HF 1397

1st Engrossment - 87th Legislature (2011 - 2012) Posted on 05/03/2011 04:37pm

A bill for an act
relating to insurance; enacting the Group Insurance Portability Act (GIPA);
conforming state law on continuation employer group health coverage to the
federal COBRA law; providing access to a GAP policy as an alternative;
amending Minnesota Statutes 2010, section 62A.17.

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

Section 1.

Minnesota Statutes 2010, section 62A.17, is amended to read:

62A.17 TERMINATION OF OR LAYOFF FROM EMPLOYMENT;
CONTINUATION AND CONVERSION RIGHTS.

Subdivision 1.

Continuation of coverage.

Every group insurance policy, group
subscriber contract, and health care plan included within the provisions of section 62A.16,
except policies, contracts, or health care plans covering employees of an agency of the
federal government, shall contain a provision which permits every covered employee who
is voluntarily or involuntarily terminated or laid off from employment, if the policy,
contract, or health care plan remains in force for active employees of the employer, to
elect to continue the coverage for the employee and dependents.

An employee shall be considered to be laid off from employment if there is a
reduction in hours to the point where the employee is no longer eligible under the policy,
contract, or health care plan. Termination shall not include discharge for gross misconduct.

Upon request by the terminated or laid off employee, a health carrier must provide
the instructions necessary to enable the employee to new text begin : (1) new text end elect continuation of coverage new text begin
under this subdivision; or (2) elect a GAP policy under subdivision 7 new text end .

Subd. 2.

Responsibility of employee.

Every covered employee electing to continue
coverage shall pay the former employer, on a monthly basis, the cost of the continued
coverage new text begin , plus an administrative fee of no more than two percent of the cost of the
coverage new text end . The policy, contract, or plan must require the group policyholder or contract
holder to, upon request, provide the employee with written verification from the insurer of
the cost of this coverage promptly at the time of eligibility for this coverage and at any time
during the continuation period. If the policy, contract, or health care plan is administered
by a trust, every covered employee electing to continue coverage shall pay the trust the
cost of continued coverage according to the eligibility rules established by the trust. In no
event shall the amount of premium charged exceed 102 percent of the cost to the plan for
such period of coverage for similarly situated employees with respect to whom neither
termination nor layoff has occurred, without regard to whether such cost is paid by the
employer or employee. The employee shall be eligible to continue the coverage until the
employee becomes covered under another group health plan, or for a period of 18 months
after the termination of or lay off from employment, whichever is shorter. If the employee
becomes covered under another group policy, contract, or health plan and the new
group policy, contract, or health plan contains any preexisting condition limitations, the
employee may, subject to the 18-month maximum continuation limit, continue coverage
with the former employer until the preexisting condition limitations have been satisfied.
The new policy, contract, or health plan is primary except as to the preexisting condition.
In the case of a newborn child who is a dependent of the employee, the new policy,
contract, or health plan is primary upon the date of birth of the child, regardless of which
policy, contract, or health plan coverage is deemed primary for the mother of the child.

Subd. 4.

Responsibility of employer.

After timely receipt of the monthly payment new text begin
for continuation coverage new text end from a covered employee, if the employer, or the trustee, if
the policy, contract, or health care plan is administered by a trust, fails to make the
payment to the insurer, nonprofit health service plan corporation, or health maintenance
organization, with the result that the employee's coverage is terminated, the employer or
trust shall become liable for the employee's coverage to the same extent as the insurer,
nonprofit health service plan corporation, or health maintenance organization would be if
the coverage were still in effect.

In the case of a policy, contract or plan administered by a trust, the employer must
notify the trustee within 30 days of the termination or layoff of a covered employee of the
name and last known address of the employee.

If the employer or trust fails to notify a covered employee, the employer or trust
shall continue to remain liable for the employee's coverage to the same extent as the
insurer would be if the coverage were still in effect.

Subd. 5.

Notice of options.

Upon the termination of or lay off from employment
of an eligible employee, the employer shall inform the employee within 14 days after
termination or lay off of:

(1) the right to elect to continue the coverage new text begin and the right to instead elect GAP
coverage under subdivision 7 new text end ;

(2) the amount the employee must pay monthly to the employer to retain the
coverage;

(3) the manner in which and the office of the employer to which the payment to
the employer must be made; deleted text begin and
deleted text end

(4) the time by which the payments to the employer must be made to retain
coverage new text begin ; and
new text end

new text begin (5) that if the employee selects a GAP policy, the employee must make payment of
the amount required by the GAP insurer directly to the GAP insurer by the time required
by the GAP insurer new text end .

If the policy, contract, or health care plan is administered by a trust, the employer
is relieved of the obligation imposed by clauses (1) to (4). The trust shall inform the
employee of the information required by clauses (1) to (4).

The employee shall have 60 days within which to elect coverage. The 60-day period
shall begin to run on the date plan coverage would otherwise terminate or on the date upon
which notice of the right to coverage is received, whichever is later.

Notice must be in writing and sent by first class mail to the employee's last known
address which the employee has provided the employer or trust.

A notice in substantially the following form shall be sufficient: "As a terminated or
laid off employee, the law authorizes you to maintain your group medical insurance for
a period of up to 18 months. To do so you must notify your former employer within 60
days of your receipt of this notice that you intend to retain this coverage and must make a
monthly payment of $.......... to ........... at .......... by the ............... of each month."

Subd. 5a.

MS 2008 [Expired, 2009 c 33 s 1]

Subd. 5b.

Notices required by the American Recovery and Reinvestment Act of
2009 (ARRA).

