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General Assembly Raised Bill No. 6710
January Session, 2023
LCO No. 3657
Referred to Committee on INSURANCE AND REAL ESTATE
Introduced by:
(INS)
AN ACT CONCERNING ASSOCIATION HEALTH PLANS.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. (NEW) (Effective October 1, 2023) (a) For the purposes of this 1
section and sections 2 and 3 of this act: 2
(1) "Commissioner" means the Insurance Commissioner; 3
(2) "Fully insured multiple employer welfare arrangement" means 4
any health benefit plan offered by a sponsoring association for the 5
purpose of providing insurance to participating employees of a 6
sponsoring association that is funded through a policy of insurance 7
issued by a licensed insurance company in this state; 8
(3) "Self-funded multiple employer welfare arrangement" means any 9
health benefit plan offered by a sponsoring association, that is not fully 10
insured by a licensed insurance company in this state, for the purpose 11
of providing insurance to participating employer members of a 12
sponsoring association; 13
(4) "ERISA" means the Employee Retirement Income Security Act of 14 Raised Bill No. 6710
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1974, as amended from time to time; 15
(5) "Employer member" means an entity in this state that is part of a 16
sponsoring association, conducts business in this state and employs 17
individuals in this state; 18
(6) "Preexisting conditions provision" has the same meaning as 19
provided in section 38a-476 of the general statutes; and 20
(7) "Sponsoring association" means any industry trade group or any 21
other trade group with employer members representing multiple trades 22
incorporated in this state that (A) is organized and has a written 23
constitution or bylaws, (B) has not less than fifty employer members, 24
and (C) has been maintained in good faith for not less than the 25
immediately preceding five years for purposes other than obtaining or 26
providing insurance. 27
Sec. 2. (NEW) (Effective October 1, 2023) (a) No self-funded multiple 28
employer welfare arrangement shall issue any health benefit plan in this 29
state unless such self-funded multiple employer welfare arrangement 30
first obtains a license from the commissioner. 31
(b) Any health benefit plan issued by a self-funded multiple 32
employer welfare arrangement that covers one or more employees of 33
one or more participating employer members of a sponsoring 34
association shall: 35
(1) Provide coverage for (A) essential health benefits as defined in the 36
Patient Protection and Affordable Care Act, P.L. 111-148, as amended 37
from time to time, or regulations adopted thereunder, and (B) the state 38
mandated coverage requirements under chapter 700c of the general 39
statutes; 40
(2) Offer a minimum level of coverage designed to provide health 41
benefits that are actuarially equivalent to not less than sixty per cent of 42
the full actuarial value of the benefits provided under the health benefit 43
plan and include coverage for inpatient hospital services and physician 44 Raised Bill No. 6710
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services; 45
(3) Not limit or exclude coverage for any individual by imposing any 46
preexisting conditions provision on such individual; 47
(4) Not establish discriminatory rules based on the health status of an 48
individual related to health benefit plan eligibility, or premium or 49
contribution requirements; 50
(5) Establish base rates formed on an actuarially sound, modified 51
community rating methodology that considers the pooling of all 52
participants' claims; and 53
(6) Utilize each employer member's risk profile to determine 54
premiums by actuarially adjusting above or below established base 55
rates, and utilize pooling or reinsurance of individual large claimants to 56
reduce the adverse impact on any specific employer member's 57
premiums. 58
(c) Any sponsoring association shall form a trust that shall establish 59
and maintain any health benefit plans for such sponsoring association. 60
Such trust shall be authorized to sell health benefit plans to employer 61
members of the sponsoring association by meeting the following 62
conditions: 63
(1) The trust shall be subject to ERISA and any regulations or 64
standards prescribed by the United States Department of Labor to 65
enforce multiple employer welfare arrangements; 66
(2) A Form M-1 shall be filed each year with the United States 67
Department of Labor. For purposes of this subdivision, "Form M-1" 68
means an annual report required by the United States Department of 69
Labor for multiple employer welfare arrangements that includes, but is 70
not limited to, the following: (A) Identification of the sponsoring 71
