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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

                            CHAPTER 175-S.F.No. 1715 
                  An act relating to insurance; making changes in 
                  response to the federal Health Insurance Portability 
                  and Accountability Act of 1996; amending Minnesota 
                  Statutes 1996, sections 62E.02, subdivision 13; 
                  62E.14, subdivisions 3 and 4c; 62H.01; 62L.02, 
                  subdivisions 9, 11, 15, 19, 23, 24, 26, and by adding 
                  subdivisions; 62L.03, subdivisions 1, 2, 3, 4, and 5; 
                  and 62Q.18, subdivisions 1 and 7; proposing coding for 
                  new law in Minnesota Statutes, chapter 62Q. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1
                        INDIVIDUAL MARKET CHANGES (MCHA)
           Section 1.  Minnesota Statutes 1996, section 62E.02, 
        subdivision 13, is amended to read: 
           Subd. 13.  [ELIGIBLE PERSON.] "Eligible person" means an 
        individual who is currently and has been a resident of Minnesota 
        for the six months immediately preceding the date of receipt by 
        the association or its writing carrier of a completed 
        certificate of eligibility and who meets the enrollment 
        requirements of section 62E.14.  For purposes of eligibility 
        under section 62E.14, subdivision 4c, paragraph (b), this 
        definition is modified as provided in that paragraph. 
           Sec. 2.  Minnesota Statutes 1996, section 62E.14, 
        subdivision 3, is amended to read: 
           Subd. 3.  [PREEXISTING CONDITIONS.] No person who obtains 
        coverage pursuant to this section shall be covered for any 
        preexisting condition during the first six months of coverage 
        under the state plan if the person was diagnosed or treated for 
        that condition during the 90 days immediately preceding the 
        filing of an application except as provided under subdivisions 
        4, 4a, 4b, 4c, 4d, 5, and 6, and 7 and section 62E.18. 
           Sec. 3.  Minnesota Statutes 1996, section 62E.14, 
        subdivision 4c, is amended to read: 
           Subd. 4c.  [WAIVER OF PREEXISTING CONDITIONS FOR PERSONS 
        WHOSE COVERAGE IS TERMINATED OR WHO EXCEED THE MAXIMUM LIFETIME 
        BENEFIT.] (a) A Minnesota resident may enroll in the 
        comprehensive health plan with a waiver of the preexisting 
        condition limitation described in subdivision 3 if that person 
        applies for coverage within 90 days of termination of prior 
        coverage and if the termination is for reasons other than fraud 
        or nonpayment of premiums.  
           For purposes of this subdivision paragraph, termination of 
        prior coverage includes exceeding the maximum lifetime benefit 
        of existing coverage. 
           Coverage in the comprehensive health plan is effective on 
        the date of termination of prior coverage.  The availability of 
        conversion rights does not affect a person's rights under this 
        subdivision paragraph. 
           This section does not apply to prior coverage provided 
        under policies designed primarily to provide coverage payable on 
        a per diem, fixed indemnity, or nonexpense incurred basis, or 
        policies providing only accident coverage. 
           (b) An eligible individual, as defined under United States 
        Code, chapter 42, section 300gg-41(b) may enroll in the 
        comprehensive health insurance plan with a waiver of the 
        preexisting condition limitation described in subdivision 3 and 
        a waiver of the evidence of rejection or similar events 
        described in subdivision 1, clause (c).  The eligible individual 
        must apply for enrollment under this paragraph within 63 days of 
        termination of prior coverage, and coverage under the 
        comprehensive health insurance plan is effective as of the date 
        of receipt of the complete application.  The six month 
        durational residency requirement provided in section 62E.02, 
        subdivision 13, does not apply with respect to eligibility for 
        enrollment under this paragraph, but the applicant must be a 
        Minnesota resident as of the date of application.  A person's 
        eligibility to enroll under this paragraph does not affect the 
        person's eligibility to enroll under any other provision. 
           Sec. 4.  [EFFECTIVE DATE.] 
           Sections 1 to 3 are effective January 1, 1998. 
