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| Life Accident and Health > Senate Bill 125 > FAQ Technical |
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| Senate Bill 125 Frequently Asked Questions - Technical |
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- What limitations are there with respect to list billing and composite billing? Can a carrier change the billing method on or after January 1, 2006?
RSA 420-G:4 I (e) (6) as amended by SB 125 states that "Carriers may calculate premium rates using either list billing or composite billing. Carriers shall use the same billing method in all succeeding rating periods unless the small employer agrees to allow the carrier to change the methodology." RSA 420-G:4 I (a) specifies that "all premiums charged shall be guaranteed for at least 12 months." RSA 420-G:4 I a, as amended by SB 125, specifies that "all premium rates charged shall be guaranteed for at least 12 months, and shall not be changed for any reason."
A change in billing methods would not affect the group’s total premium, but would change the premium rates for the individual members of the group. The intent of RSA 420-G:4 I was clarified through SB 125, i.e. that premium rates shall not change during a rating period. SB 125 further limited a carrier’s ability to change the billing method from one rating period to the next. With the implementation of SB 125, carriers may not change the billing method for any group without the employer’s written permission. Carriers may only implement a billing method change on an anniversary date, and after January 1, 2006 may only make the change after obtaining the written consent of the employer. A carrier may not change the billing method prior to January 1, 2006 unless the change is made on the anniversary date of the policy.
The prohibition against changing billing methods applies to carriers’ renewals. As new issues do not have a prior rating period with the carrier, the carrier may choose the billing method that will apply to the employer.
Carriers may vary the billing method used as long as such variation is applied consistently to similarly situated groups. Variations by group size, for example, would be permissible.
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- How is the rating cap determined? To what does it apply?
RSA 420-G:4 I (e) (7), as amended by SB 125, specifies that "The percentage increase in the premium rates used by a health carrier for a new rating period shall not exceed 20% of the premium rates used by that carrier in the preceding rating period. Such rate increase limitation shall not include any premium rate increase that is based on changes in the health coverage plan rate."
Premium rates mean the rates used by the employer and carrier to calculate the monthly premium. In a composite billing situation, these rates are specified on a per employee basis by the employee’s membership type (family status). In a list billing situation, these rates are specified on a per employee basis by the employee’s membership type and age.
The limitation shall be applied to every rate. For example, where a carrier is using a 3-tier composite billing method, each of the 3 rates shall be subject to the 20% limitation.
The change in any rate shall not be more than the following:
- If the employer has agreed to a change in billing methodology, the cap shall be applied to the rates that would have been in use had the newly chosen billing methodology been in place in the prior rating period.
- The employer’s choice to change its health benefit plan shall, in particular, the resultant effect on premium rates, shall not be subject to the 20% cap. In this instance, the carrier shall use the health benefit plan rate applicable to the employer’s election of coverage in each rating period.
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- What limitations are there on off-cycle requests for quotes and issues? What are a carrier’s obligations?
The Department, through the Commissioner’s Advisory Committee, is aware of the potential for increased requests for off-cycle quotes. Carriers are concerned about being overwhelmed with such requests, while brokers are concerned about fairly representing the interests of their clients.
The Department finds that carriers must provide a quote if requested. However, such offers shall be considered new issues. That is, policyholders obtaining coverage through an off-cycle quote shall not be considered renewing policyholders, but shall be considered new issues. Further, carriers may impose reasonable time frames between the date the quote was requested and the effective date of coverage to accomplish their normal and usual new business issue procedures.
The Department refers carriers to its bulletin, INS 03-041-AB.
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- Can carriers develop their own Underwriting Form or must they use the standardized health underwriting form developed by the reinsurance pool board?
With the implementation of SB 125, small employer health insurance carriers may use health statements only to make ceding decisions relative to the small employer reinsurance pool. Such statements may not be used for any underwriting purpose, or to vary the premium among groups. In view of the limited use now permitted for the standard health statement, the Department will not approve or authorize any health statement for use in the small employer health insurance market. Other than the standardized health statement developed by the reinsurance pool’s board. This accords with the legislative intent behind SB 125 to require the use of a ‘standard reinsurance underwriting form.’ All previously approved health statements for use in the small employer health insurance market may not be used for business issued or renewed on or after January 1, 2006.
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- What if an enrollee fails to return a completed underwriting form? What actions may a carrier take? What does 'complete' mean? What are acceptable time limits?
SB 125 gives a carrier 60 days from the date of issue to make a ceding decision to the reinsurance mechanism. The date of issue is the date the policy is delivered to the policyholder and generally is the same as the effective date.
A carrier may elect to require that a completed underwriting form be submitted as a condition of enrollment, and not issue a policy until completed underwriting forms are submitted for all members of the group, or a carrier may elect to issue the policy and establish a time deadline after issuance for all enrolled members to submit completed underwriting forms.
In the event that a carrier elects to refuse to enroll a member if the member does not provide the carrier with a completed underwriting form, the carrier must establish consistent time frames for the submission of the completed form. Once the carrier determines that a completed underwriting form has been submitted in accordance with the established time frames, it must enroll that member.
