62A.65 INDIVIDUAL MARKET REGULATION.
Subdivision 1. Applicability.
No health carrier, as defined in section
, shall offer,
sell, issue, or renew any individual health plan, as defined in section
, to a Minnesota
resident except in compliance with this section. This section does not apply to the Comprehensive
Health Association established in section
Subd. 2. Guaranteed renewal.
No individual health plan may be offered, sold, issued, or
renewed to a Minnesota resident unless the health plan provides that the plan is guaranteed
renewable at a premium rate that does not take into account the claims experience or any change
in the health status of any covered person that occurred after the initial issuance of the health plan
to the person. The premium rate upon renewal must also otherwise comply with this section. A
health carrier must not refuse to renew an individual health plan prior to enrollment in Medicare
Parts A and B, except for nonpayment of premiums, fraud, or misrepresentation.
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 separate
geographic regions determined by the health carrier and to establish separate index rates for each
such region. The commissioner shall grant approval if the following conditions are met:
(1) the geographic regions must be applied uniformly by the health carrier;
(2) each geographic region must be composed of no fewer than seven counties that create a
contiguous region; and
(3) 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
(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
(g) The loss ratio must comply with the section
requirements for individual health
(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.
(i) An insurer may, as part of a minimum lifetime loss ratio guarantee filing under section
, subdivision 3a, include a rating practices guarantee as provided in this paragraph. The
rating practices guarantee must be in writing and must guarantee that the policy form will be
offered, sold, issued, and renewed only with premium rates and premium rating practices that
comply with subdivisions 2, 3, 4, and 5. The rating practices guarantee must be accompanied by
an actuarial memorandum that demonstrates that the premium rates and premium rating system
used in connection with the policy form will satisfy the guarantee. The guarantee must guarantee
refunds of any excess premiums to policyholders charged premiums that exceed those permitted
under subdivision 2, 3, 4, or 5. An insurer that complies with this paragraph in connection with
a policy form is exempt from the requirement of prior approval by the commissioner under
paragraphs (c), (f), and (h).
Subd. 4. Gender rating prohibited.
No individual health plan offered, sold, issued, or
renewed to a Minnesota resident may determine the premium rate or any other underwriting
decision, including initial issuance, through a method that is in any way based upon the gender
of any person covered or to be covered under the health plan. This subdivision prohibits the
use of marital status or generalized differences in expected costs between principal insureds
and their spouses.
Subd. 5. Portability and conversion of coverage.
(a) No individual health plan may be
offered, sold, issued, or with respect to children age 18 or under renewed, to a Minnesota resident
that contains a preexisting condition limitation, preexisting condition exclusion, or exclusionary
rider, unless the limitation or exclusion is permitted under this subdivision and under chapter 62L,
provided that, except for children age 18 or under, underwriting restrictions may be retained on
individual contracts that are issued without evidence of insurability as a replacement for prior
individual coverage that was sold before May 17, 1993. The individual may be subjected to an
18-month preexisting condition limitation, unless the individual has maintained continuous
coverage as defined in section
. The individual must not be subjected to an exclusionary
rider. An individual who has maintained continuous coverage may be subjected to a onetime
preexisting condition limitation of up to 12 months, with credit for time covered under qualifying
coverage as defined in section
, at the time that the individual first is covered under an
individual health plan by any health carrier. 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. The individual must not be subjected to an
exclusionary rider. Thereafter, the individual must not be subject to any preexisting condition
limitation, preexisting condition exclusion, or exclusionary rider under an individual health plan
by any health carrier, except an unexpired portion of a limitation under prior coverage, so long as
the individual maintains continuous coverage as defined in section
(b) A health carrier must offer an individual health plan to any individual previously covered
under a group health plan issued by that health carrier, regardless of the size of the group, so long
as the individual maintained continuous coverage as defined in section
. If the individual
has available any continuation coverage provided under sections
subdivisions 1 and 2
, or continuation coverage
provided under federal law, the health carrier need not offer coverage under this paragraph
until the individual has exhausted the continuation coverage. The offer must not be subject to
underwriting, except as permitted under this paragraph. A health plan issued under this paragraph
must be a qualified plan as defined in section
and must not contain any preexisting
condition limitation, preexisting condition exclusion, or exclusionary rider, except for any
unexpired limitation or exclusion under the previous coverage. The individual health plan must
cover pregnancy on the same basis as any other covered illness under the individual health plan.
The offer of coverage by the health carrier must inform the individual that the coverage, including
what is covered and the health care providers from whom covered care may be obtained, may not
be the same as the individual's coverage under the group health plan. The offer of coverage by the
health carrier must also inform the individual that the individual, if a Minnesota resident, may be
eligible to obtain coverage from (i) other private sources of health coverage, or (ii) the Minnesota
Comprehensive Health Association, without a preexisting condition limitation, and must provide
the telephone number used by that association for enrollment purposes. The initial premium rate
for the individual health plan must comply with subdivision 3. The premium rate upon renewal
must comply with subdivision 2. In no event shall the premium rate exceed 100 percent of the
premium charged for comparable individual coverage by the Minnesota Comprehensive Health
Association, and the premium rate must be less than that amount if necessary to otherwise comply
with this section. An individual health plan offered under this paragraph to a person satisfies
the health carrier's obligation to offer conversion coverage under section
, with respect
to that person. Coverage issued under this paragraph must provide that it cannot be canceled or
nonrenewed as a result of the health carrier's subsequent decision to leave the individual, small
employer, or other group market. Section
72A.20, subdivision 28
, applies to this paragraph.
Subd. 6. Guaranteed issue not required.
Nothing in this section requires a health carrier
to initially issue a health plan to a Minnesota resident, except as otherwise expressly provided
in subdivision 4 or 5.
