Subdivision 1. Application.
The definitions in this section apply to sections
Subd. 2. Actuarial opinion.
"Actuarial opinion" means a written statement by a member
of the American Academy of Actuaries that a health carrier is in compliance with this chapter,
based on the person's examination, including a review of the appropriate records and of the
actuarial assumptions and methods utilized by the health carrier in establishing premium rates for
health benefit plans.
Subd. 3. Association.
"Association" means the Health Coverage Reinsurance Association.
Subd. 4. Base premium rate.
"Base premium rate" means as to a rating period, the lowest
premium rate charged or which could have been charged under the rating system by the health
carrier to small employers for health benefit plans with the same or similar coverage.
Subd. 5. Board of directors.
"Board of directors" means the board of directors of the Health
Coverage Reinsurance Association.
Subd. 6. Case characteristics.
"Case characteristics" means the relevant characteristics of
a small employer, as determined by a health carrier in accordance with this chapter, which are
considered by the carrier in the determination of premium rates for the small employer.
Subd. 7. Coinsurance.
"Coinsurance" means an established dollar amount or percentage
of health care expenses that an eligible employee or dependent is required to pay directly to a
provider of medical services or supplies under the terms of a health benefit plan.
Subd. 8. Commissioner.
"Commissioner" means the commissioner of commerce for
health carriers subject to the jurisdiction of the Department of Commerce or the commissioner
of health for health carriers subject to the jurisdiction of the Department of Health, or the
relevant commissioner's designated representative. For purposes of sections
"commissioner" means the commissioner of commerce or that commissioner's designated
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 63 days
of termination of qualifying coverage.
Subd. 9a. Current employee.
"Current employee" means an employee, as defined in this
section, other than a retiree or disabled former employee.
Subd. 10. Deductible.
"Deductible" means the amount of health care expenses an eligible
employee or dependent is required to incur before benefits are payable under a health benefit plan.
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
, dependent child of any age who is disabled 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
Subd. 11a. Discounted eligible charges.
"Discounted eligible charges" means, as determined
by the board of directors, eligible charges reduced by the average difference between eligible
charges and the expected liability of the health carrier for services performed. The board of
directors, in its discretion, may determine additional different discounts, based upon geographic
area and type of delivery system.
Subd. 12. Eligible charges.
"Eligible charges" means the actual charges submitted to a
health carrier by or on behalf of a provider, eligible employee, or dependent for health services
covered by the health carrier's health benefit plan. Eligible charges do not include charges for
health services excluded by the health benefit plan or charges for which an alternate health carrier
is liable under the coordination of benefit provisions of the health benefit plan.
Subd. 13. Eligible employee.
"Eligible employee" means an employee who has satisfied all
employer participation and eligibility requirements.
Subd. 13a. Employee.
"Employee" means an individual employed for at least 20 hours per
week and includes a sole proprietor or a partner of a partnership, if the sole proprietor or partner is
included under a health benefit plan of the employer, but does not include individuals who work
on a temporary, seasonal, or substitute basis. "Employee" also includes a retiree or a disabled
former employee required to be covered under sections
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.
Subd. 14. Financially impaired condition.
"Financially impaired condition" means a
situation in which a health carrier is not insolvent, but (1) is considered by the commissioner
to be potentially unable to fulfill its contractual obligations, or (2) is placed under an order of
rehabilitation or conservation by a court of competent jurisdiction.
Subd. 14a. Guaranteed issue.
"Guaranteed issue" means that a health carrier shall not
decline an application by a small employer for any health benefit plan offered by that health
carrier and shall not decline to cover under a health benefit plan any eligible employee or eligible
dependent, including persons who become eligible employees or eligible dependents after initial
issuance of the health benefit plan, subject to the health carrier's right to impose preexisting
condition limitations permitted under this chapter.
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,
(5) credit accident and health insurance as defined in section
(6) designed solely to provide dental or vision care;
(7) blanket accident and sickness insurance as defined in section
(8) accident-only coverage;
(9) a long-term care policy as defined in section
or a qualified long-term care
insurance policy as defined in section
(10) Medicare-related coverage as defined in section
62Q.01, subdivision 6
(11) workers' compensation insurance; or
(12) 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
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.
Subd. 16. Health carrier.