Alternatively, if a carrier elects to enroll a member without the submission of a completed underwriting form, the carrier must establish guidelines establishing criteria for completeness and consistent time frames for the submission of the form after enrollment. If a member fails to submit a completed underwriting form after enrollment in accordance with the carrier’s guidelines, the carrier may disenroll that member and may also disenroll the group if the group fails to meet participation requirements due to the disenrollment of that member. Such disenrollment shall not be retroactive to the issue date. The carrier shall be obligated for the payment of claims from the issue date to the disenrollment date.
Fraud shall always constitute sufficient grounds for disenrollment.
The Department expects that the reinsurance pool’s Board, in its development of the standardized form, will design the form to clearly indicate the minimum information required for the form to be deemed complete by a carrier.
Carriers may establish time frames regarding the submission of completed underwriting forms. Such time frames shall be reasonable and applied in a consistent manner. The Department, through its market conduct examination staff, will be monitoring the carrrier’s implementation the time frames set. The failure of an employee to submit a complete form within the applicable time frame established by a carrier shall be a sufficient ground either for not enrolling that employee, for disenrolling the employee, or for not providing coverage to the group if participation requirements are not met due to the non-enrollment of that employee.
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- Are there any exceptions to the new rating rules, e.g. if a carrier is not writing new business?
There are no exceptions. All carriers must comply with the new rating rules for all business issued or renewed on or after January 1, 2006. See RSA 420-G:4.
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- What information is available to employers to help them better understand the reasons for why their premium rates changed?
Carriers participating on the Advisory Committee have heard concerns from other committee participants, especially producers, regarding the need for information regarding the reason(s) for rate changes, at least during the 1st year of implementation of SB 125. The Department expects that the participants will reach consensus on a minimum amount of information that will be made available upon request.
The Department will be monitoring this process and is hopeful that the consensus reached among the participants will be sufficient to give employers access to a meaningful level of information about the causes of its premium rate changes.
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- Is there any provision being made to assure groups renewing in January that they will have sufficient time to obtain competitive quotes?
Carriers participating on the Advisory Committee have informally agreed to provide renewal quotes for January 1st anniversary dates at least 60 days in advance of the anniversary date upon request.
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- When may a carrier cede a newborn dependent?
A dependent is a newborn dependent as of the date of birth. A carrier may only cede a newborn dependent if the mother is reinsured as of the date of the birth. Carriers shall make their ceding decision within 60 days of the date of birth. Carriers may not require a family health statement on the newborn dependent in order to make its ceding decision. On an anniversary date, the newborn shall no longer be considered a newborn dependent; but simply a dependent. See question below pertaining to when carriers may require health statements from existing employees.
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- May a carrier require a family health statement from an existing employee?
During the first year of implementation, carriers may cede an employee or an employee’s dependent from any small employer group at the renewal date. A renewing carrier in this instance may require family health statements as a condition of renewal. In other words, in order to be re-enrolled, the carrier may require the timely completion of a family health statement at renewal. After the first year of implementation, carriers may cede small employer groups that have between 2 and 5 employees at every third policy anniversary. At these renewals, the renewing carrier may require family health statements as a condition of renewal. Carriers may only require family health statements when they have an opportunity to cede. If the carrier is prohibited from making ceding determination, it shall not require family health statements to be completed.
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- May a carrier ever require a health statement on a newborn dependent?
RSA 420K-:5 VII prohibits the pool from reinsuring newborn dependents unless the mother is reinsured as of the date of the birth. A dependent is a newborn dependent as of the date of its birth. At a subsequent date, e.g. the employer’s renewal date, the child would no longer be a newborn dependent, but simply a dependent. Carriers may not require family health statements on newborn dependents. Carriers may require family health statements on dependents as provided for in Question 2 above.
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- May a carrier cede a new employee in an existing group at renewal?
No. A carrier may not cede a new employee at renewal. A carrier must make its decision to cede within 60 days of the new employee’s effective date of coverage. However, during the transition year, and for certain small groups in subsequent years, carriers may cede existing employees at renewal. See other FAQs on this topic.
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- Is an employee who refuses to fill out a family health statement eligible for continuation coverage?
The family health statement shall be considered part of the necessary requirements of enrollment. Any employee who refuses to complete the necessary enrollment materials shall not be enrolled for coverage. As a condition of obtaining coverage in the small group market a carrier may require employees to submit a complete family health statement. If an employee fails to submit a complete family health statement, the carrier either may refuse to enroll the employee or disenroll the employee. Similarly, in order to obtain continuation coverage as part of a small employer group, a carrier may require a person to complete a family health statement. Because a carrier may require the submission of a family health statement as a condition of obtaining any type of health coverage in the small employer market, the refusal to complete the form disqualifies a person from obtaining coverage, regardless of whether that coverage is as part of a small employer group or continuation of coverage.
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- How is the 3rd policy anniversary determined for groups with 2-5 employees? When can carriers reconsider covered lives from these small employer groups?
Reference should be made to the group’s original issue date, not to the effective date of the legislation. If a group was issued in 2005, the carrier may consider ceding covered lives affiliated with this group at its renewal in 2006 due to the provision of the law that provides carriers with the opportunity to make a ceding determination for at each renewal in 2006. The carrier would then be able to consider ceding covered lives affiliated with this group at its renewal in 2008, as this would be the group’s 3rd anniversary with this carrier.
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