                                   ARTICLE 2
                         SMALL EMPLOYER MARKET CHANGES
           Section 1.  Minnesota Statutes 1996, section 62L.02, 
        subdivision 9, is amended to read: 
           Subd. 9.  [CONTINUOUS COVERAGE.] "Continuous coverage" 
        means the maintenance of continuous and uninterrupted qualifying 
        coverage.  An individual is considered to have maintained 
        continuous coverage if the individual requests enrollment in 
        qualifying coverage within 30 63 days of termination of 
        qualifying coverage. 
           Sec. 2.  Minnesota Statutes 1996, section 62L.02, 
        subdivision 11, is amended to read: 
           Subd. 11.  [DEPENDENT.] "Dependent" means an eligible 
        employee's spouse, unmarried child who is under the age of 19 
        years, unmarried child under the age of 25 years who is a 
        full-time student as defined in section 62A.301, dependent child 
        of any age who is handicapped and who meets the eligibility 
        criteria in section 62A.14, subdivision 2, or any other person 
        whom state or federal law requires to be treated as a dependent 
        for purposes of health plans.  For the purpose of this 
        definition, a child includes a child for whom the employee or 
        the employee's spouse has been appointed legal guardian and an 
        adoptive child as provided in section 62A.27. 
           Sec. 3.  Minnesota Statutes 1996, section 62L.02, is 
        amended by adding a subdivision to read: 
           Subd. 13b.  [ENROLLMENT DATE.] "Enrollment date" means, 
        with respect to a covered individual, the date of enrollment of 
        the individual in the health benefit plan or, if earlier, the 
        first day of the waiting period for the individual's enrollment. 
           Sec. 4.  Minnesota Statutes 1996, section 62L.02, 
        subdivision 15, is amended to read: 
           Subd. 15.  [HEALTH BENEFIT PLAN.] "Health benefit plan" 
        means a policy, contract, or certificate offered, sold, issued, 
        or renewed by a health carrier to a small employer for the 
        coverage of medical and hospital benefits.  Health benefit plan 
        includes a small employer plan.  Health benefit plan does not 
        include coverage, including any combination of the following 
        coverages, that is: 
           (1) limited to disability or income protection coverage; 
           (2) automobile medical payment coverage; 
           (3) liability insurance or supplemental to liability 
        insurance; 
           (4) designed solely to provide coverage for a specified 
        disease or illness or to provide payments on a per diem, fixed 
        indemnity, or non-expense-incurred basis, if offered as 
        independent, noncoordinated coverage; 
           (5) credit accident and health insurance as defined in 
        section 62B.02; 
           (6) designed solely to provide dental or vision care; 
           (7) blanket accident and sickness insurance as defined in 
        section 62A.11; 
           (8) accident-only coverage; 
           (9) a long-term care policy as defined in section 62A.46; 
           (10) issued as a supplement to Medicare, as defined in 
        sections 62A.31 to 62A.44, or policies, contracts, or 
        certificates that supplement Medicare issued by health 
        maintenance organizations or those policies, contracts, or 
        certificates governed by section 1833 or 1876 of the federal 
        Social Security Act, United States Code, title 42, section 1395, 
        et seq., as amended Medicare-related coverage as defined in 
        section 62Q.01, subdivision 6; 
           (11) workers' compensation insurance; or 
           (12) issued solely as a companion to a health maintenance 
        contract as described in section 62D.12, subdivision 1a, so long 
        as the health maintenance contract meets the definition of a 
        health benefit plan limited to care provided at on-site medical 
        clinics operated by an employer for the benefit of the 
        employer's employees and their dependents, in connection with 
        which the employer does not transfer risk. 
           For the purpose of this chapter, a health benefit plan 
        issued to eligible employees of a small employer who meets the 
        participation requirements of section 62L.03, subdivision 3, is 
        considered to have been issued to a small employer.  A health 
        benefit plan issued on behalf of a health carrier is considered 
        to be issued by the health carrier. 
           Sec. 5.  Minnesota Statutes 1996, section 62L.02, 
        subdivision 19, is amended to read: 
           Subd. 19.  [LATE ENTRANT.] "Late entrant" means an eligible 
        employee or dependent who requests enrollment in a health 
        benefit plan of a small employer following the initial 
        enrollment period applicable to the employee or dependent under 
        the terms of the health benefit plan, provided that the initial 
        enrollment period must be a period of at least 30 days.  
