HF 2755

2nd Engrossment - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to insurance; changing certain form and rate 
  1.3             filing requirements; eliminating certain minimum loss 
  1.4             ratio requirements; regulating joint self-insurance; 
  1.5             modifying small employer health insurance provisions; 
  1.6             extending the task force on small business health 
  1.7             insurance; modifying the geographic premium 
  1.8             variations; creating a cap on renewal premium 
  1.9             increases; amending Minnesota Statutes 2000, sections 
  1.10            62A.02, subdivisions 3, 4a, 5a, by adding a 
  1.11            subdivision; 62A.021, subdivision 1; 62A.65, 
  1.12            subdivisions 3, 5; 62D.02, subdivision 8; 62H.01; 
  1.13            62H.04; 62L.02, by adding a subdivision; 62L.03, 
  1.14            subdivisions 1, 5; 62L.08, subdivision 4, by adding a 
  1.15            subdivision; repealing Minnesota Statutes 2000, 
  1.16            section 62A.02, subdivision 2. 
  1.17  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.18     Section 1.  Minnesota Statutes 2000, section 62A.02, 
  1.19  subdivision 3, is amended to read: 
  1.20     Subd. 3.  [STANDARDS FOR APPROVAL AND DISAPPROVAL.] The 
  1.21  commissioner shall, within 60 days after the filing of any form 
  1.22  or rate, approve or disapprove the form or rate.  A rate or form 
  1.23  filing under this section may be used on or after the date of 
  1.24  filing with the commissioner.  Forms or rates that are not 
  1.25  approved or disapproved within the 60-day time period are deemed 
  1.26  approved.  The commissioner may disapprove forms or rates for 
  1.27  the following reasons: 
  1.28     (1) if the benefits provided are not reasonable in relation 
  1.29  to the premium charged; 
  1.30     (2) if it contains a provision or provisions which are 
  1.31  unjust, unfair, inequitable, misleading, deceptive or encourage 
  2.1   misrepresentation of the health plan form, or otherwise does not 
  2.2   comply with this chapter, chapter 62L, or chapter 72A; 
  2.3      (3) if the proposed premium rate is excessive or not 
  2.4   adequate inadequate; or 
  2.5      (4) the actuarial reasons and data submitted do not justify 
  2.6   the rate.  
  2.7      The party proposing a rate has the burden of proving by a 
  2.8   preponderance of the evidence that it does not violate this 
  2.9   subdivision.  
  2.10     In determining the reasonableness of a rate, the 
  2.11  commissioner shall also review all administrative contracts, 
  2.12  service contracts, and other agreements to determine the 
  2.13  reasonableness of the cost of the contracts or agreement and 
  2.14  effect of the contracts on the rate.  If the commissioner 
  2.15  determines that a contract or agreement is not reasonable, the 
  2.16  commissioner shall disapprove any rate that reflects any 
  2.17  unreasonable cost arising out of the contract or agreement.  The 
  2.18  commissioner may require any information that the commissioner 
  2.19  deems necessary to determine the reasonableness of the cost. 
  2.20     For the purposes of this subdivision, the commissioner 
  2.21  shall establish by rule a schedule of minimum anticipated loss 
  2.22  ratios which shall be based on (i) the type or types of coverage 
  2.23  provided, (ii) whether the policy is for group or individual 
  2.24  coverage, and (iii) the size of the group for group policies.  
  2.25  Except for individual policies of disability or income 
  2.26  protection insurance, the minimum anticipated loss ratio shall 
  2.27  not be less than 50 percent after the first year that a policy 
  2.28  is in force.  All applicants for a policy shall be informed in 
  2.29  writing at the time of application of the anticipated loss ratio 
  2.30  of the policy.  "Anticipated loss ratio" means the ratio at the 
  2.31  time of filing, at the time of notice of withdrawal under 
  2.32  subdivision 4a, or at the time of subsequent rate revision of 
  2.33  the present value of all expected future benefits, excluding 
  2.34  dividends, to the present value of all expected future premiums. 
  2.35     If the commissioner notifies a health carrier that has 
  2.36  filed any form or rate that it does not comply with this 
  3.1   chapter, chapter 62L, or chapter 72A, it shall be unlawful for 
  3.2   the health carrier to issue or use the form or rate.  In the 
  3.3   notice the commissioner shall specify the reasons for 
  3.4   disapproval and state that a hearing will be granted within 20 
  3.5   days after request in writing by the health carrier.  
  3.6      The 60-day period within which the commissioner is to 
  3.7   approve or disapprove the form or rate does not begin to run 
  3.8   until a complete filing of all data and materials required by 
  3.9   statute or initially requested by the commissioner has been 
  3.10  submitted.  
  3.11     However, if the supporting data is not filed within 30 days 
  3.12  after a request by the commissioner, the rate is not effective 
  3.13  and is presumed to be an excessive rate.  