association and trust establishing a self-funded multiple employer 72
welfare arrangement; and (B) a description of any health benefit plans 73
offered through the trust as a self-funded multiple employer welfare 74 Raised Bill No. 6710
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arrangement; 75
(3) Any organizational documents for a trust shall: 76
(A) State that such trust is sponsored by the sponsoring association; 77
(B) State that the purpose of such trust is to provide health care 78
benefits, including, but not limited to, medical, prescription drug, dental 79
and vision benefits, to participating employees of the sponsoring 80
association or its members, and the dependents of such participating 81
employees or members, through health benefit plans; 82
(C) Provide that trust funds shall be used for the benefit of 83
participating employees of the sponsoring association and the 84
dependents of such participating employees, through (i) self-funding of 85
claims or the purchase of reinsurance, or any combination thereof, and 86
(ii) defraying the costs and expenses of administering and operating 87
such trust and any health benefit plan; 88
(D) Limit participation in any health benefit plan to participating 89
employees of the sponsoring association and such sponsoring 90
association's employer members; 91
(E) Establish and maintain a board of trustees, composed of not less 92
than five trustees, that shall have fiscal control over such self-funded 93
multiple employer welfare arrangement. Any board of trustees shall 94
have the authority to (i) approve applications of association employer 95
members for participation in the self-funded multiple employer welfare 96
arrangement, and (ii) contract with any licensed administrator or service 97
company to administer the daily operations of the self-funded multiple 98
employer welfare arrangement; 99
(F) Implement a process for the election of trustees to the board of 100
trustees; and 101
(G) Require each trustee to discharge such trustee's duties in 102
accordance with generally accepted fiduciary standards, as determined 103
by the commissioner, in accordance with the provisions of chapter 54 of 104 Raised Bill No. 6710
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the general statutes; 105
(4) The trust shall establish and maintain reserves calculated in 106
accordance with the accounting requirements of the National 107
Association of Insurance Commissioners Accounting Practices and 108
Procedures Manual, version effective January 1, 2001, and subsequent 109
revisions, and in accordance with any financial and solvency 110
regulations adopted by the commissioner, in accordance with the 111
provisions of chapter 54 of the general statutes; 112
(5) The trust shall purchase and maintain an insurance policy 113
providing coverage for stop-loss insurance with retention levels 114
determined in accordance with actuarial principles from insurers 115
licensed to transact the business of insurance in this state; 116
(6) The trust shall purchase and maintain commercially reasonable 117
fiduciary liability insurance from insurers licensed to transact the 118
business of insurance in this state; 119
(7) The trust shall purchase and maintain a bond in an amount and 120
form approved by the commissioner; and 121
(8) No trust shall include in its name, the words "insurance", 122
"insurer", "underwriter", "mutual", or any other word or term or 123
combination of words or terms that is descriptive of an insurance 124
company or insurance business, unless the context of such words or 125
terms indicate that such trust is not an insurance company and is not 126
transacting the business of insurance. 127
(d) Any board of trustees established pursuant to subsection (c) of 128
this section shall: 129
(1) Operate any health benefit plans in accordance with generally 130
accepted fiduciary standards, as established in regulations adopted by 131
the commissioner, in accordance with the provisions of chapter 54 of the 132
general statutes; and 133
(2) Have the authority to collect special assessments against employer 134 Raised Bill No. 6710
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members and enforce the collection of such special assessments. 135
(e) Each employer member shall be liable for such employer 136
member's allocated share of the liabilities of the sponsoring association 137
under any health benefit plan, as determined by the board of trustees. 138
(f) Health benefit plan documents issued by any such self-funded 139
multiple employer welfare arrangement shall have the following 140
statement printed on the first page in fourteen-point boldface type: "This 141
coverage is not insurance and is not offered through an insurance 142
company. This coverage is not required to comply with certain federal 143