        However, an eligible employee or dependent must not be 
        considered a late entrant if: 
           (1) the individual was covered under qualifying coverage at 
        the time the individual was eligible to enroll in the health 
        benefit plan, declined enrollment on that basis, and presents to 
        the health carrier a certificate of termination of the 
        qualifying coverage, due to loss of eligibility for that 
        coverage, or proof of the termination of employer contributions 
        toward that coverage, provided that the individual maintains 
        continuous coverage. and requests enrollment within 30 days of 
        termination of qualifying coverage or termination of the 
        employer's contribution toward that coverage.  For purposes of 
        this clause, loss of eligibility includes loss of eligibility as 
        a result of legal separation, divorce, death, termination of 
        employment, or reduction in the number of hours of employment.  
        For purposes of this clause, an individual is not a late entrant 
        if the individual elects coverage under the health benefit plan 
        rather than accepting continuation coverage for which the 
        individual is eligible under state or federal law with respect 
        to the individual's previous qualifying coverage; 
           (2) the individual has lost coverage under another group 
        health plan due to the expiration of benefits available under 
        the Consolidated Omnibus Budget Reconciliation Act of 1985, 
        Public Law Number 99-272, as amended, and any state continuation 
        laws applicable to the employer or health carrier, provided that 
        the individual maintains continuous coverage and requests 
        enrollment within 30 days of the loss of coverage; 
           (3) the individual is a new spouse of an eligible employee, 
        provided that enrollment is requested within 30 days of becoming 
        legally married; 
           (4) the individual is a new dependent child of an eligible 
        employee, provided that enrollment is requested within 30 days 
        of becoming a dependent; 
           (5) the individual is employed by an employer that offers 
        multiple health benefit plans and the individual elects a 
        different plan during an open enrollment period; or 
           (6) a court has ordered that coverage be provided for a 
        former spouse or dependent child under a covered employee's 
        health benefit plan and request for enrollment is made within 30 
        days after issuance of the court order. 
           Sec. 6.  Minnesota Statutes 1996, section 62L.02, 
        subdivision 23, is amended to read: 
           Subd. 23.  [PREEXISTING CONDITION.] "Preexisting condition" 
        means, with respect to coverage, a condition manifesting in a 
        manner that causes an ordinarily prudent person to seek medical 
        advice, diagnosis, care, or treatment or present before the 
        individual's enrollment date for the coverage, for which medical 
        advice, diagnosis, care, or treatment was recommended or 
        received during the six months immediately preceding 
        the effective date of coverage, or a pregnancy existing as of 
        the effective date of coverage of a health benefit 
        plan enrollment date. 
           Sec. 7.  Minnesota Statutes 1996, section 62L.02, 
        subdivision 24, is amended to read: 
           Subd. 24.  [QUALIFYING COVERAGE.] "Qualifying coverage" 
        means health benefits or health coverage provided under: 
           (1) a health benefit plan, as defined in this section, but 
        without regard to whether it is issued to a small employer and 
        including blanket accident and sickness insurance, other than 
        accident-only coverage, as defined in section 62A.11; 
           (2) part A or part B of Medicare; 
           (3) medical assistance under chapter 256B; 
           (4) general assistance medical care under chapter 256D; 
           (5) MCHA; 
           (6) a self-insured health plan; 
           (7) the MinnesotaCare program established under section 
        256.9352, when the plan includes inpatient hospital services as 
        provided in section 256.9353; 
           (8) a plan provided under section 43A.316, 43A.317, or 
        471.617; 
           (9) the Civilian Health and Medical Program of the 
        Uniformed Services (CHAMPUS) or other coverage provided under 
        United States Code, title 10, chapter 55; 
           (10) coverage provided by a health care network cooperative 
        under chapter 62R or by a health provider cooperative under 
        section 62R.17; or 
           (11) a medical care program of the Indian Health Service or 
        of a tribal organization; 
           (12) the federal Employees Health Benefits Plan, or other 
        coverage provided under United States Code, title 5, chapter 89; 
           (13) a health benefit plan under section 5(e) of the Peace 
        Corps Act, codified as United States Code, title 22, section 
        2504(e); or 
           (14) a plan similar to any of the above plans provided in 
        this state or in another state as determined by the commissioner.