  3.14     Sec. 2.  Minnesota Statutes 2000, section 62A.02, 
  3.15  subdivision 4a, is amended to read: 
  3.16     Subd. 4a.  [DISAPPROVAL OR WITHDRAWAL OF APPROVAL.] The 
  3.17  commissioner may, at any time after a 20-day written notice has 
  3.18  been given to the insurer, withdraw approval of any form or rate 
  3.19  that has previously been approved on any of the grounds stated 
  3.20  in this section.  (a) Upon written notice to the health carrier, 
  3.21  the commissioner may disapprove or withdraw approval of a form 
  3.22  if the form violates this section.  The notice shall specify the 
  3.23  objectionable provisions, state the reasons for the 
  3.24  commissioner's decision, and state that a hearing will be 
  3.25  granted in 20 days after the request in writing by the health 
  3.26  carrier.  Disapproval of a form that was deemed approved is 
  3.27  retroactive to the date of filing with the commissioner.  If the 
  3.28  form is already legally in use by the health carrier in this 
  3.29  state, the notice shall give the effective date of the 
  3.30  commissioner's disapproval which shall not be less than 30 days 
  3.31  subsequent to the delivery of the notice.  If the form is not 
  3.32  legally in use, the disapproval shall be effective immediately. 
  3.33     (b) Upon written notice to the health carrier, the 
  3.34  commissioner may disapprove a rate that has not been approved or 
  3.35  deemed approved if the rate violates this section.  The notice 
  3.36  shall state the reasons for the commissioner's decision, and 
  4.1   state that a hearing will be granted in 20 days after a written 
  4.2   request by the health carrier.  No more than 45 days after a 
  4.3   rate has been deemed approved, the commissioner, after a hearing 
  4.4   for which at least 30 days' written notice has been given, may 
  4.5   withdraw approval of rates deemed approved under this section 
  4.6   and may order an appropriate refund or a future premium credit 
  4.7   to policyholders.  The notice of a hearing to consider the 
  4.8   withdrawal of approval must specify the matters to be considered 
  4.9   at the hearing.  The health carrier may waive its right to a 
  4.10  hearing under this paragraph.  Disapproval of rates that were 
  4.11  deemed approved is retroactive to the date of filing with the 
  4.12  commissioner.  If the rate is already legally in use by the 
  4.13  health carrier in this state, the withdrawal of approval notice 
  4.14  must give the effective date of the commissioner's withdrawal of 
  4.15  approval, which must be not less than 30 days after delivery of 
  4.16  the notice.  If the rate is not legally in use, the disapproval 
  4.17  must be effective immediately.  
  4.18     (c) It is unlawful for the health carrier to issue a form 
  4.19  or rate or use it in connection with any health plan after the 
  4.20  effective date of the withdrawal of approval.  The notice of 
  4.21  withdrawal of approval must advise the health carrier of the 
  4.22  right to a hearing under the contested case procedures of 
  4.23  chapter 14, and must specify the matters to be considered at the 
  4.24  hearing.  
  4.25     The commissioner may request a health carrier to provide 
  4.26  actuarial reasons and data, as well as other information, needed 
  4.27  to determine if a previously approved rate continues to satisfy 
  4.28  the requirements of this section.  If the requested information 
  4.29  is not provided within 30 days after request by the 
  4.30  commissioner, the rate is presumed to be an excessive rate.  
  4.31     Sec. 3.  Minnesota Statutes 2000, section 62A.02, 
  4.32  subdivision 5a, is amended to read: 
  4.33     Subd. 5a.  [HEARING.] In the case of disapproval of a form 
  4.34  or rate or withdrawal of approval of a form, if the health 
  4.35  carrier must does not request a hearing before the 20-day notice 
  4.36  period has ended, or the commissioner's order is final.  A 
  5.1   request for hearing stays the commissioner's order until the 
  5.2   commissioner notifies the health carrier of the result of the 
  5.3   hearing.  The commissioner's order may require the modification 
  5.4   of any rate or form and may require continued coverage to 
  5.5   persons covered under a health plan to which the disapproved 
  5.6   form or rate applies.  
  5.7      Sec. 4.  Minnesota Statutes 2000, section 62A.02, is 
  5.8   amended by adding a subdivision to read: 
  5.9      Subd. 8.  [DEFINITIONS.] For the purpose of rates reviewed 
  5.10  under this section: 
  5.11     (1) "excessive" means a rate that is likely to produce a 
  5.12  long-term profit that is, or expenses that are, unreasonably 
  5.13  high for the coverage provided; and 
  5.14     (2) "inadequate" means a rate that is unreasonably low for 
  5.15  the coverage provided and the continued use of which endangers 
  5.16  the solvency of the health carrier using the rate or will have 
  5.17  the effect of substantially lessening competition or creating a 
  5.18  monopoly for any health carrier. 
