Chapter 86

Group and Blanket Accident and Health Insurance

23-86-101. Blanket accident and health insurance — Definition.

Blanket accident and health insurance is declared to be that form of accident and health insurance covering groups of persons as enumerated in one (1) of the following subdivisions:

(1) Under a policy or contract issued to any common carrier or to any operator, owner, or lessee of a means of transportation, who or which shall be deemed the policyholder, covering a group defined as all persons or all persons of a class who may become passengers on the common carrier or such means of transportation;

(2) Under a policy or contract issued to an employer, who shall be deemed the policyholder, covering all employees, dependents, or guests, defined by reference to specified hazards incident to the activities or operations of the employer or any class of employees, dependents, or guests similarly defined;

(3) Under a policy or contract issued to a school or other institution of learning, camp, or sponsor thereof or to the head or principal thereof, who or which shall be deemed the policyholder, covering students or campers. Supervisors and employees may be included;

(4) Under a policy or contract issued in the name of any religious, charitable, recreational, educational, or civic organization, which shall be deemed the policyholder, covering participants in activities sponsored by the organization;

(5) Under a policy or contract issued to a sports team or sponsors thereof, which shall be deemed the policyholder, covering members, officials, and supervisors;

(6) Under a policy or contract issued in the name of any volunteer fire department, first aid, or other such volunteer group or agency having jurisdiction thereof, which shall be deemed the policyholder, covering all of the members of the fire department or group; or

(7) Under a policy or contract issued to cover any other risk or class of risks that, in the discretion of the Insurance Commissioner, may be properly eligible for blanket accident and health insurance. The discretion of the commissioner may be exercised on an individual risk basis or class of risks, or both.

23-86-102. Blanket accident and health insurance — Required provisions.

(a) Any insurer authorized to write accident and health insurance in this state shall have the power to issue blanket accident and health insurance.

(b) No blanket policy may be issued or delivered in this state unless a copy of the form shall have been filed in accordance with § 23-79-109.

(c) Every blanket policy shall contain provisions that in the opinion of the Insurance Commissioner are at least as favorable to the policyholder and the individual insured as the following:

(1) A provision that the policy and the application shall constitute the entire contract between the parties and that all statements made by the policyholder, in the absence of fraud, shall be deemed representations and not warranties, and that no such statements shall be used in defense to a claim under the policy, unless it is contained in a written application;

(2)(A) A provision that written notice of sickness or of injury must be given to the insurer within twenty (20) days after the date when such sickness or injury occurred.

(B) Failure to give notice within the time shall not invalidate or reduce any claim, if it shall be shown not to have been reasonably possible to give such notice and that notice was given as soon as was reasonably possible;

(3)(A) A provision that the insurer will furnish to the policyholder such forms as are usually furnished by it for filing proof of loss.

(B) If the forms are not furnished before the expiration of fifteen (15) days after the giving of the notice, the claimant shall be deemed to have complied with the requirements of the policy as to proof of loss upon submitting, within the time fixed in the policy for filing proof of loss, written proof covering the occurrence, character, and extent of the loss for which claim is made;

(4)(A) A provision that in the case of claim for loss of time for disability, written proof of the loss must be furnished to the insurer within thirty (30) days after the commencement of the period for which the insurer is liable, and the subsequent written proofs of the continuance of the disability must be furnished to the insurer at such intervals as the insurer may reasonably require, and that in the case of claim for any other loss, written proof of the loss must be furnished to the insurer within ninety (90) days after the date of loss.

(B) Failure to furnish proof within the time shall not invalidate or reduce any claim, if it shall be shown not to have been reasonably possible to furnish the proof and that the proof was furnished as soon as was reasonably possible;

(5) A provision that all benefits payable under the policy other than benefits for loss of time will be payable immediately upon receipt of due written proof of the loss, and that, subject to due proof of loss, all accrued benefits payable under the policy for loss of time will be paid not later than at the expiration of each period of thirty (30) days during the continuance of the period for which the insurer is liable, and that any balance remaining unpaid at the termination of the period will be paid immediately upon receipt of the proof;

(6) A provision that the insurer, at its own expense, shall have the right and opportunity to examine the person of the insured when and so often as it may reasonably require during the pendency of claim under the policy and also the right and opportunity to make an autopsy in case of death where it is not prohibited by law;

(7) A provision that no action at law or in equity shall be brought to recover under the policy prior to the expiration of sixty (60) days after written proof of loss has been furnished in accordance with the requirements of the policy and that no such action shall be brought after the expiration of three (3) years after the time written proof of loss is required to be furnished; and

(8)(A) In any contract that contains a provision whereby coverage of a dependent in a family group terminates at a specified age, there shall also be a provision that coverage of an unmarried dependent who is incapable of sustaining employment by reason of mental retardation or physical disability, who became so incapacitated prior to the attainment of nineteen (19) years of age, and who is chiefly dependent upon the employee for support and maintenance shall not terminate, but coverage shall continue so long as the contract remains in force and so long as the dependent remains in such condition.