           Sec. 8.  Minnesota Statutes 1996, section 62L.02, 
        subdivision 26, is amended to read: 
           Subd. 26.  [SMALL EMPLOYER.] (a) "Small employer" means, 
        with respect to a calendar year and a plan year, a person, firm, 
        corporation, partnership, association, or other entity actively 
        engaged in business, including a political subdivision of the 
        state, that, on at least 50 percent of its working days during 
        the preceding 12 months, employed an average of no fewer than 
        two nor more than 29, or after June 30, 1995, more than 49, 50 
        current employees, the majority of whom were employed in this 
        state.  If an employer has only two eligible employees and one 
        is the spouse, child, sibling, parent, or grandparent of the 
        other, the employer must be a Minnesota domiciled employer and 
        have paid social security or self-employment tax on behalf of 
        both eligible employees on business days during the preceding 
        calendar year and that employs at least two current employees on 
        the first day of the plan year.  If an employer has only one 
        eligible employee who has not waived coverage, the sale of a 
        health plan to or for that eligible employee is not a sale to a 
        small employer and is not subject to this chapter and may be 
        treated as the sale of an individual health plan.  A small 
        employer plan may be offered through a domiciled association to 
        self-employed individuals and small employers who are members of 
        the association, even if the self-employed individual or small 
        employer has fewer than two current employees.  Entities that 
        are eligible to file a combined tax return for purposes of state 
        tax laws treated as a single employer under subsection (b), (c), 
        (m), or (o) of section 414 of the federal Internal Revenue Code 
        are considered a single employer for purposes of determining the 
        number of current employees.  Small employer status must be 
        determined on an annual basis as of the renewal date of the 
        health benefit plan.  The provisions of this chapter continue to 
        apply to an employer who no longer meets the requirements of 
        this definition until the annual renewal date of the employer's 
        health benefit plan.  If an employer was not in existence 
        throughout the preceding calendar year, the determination of 
        whether the employer is a small employer is based upon the 
        average number of current employees that it is reasonably 
        expected that the employer will employ on business days in the 
        current calendar year.  For purposes of this definition, the 
        term employer includes any predecessor of the employer.  An 
        employer that has more than 50 current employees but has 50 or 
        fewer employees, as "employee" is defined under United States 
        Code, title 29, section 1002(6), is a small employer under this 
        subdivision. 
           (b) Where an association, as defined in section 62L.045, 
        comprised of employers contracts with a health carrier to 
        provide coverage to its members who are small employers, the 
        association and health benefit plans it provides to small 
        employers, are subject to section 62L.045, with respect to small 
        employers in the association, even though the association also 
        provides coverage to its members that do not qualify as small 
        employers.  
           (c) If an employer has employees covered under a trust 
        specified in a collective bargaining agreement under the federal 
        Labor-Management Relations Act of 1947, United States Code, 
        title 29, section 141, et seq., as amended, or employees whose 
        health coverage is determined by a collective bargaining 
        agreement and, as a result of the collective bargaining 
        agreement, is purchased separately from the health plan provided 
        to other employees, those employees are excluded in determining 
        whether the employer qualifies as a small employer.  Those 
        employees are considered to be a separate small employer if they 
        constitute a group that would qualify as a small employer in the 
        absence of the employees who are not subject to the collective 
        bargaining agreement. 
           Sec. 9.  Minnesota Statutes 1996, section 62L.02, is 
        amended by adding a subdivision to read: 
           Subd. 29.  [WAITING PERIOD.] "Waiting period" means, with 
        respect to an individual who is a potential enrollee under a 
        health benefit plan, the period that must pass with respect to 
        the individual before the individual is eligible, under the 
        employer's eligibility requirements, for coverage under the 
        health benefit plan. 
           Sec. 10.  Minnesota Statutes 1996, section 62L.03, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GUARANTEED ISSUE AND REISSUE.] (a) Every 
        health carrier shall, as a condition of authority to transact 
        business in this state in the small employer market, 
        affirmatively market, offer, sell, issue, and renew any of its 
        health benefit plans, on a guaranteed issue basis, to any small 
        employer that meets the participation and contribution 
        requirements of subdivision 3, as provided in this chapter.  
           (b) Notwithstanding paragraph (a), a health carrier may, at 
        the time of coverage renewal, modify the health coverage for a 
        product offered in the small employer market if the modification 
        is consistent with state law, approved by the commissioner, and 
        effective on a uniform basis for all small employers purchasing 
        that product other than through a qualified association in 
        compliance with section 62L.045, subdivision 2. 