market requirements for health insurance, and is not required to comply 144
with certain state laws for health insurance. Each member shall be liable 145
for such member's allocated share of the liabilities of the sponsoring 146
association under the health benefit plans as determined by the board 147
of trustees. Each member may be responsible for paying an additional 148
sum if the annual premiums present a deficit of funds for the trust. The 149
trust's financial documents shall be made available upon request by a 150
participant in the health benefit plan". 151
(g) This section shall not apply to any fully insured multiple 152
employer welfare arrangement that offers or provides any health benefit 153
plan that is fully insured by any insurer authorized to transact the 154
business of insurance in this state. 155
(h) The commissioner shall adopt regulations, in accordance with the 156
provisions of chapter 54 of the general statutes, to implement the 157
provisions of this section, including, but not limited to, the requirements 158
of self-funded multiple employer welfare arrangements for: (1) 159
Licensing; (2) financial condition and actuarial standards; (3) solvency 160
and insolvency, including, but not limited to, the use of trust deposits 161
and security bonds; (4) transparency and reporting; and (5) filings. 162
Sec. 3. (NEW) (Effective October 1, 2023) (a) Any sponsoring 163
association that sponsors any fully insured multiple employer welfare 164
arrangement shall have a written constitution and bylaws that require: 165 Raised Bill No. 6710
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(1) The sponsoring association to hold regular meetings not less than 166
once annually to further the purposes of such sponsoring association's 167
participating employers; and 168
(2) The sponsoring association to collect dues or solicit contributions 169
from such sponsoring association's participating employers. 170
(b) Any health benefit plan issued by any fully insured multiple 171
employer welfare arrangement shall: 172
(1) Comply with regulations or standards prescribed by the United 173
States Department of Labor pertaining to multiple employer welfare 174
arrangements; 175
(2) Qualify as a large group market plan subject to (A) all coverage 176
mandates under chapter 700c of the general statutes applicable to a large 177
group market plan offered in this state, and (B) the large group market 178
insurance regulations pursuant to the Public Health Service Act, 42 USC 179
2791, as amended from time to time; 180
(3) Adhere to the group health plan coverage requirements under the 181
Patient Protection and Affordable Care Act, P.L. 111-148, as amended 182
from time to time; 183
(4) Not limit or exclude coverage for any individual by imposing any 184
preexisting conditions provision on such individual; 185
(5) Provide coverage for (A) essential health benefits as defined in the 186
Patient Protection and Affordable Care Act, P.L. 111-148, as amended 187
from time to time, or regulations adopted thereunder, and (B) the state 188
mandated coverage requirements under chapter 700c of the general 189
statutes; 190
(6) Offer a minimum level of coverage designed to provide benefits 191
that are actuarially equivalent to not less than sixty per cent of the full 192
actuarial value of the benefits provided under the health benefit plan; 193
and 194 Raised Bill No. 6710
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(7) Be available only to participating employers of the fully insured 195
multiple employer welfare arrangement. 196
Sec. 4. Section 38a-567 of the general statutes is repealed and the 197
following is substituted in lieu thereof (Effective October 1, 2023): 198
Health insurance plans [, associations of small employers] and other 199
insurance arrangements covering small employers and insurers and 200
producers marketing such plans and arrangements shall be subject to 201
the following provisions: 202
(1) (A) Any such plan or arrangement shall be offered on a 203
guaranteed issue basis with respect to all eligible employees or 204
dependents of such employees, at the option of the small employer, 205
policyholder or contractholder, as the case may be. 206
(B) Any such plan or arrangement shall be renewable with respect to 207
all eligible employees or dependents at the option of the small employer, 208
policyholder or contractholder, as the case may be, except: (i) For 209
nonpayment of the required premiums by the small employer, 210
policyholder or contractholder; (ii) for fraud or misrepresentation of the 211
small employer, policyholder or contractholder or, with respect to 212
coverage of individual insured, the insureds or their representatives; 213