  5.19     Sec. 5.  Minnesota Statutes 2000, section 62A.021, 
  5.20  subdivision 1, is amended to read: 
  5.21     Subdivision 1.  [LOSS RATIO STANDARDS.] (a) Notwithstanding 
  5.22  section 62A.02, subdivision 3, relating to loss ratios, health 
  5.23  care policies or certificates shall not be delivered or issued 
  5.24  for delivery to an individual or to a small employer as defined 
  5.25  in section 62L.02, unless the policies or certificates can be 
  5.26  expected, as estimated for the entire period for which rates are 
  5.27  computed to provide coverage, to return to Minnesota 
  5.28  policyholders and certificate holders in the form of aggregate 
  5.29  benefits not including anticipated refunds or credits, provided 
  5.30  under the policies or certificates, (1) at least 75 percent of 
  5.31  the aggregate amount of premiums earned in the case of policies 
  5.32  issued in the small employer market, as defined in section 
  5.33  62L.02, subdivision 27, calculated on an aggregate basis; and 
  5.34  (2) at least 65 percent of the aggregate amount of premiums 
  5.35  earned in the case of each policy form or certificate form 
  5.36  issued in the individual market; calculated on the basis of 
  6.1   incurred claims experience or incurred health care expenses 
  6.2   where coverage is provided by a health maintenance organization 
  6.3   on a service rather than reimbursement basis and earned premiums 
  6.4   for the period and according to accepted actuarial principles 
  6.5   and practices.  Assessments by the reinsurance association 
  6.6   created in chapter 62L and all types of taxes, surcharges, or 
  6.7   assessments created by Laws 1992, chapter 549, or created on or 
  6.8   after April 23, 1992, are included in the calculation of 
  6.9   incurred claims experience or incurred health care expenses.  
  6.10  The applicable percentage for policies and certificates issued 
  6.11  in the small employer market, as defined in section 62L.02, 
  6.12  increases by one percentage point on July 1 of each year, 
  6.13  beginning on July 1, 1994, until an 82 percent loss ratio is 
  6.14  reached on July 1, 2000.  The applicable percentage for policy 
  6.15  forms and certificate forms issued in the individual market 
  6.16  increases by one percentage point on July 1 of each year, 
  6.17  beginning on July 1, 1994, until a 72 percent loss ratio is 
  6.18  reached on July 1, 2000.  A health carrier that enters a market 
  6.19  after July 1, 1993, does not start at the beginning of the 
  6.20  phase-in schedule and must instead comply with the loss ratio 
  6.21  requirements applicable to other health carriers in that market 
  6.22  for each time period.  Premiums earned and claims incurred in 
  6.23  markets other than the small employer and individual markets are 
  6.24  not relevant for purposes of this section. 
  6.25     (b) All filings of rates and rating schedules shall 
  6.26  demonstrate that actual expected claims in relation to premiums 
  6.27  comply with the requirements of this section when combined with 
  6.28  actual experience to date.  Filings of rate revisions shall also 
  6.29  demonstrate that the anticipated loss ratio over the entire 
  6.30  future period for which the revised rates are computed to 
  6.31  provide coverage can be expected to meet the appropriate loss 
  6.32  ratio standards, and aggregate loss ratio from inception of the 
  6.33  policy form or certificate form shall equal or exceed the 
  6.34  appropriate loss ratio standards. 
  6.35     (c) A health carrier that issues health care policies and 
  6.36  certificates to individuals or to small employers, as defined in 
  7.1   section 62L.02, in this state shall file annually its rates, 
  7.2   rating schedule, and supporting documentation including ratios 
  7.3   of incurred losses to earned premiums by policy form or 
  7.4   certificate form duration for approval by the commissioner 
  7.5   according to the filing requirements and procedures prescribed 
  7.6   by the commissioner.  The supporting documentation shall also 
  7.7   demonstrate in accordance with actuarial standards of practice 
  7.8   using reasonable assumptions that the appropriate loss ratio 
  7.9   standards can be expected to be met over the entire period for 
  7.10  which rates are computed.  The demonstration shall exclude 
  7.11  active life reserves.  If the data submitted does not confirm 
  7.12  that the health carrier has satisfied the loss ratio 
  7.13  requirements of this section, the commissioner shall notify the 
  7.14  health carrier in writing of the deficiency.  The health carrier 
  7.15  shall have 30 days from the date of the commissioner's notice to 
  7.16  file amended rates that comply with this section.  If the health 
  7.17  carrier fails to file amended rates within the prescribed time, 
  7.18  the commissioner shall order that the health carrier's filed 
  7.19  rates for the nonconforming policy form or certificate form be 
  7.20  reduced to an amount that would have resulted in a loss ratio 
  7.21  that complied with this section had it been in effect for the 
  7.22  reporting period of the supplement.  The health carrier's 
  7.23  failure to file amended rates within the specified time or the 
  7.24  issuance of the commissioner's order amending the rates does not 
  7.25  preclude the health carrier from filing an amendment of its 
  7.26  rates at a later time.  The commissioner shall annually make the 
  7.27  submitted data available to the public at a cost not to exceed 
  7.28  the cost of copying.  The data must be compiled in a form useful 
  7.29  for consumers who wish to compare premium charges and loss 
  7.30  ratios. 
  7.31     (d) Each sale of a policy or certificate that does not 
  7.32  comply with the loss ratio requirements of this section is an 
  7.33  unfair or deceptive act or practice in the business of insurance 
  7.34  and is subject to the penalties in sections 72A.17 to 72A.32. 
  7.35     (e)(1) For purposes of this section, health care policies 
  7.36  issued as a result of solicitations of individuals through the 
  8.1   mail or mass media advertising, including both print and 
  8.2   broadcast advertising, shall be treated as individual policies. 
  8.3      (2) For purposes of this section, (i) "health care policy" 
  8.4   or "health care certificate" is a health plan as defined in 
  8.5   section 62A.011; and (ii) "health carrier" has the meaning given 
  8.6   in section 62A.011 and includes all health carriers delivering 
  8.7   or issuing for delivery health care policies or certificates in 
  8.8   this state or offering these policies or certificates to 
  8.9   residents of this state.  
