1.1 	A bill for an act
1.2 	relating to insurance; providing state-funded
1.3 	reinsurance for small employer health coverage;
1.4 	appropriating money; amending Minnesota Statutes 2004,
1.5 	section 62L.08, subdivision 2; proposing coding for
1.6 	new law in Minnesota Statutes, chapter 256.
1.7 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8 	Section 1. Minnesota Statutes 2004, section 62L.08,
1.9 	subdivision 2, is amended to read:
1.10 		Subd. 2.General premium variations.  Beginning July 1,
1.11 	1993, each health carrier must offer premium rates to small
1.12 	employers that are no more than 25 percent above and no more
1.13 	than 25 percent below the index rate charged to small employers
1.14 	for the same or similar coverage, adjusted pro rata for rating
1.15 	periods of less than one year.  The premium variations permitted
1.16 	by this subdivision must be based only on health status, claims
1.17 	experience, the availability of reinsurance payments under
1.18 	section 256.9561,industry of the employer, and duration of
1.19 	coverage from the date of issue.  For purposes of this
1.20 	subdivision, health status includes refraining from tobacco use
1.21 	or other actuarially valid lifestyle factors associated with
1.22 	good health, provided that the lifestyle factor and its effect
1.23 	upon premium rates have been determined to be actuarially valid
1.24 	and approved by the commissioner.  Variations permitted under
1.25 	this subdivision must not be based upon age or applied
1.26 	differently at different ages.  This subdivision does not
2.1 	prohibit use of a constant percentage adjustment for factors
2.2 	permitted to be used under this subdivision.