(iii) for noncompliance with plan or arrangement provisions; (iv) when 214
the number of insureds covered under the plan or arrangement is less 215
than the number of insureds or percentage of insureds required by 216
participation requirements under the plan or arrangement; or (v) when 217
the small employer, policyholder or contractholder is no longer actively 218
engaged in the business in which it was engaged on the effective date of 219
the plan or arrangement. 220
(C) Renewability of coverage may be effected by either continuing in 221
effect a plan or arrangement covering a small employer or by 222
substituting upon renewal for the prior plan or arrangement the plan or 223
arrangement then offered by the carrier that most closely corresponds 224
to the prior plan or arrangement and is available to other small 225
employers. Such substitution shall only be made under conditions 226 Raised Bill No. 6710
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approved by the commissioner. A carrier may substitute a plan or 227
arrangement as set forth in this subparagraph only if the carrier effects 228
the same substitution upon renewal for all small employers previously 229
covered under the particular plan or arrangement, unless otherwise 230
approved by the commissioner. The substitute plan or arrangement 231
shall be subject to the rating restrictions specified in this section on the 232
same basis as if no substitution had occurred, except for an adjustment 233
based on coverage differences. 234
(D) Any such plan or arrangement shall provide special enrollment 235
periods (i) to all eligible employees or dependents as set forth in 45 CFR 236
147.104, as amended from time to time, and (ii) for coverage under such 237
plan or arrangement ordered by a court for a spouse or minor child of 238
an eligible employee where request for enrollment is made not later than 239
thirty days after the issuance of such court order. 240
(2) (A) As used in this subdivision, "grandfathered plan" has the same 241
meaning as "grandfathered health plan" as provided in the Patient 242
Protection and Affordable Care Act, P.L. 111-148, as amended from time 243
to time. 244
(B) With respect to grandfathered plans issued to small employers, 245
the premium rates charged or offered shall be established on the basis 246
of a single pool of all grandfathered plans, adjusted to reflect one or 247
more of the following classifications: 248
(i) Age, provided age brackets of less than five years shall not be 249
utilized; 250
(ii) Gender; 251
(iii) Geographic area, provided an area smaller than a county shall 252
not be utilized; 253
(iv) Industry, provided the rate factor associated with any industry 254
classification shall not vary from the arithmetic average of the highest 255
and lowest rate factors associated with all industry classifications by 256 Raised Bill No. 6710
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greater than fifteen per cent of such average, and provided further, the 257
rate factors associated with any industry shall not be increased by more 258
than five per cent per year; 259
(v) Group size, provided the highest rate factor associated with group 260
size shall not vary from the lowest rate factor associated with group size 261
by a ratio of greater than 1.25 to 1.0; 262
(vi) Administrative cost savings resulting from the administration of 263
an association group plan or a plan written pursuant to section 5-259, 264
provided the savings reflect a reduction to the small employer carrier's 265
overall retention that is measurable and specifically realized on items 266
such as marketing, billing or claims paying functions taken on directly 267
by the plan administrator or association, except that such savings may 268
not reflect a reduction realized on commissions; 269
(vii) Savings resulting from a reduction in the profit of a carrier that 270
writes small business plans or arrangements for an association group 271
plan or a plan written pursuant to section 5-259, provided any loss in 272
overall revenue due to a reduction in profit is not shifted to other small 273
employers; and 274
(viii) Family composition, provided the small employer carrier shall 275
utilize only one or more of the following billing classifications: (I) 276
Employee; (II) employee plus family; (III) employee and spouse; (IV) 277
employee and child; (V) employee plus one dependent; and (VI) 278
employee plus two or more dependents. 279
(C) (i) With respect to nongrandfathered plans issued to small 280
employers, the premium rates charged or offered shall be established on 281
the basis of a single pool of all nongrandfathered plans, adjusted to 282
reflect one or more of the following classifications: 283
(I) Age, in accordance with a uniform age rating curve established by 284
