Health insurance — Closing a block of business

  1. Law
  2. Arkansas Code
  3. Public Utilities and Regulated Industries
  4. Insurance
  5. Insurance Policies Generally
  6. General Provisions
  7. Health insurance — Closing a block of business

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  1. (a) As used in this section:

    1. (1) “Block of business” means a particular policy form or contract other than a group policy form or contract providing health insurance coverage that includes distinct benefits, services, and terms individually underwritten and issued by a carrier to one (1) or more individuals residing in the State of Arkansas;

    2. (2) “Carrier” means an entity subject to the insurance laws of the State of Arkansas or the jurisdiction of the Insurance Commissioner that contracts or offers to contract to provide health insurance coverage, including, but not limited to, an insurance company, a health maintenance organization, or a hospital medical service corporation;

    3. (3) “Closed block of business” means a block of business that a carrier ceases to actively offer or sell to new applicants; and

    4. (4)

      1. (A) “Health insurance coverage” means benefits consisting of medical, pharmaceutical, surgical, hospitalization, or similar goods or services for the purpose of preventing, alleviating, curing, or healing human illness provided directly or indirectly through insurance, reimbursement, or otherwise, including:

        1. (i) Items and services paid under any policy or contract individually underwritten and issued by a carrier; and

        2. (ii) Without limitation, the following classifications of individual policies or individual contracts offered by a carrier:

          1. (a) Comprehensive major medical;

          2. (b) Critical illness and specified disease;

          3. (c) Dental;

          4. (d) HMO and managed care;

          5. (e) Industrial health;

          6. (f) Medical and surgical outpatient benefits;

          7. (g) Supplemental hospital indemnity; and

          8. (h) Vision.

      2. (B) “Health insurance coverage” does not include policies or contracts covering only:

        1. (i) Accident, credit, disability income, or long-term care insurance;

        2. (ii) Automobile medical payment insurance;

        3. (iii) A Medicare supplemental policy as defined in 42 U.S.C. § 1395ss(g)(1), as it existed on January 1, 2005; or

        4. (iv) Claims under the Workers' Compensation Law, § 11-9-101 et seq., or the Public Employee Workers' Compensation Act, § 21-5-601 et seq.

  2. (b)

    1. (1) A block of business shall not be closed by a carrier unless the carrier pools the experience of the closed block of business with all blocks of business within the same classification previously closed by the carrier for the purpose of determining the percentage premium rate increase of any policy or contract within the closed block of business.

    2. (2) The carrier shall not impose a rate penalty or surcharge under subdivision (b)(1) of this section beyond that which reflects the experience of the combined pool.

  3. (c) The commissioner may approve other rate increases based upon:

    1. (1) The size of the rate action;

    2. (2) The experience of policy forms within a pool;

    3. (3) The remaining amount of health insurance coverage in force by policy or contract form; and

    4. (4) Other factors the commissioner considers appropriate.

  4. (d)

    1. (1) Unless an insurer presents evidence satisfactory to the commissioner to the contrary, a block of business shall be presumed to be closed if the block of business has been in existence for more than twenty-four (24) months and:

      1. (A) For a period of twenty-four (24) months, the number of contracts for the block of business has decreased by twelve percent (12%) or more; or

      2. (B) The block of business has fewer than one hundred (100) policies or contracts in the State of Arkansas.

    2. (2)

      1. (A) The fact that a block of business does not meet one (1) of the presumptions set forth in this subsection shall not preclude a different determination by the commissioner.

      2. (B) At the request of an insurer adversely affected by the commissioner's determination, the commissioner shall schedule a hearing within thirty (30) days after receipt of the request for a hearing.

    3. (3)

      1. (A) The closed block of business for a class of policies or contracts shall be determined at the time of a rate filing of any block of business within the class.

      2. (B) In addition, other blocks of business within the same class shall be reviewed before submitting a proposed rate increase for the block of business.

      3. (C) A justification for excluding the block of business from the closed block of business shall be included as part of the proposed rate increase.

  5. (e)

    1. (1) A carrier shall notify the commissioner in writing within thirty (30) days of its decision to close a block of business.

    2. (2) The carrier shall provide any additional information requested by the commissioner within:

      1. (A) Fifteen (15) business days of the request; or

      2. (B) A later time if allowed by the commissioner.

  6. (f) A carrier shall preserve for a period of not less than five (5) years in an identified location that is readily accessible for review by the commissioner all books and records relating to any action taken by the carrier under subsection (b) of this section.

  7. (g) A carrier with the purpose of evading this section shall not:

    1. (1) Offer or sell any policy or contract; or

    2. (2) Provide false or misleading information about the active or closed status of a block of business.


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