(B) At the request and expense of the insurer, proof of the incapacity or dependency must be furnished to the insurer by the policyholder. In no event shall this requirement preclude eligible dependents under Acts 1975, No. 649, § 5, as amended, regardless of age.

23-86-103. Blanket accident and health insurance — Application and certificates not required.

An individual application shall not be required from a person covered under a blanket accident and health policy or contract, nor shall it be necessary for the insurer to furnish each person a certificate.

23-86-104. Blanket accident and health insurance — Payment of benefits.

(a)(1) All benefits under any blanket accident and health policy shall be payable to the person insured, to the designated beneficiaries, or to his or her estate.

(2) However, if the person insured is a minor or mental incompetent, the benefits may be made payable to the parent, guardian, or other person actually supporting the minor or mental incompetent. If the entire cost of the insurance has been borne by the employer, the benefits may be made payable to the employer.

(b)(1) However, the policy may provide that all or any portion of any indemnities provided by the policy on account of hospital, nursing, medical, or surgical services, at the insurer's option, may be paid directly to the hospital or person rendering the services, but the policy may not require that the service be rendered by a particular hospital or person.

(2) Payment so made shall discharge the insurer's obligation with respect to the amount of insurance paid.

23-86-105. [Repealed.]

23-86-106. Group accident and health insurance — Definition.

Group accident and health insurance is declared to be that form of accident and health insurance covering groups of persons as defined in this section, with or without one (1) or more members of their families or one (1) or more of their dependents, or covering one (1) or more members of the families or one (1) or more dependents of the groups of persons, and issued upon the following basis:

(1)(A) Under a policy issued to an employer or trustees of a fund established by an employer, who shall be deemed the policyholder, insuring employees of the employer for the benefit of persons other than the employer.

(B) The term “employees” as used in this subdivision (1) shall be deemed to include the:

(i) Officers, managers, and employees of the employer;

(ii) Individual proprietor or partner, if the employer is an individual proprietor or partnership;

(iii) Officers, managers, and employees of subsidiary or affiliated corporations; and

(iv) Individual proprietors, partners, and employees of individuals and firms, if the business of the employer and the individual or firm is under common control through stock ownership, contract, or otherwise.

(i) May include retired employees; and

(ii) Shall include members of limited liability corporations and members of limited liability partnerships.

(D) A policy issued to insure employees of a public body may provide that the term “employees” shall include elected or appointed officials.

(E) The policy may provide that the term “employees” shall include the trustees or their employees, or both, if their duties are principally connected with the trusteeship;

(2)(A) Under a policy issued to an association, including a labor union, that has a constitution and bylaws and that the Insurance Commissioner finds, regardless of where the association is domiciled or does business, has been organized and maintained in good faith for purposes other than that of obtaining insurance or insuring members, employees, or employees of members of the association for the benefit of persons other than the association or its officers or trustees.

(B) The term “employees” as used in this subdivision (2) may include retired employees;

(3)(A) Under a policy issued to the trustees of a fund established by two (2) or more employers in the same or related industry or by one (1) or more labor unions or by one (1) or more employers and one (1) or more labor unions or by an association as defined in subdivision (2) of this section, who shall be deemed the policyholder, to insure employees of the employers or members of the unions or of the association, or employees of members of the association, for the benefit of persons other than the employers or the unions or the association.

(B) The term “employees” as used in this subdivision (3) may include:

(i) The officers, managers, and employees of the employer and the individual proprietor or partners, if the employer is an individual proprietor or partnership; and

(ii) Retired employees.

(C) The policy may provide that the term “employees” shall include the trustees or their employees, or both, if their duties are principally connected with such trusteeship;

(4) Under a policy issued to any person or organization to which a policy of group life insurance may be issued or delivered in this state to insure any classes of individuals that could be insured under the group life policy; and

(5) Under a policy issued to cover any other substantially similar group that, in the discretion of the Insurance Commissioner, may be subject to the issuance of a group accident and health policy or contract.

23-86-107. Group accident and health insurance — Requires authorized insurer.

(a) All group accident and health insurance placed by an employer on employees who are residents of this state shall be placed by the employer with an insurer authorized to transact insurance in this state.

(b) This section shall not apply to group insurance lawfully placed in an insurer transacting insurance as a surplus line insurer under §§ 23-65-101 et seq., 23-65-201 et seq., and 23-65-301 et seq.