  8.10     (f) The loss ratio phase-in as ratios described in 
  8.11  paragraph (a) does do not apply to individual policies and small 
  8.12  employer policies issued by a health plan company that is 
  8.13  assessed less than three ten percent of the total annual amount 
  8.14  assessed by the Minnesota comprehensive health association.  
  8.15  These policies must meet a 68 60 percent loss ratio for 
  8.16  individual policies, a 71 percent loss ratio for small employer 
  8.17  policies with fewer than ten employees, and a 75 percent loss 
  8.18  ratio for all other small employer policies.  For purposes of 
  8.19  the percentage calculation of the association's assessments, a 
  8.20  health plan company's assessments include those of its 
  8.21  affiliates.  
  8.22     (g) The commissioners of commerce and health shall each 
  8.23  annually issue a public report listing, by health plan company, 
  8.24  the actual loss ratios experienced in the individual and small 
  8.25  employer markets in this state by the health plan companies that 
  8.26  the commissioners respectively regulate.  The commissioners 
  8.27  shall coordinate release of these reports so as to release them 
  8.28  as a joint report or as separate reports issued the same day.  
  8.29  The report or reports shall be released no later than June 1 for 
  8.30  loss ratios experienced for the preceding calendar year.  Health 
  8.31  plan companies shall provide to the commissioners any 
  8.32  information requested by the commissioners for purposes of this 
  8.33  paragraph. 
  8.34     Sec. 6.  Minnesota Statutes 2000, section 62A.65, 
  8.35  subdivision 3, is amended to read: 
  8.36     Subd. 3.  [PREMIUM RATE RESTRICTIONS.] No individual health 
  9.1   plan may be offered, sold, issued, or renewed to a Minnesota 
  9.2   resident unless the premium rate charged is determined in 
  9.3   accordance with the following requirements:  
  9.4      (a) Premium rates must be no more than 25 percent above and 
  9.5   no more than 25 percent below the index rate charged to 
  9.6   individuals for the same or similar coverage, adjusted pro rata 
  9.7   for rating periods of less than one year.  The premium 
  9.8   variations permitted by this paragraph must be based only upon 
  9.9   health status, claims experience, and occupation.  For purposes 
  9.10  of this paragraph, health status includes refraining from 
  9.11  tobacco use or other actuarially valid lifestyle factors 
  9.12  associated with good health, provided that the lifestyle factor 
  9.13  and its effect upon premium rates have been determined by the 
  9.14  commissioner to be actuarially valid and have been approved by 
  9.15  the commissioner.  Variations permitted under this paragraph 
  9.16  must not be based upon age or applied differently at different 
  9.17  ages.  This paragraph does not prohibit use of a constant 
  9.18  percentage adjustment for factors permitted to be used under 
  9.19  this paragraph. 
  9.20     (b) Premium rates may vary based upon the ages of covered 
  9.21  persons only as provided in this paragraph.  In addition to the 
  9.22  variation permitted under paragraph (a), each health carrier may 
  9.23  use an additional premium variation based upon age of up to plus 
  9.24  or minus 50 percent of the index rate. 
  9.25     (c) A health carrier may request approval by the 
  9.26  commissioner to establish no more than three geographic regions 
  9.27  and to establish separate index rates for each region, provided 
  9.28  that the index rates do not vary between any two regions by more 
  9.29  than 20 40 percent.  If health carriers that do not do business 
  9.30  in the Minneapolis/St. Paul metropolitan area may request 
  9.31  approval for no more than two geographic regions, and clauses 
  9.32  (2) and (3) do not apply to approval of requests made by those 
  9.33  health carriers.  The commissioner may grant approval if the 
  9.34  following conditions are met: 
  9.35     (1) the geographic regions must be applied uniformly by the 
  9.36  health carrier; 
 10.1      (2) one geographic region must be based on the 
 10.2   Minneapolis/St. Paul metropolitan area; 
 10.3      (3) for each geographic region that is rural, the index 
 10.4   rate for that region must not exceed the index rate for the 
 10.5   Minneapolis/St. Paul metropolitan area; and 
 10.6      (4) the health carrier provides actuarial justification 
 10.7   acceptable to the commissioner for the proposed geographic 
 10.8   variations in index rates, establishing that the variations are 
 10.9   based upon differences in the cost to the health carrier of 
 10.10  providing coverage. 
 10.11     (d) Health carriers may use rate cells and must file with 
 10.12  the commissioner the rate cells they use.  Rate cells must be 
 10.13  based upon the number of adults or children covered under the 
 10.14  policy and may reflect the availability of Medicare coverage.  
 10.15  The rates for different rate cells must not in any way reflect 
 10.16  generalized differences in expected costs between principal 
 10.17  insureds and their spouses. 
 10.18     (e) In developing its index rates and premiums for a health 
 10.19  plan, a health carrier shall take into account only the 
 10.20  following factors: 
 10.21     (1) actuarially valid differences in rating factors 
 10.22  permitted under paragraphs (a) and (b); and 
 10.23     (2) actuarially valid geographic variations if approved by 
 10.24  the commissioner as provided in paragraph (c). 
 10.25     (f) All premium variations must be justified in initial 
 10.26  rate filings and upon request of the commissioner in rate 
 10.27  revision filings.  All rate variations are subject to approval 
 10.28  by the commissioner. 
