2003 Minnesota Statutes

     62A.65 Individual market regulation. 

    Subdivision 1.    Applicability.  No health carrier, as 
 defined in section 62A.011, shall offer, sell, issue, or renew 
 any individual health plan, as defined in section 62A.011, to a 
 Minnesota resident except in compliance with this section.  This 
 section does not apply to the Comprehensive Health Association 
 established in section 62E.10. 

    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 no more than three geographic regions 
 and to establish separate index rates for each region, 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.  The commissioner may grant approval if the following 
 conditions are met: 

    (1) the geographic regions must be applied uniformly by the 
 health carrier; 

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

    (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 

    (4) 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. 

    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 62L.02.  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 62L.02, 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 62L.02. 

    (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 62L.02.  If the individual has available 
 any continuation coverage provided under sections 62A.146; 
 62A.148; 62A.17, subdivisions 1 and 2; 62A.20; 62A.21; 62C.142; 
 62D.101; or 62D.105, 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 62E.02 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 
 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 
 62E.16, 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 this provision.  

    (c) Notwithstanding subdivision 3, and section 62A.021, a 
 health carrier may combine short-term coverage with its most 
 commonly sold individual qualified plan, as defined in section 
 62E.02, 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 62L.02.  Short-term 
 coverage is a health plan and is qualifying coverage as defined 
 in section 62L.02.  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. 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.  

    HIST: 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