           This requirement Paragraph (a) does not apply to a health 
        benefit plan designed for a small employer to comply with a 
        collective bargaining agreement, provided that the health 
        benefit plan otherwise complies with this chapter and is not 
        offered to other small employers, except for other small 
        employers that need it for the same reason.  This paragraph 
        applies only with respect to collective bargaining agreements 
        entered into prior to August 21, 1996, and only with respect to 
        plan years beginning before the later of July 1, 1997, or the 
        date upon which the last of the collective bargaining agreements 
        relating to the plan terminates determined without regard to any 
        extension agreed to after August 21, 1996. 
           (c) Every health carrier participating in the small 
        employer market shall make available both of the plans described 
        in section 62L.05 to small employers and shall fully comply with 
        the underwriting and the rate restrictions specified in this 
        chapter for all health benefit plans issued to small employers.  
           (d) A health carrier may cease to transact business in the 
        small employer market as provided under section 62L.09. 
           Sec. 11.  Minnesota Statutes 1996, section 62L.03, 
        subdivision 2, is amended to read: 
           Subd. 2.  [EXCEPTIONS.] (a) No health maintenance 
        organization is required to offer coverage or accept 
        applications under subdivision 1 in the case of the following: 
           (1) with respect to a small employer, where the worksite of 
        the employees of the small employer is not physically located 
        does not have eligible employees who work or reside in the 
        health maintenance organization's approved service areas; or 
           (2) with respect to an employee, when the employee does not 
        work or reside within the health maintenance organization's 
        approved service areas.  
           (b) A health carrier participating in the small employer 
        market shall not be required to offer coverage or accept 
        applications pursuant to subdivision 1 where the commissioner 
        finds that the acceptance of an application or applications 
        would place the health carrier participating in the small 
        employer market in a financially impaired condition, provided, 
        however, that a health carrier participating in the small 
        employer market that has not offered coverage or accepted 
        applications pursuant to this paragraph shall not offer coverage 
        or accept applications for any health benefit plan until 180 
        days following a determination by the commissioner that the 
        health carrier is not financially impaired and that offering 
        coverage or accepting applications under subdivision 1 would not 
        cause the health carrier to become financially impaired. 
           Sec. 12.  Minnesota Statutes 1996, section 62L.03, 
        subdivision 3, is amended to read: 
           Subd. 3.  [MINIMUM PARTICIPATION AND CONTRIBUTION.] (a) A 
        small employer that has at least 75 percent of its eligible 
        employees who have not waived coverage participating in a health 
        benefit plan and that contributes at least 50 percent toward the 
        cost of coverage of each eligible employee must be guaranteed 
        coverage on a guaranteed issue basis from any health carrier 
        participating in the small employer market.  The participation 
        level of eligible employees must be determined at the initial 
        offering of coverage and at the renewal date of coverage.  A 
        health carrier must not increase the participation requirements 
        applicable to a small employer at any time after the small 
        employer has been accepted for coverage.  For the purposes of 
        this subdivision, waiver of coverage includes only waivers due 
        to:  (1) coverage under another group health plan; (2) coverage 
        under Medicare Parts A and B; (3) coverage under MCHA permitted 
        under section 62E.141; or (4) coverage under medical assistance 
        under chapter 256B or general assistance medical care under 
        chapter 256D. 
           (b) If a small employer does not satisfy the contribution 
        or participation requirements under this subdivision, a health 
        carrier may voluntarily issue or renew individual health plans, 
        or a health benefit plan which must fully comply with this 
        chapter.  A health carrier that provides a health benefit plan 
        to a small employer that does not meet the contribution or 
        participation requirements of this subdivision must maintain 
        this information in its files for audit by the commissioner.  A 
        health carrier may not offer an individual health plan, 
        purchased through an arrangement between the employer and the 
        health carrier, to any employee unless the health carrier also 
        offers the individual health plan, on a guaranteed issue basis, 
        to all other employees of the same employer. 
           (c) Nothing in this section obligates a health carrier to 
        issue coverage to a small employer that currently offers 
        coverage through a health benefit plan from another health 
        carrier, unless the new coverage will replace the existing 
        coverage and not serve as one of two or more health benefit 
        plans offered by the employer.  This paragraph does not apply if 
        the small employer will meet the required participation level 
        with respect to the new coverage. 
