Coverage Without Preexisting Condition Exclusion Required — Alternative Coverage — Network Plans — Financial Capacity Limit
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On and after July 1, 1997, each health insurance issuer that offers individual health insurance coverage in this state must offer to and accept for enrollment every eligible individual who applies for coverage without imposing any preexisting condition exclusion with respect to the coverage.
As used in this section, “eligible individual” means an individual:
For whom, as of the date on which the individual seeks coverage under this section, the aggregate of periods of creditable coverage is eighteen (18) or more months and whose most recent prior creditable coverage was under a group health plan, governmental plan, or church plan, or health insurance coverage offered in connection with the plan;
Who is not eligible for coverage under a group health plan, Title XVII of the Social Security Act, Part A or Part B (42 U.S.C. § 1391 et seq.), or state coverage pursuant to Title XIX of the Social Security Act (42 U.S.C. § 1396 et seq.), or any successor program, and does not have other health insurance coverage;
Whose most recent coverage within the coverage period described in subdivision (b)(1) was not terminated based on nonpayment of premiums or fraud; and
Who, if offered the option of continuation coverage, accepted the coverage and exhausted the coverage.
Alternative Coverage Permitted.
In General.
The health insurance issuer may elect to limit the coverage offered under subsection (a) so long as it offers at least two (2) different policy forms of health insurance coverage, both of which:
Are designed for, made generally available to, and actively marketed to, and enroll both eligible and other individuals by the issuer; and
Meet the requirement of subdivision (c)(2) or (c)(3), as elected by the issuer.
For purposes of this subsection (c), policy forms that have different cost-sharing arrangements or different riders shall be considered to be different policy forms.
Choice of Most Popular Policy Forms. The requirement of this subdivision (c)(2) is met, for health insurance coverage policy forms offered by an issuer in the individual market, if the issuer offers the policy forms for individual health insurance coverage with the largest, and next to largest, premium volume of all the policy forms offered by the issuer in this state or applicable marketing or service area, as may be prescribed in regulation, by the issuer in the individual market in the period involved.
Choice of Two (2) Policy Forms with Representative Coverage.
The requirement of this subdivision (c)(3)(A) is met, for health insurance coverage policy forms offered by an issuer in the individual market, if the issuer offers a lower-level coverage policy form, as defined in subdivision (c)(3)(B), and a higher-level coverage policy form, as defined in subdivision (c)(3)(C), each of which includes benefits substantially similar to other individual health insurance coverage offered by the issuer in that state and each of which is covered under a mechanism that provides for risk adjustment, risk spreading or a risk spreading mechanism, among issuers or policies of an issuer, or otherwise provides for some financial subsidization for eligible individuals, including through assistance to participating issuers.
A lower-level of coverage policy form provides that the actuarial value of the benefits under the coverage is at least eighty-five percent (85%) but not greater than one hundred percent (100%) of a weighted average, described in subdivision (c)(3)(D).
A higher-level of coverage policy form provides that:
The actuarial value of the benefits under the coverage is at least fifteen percent (15%) greater than the actuarial value of the coverage described in subdivision (c)(3)(B) offered by the issuer in the area involved; and
The actuarial value of the benefits under the coverage is at least one hundred percent (100%) but not greater than one hundred twenty percent (120%) of a weighted average, described in subdivision (c)(3)(D).
For purposes of this subdivision (c)(3), the weighted average is the average actuarial value of the benefits provided by all the health insurance coverage issued, as elected by the issuer, either by that issuer or by all issuers in this state in the individual market during the previous year, not including coverage issued under this section, weighted by enrollment for the different coverage.
The issuer elections under subdivision (c)(1) shall apply uniformly to all eligible individuals in this state for that issuer. The election shall be made to the commissioner and shall be effective for no less than a two-year period. All elections shall be in a form and manner as prescribed by the commissioner.
For purposes of subdivision (c)(3), the actuarial value of benefits provided under individual health insurance coverage shall be calculated based on a standardized population and a set of standardized utilization and cost factors.
Special Rules for Network Plans.
In the case of a health insurance issuer that offers health insurance coverage in the individual market through a network plan, the issuer may:
Limit the individuals who may be enrolled under the coverage to those who live, reside, or work within the service area for the network plan; and
Within the service area of the plan, deny the coverage to the individuals if the issuer has demonstrated to the commissioner that it will not have the capacity to deliver services adequately to additional individual enrollees because of its obligations to existing group contract holders and enrollees and individual enrollees and it is applying this subdivision (d)(1)(B) uniformly to individuals without regard to any health status-related factor of the individuals and without regard to whether the individuals are eligible individuals.
An issuer, upon denying health insurance coverage in any service area in accordance with subdivision (d)(1)(B), may not offer coverage in the individual market within the service area for a period of one hundred eighty (180) days after the coverage is denied.
Application of Financial Capacity Limits.
A health insurance issuer may deny health insurance coverage in the individual market to an eligible individual if the issuer has demonstrated to the commissioner that:
It does not have the financial reserves necessary to underwrite additional coverage; and
It is applying this subdivision (e)(1) uniformly to all individuals in the individual market in the state and without regard to any health status-related factor of the individuals and without regard to whether the individuals are eligible individuals.
An issuer, upon denying individual health insurance coverage in accordance with subdivision (e)(1), may not offer the coverage in the individual market within the service area 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.
This subsection (e) may be applied on a service-area specific basis.
Subsection (a) shall not require a health insurance issuer offering health insurance coverage only in connection with group health plans or through bona fide associations to offer health insurance coverage in the individual market.