Small Group Market — Network Plans — Financial Capacity Limits — Applicability

  1. Law
  2. Tennessee Code
  3. Insurance
  4. Policies and Policyholders
  5. Health Insurance Portability, Availability and Renewability Act
  6. Small Group Market — Network Plans — Financial Capacity Limits — Applicability

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  1. Issuance of Coverage in the Small Group Market.
    1. Subject to subsections (b)-(e), each health insurance issuer that offers health insurance coverage in the small group market in this state must accept:
      1. Every small employer in the state that applies for the coverage; and
      2. For enrollment under the coverage every eligible individual who applies for enrollment during the period in which the individual first becomes eligible to enroll under the terms of the group health plan and may not place any restriction that is inconsistent with § 56-7-2804 on an eligible individual being a participant or beneficiary.
    2. Eligible Individual Defined.  As used in this section, “eligible individual” means, with respect to a health insurance issuer that offers health insurance coverage to a small employer in connection with a group health plan in the small group market, the individual in relation to the employer as shall be determined:
      1. In accordance with the terms of the plan;
      2. As provided by the issuer under rules of the issuer that are uniformly applicable in this state to small employers in the small group market; and
      3. In accordance with all applicable state laws governing the issuer and the market.
  2. Special Rules for Network Plans.
    1. In the case of a health insurance issuer that offers health insurance coverage in the small group market through a network plan, the issuer may:
      1. Limit the employers that may apply for the coverage to those with eligible individuals who live, work, or reside in the service area for the network plan; and
      2. Within the service area of the plan, deny the coverage to the employers if the issuer has demonstrated to the commissioner that:
        1. It will not have the capacity to deliver services adequately to enrollees of any additional groups because of its obligations to existing group contract holders and enrollees; and
        2. It is applying this subdivision (b)(1)(B) uniformly to all employers without regard to the claims experience of those employers and their employees and their dependents, or any health status-related factor relating to the employees and dependents.
    2. An issuer, upon denying health insurance coverage in any service area in accordance with subdivision (b)(1)(B), may not offer coverage in the small group market within the service area for a period of one hundred eighty (180) days after the date the coverage is denied.
  3. Application of Financial Capacity Limits.
    1. A health insurance issuer may deny health insurance coverage in the small group market if the issuer has demonstrated to the commissioner that:
      1. It does not have the financial reserves necessary to underwrite additional coverage; and
      2. It is applying this subdivision (c)(1) uniformly to all employers in the small group market in this state consistent with applicable state law and without regard to the claims experience of those employers and their employees and their dependents, or any health status-related factor relating to the employees and dependents.
    2. A health insurance issuer upon denying health insurance coverage in connection with group health plans in accordance with subdivision (c)(1) in this state may not offer coverage in connection with group health plans in the small group market in the state for a period of one hundred eighty (180) days after the date the coverage is denied or until the issuer has demonstrated to the commissioner that the issuer has sufficient financial reserves to underwrite additional coverage, whichever is later. The commissioner may provide for the application of this subsection (c) on a service-area-specific basis.
  4. Exception to Requirement for Failure to Meet Certain Minimum Participation or Contribution Rules.
    1. Subsection (a) shall not be construed to preclude a health insurance issuer from establishing employer contribution rules or group participation rules for the offering of health insurance coverage in connection with a health group plan in the small group market, as allowed under applicable state law.
    2. As used in subdivision (d)(1):
      1. “Employer contribution rule” means a requirement relating to the minimum level or amount of employer contribution toward the premium for enrollment of participants and beneficiaries; and
      2. “Group participation rule” means a requirement relating to the minimum number of participants or beneficiaries that must be enrolled in relation to a specified percentage or number of eligible individuals or employees of an employer.
  5. Exception for Coverage Offered Only to Bona Fide Association Members.  Subsection (a) shall not apply to health insurance coverage offered by a health insurance issuer if the coverage is made available in the small group market only through one (1) or more bona fide associations.
  6. In connection with the offering of any health insurance coverage to a small employer, a health insurance issuer:
    1. Shall make a reasonable disclosure to the employer, as part of its solicitation and sales materials, of the availability of information described in subsection (g); and
    2. Upon request of the small employer, provide such information.
    1. Subject to subdivision (g)(3), with respect to a health insurance issuer offering health insurance coverage to a small employer, information described in this subsection (g) is information concerning:
      1. The provisions of the coverage concerning issuer's right to change premium rates and the factors that may affect changes in premium rates;
      2. The provisions of the coverage relating to renewability of coverage;
      3. The provisions of the coverage relating to any preexisting condition exclusion; and
      4. The benefits and premiums available under all health insurance coverage for which the employer is qualified.
    2. Information under this subsection (g) shall be provided to small employers in a manner determined to be understandable by the average small employer, and shall be sufficient to reasonably inform small employers of their rights and obligations under the health insurance coverage.
    3. An issuer is not required to disclose any information under subsection (f) that is proprietary and trade secret information under applicable law.
  8. The requirements of this part addressing the small and large group markets shall not apply to any group health plan, and health insurance coverage offered in connection with a group health plan, for any plan year if, on the first day of the plan year, the plan has fewer than two (2) participants who are current employees.
  9. Rules to be used in the determination of employer size are:
    1. All persons treated as a single employer under § 414(b), (c), (m), or (o) of the Internal Revenue Code of 1986 (26 U.S.C. § 414(b), (c), (m), and (o)), shall be treated as one (1) employer;
    2. In the case of an employer that was not in existence throughout the preceding calendar year, the determination of whether the employer is a small or large employer shall be based on the average number of employees that it is reasonably expected the employer will employ on business days in the current calendar year; and
    3. Any reference in this subsection (i) to an employer shall include a reference to any predecessor of the employer.


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