           Sec. 13.  Minnesota Statutes 1996, section 62L.03, 
        subdivision 4, is amended to read: 
           Subd. 4.  [UNDERWRITING RESTRICTIONS.] (a) Health carriers 
        may apply underwriting restrictions to coverage for health 
        benefit plans for small employers, including any preexisting 
        condition limitations, only as expressly permitted under this 
        chapter.  For purposes of this section, "underwriting 
        restrictions" means any refusal of the health carrier to issue 
        or renew coverage, any premium rate higher than the lowest rate 
        charged by the health carrier for the same coverage, any 
        preexisting condition limitation, preexisting condition 
        exclusion, or any exclusionary rider.  
           (b) Health carriers may collect information relating to the 
        case characteristics and demographic composition of small 
        employers, as well as health status and health history 
        information about employees, and dependents of employees, of 
        small employers.  
           (c) Except as otherwise authorized for late entrants, 
        preexisting conditions may be excluded by a health carrier for a 
        period not to exceed 12 months from the effective enrollment 
        date of coverage of an eligible employee or dependent, but 
        exclusionary riders must not be used.  When calculating a 
        preexisting condition limitation, a health carrier shall credit 
        the time period an eligible employee or dependent was previously 
        covered by qualifying coverage, provided that the individual 
        maintains continuous coverage.  Late entrants may be subject to 
        a preexisting condition limitation not to exceed 18 months from 
        the effective enrollment date of coverage of the late entrant, 
        but must not be subject to any exclusionary rider or preexisting 
        condition exclusion.  When calculating any length of preexisting 
        condition limitation, a health carrier shall credit the time 
        period an eligible employee or dependent was previously covered 
        by qualifying coverage, provided that the individual maintains 
        continuous coverage.  The credit must be given for all 
        qualifying coverage with respect to all preexisting conditions, 
        regardless of whether the conditions were preexisting with 
        respect to any previous qualifying coverage.  Section 60A.082, 
        relating to replacement of group coverage, and the rules adopted 
        under that section apply to this chapter, and this chapter's 
        requirements are in addition to the requirements of that section 
        and the rules adopted under it.  A health carrier shall, at the 
        time of first issuance or renewal of a health benefit plan on or 
        after July 1, 1993, credit against any preexisting condition 
        limitation or exclusion permitted under this section, the time 
        period prior to July 1, 1993, during which an eligible employee 
        or dependent was covered by qualifying coverage, if the person 
        has maintained continuous coverage.  
           (d) Health carriers shall not use pregnancy as a 
        preexisting condition under this chapter. 
           Sec. 14.  Minnesota Statutes 1996, section 62L.03, 
        subdivision 5, is amended to read: 
           Subd. 5.  [CANCELLATIONS AND FAILURES TO RENEW.] (a) No 
        health carrier shall cancel, decline to issue, or fail to renew 
        a health benefit plan as a result of the claim experience or 
        health status of the persons covered or to be covered by the 
        health benefit plan.  For purposes of this subdivision, a 
        failure to renew does not include a uniform modification of 
        coverage at time of renewal, as described in subdivision 1. 
           (b) A health carrier may cancel or fail to renew a health 
        benefit plan: 
           (1) for nonpayment of the required premium; 
           (2) for fraud or misrepresentation by the small employer, 
        or, with respect to coverage of an individual eligible employee 
        or dependent, fraud or misrepresentation by the eligible 
        employee or dependent, with respect to eligibility for coverage 
        or any other material fact; 
           (3) if the employer fails to comply with the minimum 
        contribution percentage required under subdivision 3; or 
           (4) for any other reasons or grounds expressly permitted by 
        the respective licensing laws and regulations governing a health 
        carrier, including, but not limited to, service area 
        restrictions imposed on health maintenance organizations under 
        section 62D.03, subdivision 4, paragraph (m), to the extent that 
        these grounds are not expressly inconsistent with this chapter. 
           (c) A health carrier may fail to renew a health benefit 
        plan: 
           (1) if eligible employee participation during the preceding 
        calendar year declines to less than 75 percent, subject to the 
        waiver of coverage provision in subdivision 3; 
           (2) if the health carrier ceases to do business in the 
        small employer market under section 62L.09; or 
           (3) if a failure to renew is based upon the health 
        carrier's decision to discontinue the health benefit plan form 
        previously issued to the small employer, but only if the health 
        carrier permits each small employer covered under the prior form 
        to switch to its choice of any other health benefit plan offered 
        by the health carrier, without any underwriting restrictions 
        that would not have been permitted for renewal purposes. 
