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Minnesota Legislature

Office of the Revisor of Statutes

HF 3505

1st Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 03/14/2006
1st Engrossment Posted on 03/27/2006

Current Version - 1st Engrossment

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A bill for an act
relating to insurance; permitting reductions in premiums on small employer
health insurance in greater Minnesota; amending Minnesota Statutes 2004,
sections 62A.65, subdivision 3; 62L.08, subdivision 4.

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

Section 1.

Minnesota Statutes 2004, section 62A.65, subdivision 3, is amended to read:


Subd. 3.

Premium rate restrictions.

No individual health plan may be offered,
sold, issued, or renewed to a Minnesota resident unless the premium rate charged is
determined in accordance with the following requirements:

(a) Premium rates must be no more than 25 percent above and no more than 25
percent below the index rate charged to individuals for the same or similar coverage,
adjusted pro rata for rating periods of less than one year. The premium variations
permitted by this paragraph must be based only upon health status, claims experience,
and occupation. For purposes of this paragraph, health status includes refraining from
tobacco use or other actuarially valid lifestyle factors associated with good health,
provided that the lifestyle factor and its effect upon premium rates have been determined
by the commissioner to be actuarially valid and have been approved by the commissioner.
Variations permitted under this paragraph must not be based upon age or applied
differently at different ages. This paragraph does not prohibit use of a constant percentage
adjustment for factors permitted to be used under this paragraph.

(b) Premium rates may vary based upon the ages of covered persons only as
provided in this paragraph. In addition to the variation permitted under paragraph (a),
each health carrier may use an additional premium variation based upon age of up to
plus or minus 50 percent of the index rate.

(c) A health carrier may request approval by the commissioner to establish deleted text beginno
more than three
deleted text endnew text begin separatenew text end geographic deleted text beginregionsdeleted text endnew text begin areas determined by the health carriernew text end and
to establish separate index rates for each deleted text beginregion, provided that the index rates do not
vary between any two regions by more than 20 percent. Health carriers that do not do
business in the Minneapolis/St. Paul metropolitan area may request approval for no more
than two geographic regions, and clauses (2) and (3) do not apply to approval of requests
made by those health carriers
deleted text endnew text begin such areanew text end. The commissioner deleted text beginmaydeleted text endnew text begin shallnew text end grant approval if
the following conditions are met:

(1) the geographic deleted text beginregionsdeleted text endnew text begin areasnew text end must be applied uniformly by the health carrier;

deleted text begin (2) one geographic region must be based on the Minneapolis/St. Paul metropolitan
area;
deleted text end

deleted text begin (3) for each geographic region that is rural, the index rate for that region must not
exceed the index rate for the Minneapolis/St. Paul metropolitan area; and
deleted text end

new text begin (2) each geographic region must be composed of no fewer than seven counties that
create a contiguous region; and
new text end

deleted text begin (4)deleted text endnew text begin (3)new text end the health carrier provides actuarial justification acceptable to the
commissioner for the proposed geographic variations in index rates, establishing that the
variations are based upon differences in the cost to the health carrier of providing coverage.

(d) Health carriers may use rate cells and must file with the commissioner the rate
cells they use. Rate cells must be based upon the number of adults or children covered
under the policy and may reflect the availability of Medicare coverage. The rates for
different rate cells must not in any way reflect generalized differences in expected costs
between principal insureds and their spouses.

(e) In developing its index rates and premiums for a health plan, a health carrier shall
take into account only the following factors:

(1) actuarially valid differences in rating factors permitted under paragraphs (a)
and (b); and

(2) actuarially valid geographic variations if approved by the commissioner as
provided in paragraph (c).

(f) All premium variations must be justified in initial rate filings and upon request of
the commissioner in rate revision filings. All rate variations are subject to approval by
the commissioner.

(g) The loss ratio must comply with the section 62A.021 requirements for individual
health plans.

(h) The rates must not be approved, unless the commissioner has determined that the
rates are reasonable. In determining reasonableness, the commissioner shall consider the
growth rates applied under section 62J.04, subdivision 1, paragraph (b), to the calendar
year or years that the proposed premium rate would be in effect, actuarially valid changes
in risks associated with the enrollee populations, and actuarially valid changes as a result
of statutory changes in Laws 1992, chapter 549.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007, and applies to
policies issued or renewed on or after that date.
new text end

Sec. 2.

Minnesota Statutes 2004, section 62L.08, subdivision 4, is amended to read:


Subd. 4.

Geographic premium variations.

A health carrier may request approval
by the commissioner to establish deleted text beginno more than threedeleted text endnew text begin separatenew text end geographic deleted text beginregionsdeleted text endnew text begin areas
determined by the health carrier
new text end and to establish separate index rates for each deleted text beginregion,
provided that the index rates do not vary between any two regions by more than 20
percent. Health carriers that do not do business in the Minneapolis/St. Paul metropolitan
area may request approval for no more than two geographic regions, and clauses (2) and
(3) do not apply to approval of requests made by those health carriers. A health carrier
may also request approval to establish one or more additional geographic regions and one
or more separate index rates for premiums for employees working and residing outside
of Minnesota
deleted text endnew text begin such areanew text end. The commissioner deleted text beginmaydeleted text endnew text begin shallnew text end grant approval if the following
conditions are met:

(1) the geographic deleted text beginregionsdeleted text endnew text begin areasnew text end must be applied uniformly by the health carrier;

deleted text begin (2) one geographic region must be based on the Minneapolis/St. Paul metropolitan
area;
deleted text end

deleted text begin (3) if one geographic region is rural, the index rate for the rural region must not
exceed the index rate for the Minneapolis/St. Paul metropolitan area;
deleted text end

new text begin (2) each geographic region must be composed of no fewer than seven counties that
create a contiguous region; and
new text end

deleted text begin (4)deleted text endnew text begin (3)new text end the health carrier provides actuarial justification acceptable to the
commissioner for the proposed geographic variations in index rates, establishing that the
variations are based upon differences in the cost to the health carrier of providing coverage.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007, and applies to
policies issued or renewed on or after that date.
new text end