-time employees.  The group or association shall be responsible for any administrative duties required for the enrollment of part-time employees such as monitoring eligibility, collecting premiums, and transmitting payment to the insurer.

     (b)  A group health insurer may limit periods of enrollment for part-time employees to a minimum of thirty calendar days; provided that:

     (1)  Part-time employees who experience a qualifying event shall enroll with a group health insurer within thirty days of the qualifying event; and

     (2)  Group health insurers shall be allowed to impose a one-year waiting period against part-time employees who terminate coverage for any reason.  If a part-time employee terminates coverage and a one-year waiting period is imposed against the employee, a group health insurer need not reenroll the employee until the period of enrollment following the one-year waiting period.

     For the purposes of this section:

     "Group or association" shall not include any state or political subdivision of any state, or instrumentality thereof.

     "Health care" includes hospitalization, surgery, medical or nursing care, drugs, or restorative appliances.

     "Part-time employee" means a person employed by a single employer for at least fifteen, but less than twenty hours per week and for a continuous period of at least eighteen months.

     "Qualifying event" means the date on which the part-time employee has been continuously employed by a single employer for a period of eighteen months or the date on which a dependent of the part-time employee becomes eligible for coverage through loss of other health care coverage, marriage, birth, or adoption.

     "Regular employee" means a person employed by a single employer for at least twenty hours per week."

     SECTION 6.  Chapter 432:2, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§432:2-    Group health care coverage; part-time employees.  (a)  A fraternal benefit society in this State whose hospital and medical service corporation contract provides health care coverage for the regular employees of any group or association shall offer the same coverage to part-time employees of that group or association.  If the group or association offers family coverage as defined in section 431:10A-103 to its regular employees, it shall offer the same family coverage to part-time employees.  The group or association shall not be required by this section to pay any part of the premium for coverage of part-time employees.  The group or association shall be responsible for any administrative duties required for the enrollment of part-time employees such as monitoring eligibility, collecting premiums, and transmitting payment to the insurer.

     (b)  A group health insurer may limit periods of enrollment for part-time employees to a minimum of thirty calendar days; provided that:

     (1)  Part-time employees who experience a qualifying event shall enroll with a group health insurer within thirty days of the qualifying event; and

     (2)  Group health insurers shall be allowed to impose a one-year waiting period against part-time employees who terminate coverage for any reason.  If a part-time employee terminates coverage and a one-year waiting period is imposed against the employee, a group health insurer need not reenroll the employee until the period of enrollment following the one-year waiting period.

     For the purposes of this section:

     "Group or association" shall not include any state or political subdivision of any state, or instrumentality thereof.

     "Health care" includes hospitalization, surgery, medical or nursing care, drugs, or restorative appliances.

     "Part-time employee" means a person employed by a single employer for at least fifteen, but less than twenty hours per week and for a continuous period of at least eighteen months.

     "Qualifying event" means the date on which the part-time employee has been continuously employed by a single employer for a period of eighteen months or the date on which a dependent of the part-time employee becomes eligible for coverage through loss of other health care coverage, marriage, birth, or adoption.

     "Regular employee" means a person employed by a single employer for at least twenty hours per week."

     SECTION 7.  Chapter 432D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§432D-    Group health care coverage; part-time employees.  (a)  A health maintenance organization that issues a policy, contract, plan, or agreement in this State that provides health care coverage for the regular employees of any group or association shall offer the same coverage to part-time employees of that group or association.  If the group or association offers family coverage as defined in section 431:10A-103 to its regular employees, it shall offer the same family coverage to part-time employees.  The group or association shall not be required by this section to pay any part of the premium for coverage of part-time employees.  The group or association shall be responsible for any administrative duties required for the enrollment of part-time employees such as monitoring eligibility, collecting premiums, and transmitting payment to the insurer.

     (b)  A group health insurer may limit periods of enrollment for part-time employees to a minimum of thirty calendar days; provided that:

     (1)  Part-time employees who experience a qualifying event shall enroll with a group health insurer within thirty days of the qualifying event; and

     (2)  Group health insurers shall be allowed to impose a one-year waiting period against part-time employees who terminate coverage for any reason.  If a part-time employee terminates coverage and a one-year waiting period is imposed against the employee, a group health insurer need not reenroll the employee until the period of enrollment following the one-year waiting period.

     For the purposes of this section:

     "Group or association" shall not include any state or political subdivision of any state, or instrumentality thereof.

     "Health care" includes hospitalization, surgery, medical or nursing care, drugs, or restorative appliances.

     "Part-time employee" means a person employed by a single employer for at least fifteen, but less than twenty hours per week and for a continuous period of at least eighteen months.

     "Qualifying event" means the date on which the part-time employee has been continuously employed by a single employer for a period of eighteen months or the date on which a dependent of the part-time employee becomes eligible for coverage through loss of other health care coverage, marriage, birth, or adoption.

     "Regular employee" means a person employed by a single employer for at least twenty hours per week."

     SECTION 8.  (a)  The insurance commissioner shall prepare a report of the costs and benefits of sections 4, 5, 6, and 7 of this Act.  The report shall be prepared with the cooperation and assistance of the disability compensation division of the department of labor and industrial relations.  The report shall include:

     (1)  An evaluation of the success of sections 4, 5, 6, and 7 of this Act in providing part-time employees with access to health care coverage;

     (2)  An evaluation of the costs to employees, employers, and insurers of providing that coverage;

     (3)  Any recommendations concerning sections 4, 5, 6, and 7 of this Act; and

     (4)  Any other information necessary for a reasonable assessment of the costs and benefits of sections 4, 5, 6, and 7 of this Act to be made, and to allow health care coverage to be made available to part-time employees at the lowest possible cost.

     (b)  Each insurer subject to sections 4, 5, 6, and 7 of this Act shall submit, at the time and in the form prescribed by the insurance commissioner, the information deemed necessary by the insurance commissioner to complete the report required by this section.  In obtaining this information, the insurance commissioner shall seek to minimize an insurer's cost of compliance.

     (c)  The insurance commissioner shall report its findings, recommendations, and any proposed legislation to the legislature no later than twenty days prior to the convening of the regular session of 2011.

     SECTION 9.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 10.  This Act shall take effect upon its approval; provided that:

     (1)  Sections 1, 2, and 3 of this Act shall be repealed on July 1, 2011;

     (2)  Sections 431:1-102 and 432D-19, Hawaii Revised Statutes, shall be reenacted in the form in which they read on the day before the approval of this Act; and

     (3)  Sections 4, 5, 6, and 7 of this Act shall take effect on January 1, 2020, and shall be repealed on July 1, 2014.