 10.29     (g) The loss ratio must comply with the section 62A.021 
 10.30  requirements for individual health plans. 
 10.31     (h) The rates must not be approved, unless the commissioner 
 10.32  has determined that the rates are reasonable.  In determining 
 10.33  reasonableness, the commissioner shall consider the growth rates 
 10.34  applied under section 62J.04, subdivision 1, paragraph (b), to 
 10.35  the calendar year or years that the proposed premium rate would 
 10.36  be in effect, actuarially valid changes in risks associated with 
 11.1   the enrollee populations, and actuarially valid changes as a 
 11.2   result of statutory changes in Laws 1992, chapter 549. 
 11.3      Sec. 7.  Minnesota Statutes 2000, section 62A.65, 
 11.4   subdivision 5, is amended to read: 
 11.5      Subd. 5.  [PORTABILITY AND CONVERSION OF COVERAGE.] (a) No 
 11.6   individual health plan may be offered, sold, issued, or with 
 11.7   respect to children age 18 or under renewed, to a Minnesota 
 11.8   resident that contains a preexisting condition limitation, 
 11.9   preexisting condition exclusion, or exclusionary rider, unless 
 11.10  the limitation or exclusion is permitted under this subdivision 
 11.11  and under chapter 62L, provided that, except for children age 18 
 11.12  or under, underwriting restrictions may be retained on 
 11.13  individual contracts that are issued without evidence of 
 11.14  insurability as a replacement for prior individual coverage that 
 11.15  was sold before May 17, 1993.  The individual may be subjected 
 11.16  to an 18-month preexisting condition limitation, unless the 
 11.17  individual has maintained continuous coverage as defined in 
 11.18  section 62L.02.  The individual must not be subjected to an 
 11.19  exclusionary rider.  An individual who has maintained continuous 
 11.20  coverage may be subjected to a one-time preexisting condition 
 11.21  limitation of up to 12 months, with credit for time covered 
 11.22  under qualifying coverage as defined in section 62L.02, at the 
 11.23  time that the individual first is covered under an individual 
 11.24  health plan by any health carrier.  Credit must be given for all 
 11.25  qualifying coverage with respect to all preexisting conditions, 
 11.26  regardless of whether the conditions were preexisting with 
 11.27  respect to any previous qualifying coverage.  The individual 
 11.28  must not be subjected to an exclusionary rider.  Thereafter, the 
 11.29  individual must not be subject to any preexisting condition 
 11.30  limitation, preexisting condition exclusion, or exclusionary 
 11.31  rider under an individual health plan by any health carrier, 
 11.32  except an unexpired portion of a limitation under prior 
 11.33  coverage, so long as the individual maintains continuous 
 11.34  coverage as defined in section 62L.02. 
 11.35     (b) A health carrier must offer an individual health plan 
 11.36  to any individual previously covered under a group health plan 
 12.1   issued by that health carrier, regardless of the size of the 
 12.2   group, so long as the individual maintained continuous coverage 
 12.3   as defined in section 62L.02.  If the individual has available 
 12.4   any continuation coverage provided under sections 62A.146; 
 12.5   62A.148; 62A.17, subdivisions 1 and 2; 62A.20; 62A.21; 62C.142; 
 12.6   62D.101; or 62D.105, or continuation coverage provided under 
 12.7   federal law, the health carrier need not offer coverage under 
 12.8   this paragraph until the individual has exhausted the 
 12.9   continuation coverage.  The offer must not be subject to 
 12.10  underwriting, except as permitted under this paragraph.  A 
 12.11  health plan issued under this paragraph must be a qualified plan 
 12.12  as defined in section 62E.02 and must not contain any 
 12.13  preexisting condition limitation, preexisting condition 
 12.14  exclusion, or exclusionary rider, except for any unexpired 
 12.15  limitation or exclusion under the previous coverage.  The 
 12.16  individual health plan must cover pregnancy on the same basis as 
 12.17  any other covered illness under the individual health plan.  The 
 12.18  initial premium rate for the individual health plan must comply 
 12.19  with subdivision 3.  The premium rate upon renewal must comply 
 12.20  with subdivision 2.  In no event shall the premium rate exceed 
 12.21  90 100 percent of the premium charged for comparable individual 
 12.22  coverage by the Minnesota comprehensive health association, and 
 12.23  the premium rate must be less than that amount if necessary to 
 12.24  otherwise comply with this section.  An individual health plan 
 12.25  offered under this paragraph to a person satisfies the health 
 12.26  carrier's obligation to offer conversion coverage under section 
 12.27  62E.16, with respect to that person.  Coverage issued under this 
 12.28  paragraph must provide that it cannot be canceled or nonrenewed 
 12.29  as a result of the health carrier's subsequent decision to leave 
 12.30  the individual, small employer, or other group market.  Section 
 12.31  72A.20, subdivision 28, applies to this paragraph. 