23-86-108. Group accident and health insurance — Required provisions.

Each group accident and health insurance policy shall contain in substance the following provisions:

(1) A provision that, in the absence of fraud, all statements made by applicants or the policyholder or by an insured person shall be deemed representations and not warranties and that no statement made for the purpose of effecting insurance shall void the insurance or reduce benefits unless contained in a written instrument signed by the policyholder of the insured person, a copy of which has been furnished to the policyholder or to the person or his or her beneficiary;

(2)(A) A provision that the insurer will furnish to the policyholder for delivery to each employee or member of the insured group a statement in summary form of the essential features of the insurance coverage of the employee or member and to whom benefits under the policy are payable.

(B) If dependents are included in the coverage, only one (1) certificate need be issued for each family unit;

(3) A provision that to the group originally insured may be added from time to time eligible new employees or members or dependents, as the case may be, in accordance with the terms of the policy;

(4)(A) In any contract that contains a provision whereby coverage of a dependent in a family group terminates at a specified age, there shall also be a provision that coverage of an unmarried dependent who is incapable of sustaining employment by reason of mental retardation or physical disability, who became so incapacitated prior to the attainment of nineteen (19) years of age and who is chiefly dependent upon the employee for support and maintenance, shall not terminate, but coverage shall continue so long as the coverage of the employee or member remains in force and so long as the dependent remains in such condition.

(B) At the request and expense of the insurer, proof of the incapacity or dependency must be furnished to the insurer by the policyholder, except in no event shall this requirement preclude eligible dependents under Acts 1975, No. 649, § 5, as amended, regardless of age.

(5)(A) No policy or contract of group accident and health insurance, including contracts issued by hospital and medical service corporations, that provides coverage for any of the following services when delivered on an inpatient basis shall hereafter be sold, delivered, or issued for delivery or offered for sale in this state unless the identical coverage for such services is provided when delivered on an outpatient basis:

(i) Laboratory and pathological tests;

(ii) X rays;

(iii) Chemotherapy;

(iv) Radiation treatment; and

(v) Renal dialysis.

(B) However, the coverage required by subdivision (5)(A) of this section shall not be required when any policyholder or contract holder shall reject the coverage in writing.

(D) All existing group contracts, including existing group contracts issued by hospital and medical service corporations, shall conform to the provisions of this subdivision (5) upon the first anniversary of the issue date, after March 12, 1981;

(6) A provision that:

(A) All benefits payable under the policy other than benefits for loss of time will be payable immediately upon receipt of written proof of such loss;

(B) Subject to proof of loss, all accrued benefits payable under the policy for loss of time will be paid not later than at the expiration of each period of thirty (30) days during the continuance of the period for which the insurer is liable; and

(C) Any balance remaining unpaid at the termination of that period will be paid immediately upon receipt of due proof; and

(7)(A) Every insurer, hospital or medical service corporation, fraternal benefit society, self-funded health care plan, or health maintenance organization providing replacement coverage, with respect to group accident and health benefits within a period of sixty (60) days from the date of discontinuance of a prior plan, shall immediately cover all employees and dependents:

(i) If each employee or dependent was validly covered under the previous plan at the date of the discontinuance;

(ii) If each employee or dependent is a member of the class of individuals eligible for coverage under the succeeding carrier's plan, regardless of any of the plan's limitations or exclusions relating to “actively at work” or hospital confinement; and

(iii) Only if the group accident and health benefits were provided to a group consisting of more than fifteen (15) members.

(B) The succeeding carrier shall be entitled to deduct from its benefits any benefits payable by the previous carrier pursuant to an extension of benefits provision.

(C) No provision in a succeeding carrier's plan of replacement coverage that would operate to reduce or exclude benefits on the basis that the condition giving rise to benefits preexisted the effective date of the succeeding carrier's plan shall be applied with respect to those employees and dependents validly insured under the previous carrier's policy on the date of discontinuance if benefits for the condition would have been payable under the previous carrier's plan.

(D) The provisions of this section shall apply upon the issuance of an insurance policy or health care plan:

(i) To a group whose benefits had previously been self-insured;

(ii) To a self-insurer providing coverage to a group that had been previously covered by an insurer; and

(iii) To a group that had previously been covered by an insurer.

23-86-109. Group accident and health insurance — Optional continuation of benefit provisions.

Any group accident and health policy that contains provisions for the payment by the insurer of benefits for expenses incurred on account of hospital, nursing, medical, or surgical services for members of the family or dependents of a person in the insured group may provide for the continuation of the benefit provisions, or any parts thereof, after the death of the person in the insured group.

23-86-110. Group accident and health insurance — Administration of benefits.