the commissioner; or 285
(II) Geographic area, as defined by the commissioner. 286 Raised Bill No. 6710
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(ii) Total premium rates for family coverage for nongrandfathered 287
plans shall be determined by adding the premiums for each individual 288
family member, except that with respect to family members under 289
twenty-one years of age, the premiums for only the three oldest covered 290
children shall be taken into account in determining the total premium 291
rate for such family. 292
(iii) Premium rates for employees and dependents for 293
nongrandfathered plans shall be calculated for each covered individual 294
and premium rates for the small employer group shall be calculated by 295
totaling the premiums attributable to each covered individual. 296
(iv) Premium rates for any given plan may vary by (I) actuarially 297
justified differences in plan design, and (II) actuarially justified amounts 298
to reflect the policy's provider network and administrative expense 299
differences that can be reasonably allocated to such policy. 300
(3) No small employer carrier or producer shall, directly or indirectly, 301
engage in the following activities: 302
(A) Encouraging or directing small employers to refrain from filing 303
an application for coverage with the small employer carrier because of 304
the health status, claims experience, industry, occupation or geographic 305
location of the small employer, except the provisions of this 306
subparagraph shall not apply to information provided by a small 307
employer carrier or producer to a small employer regarding the carrier's 308
established geographic service area or a restricted network provision of 309
a small employer carrier; or 310
(B) Encouraging or directing small employers to seek coverage from 311
another carrier because of the health status, claims experience, industry, 312
occupation or geographic location of the small employer. 313
(4) No small employer carrier shall, directly or indirectly, enter into 314
any contract, agreement or arrangement with a producer that provides 315
for or results in the compensation paid to a producer for the sale of a 316
health benefit plan to be varied because of the health status, claims 317 Raised Bill No. 6710
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experience, industry, occupation or geographic area of the small 318
employer. A small employer carrier shall provide reasonable 319
compensation, as provided under the plan of operation of the program, 320
to a producer, if any, for the sale of a health care plan. No small 321
employer carrier shall terminate, fail to renew or limit its contract or 322
agreement of representation with a producer for any reason related to 323
the health status, claims experience, occupation, or geographic location 324
of the small employers placed by the producer with the small employer 325
carrier. 326
(5) No small employer carrier or producer shall induce or otherwise 327
encourage a small employer to separate or otherwise exclude an 328
employee from health coverage or benefits provided in connection with 329
the employee's employment. 330
(6) No small employer carrier or producer shall disclose (A) to a small 331
employer the fact that any or all of the eligible employees of such small 332
employer have been or will be reinsured with the pool, or (B) to any 333
eligible employee or dependent the fact that he has been or will be 334
reinsured with the pool. 335
(7) If a small employer carrier enters into a contract, agreement or 336
other arrangement with another party to provide administrative, 337
marketing or other services related to the offering of health benefit plans 338
to small employers in this state, the other party shall be subject to the 339
provisions of this section. 340
(8) The commissioner may adopt regulations, in accordance with the 341
provisions of chapter 54, setting forth additional standards to provide 342
for the fair marketing and broad availability of health benefit plans to 343
small employers. 344
(9) Any violation of subdivisions (3) to (7), inclusive, of this section 345
and of any regulations established under subdivision (8) of this section 346
shall be an unfair and prohibited practice under sections 38a-815 to 38a-347
830, inclusive. 348 Raised Bill No. 6710
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This act shall take effect as follows and shall amend the following
sections:
Section 1 October 1, 2023 New section
Sec. 2 October 1, 2023 New section
Sec. 3 October 1, 2023 New section
Sec. 4 October 1, 2023 38a-567
Statement of Purpose:
To authorize self-funded and fully insured multiple employer welfare
arrangements in this state.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]