 12.32     Sec. 8.  Minnesota Statutes 2000, section 62D.02, 
 12.33  subdivision 8, is amended to read: 
 12.34     Subd. 8.  [HEALTH MAINTENANCE CONTRACT.] "Health 
 12.35  maintenance contract" means any contract whereby a health 
 12.36  maintenance organization agrees to provide comprehensive health 
 13.1   maintenance services to enrollees, provided that the contract 
 13.2   may contain reasonable enrollee copayment cost-sharing 
 13.3   provisions.  An individual or group health maintenance contract 
 13.4   may contain the copayment and deductible provisions specified in 
 13.5   this subdivision.  Copayment and deductible provisions in group 
 13.6   contracts shall not discriminate on the basis of age, sex, race, 
 13.7   length of enrollment in the plan, or economic status; and during 
 13.8   every open enrollment period in which all offered health benefit 
 13.9   plans, including those subject to the jurisdiction of the 
 13.10  commissioners of commerce or health, fully participate without 
 13.11  any underwriting restrictions, copayment and deductible 
 13.12  provisions shall not discriminate on the basis of preexisting 
 13.13  health status.  In no event shall the sum of the annual 
 13.14  copayments and deductible exceed the maximum out-of-pocket 
 13.15  expenses allowable for a number three qualified plan under 
 13.16  section 62E.06, nor shall that sum exceed $5,000 per family.  
 13.17  The annual deductible must not exceed $1,000 $5,000 per person 
 13.18  or $10,000 per family.  The annual deductible must not apply to 
 13.19  preventive health services as described in Minnesota Rules, part 
 13.20  4685.0801, subpart 8.  Where sections 62D.01 to 62D.30 permit a 
 13.21  health maintenance organization to contain reasonable copayment 
 13.22  provisions for preexisting health status, these provisions may 
 13.23  vary with respect to length of enrollment in the plan.  A health 
 13.24  maintenance organization may impose coinsurance, expressed as 
 13.25  percentages or flat fee copayments, up to a maximum of 50 
 13.26  percent of the provider amount paid at the time the claim is 
 13.27  processed.  A health maintenance organization shall provide for 
 13.28  an out-of-pocket maximum on enrollee cost-sharing up to $8,000 
 13.29  per person per year on group health plans and up to $15,000 per 
 13.30  person per year on individual health plans.  Any contract may 
 13.31  provide for health care services in addition to those set forth 
 13.32  in subdivision 7. 
 13.33     Sec. 9.  Minnesota Statutes 2000, section 62H.01, is 
 13.34  amended to read: 
 13.35     62H.01 [AUTHORITY TO JOINTLY SELF-INSURE.] 
 13.36     Any two or more employers, excluding the state and its 
 14.1   political subdivisions as described in section 471.617, 
 14.2   subdivision 1, who are authorized to transact business in 
 14.3   Minnesota may jointly self-insure employee health, dental, 
 14.4   short-term disability benefits, or other benefits permitted 
 14.5   under the Employee Retirement Income Security Act of 1974, 
 14.6   United States Code, title 29, sections 1001 et seq.  If an 
 14.7   employer chooses to jointly self-insure in accordance with this 
 14.8   chapter, the employer must participate in the joint plan for at 
 14.9   least three consecutive years.  If an employer terminates 
 14.10  participation in the joint plan before the conclusion of this 
 14.11  three-year period, a financial penalty may be assessed under the 
 14.12  joint plan, not to exceed the amount contributed by the employer 
 14.13  to the plan's reserves as determined under Minnesota Rules, part 
 14.14  2765.1200.  Joint plans must have a minimum of 100 1,000 covered 
 14.15  employees and meet all conditions and terms of sections 62H.01 
 14.16  to 62H.08.  Joint plans covering employers not resident in 
 14.17  Minnesota must meet the requirements of sections 62H.01 to 
 14.18  62H.08 as if the portion of the plan covering Minnesota resident 
 14.19  employees was treated as a separate plan.  A plan may cover 
 14.20  employees resident in other states only if the plan complies 
 14.21  with the applicable laws of that state. 
 14.22     A multiple employer welfare arrangement as defined in 
 14.23  United States Code, title 29, section 1002(40)(a), is subject to 
 14.24  this chapter to the extent authorized by the Employee Retirement 
 14.25  Income Security Act of 1974, United States Code, title 29, 
 14.26  sections 1001 et seq.  The commissioner of commerce may, on 
 14.27  behalf of the state, enter into an agreement with the United 
 14.28  States Secretary of Labor for delegation to the state of some or 
 14.29  all of the secretary's enforcement authority with respect to 
 14.30  multiple employer welfare arrangements, as described in United 
 14.31  States Code, title 29, section 1136(c). 
 14.32     Sec. 10.  Minnesota Statutes 2000, section 62H.04, is 
 14.33  amended to read: 
 14.34     62H.04 [COMPLIANCE WITH OTHER LAWS.] 
 14.35     (a) A joint self-insurance plan is subject to the 
 14.36  requirements of chapters 62A, 62E, and 62L, and 62Q, and 
 15.1   sections 72A.17 to 72A.32 unless otherwise specifically exempt.  
 15.2   A joint self-insurance plan must not offer less than a number 
 15.3   two qualified plan or its actuarial equivalent.  A joint 
 15.4   self-insurance plan must pay assessments made by the Minnesota 
 15.5   Comprehensive Health Association, as required under section 
 15.6   62E.11. 