           (d) A health carrier need not renew a health benefit plan, 
        and shall not renew a small employer plan, if an employer ceases 
        to qualify as a small employer as defined in section 62L.02.  If 
        a health benefit plan, other than a small employer plan, 
        provides terms of renewal that do not exclude an employer that 
        is no longer a small employer, the health benefit plan may be 
        renewed according to its own terms.  If a health carrier issues 
        or renews a health plan to an employer that is no longer a small 
        employer, without interruption of coverage, the health plan is 
        subject to section 60A.082.  Between July 1, 1994, and June 30, 
        1995, a health benefit plan in force during this time may be 
        renewed, if the number of employees exceeds two, but does not 
        exceed 49 employees. 
           Sec. 15.  [EFFECTIVE DATE.] 
           Sections 1 to 14 are effective July 1, 1997, and apply to 
        coverage issued or renewed on or after that date. 
                                   ARTICLE 3
                         LARGE EMPLOYER MARKET CHANGES
           Section 1.  Minnesota Statutes 1996, section 62Q.18, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITION.] For purposes of this section, 
           (1) "continuous coverage" has the meaning given in section 
        62L.02, subdivision 9; 
           (2) "guaranteed issue" means: 
           (i) for individual health plans, that a health plan company 
        shall not decline an application by an individual for any 
        individual health plan offered by that health plan company, 
        including coverage for a dependent of the individual to whom the 
        health plan has been or would be issued; and 
           (ii) for group health plans, that a health plan company 
        shall not decline an application by a group for any group health 
        plan offered by that health plan company and shall not decline 
        to cover under the group health plan any person eligible for 
        coverage under the group's eligibility requirements, including 
        persons who become eligible after initial issuance of the group 
        health plan; and 
           (3) "large employer" means an entity that would be a small 
        employer, as defined in section 62L.02, subdivision 26, except 
        that the entity has more than 50 current employees, based upon 
        the method provided in that subdivision for determining the 
        number of current employees; 
           (4) "preexisting condition" has the meaning given in 
        section 62L.02, subdivision 23; and 
           (3) (5) "qualifying coverage" has the meaning given in 
        section 62L.02, subdivision 24. 
           Sec. 2.  Minnesota Statutes 1996, section 62Q.18, 
        subdivision 7, is amended to read: 
           Subd. 7.  [PORTABILITY OF COVERAGE.] Effective July 1, 
        1994, no health plan company shall offer, sell, issue, or renew 
        any group health plan that does not, with respect to individuals 
        who maintain continuous coverage and who qualify under the 
        group's eligibility requirements: 
           (1) make coverage available on a guaranteed issue basis; 
        and 
           (2) give full credit for previous continuous coverage 
        against any applicable preexisting condition limitation or 
        preexisting condition exclusion.; and 
           (3) with respect to a group health plan offered, sold, 
        issued, or renewed to a large employer, impose preexisting 
        condition limitations or preexisting condition exclusions except 
        to the extent that would be permitted under chapter 62L if the 
        group sponsor were a small employer as defined in section 
        62L.02, subdivision 26. 
           To the extent that this subdivision conflicts with chapter 
        62L, chapter 62L governs, regardless of whether the group 
        sponsor is a small employer as defined in section 62L.02, except 
        that for group health plans issued to groups that are not small 
        employers, this subdivision's requirement that the individual 
        have maintained continuous coverage applies.  An individual who 
        has maintained continuous coverage, but would be considered a 
        late entrant under chapter 62L, may be treated as a late entrant 
        in the same manner under this subdivision as permitted under 
        chapter 62L.  
           Sec. 3.  [62Q.185] [GUARANTEED RENEWABILITY; LARGE EMPLOYER 
        GROUP HEALTH COVERAGE.] 
           (a) No health plan company, as defined in section 62Q.01, 
        subdivision 4, shall refuse to renew a health benefit plan, as 
        defined in section 62L.02, subdivision 15, but issued to a large 
        employer, as defined in section 62Q.18, subdivision 1. 
