2006 Minnesota Statutes

60A.235 STANDARDS FOR DETERMINING WHETHER CONTRACTS ARE HEALTH
PLAN CONTRACTS OR STOP LOSS CONTRACTS.
    Subdivision 1. Findings and purpose. The purpose of this section is to establish a standard
for the determination of whether an insurance policy or other evidence or coverage should be
treated as a policy of accident and sickness insurance or a stop loss policy for the purpose
of the regulation of the business of insurance. The laws regulating the business of insurance
in Minnesota impose distinctly different requirements upon accident and sickness insurance
policies and stop loss policies. In particular, the regulation of accident and sickness insurance in
Minnesota includes measures designed to reform the health insurance market, to minimize or
prohibit selective rating or rejection of employee groups or individual group members based upon
health conditions, and to provide access to affordable health insurance coverage regardless of
preexisting health conditions. The health care reform provisions enacted in Minnesota will only
be effective if they are applied to all insurers and health carriers who in substance, regardless of
purported form, engage in the business of issuing health insurance coverage to employees of an
employee group. This section applies to insurance companies and health carriers and the policies
or other evidence of coverage that they issue. This section does not apply to employers or the
benefit plans they establish for their employees.
    Subd. 2. Definitions. For purposes of this section, the terms defined in this subdivision
have the meanings given.
(a) "Attachment point" means the claims amount beyond which the insurance company or
health carrier incurs a liability for payment.
(b) "Direct coverage" means coverage under which an insurance company or health carrier
assumes a direct obligation to an individual, under the policy or evidence of coverage, with
respect to health care expenses incurred by the individual or a member of the individual's family.
(c) "Expected claims" means the amount of claims that, in the absence of a stop loss
policy or other insurance or evidence of coverage, are projected to be incurred under an
employer-sponsored plan covering health care expenses.
(d) "Expected plan claims" means the expected claims less the projected claims in excess of
the specific attachment point, adjusted to be consistent with the employer's aggregate contract
period.
(e) "Health plan" means a health plan as defined in section 62A.011 and includes group
coverage regardless of the size of the group.
(f) "Health carrier" means a health carrier as defined in section 62A.011.
    Subd. 3. Health plan policies issued as stop loss coverage. (a) An insurance company or
health carrier issuing or renewing an insurance policy or other evidence of coverage, that provides
coverage to an employer for health care expenses incurred under an employer-sponsored plan
provided to the employer's employees, retired employees, or their dependents, shall issue the
policy or evidence of coverage as a health plan if the policy or evidence of coverage:
(1) has a specific attachment point for claims incurred per individual that is lower than
$10,000; or
(2) has an aggregate attachment point that is lower than the sum of:
(i) 140 percent of the first $50,000 of expected plan claims;
(ii) 120 percent of the next $450,000 of expected plan claims; and
(iii) 110 percent of the remaining expected plan claims.
(b) Where the insurance policy or evidence of coverage applies to a contract period of
more than one year, the dollar amounts set forth in paragraph (a), clauses (1) and (2), must be
multiplied by the length of the contract period expressed in years.
(c) The commissioner may adjust the constant dollar amounts provided in paragraph (a),
clauses (1) and (2), on January 1 of any year, based upon changes in the medical component of the
Consumer Price Index (CPI). Adjustments must be in increments of $100 and must not be made
unless at least that amount of adjustment is required. The commissioner shall publish any change
in these dollar amounts at least three months before their effective date.
(d) A policy or evidence of coverage issued by an insurance company or health carrier that
provides direct coverage of health care expenses of an individual including a policy or evidence
of coverage administered on a group basis is a health plan regardless of whether the policy or
evidence of coverage is denominated as stop loss coverage.
    Subd. 4. Compliance. (a) An insurance company or health carrier that is required to issue
a policy or evidence of coverage as a health plan under this section shall, even if the policy or
evidence of coverage is denominated as stop loss coverage, comply with all the laws of this
state that apply to the health plan, including, but not limited to, chapters 62A, 62C, 62D, 62E,
62L, and 62Q.
(b) With respect to an employer who had been issued a policy or evidence of coverage
denominated as stop loss coverage before June 2, 1995, compliance with this section is required
as of the first renewal date occurring on or after June 2, 1995.
History: 1995 c 258 s 6