 15.7      (b) A joint self-insurance plan is exempt from providing 
 15.8   the mandated health benefits described in chapters 62A, 62E, 
 15.9   62L, and 62Q if it otherwise provides the benefits required 
 15.10  under the Employee Retirement Income Security Act of 1974, 
 15.11  United States Code, title 29, sections 1001, et seq., for all 
 15.12  employers and not just for the employers with 50 or more 
 15.13  employees who are covered by that federal law.  
 15.14     (c) A joint self-insurance plan is exempt from section 
 15.15  62L.03, subdivision 1, if the plan offers an annual open 
 15.16  enrollment period of no less than 15 days during which all 
 15.17  employers that qualify for membership may enter the plan without 
 15.18  preexisting condition limitations or exclusions except those 
 15.19  permitted under chapter 62L.  
 15.20     (d) A joint self-insurance plan is exempt from sections 
 15.21  62A.16, 62A.17, 62A.20, and 62A.21 if the joint self-insurance 
 15.22  plan complies with the continuation requirements under the 
 15.23  Employee Retirement Income Security Act of 1974, United States 
 15.24  Code, title 29, sections 1001, et seq., for all employers and 
 15.25  not just for the employers with 20 or more employees who are 
 15.26  covered by that federal law. 
 15.27     (e) A joint self-insurance plan must provide to all 
 15.28  employers the maternity coverage required by federal law for 
 15.29  employers with 15 or more employees. 
 15.30     Sec. 11.  Minnesota Statutes 2000, section 62L.02, is 
 15.31  amended by adding a subdivision to read: 
 15.32     Subd. 22a.  [NEW BUSINESS PREMIUM RATE.] "New business 
 15.33  premium rate" means, as to a rating period, the premium rate 
 15.34  charged or offered by the small employer carrier to small 
 15.35  employers with similar case characteristics for newly issued 
 15.36  health benefit plans with the same or similar coverage. 
 16.1      Sec. 12.  Minnesota Statutes 2000, section 62L.03, 
 16.2   subdivision 1, is amended to read: 
 16.3      Subdivision 1.  [GUARANTEED ISSUE AND REISSUE.] (a) Every 
 16.4   health carrier shall, as a condition of authority to transact 
 16.5   business in this state in the small employer market, 
 16.6   affirmatively market, offer, sell, issue, and renew any of its 
 16.7   health benefit plans, on a guaranteed issue basis, to any small 
 16.8   employer, including a small employer covered by paragraph (b) or 
 16.9   (c), that meets the participation and contribution requirements 
 16.10  of subdivision 3, as provided in this chapter.  
 16.11     (b) A small employer that has its workforce exceed 50 
 16.12  employees during a plan or policy year has the option to 
 16.13  continue coverage as a small employer or be nonrenewed and seek 
 16.14  replacement coverage in the large employer market. 
 16.15     (c) A small employer that has its workforce reduced to 
 16.16  fewer than two employees may continue coverage as a small 
 16.17  employer for the plan or policy year following the plan or 
 16.18  policy year in which the reduction took place. 
 16.19     (d) Notwithstanding paragraph (a), a health carrier may, at 
 16.20  the time of coverage renewal, modify the health coverage for a 
 16.21  product offered in the small employer market if the modification 
 16.22  is consistent with state law, approved by the commissioner, and 
 16.23  effective on a uniform basis for all small employers purchasing 
 16.24  that product other than through a qualified association in 
 16.25  compliance with section 62L.045, subdivision 2. 
 16.26     Paragraph (a) does not apply to a health benefit plan 
 16.27  designed for a small employer to comply with a collective 
 16.28  bargaining agreement, provided that the health benefit plan 
 16.29  otherwise complies with this chapter and is not offered to other 
 16.30  small employers, except for other small employers that need it 
 16.31  for the same reason.  This paragraph applies only with respect 
 16.32  to collective bargaining agreements entered into prior to August 
 16.33  21, 1996, and only with respect to plan years beginning before 
 16.34  the later of July 1, 1997, or the date upon which the last of 
 16.35  the collective bargaining agreements relating to the plan 
 16.36  terminates determined without regard to any extension agreed to 
 17.1   after August 21, 1996. 
 17.2      (c) (e) Every health carrier participating in the small 
 17.3   employer market shall make available both of the plans described 
 17.4   in section 62L.05 to small employers and shall fully comply with 
 17.5   the underwriting and the rate restrictions specified in this 
 17.6   chapter for all health benefit plans issued to small employers.  
 17.7      (d) (f) A health carrier may cease to transact business in 
 17.8   the small employer market as provided under section 62L.09. 
 17.9      Sec. 13.  Minnesota Statutes 2000, section 62L.03, 
 17.10  subdivision 5, is amended to read: 
 17.11     Subd. 5.  [CANCELLATIONS AND FAILURES TO RENEW.] (a) No 
 17.12  health carrier shall cancel, decline to issue, or fail to renew 
 17.13  a health benefit plan as a result of the claim experience or 
 17.14  health status of the persons covered or to be covered by the 
 17.15  health benefit plan.  For purposes of this subdivision, a 
 17.16  failure to renew does not include a uniform modification of 
 17.17  coverage at time of renewal, as described in subdivision 1. 