           (b) This section does not require renewal if: 
           (1) the large employer has failed to pay premiums or 
        contributions as required under the terms of the health benefit 
        plan, or the health plan company has not received timely premium 
        payments unless the late payments were received within a grace 
        period provided under state law; 
           (2) the large employer has performed an act or practice 
        that constitutes fraud or misrepresentation of material fact 
        under the terms of the health benefit plan; 
           (3) the large employer has failed to comply with a material 
        plan provision relating to employer contribution or group 
        participation rules not prohibited by state law; 
           (4) the health plan company is ceasing to offer coverage in 
        the large employer market in this state in compliance with 
        United States Code, title 42, section 300gg-12(c), and 
        applicable state law; 
           (5) in the case of a health maintenance organization, there 
        is no longer any enrollee in the large employer's health benefit 
        plan who lives, resides, or works in the approved service area; 
        or 
           (6) in the case of a health benefit plan made available to 
        large employers only through one or more bona fide associations, 
        the membership of the large employer in the association ceases, 
        but only if such coverage is terminated uniformly without regard 
        to any health-related factor relating to any covered individual. 
           (c) This section does not prohibit a health plan company 
        from modifying the premium rate or from modifying the coverage 
        for purposes of renewal. 
           Sec. 4.  [EFFECTIVE DATE.] 
           Sections 1 to 3 are effective July 1, 1997, and apply to 
        health benefit plans offered, sold, issued, or renewed on or 
        after that date. 
                                   ARTICLE 4
                               GENERAL PROVISIONS
           Section 1.  Minnesota Statutes 1996, section 62H.01, is 
        amended to read: 
           62H.01 [JOINT SELF-INSURANCE EMPLOYEE HEALTH PLAN.] 
           Any two or more employers, excluding the state and its 
        political subdivisions as described in section 471.617, 
        subdivision 1, who are authorized to transact business in 
        Minnesota may jointly self-insure employee health, dental, 
        short-term disability benefits, or other benefits permitted 
        under the Employee Retirement Income Security Act of 1974, 
        United States Code, title 29, sections 1001 et seq.  Joint plans 
        must have a minimum of 100 covered employees and meet all 
        conditions and terms of sections 62H.01 to 62H.08.  Joint plans 
        covering employers not resident in Minnesota must meet the 
        requirements of sections 62H.01 to 62H.08 as if the portion of 
        the plan covering Minnesota resident employees was treated as a 
        separate plan.  A plan may cover employees resident in other 
        states only if the plan complies with the applicable laws of 
        that state. 
           A multiple employer welfare arrangement as defined in 
        United States Code, title 29, section 1002(40)(a), is subject to 
        this chapter to the extent authorized by the Employee Retirement 
        Income Security Act of 1974, United States Code, title 29, 
        sections 1001 et seq.  The commissioner of commerce may, on 
        behalf of the state, enter into an agreement with the United 
        States Secretary of Labor for delegation to the state of some or 
        all of the secretary's enforcement authority with respect to 
        multiple employer welfare arrangements, as described in United 
        States Code, title 29, section 1136(c). 
           Sec. 2.  [62Q.021] [FEDERAL ACT; COMPLIANCE REQUIRED.] 
           Each health plan company shall comply with the federal 
        Health Insurance Portability and Accountability Act of 1996, 
        including any federal regulations adopted under that act, to the 
        extent that it imposes a requirement that applies in this state 
        and that is not also required by the laws of this state.  This 
        section does not require compliance with any provision of the 
        federal act prior to the effective date provided for that 
        provision in the federal act.  The commissioner shall enforce 
        this section. 
           Sec. 3.  [62Q.181] [WRITTEN CERTIFICATION OF COVERAGE.] 
           A health plan company shall provide the written 
        certifications of coverage required under United States Code, 
        title 42, sections 300gg(e) and 300gg-43.  This section applies 
        only to coverage that is subject to regulation under state law 
        and only to the extent that the certification of coverage is 
        required under federal law.  The commissioner shall enforce this 
        section. 
           Sec. 4.  [EFFECTIVE DATE.] 
           Sections 1 and 2 are effective the day following final 
        enactment.  Section 3 is effective July 1, 1997. 
           Presented to the governor May 17, 1997 
           Signed by the governor May 19, 1997, 7:11 p.m.