"Health carrier" means an insurance company licensed under
chapter 60A to offer, sell, or issue a policy of accident and sickness insurance as defined in section
; a health service plan corporation licensed under chapter 62C; a health maintenance
organization licensed under chapter 62D; a community integrated service network operating
under chapter 62N; an accountable provider network regulated under chapter 62T; a fraternal
benefit society operating under chapter 64B; a joint self-insurance employee health plan operating
under chapter 62H; a multiple employer welfare arrangement, as defined in United States Code,
title 29, section 1002(40), as amended. Any use of this definition in another chapter by reference
does not include a community integrated service network, unless otherwise specified. For the
purpose of this chapter, companies that are affiliated companies or that are eligible to file a
consolidated tax return must be treated as one health carrier, except that any insurance company
or health service plan corporation that is an affiliate of a health maintenance organization located
in Minnesota, or any health maintenance organization located in Minnesota that is an affiliate of
an insurance company or health service plan corporation, or any health maintenance organization
that is an affiliate of another health maintenance organization in Minnesota, may treat the health
maintenance organization as a separate health carrier.
Subd. 17. Health plan.
"Health plan" means a health plan as defined in section
and includes individual and group coverage regardless of the size of the group, unless otherwise
Subd. 18. Index rate.
"Index rate" means as to a rating period for small employers the
arithmetic average of the applicable base premium rate and the corresponding highest premium
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 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.
Subd. 20. MCHA.
"MCHA" means the Minnesota Comprehensive Health Association
established under section
Subd. 21. Medical necessity.
"Medical necessity" means the appropriate and necessary
medical and hospital services eligible for payment under a health benefit plan as determined by
a health carrier.
Subd. 22. Members.
"Members" means the health carriers operating in the small employer
market who may participate in the association.
Subd. 23. Preexisting condition.
"Preexisting condition" means, with respect to coverage,
a condition 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 enrollment date.
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
(2) part A or part B of Medicare;
(3) medical assistance under chapter 256B;
(4) general assistance medical care under chapter 256D;
(6) a self-insured health plan;
(7) the MinnesotaCare program established under section
(8) a plan provided under section
(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;
(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);
(14) a health plan;
(15) a plan similar to any of the above plans provided in this state or in another state as
determined by the commissioner;
(16) any plan established or maintained by a state, the United States government, or a foreign
country, or any political subdivision of a state, the United States government, or a foreign country
that provides health coverage to individuals who are enrolled in the plan; or
(17) the State Children's Health Insurance Program (SCHIP).
Subd. 25. Rating period.
"Rating period" means the 12-month period for which premium
rates established by a health carrier are assumed to be in effect, as determined by the health
carrier. During the rating period, a health carrier may adjust the rate based on the prorated change
in the index rate.
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 employed an average of no fewer
than two nor more than 50 current 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 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
, 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
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
Subd. 27. Small employer market.
(a) "Small employer market" means the market for
health benefit plans for small employers.
(b) A health carrier is considered to be participating in the small employer market if the
carrier offers, sells, issues, or renews a health benefit plan to: (1) any small employer; or (2) the
eligible employees of a small employer offering a health benefit plan if, with the knowledge of the
health carrier, either of the following conditions is met:
(i) any portion of the premium or benefits is paid for or reimbursed by a small employer; or
(ii) the health benefit plan is treated by the employer or any of the eligible employees or
dependents as part of a plan or program for the purposes of the Internal Revenue Code, section
106, 125, or 162.
Subd. 28. Small employer plan.
"Small employer plan" means a health benefit plan issued
by a health carrier to a small employer for coverage of the medical and hospital benefits described
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.
History: 1992 c 549 art 2 s 2; 1993 c 47 s 1; 1993 c 247 art 2 s 1-5; 1993 c 345 art 7 s 1-3;
1994 c 465 art 3 s 61; 1994 c 625 art 10 s 16-28,50; 1995 c 234 art 7 s 12-15; 1995 c 258 s 44;
1997 c 71 art 2 s 7; 1997 c 175 art 2 s 1-9; 1997 c 225 art 2 s 62; 1999 c 177 s 52; 1999 c 181 s
1; 2001 c 7 s 15; 2005 c 56 s 1; 2006 c 255 s 27