 17.18     (b) A health carrier may cancel or fail to renew a health 
 17.19  benefit plan: 
 17.20     (1) for nonpayment of the required premium; 
 17.21     (2) for fraud or misrepresentation by the small employer 
 17.22  with respect to eligibility for coverage or any other material 
 17.23  fact; 
 17.24     (3) if the employer fails to comply with the minimum 
 17.25  contribution percentage required under subdivision 3; or 
 17.26     (4) for any other reasons or grounds expressly permitted by 
 17.27  the respective licensing laws and regulations governing a health 
 17.28  carrier, including, but not limited to, service area 
 17.29  restrictions imposed on health maintenance organizations under 
 17.30  section 62D.03, subdivision 4, paragraph (m), to the extent that 
 17.31  these grounds are not expressly inconsistent with this chapter. 
 17.32     (c) A health carrier may fail to renew a health benefit 
 17.33  plan: 
 17.34     (1) if eligible employee participation during the preceding 
 17.35  calendar year declines to less than 75 percent, subject to the 
 17.36  waiver of coverage provision in subdivision 3; 
 18.1      (2) if the health carrier ceases to do business in the 
 18.2   small employer market under section 62L.09; or 
 18.3      (3) if a failure to renew is based upon the health 
 18.4   carrier's decision to discontinue the health benefit plan form 
 18.5   previously issued to the small employer, but only if the health 
 18.6   carrier permits each small employer covered under the prior form 
 18.7   to switch to its choice of any other health benefit plan offered 
 18.8   by the health carrier, without any underwriting restrictions 
 18.9   that would not have been permitted for renewal purposes. 
 18.10     (d) A health carrier need not renew a health benefit plan, 
 18.11  and shall not renew a small employer plan, if an employer ceases 
 18.12  to qualify as a small employer as defined in section 62L.02, 
 18.13  except as provided in subdivision 1, paragraphs (b) and (c).  If 
 18.14  a health benefit plan, other than a small employer plan, 
 18.15  provides terms of renewal that do not exclude an employer that 
 18.16  is no longer a small employer, the health benefit plan may be 
 18.17  renewed according to its own terms.  If a health carrier issues 
 18.18  or renews a health plan to an employer that is no longer a small 
 18.19  employer, without interruption of coverage, the health plan is 
 18.20  subject to section 60A.082.  
 18.21     (e) A health carrier may cancel or fail to renew the 
 18.22  coverage of an individual employee or dependent under a health 
 18.23  benefit plan for fraud or misrepresentation by the eligible 
 18.24  employee or dependent with respect to eligibility for coverage 
 18.25  or any other material fact. 
 18.26     Sec. 14.  Minnesota Statutes 2000, section 62L.08, is 
 18.27  amended by adding a subdivision to read: 
 18.28     Subd. 2a.  [RENEWAL PREMIUM INCREASES LIMITED.] (a) 
 18.29  Beginning January 1, 2003, the percentage increase in the 
 18.30  premium rate charged to a small employer for a new rating period 
 18.31  must not exceed the sum of the following: 
 18.32     (1) the percentage change in the new business premium rate 
 18.33  measured from the first day of the prior rating period to the 
 18.34  first day of the new rating period; 
 18.35     (2) an adjustment, not to exceed 15 percent annually and 
 18.36  adjusted pro rata for rating periods of less than one year, due 
 19.1   to the claims experience, health status, or duration of coverage 
 19.2   of the employees or dependents of the employer; and 
 19.3      (3) any adjustment due to change in coverage or in the case 
 19.4   characteristics of the employer. 
 19.5      (b) This subdivision does not apply if the employer 
 19.6   intentionally provides the health carrier with false information.
 19.7      Sec. 15.  Minnesota Statutes 2000, section 62L.08, 
 19.8   subdivision 4, is amended to read: 
 19.9      Subd. 4.  [GEOGRAPHIC PREMIUM VARIATIONS.] A health carrier 
 19.10  may request approval by the commissioner to establish no more 
 19.11  than three geographic regions and to establish separate index 
 19.12  rates for each region, provided that the index rates do not vary 
 19.13  between any two regions by more than 20 40 percent.  If health 
 19.14  carriers that do not do business in the Minneapolis/St. Paul 
 19.15  metropolitan area may request approval for no more than two 
 19.16  geographic regions, and clauses (2) and (3) do not apply to 
 19.17  approval of requests made by those health carriers.  A health 
 19.18  carrier may also request approval to establish one or more 
 19.19  additional geographic regions and one or more separate index 
 19.20  rates for premiums for employees working and residing outside of 
 19.21  Minnesota.  The commissioner may grant approval if the following 
 19.22  conditions are met: 
 19.23     (1) the geographic regions must be applied uniformly by the 
 19.24  health carrier; 
 19.25     (2) one geographic region must be based on the 
 19.26  Minneapolis/St. Paul metropolitan area; 
 19.27     (3) if one geographic region is rural, the index rate for 
 19.28  the rural region must not exceed the index rate for the 
 19.29  Minneapolis/St. Paul metropolitan area; 
 19.30     (4) the health carrier provides actuarial justification 
 19.31  acceptable to the commissioner for the proposed geographic 
 19.32  variations in index rates, establishing that the variations are 
 19.33  based upon differences in the cost to the health carrier of 
 19.34  providing coverage. 
 19.35     Sec. 16.  [REPEALER.] 
 19.36     Minnesota Statutes 2000, section 62A.02, subdivision 2, is 
 20.1   repealed.