Subd. 7. Short-term coverage.
(a) For purposes of this section, "short-term coverage"
means an individual health plan that:
(1) is issued to provide coverage for a period of 185 days or less, except that the health plan
may permit coverage to continue until the end of a period of hospitalization for a condition for
which the covered person was hospitalized on the day that coverage would otherwise have ended;
(2) is nonrenewable, provided that the health carrier may provide coverage for one or more
subsequent periods that satisfy clause (1), if the total of the periods of coverage do not exceed a
total of 365 days out of any 555-day period, plus any additional days covered as a result of
hospitalization on the day that a period of coverage would otherwise have ended;
(3) does not cover any preexisting conditions, including ones that originated during a
previous identical policy or contract with the same health carrier where coverage was continuous
between the previous and the current policy or contract; and
(4) is available with an immediate effective date without underwriting upon receipt of a
completed application indicating eligibility under the health carrier's eligibility requirements,
provided that coverage that includes optional benefits may be offered on a basis that does not
meet this requirement.
(b) Short-term coverage is not subject to subdivisions 2 and 5. Short-term coverage may
exclude as a preexisting condition any injury, illness, or condition for which the covered person
had medical treatment, symptoms, or any manifestations before the effective date of the coverage,
but dependent children born or placed for adoption during the policy period must not be subject to
(c) Notwithstanding subdivision 3, and section
, a health carrier may combine
short-term coverage with its most commonly sold individual qualified plan, as defined in section
, other than short-term coverage, for purposes of complying with the loss ratio requirement.
(d) The 365-day coverage limitation provided in paragraph (a) applies to the total number of
days of short-term coverage that covers a person, regardless of the number of policies, contracts,
or health carriers that provide the coverage. A written application for short-term coverage must
ask the applicant whether the applicant has been covered by short-term coverage by any health
carrier within the 555 days immediately preceding the effective date of the coverage being
applied for. Short-term coverage issued in violation of the 365-day limitation is valid until the
end of its term and does not lose its status as short-term coverage, in spite of the violation. A
health carrier that knowingly issues short-term coverage in violation of the 365-day limitation is
subject to the administrative penalties otherwise available to the commissioner of commerce or
the commissioner of health, as appropriate.
(e) Time spent under short-term coverage counts as time spent under a preexisting condition
limitation for purposes of group or individual health plans, other than short-term coverage,
subsequently issued to that person, or to cover that person, by any health carrier, if the person
maintains continuous coverage as defined in section
. Short-term coverage is a health plan
and is qualifying coverage as defined in section
. Notwithstanding any other law to the
contrary, a health carrier is not required under any circumstances to provide a person covered by
short-term coverage the right to obtain coverage on a guaranteed issue basis under another health
plan offered by the health carrier, as a result of the person's enrollment in short-term coverage.
Subd. 7a. Short-term coverage; applicability.
Notwithstanding subdivision 3, paragraph
(g), and subdivision 7, paragraph (c), short-term coverage is not subject to section
Subd. 8. Cessation of individual business.
Notwithstanding the provisions of subdivisions 1
to 7, a health carrier may elect to cease doing business in the individual health plan market in
this state if it complies with the requirements of this subdivision. For purposes of this section,
"cease doing business" means to discontinue issuing new individual health plans and to refuse to
renew all of the health carrier's existing individual health plans issued in this state whose terms
permit refusal to renew under the circumstances specified in this subdivision. This subdivision
does not permit cancellation of an individual health plan, unless the terms of the health plan
permit cancellation under the circumstances specified in this subdivision. A health carrier
electing to cease doing business in the individual health plan market in this state shall notify the
commissioner 180 days prior to the effective date of the cessation. Within 30 days after the
termination, the health carrier shall submit to the commissioner a complete list of policyholders
that have been terminated. The cessation of business does not include the failure of a health
carrier to offer or issue new business in the individual health plan market or continue an existing
product line in that market, provided that a health carrier does not terminate, cancel, or fail to
renew its current individual health plan business. A health carrier electing to cease doing business
in the individual health plan market shall provide 120 days' written notice to each policyholder
covered by an individual health plan issued by the health carrier. This notice must also inform
each policyholder of the existence of the Minnesota Comprehensive Health Association, the
requirements for being accepted, the procedures for applying for coverage, and the telephone
numbers at the Department of Health and the Department of Commerce for information about
private individual or family health coverage. A health carrier that ceases to write new business in
the individual health plan market shall continue to be governed by this section with respect to
continuing individual health plan business conducted by the health carrier. A health carrier that
ceases to do business in the individual health plan market after July 1, 1994, is prohibited from
writing new business in the individual health plan market in this state for a period of five years
from the date of notice to the commissioner. This subdivision applies to any health maintenance
organization that ceases to do business in the individual health plan market in one service area
with respect to that service area only. Nothing in this subdivision prohibits an affiliated health
maintenance organization from continuing to do business in the individual health plan market
in that same service area. The right to refuse to renew an individual health plan under this
subdivision does not apply to individual health plans issued on a guaranteed renewable basis that
does not permit refusal to renew under the circumstances specified in this subdivision.
History: 1992 c 549 art 3 s 12; 1993 c 247 art 3 s 6; 1993 c 345 art 8 s 4; 1994 c 506 s 1;
1994 c 625 art 10 s 8-12; 1995 c 234 art 7 s 4,5; 1998 c 407 art 8 s 1; 1998 c 408 s 25; 1999 c 177
s 41; 2001 c 215 s 17; 2002 c 330 s 12; 1Sp2003 c 14 art 7 s 7; 2004 c 268 s 1,9; 2006 c 255 s 16