(a) An employer that maintains a group health plan that is not described in
Internal Revenue Code, section 6432(b)(1) or (2), as added by section 3001(a)(12)(A) of
the American Recovery and Reinvestment Act of 2009 (ARRA), must notify the health
carrier of the termination of, or the layoff from, employment of a covered employee, and
the name and last known address of the employee, within the later of ten days after the
termination or layoff event, or June 8, 2009.

(b) The health carrier for a group health plan that is not described in Internal Revenue
Code, section 6432(b)(1) or (2), as added by section 3001(a)(12)(A) of the ARRA,
must provide the notice of extended election rights which is required by subdivision
5a, paragraph (a), as well as any other notice that is required by the ARRA regarding
the availability of premium reduction rights, to the individual within 30 days after the
employer notifies the health carrier as required by paragraph (a).

(c) The notice responsibilities set forth in this subdivision end when the premium
reduction provisions under ARRA expire.

Subd. 6.

Conversion to individual policy.

A group insurance policy that provides
posttermination or layoff coverage as required by this section shall also include a provision
allowing a covered employee, surviving spouse, or dependent at the expiration of the
posttermination or layoff coverage provided by subdivision 2 new text begin , or at the expiration of a
GAP policy under subdivision 7, new text end to obtain from the insurer offering the group policy
or group subscriber contract, at the employee's, spouse's, or dependent's option and
expense, without further evidence of insurability and without interruption of coverage,
an individual policy of insurance or an individual subscriber contract providing at
least the minimum benefits of a qualified plan as prescribed by section 62E.06 and the
option of a number three qualified plan, a number two qualified plan, and a number one
qualified plan as provided by section 62E.06, subdivisions 1 to 3, provided application
is made to the insurer within 30 days following notice of the expiration of the continued
new text begin or GAP new text end coverage and upon payment of the appropriate premium. The required conversion
contract must treat pregnancy the same as any other covered illness under the conversion
contract. A health maintenance contract issued by a health maintenance organization that
provides posttermination or layoff coverage as required by this section shall also include a
provision allowing a former employee, surviving spouse, or dependent at the expiration of
the posttermination or layoff coverage provided in subdivision 2 new text begin or 7 new text end to obtain from the
health maintenance organization, at the former employee's, spouse's, or dependent's option
and expense, without further evidence of insurability and without interruption of coverage,
an individual health maintenance contract. Effective January 1, 1985, enrollees who have
become nonresidents of the health maintenance organization's service area shall be given
the option, to be arranged by the health maintenance organization, of a number three
qualified plan, a number two qualified plan, or a number one qualified plan as provided by
section 62E.06, subdivisions 1 to 3. This option shall be made available at the enrollee's
expense, without further evidence of insurability and without interruption of coverage.

A policy providing reduced benefits at a reduced premium rate may be accepted
by the employee, the spouse, or a dependent in lieu of the optional coverage otherwise
required by this subdivision.

The individual policy or contract shall be renewable at the option of the individual
as long as the individual is not covered under another qualified plan as defined in section
62E.02, subdivision 4. Any revisions in the table of rate for the individual policy shall
apply to the covered person's original age at entry and shall apply equally to all similar
policies issued by the insurer.

new text begin Subd. 7. new text end

new text begin Direct access to a GAP policy. new text end

new text begin (a) In addition to other coverage required
to be available under this section, a health plan that provides group health coverage to an
employer must contain a provision which provides to every covered employee eligible
for continuation health coverage under subdivision 1, the right to instead obtain from the
health carrier a direct GAP policy under this subdivision without first enrolling in and
completing continuation coverage. The health carrier, on behalf of the employer, shall
provide the former employee with written notice of the former employee's rights under
subdivisions 1 to 5. Coverage under this subdivision must be offered to any terminated
or laid-off employee to whom continuation coverage must be offered under federal law
or Minnesota law.
new text end

new text begin (b) The individual direct GAP policies available to a former employee, including
dependent coverage at the option of the former employee, must consist of at least the
following options:
new text end

new text begin (1) annual deductible of $1,000 per individual, 80 percent coverage above the
deductible, subject to an annual $10,000 limit on out-of-pocket costs;
new text end

new text begin (2) a $15,000 annual deductible plan and 100 percent coverage thereafter; and
new text end

new text begin (3) qualified high-deductible health plan and health savings account with an annual
deductible of $5,950 per individual and $11,900 per family, with 100 percent coverage
above those deductibles.
new text end

new text begin The deductibles allowed under this paragraph are adjusted annually to match the federal
law regarding qualified high-deductible health plans and health savings accounts.
new text end

new text begin (c) The insurer must not consider the insurer's loss experience under policies issued
under this subdivision in determining the premium or any other feature of the employer's
group coverage.
new text end

new text begin (d) A former employee is not eligible for GAP coverage under this subdivision if
the former employee has enrolled in continuation coverage under subdivisions 1 to 5.
An election to receive coverage under this subdivision must be made no later than the
deadline for electing continuation coverage under subdivisions 1 to 5.
new text end

new text begin (e) GAP coverage must be offered up to the maximum duration required under the
federal COBRA law for continuation coverage of the former employee or other eligible
individual.
new text end

new text begin (f) The conversion plan option must be offered to GAP plan enrollees at the
conclusion of eligibility for GAP coverage.
new text end

new text begin (g) GAP coverage under this subdivision must be available on a guaranteed-issue
basis, following the HIPPA preexisting condition limitation for employer-provided group
insurance.
new text end

new text begin (h) Health plan companies shall pay the same service fees equal to those fees being
paid under the employer's group insurance plan to the licensed health insurance producer
that enrolls the individual in a GAP plan, to be paid for the period in which the individual
continues GAP coverage.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2012, and applies to losses
of eligibility for employer group coverage that begin on or after that date.
new text end