2.3 	Sec. 2. [256.9561] SMALL EMPLOYER REINSURANCE FUND.
2.4 		Subdivision 1.Definitions. For purposes of this
2.5 	section, the following definitions apply:
2.6 	(a) "Commissioner" means the commissioner of human services.
2.7 	(b) "Health plan" means a policy, contract, or certificate
2.8 	issued by a health plan company to a qualifying employer, if the
2.9 	policy, contract, or certificate meets the requirements of
2.10 	chapter 62L.
2.11 	(c) "Health plan company" means:
2.12 	(1) a health carrier as defined under section 62A.011,
2.13 	subdivision 2;
2.14 	(2) a community integrated service network operating under
2.15 	chapter 62N; or 
2.16 	(3) an accountable provider network operating under chapter
2.17 	62T.
2.18 	(d) "Qualifying employer" means an employer who:
2.19 	(1) is a small employer as defined in section 62L.02,
2.20 	subdivision 26, that has at least two, but no more than ten,
2.21 	current employees;
2.22 	(2) did not offer employer-subsidized health care coverage
2.23 	to its employees for at least 12 months prior to obtaining a
2.24 	health plan; and 
2.25 	(3) is offering employer-subsidized health coverage through
2.26 	the health plan to all eligible employees, as defined in section
2.27 	62L.02, subdivision 13, except for employees who are eligible
2.28 	for Medicare.
2.29 	(e) "Employer-subsidized health coverage" means health
2.30 	coverage for which the employer pays at least 50 percent of the
2.31 	cost of coverage for the employee.
2.32 	(f) "Qualifying enrollee" means an employee of a qualifying
2.33 	employer or the employee's dependent, as defined in section
2.34 	62L.02, subdivision 11, covered by a health plan.
2.35 		Subd. 2.Creation of account. (a) A small employer
2.36 	reinsurance fund account is established in the general fund.
3.1 	The commissioner shall use the money to establish a stop-loss
3.2 	fund to reimburse health plan companies for claims paid for
3.3 	qualifying enrollees.  The account consists of money
3.4 	appropriated by the legislature.  Money from the account must be
3.5 	used for the reinsurance fund.
3.6 	(b) The commissioner may accept grants from public or
3.7 	private entities for the purpose of expanding the reinsurance
3.8 	fund.  Any grant money received by the commissioner must be
3.9 	deposited in the account and distributed in accordance with this
3.10 	section.
3.11 		Subd. 3.Reimbursement. (a) A health plan company may
3.12 	receive reimbursement from the fund for 90 percent of the
3.13 	payments made, less any third-party recoveries, for claims
3.14 	incurred in a calendar year for a qualifying enrollee for
3.15 	services that in aggregate exceed $30,000 but not of the
3.16 	payments that exceed $100,000.
3.17 	(b) Claims must be reported and funds must be distributed
3.18 	on a calendar-year basis.
3.19 	(c) Once claims incurred on behalf of a qualifying enrollee
3.20 	reach $100,000 in a given calendar year, no further claims may
3.21 	be reimbursed on behalf of that enrollee in that calendar year.
3.22 	(d) If a health plan company collects third-party
3.23 	recoveries for a claim after the health plan company has
3.24 	received reimbursement for the claim from the reinsurance fund
3.25 	account, the health plan company must reimburse the account with
3.26 	the amount that would have been subtracted from the payment
3.27 	under this subdivision.  The health plan company is not required
3.28 	to reimburse the account for more than the amount received by
3.29 	the health plan company for that claim as calculated under
3.30 	subdivision 5.
3.31 		Subd. 4.Request process. (a) Each health plan company
3.32 	must submit a request for reimbursement from the fund on a form
3.33 	prescribed by the commissioner.  Requests for payment must be
3.34 	submitted no later than April 1 following the end of the
3.35 	calendar year for which the reimbursement request is being made.
3.36 	(b) The commissioner may require a health plan company to
4.1 	submit claims data as needed in connection with the
4.2 	reimbursement request.
4.3 		Subd. 5.Distribution. (a) The commissioner shall
4.4 	calculate the total qualified claims reimbursement amount for
4.5 	all health plan companies for the calendar year for which claims
4.6 	are being reported and shall distribute the reinsurance funds
4.7 	before June 30 of the following calendar year.
4.8 	(b) In the event that the total amount requested for
4.9 	reimbursement by the health plan companies for a calendar year
4.10 	exceeds the funds available for distribution for claims paid by
4.11 	all health plan companies during the same calendar year, the
4.12 	commissioner shall provide for the pro rata distribution of the
4.13 	available funds.  Each health plan company is eligible to
4.14 	receive only a proportionate amount of the available funds as
4.15 	the health plan company's total eligible claims paid compares to
4.16 	the total eligible claims paid by all health plan companies.
4.17 	(c) If funds available for distribution for claims paid by
4.18 	all health plan companies during a calendar year exceed the
4.19 	total amount requested for reimbursement by all health plan
4.20 	companies during the same calendar year, any excess funds must
4.21 	be reallocated for distribution in the next calendar year and
4.22 	may carry over into the next biennium.
4.23 		Subd. 6.Data. Upon the request of the commissioner,
4.24 	each health plan company shall furnish such data as the
4.25 	commissioner deems necessary to administer the fund.  The
4.26 	commissioner may require that such data be submitted on a per
4.27 	enrollee, aggregate, or categorical basis.  Any data submitted
4.28 	under this section is classified as private data or nonpublic
4.29 	data as defined in section 13.02.
4.30 		Subd. 7.Delegation. The commissioner may delegate any
4.31 	or all of the commissioner's administrative duties under this
4.32 	section to another state agency or to a private contractor.
4.33 		Subd. 8.Effect on premiums. Premiums charged to
4.34 	eligible employers must reflect the existence of the reinsurance
4.35 	fund created in this section.  The commissioner of commerce or
4.36 	commissioner of health, as appropriate, shall enforce this
5.1 	subdivision.

5.2 	Sec. 3. APPROPRIATION.
 5.3 	$....... is appropriated from the general fund to the
5.4 	reinsurance fund account to be used by the commissioner of human
5.5 	services for purposes of section 2 for fiscal years 2006 to 2007.

5.6 	Sec. 4. EFFECTIVE DATE.
 5.7 	Sections 1 and 2 are effective January 1, 2006, and apply
5.8 	to health plans issued or renewed on or after that date.