(a)(1) All group accident and health carriers including hospital and medical service corporations shall be subject to the “primary” and “secondary” carrier rules and regulations promulgated by the Insurance Commissioner.

(2) The secondary carrier shall administer benefits on a timely basis.

(b) This section shall be applicable to all group contracts of accident and health insurance sold, delivered, or issued for delivery, renewed, or offered for sale in this state, including those issued by hospital and medical service corporations, except group contracts for employees whose employer pays one hundred percent (100%) of the premiums.

23-86-111. Group accident and health insurance — Payment of benefits when other like insurance exists.

(a)(1) No contract of group accident and health insurance coverage sold, delivered or issued for delivery, renewed, or offered for sale in this state by an insurer, hospital and medical service corporation, or health maintenance organization, directly or indirectly providing indemnity, services, health care services, or cash to an individual as a result of hospitalization, medical or surgical treatment, or dental care, shall contain any provision for the denial or reduction of benefits because of the existence of other like insurance except to the extent that the aggregate benefits with respect to the covered medical expenses incurred under the contract and all other like insurance with other insurers, hospital and medical service corporations, or health maintenance organizations exceed all covered medical expenses incurred.

(2) The term “other like insurance” may include group or blanket accident and health insurance or group coverage provided by health maintenance organizations, hospital and medical service corporations, government insurance plans, except Medicaid, union welfare plans, employer or employee benefit organizations, or workers' compensation insurance or no-fault automobile coverage provided for or required by any statute.

(b)(1) No group accident and health insurance policy providing disability income coverage sold, delivered, or issued for delivery, renewed, or offered for sale in this state shall provide for reduction in the amount of the disability benefits payable to the insured to the extent of and because of the existence of other such coverage unless the policy provides a minimum amount payable, regardless of the reduction, of fifty dollars ($50.00) per month.

(2) “Other such coverage” for which a reduction may be effected includes:

(A) Governmental programs such as Social Security, the Arkansas Public Employees' Retirement System, the state workers' compensation system, and all other government-sponsored, mandatory plans or programs that provide for disability benefit coverage;

(B) Disability or pension income coverages as established by the Insurance Commissioner through implementing rules and regulations; and

(C) Such other programs, coverages, or permissible reductions as the commissioner may establish through rules and regulations.

(3) The amount of any such reduction shall not be increased with any increase in the level of Social Security benefits payable that becomes effective after a claim commences.

(4) The commissioner may also issue rules and regulations to implement this section and § 23-86-110, including, but not limited to, the nature and timing of proofs of eligibility for Social Security benefits.

(c) This section shall be applicable to all group contracts of accident and health insurance sold, delivered, or issued for delivery, renewed, or offered for sale in this state, except group contracts for employees whose employer pays one hundred percent (100%) of the premiums.

23-86-112. Group accident and health insurance — Direct payment of hospital or medical services.

(a) On request by the group policyholder, any group accident and health policy may provide that all or any portion of any indemnities provided by any policy on account of hospital, nursing, medical, or surgical services may be paid, at the insurer's option, directly to the hospital or person rendering such services, but the policy may not require that the service be rendered by a particular hospital or person.

(b) Payment so made shall discharge the insurer's obligation with respect to the amount of insurance paid.

23-86-113. Minimum benefits for mental illness in group accident and health policies or subscriber's contracts.

(a) Unless refused in writing, every group accident and health policy or group contract of hospital and medical service corporations issued or renewed after July 1, 1983, providing hospitalization or medical benefits to Arkansas residents for conditions arising from mental illness shall provide the following minimum benefits on and after July 1, 1983:

(1) In the case of benefits based upon confinement as an inpatient in a hospital, psychiatric hospital, or outpatient psychiatric center licensed by the Department of Health or a community mental health center certified by the Division of Mental Health Services of the Department of Human Services, the benefits shall be as defined in subsection (b) of this section;

(2)(A) In the case of benefits provided for partial hospitalization in a hospital, psychiatric hospital, or outpatient psychiatric center licensed by the Department of Health or a community mental health center certified by the Division of Mental Health Services of the Department of Human Services as defined in subsection (b) of this section.

(B) For the purpose of this section, “partial hospitalization” means continuous treatment for at least four (4) hours, but not more than sixteen (16) hours in any twenty-four-hour period; and

(3) In the case of outpatient benefits, the benefits shall cover services furnished by:

(A) A hospital, a psychiatric hospital, or an outpatient psychiatric center licensed by the Department of Health;

(B) A physician licensed under the Arkansas Medical Practices Act, §§ 17-95-201 et seq., 17-95-301 et seq., and 17-95-401 et seq.;

(D) A community mental health center or other mental health clinic certified by the Division of Mental Health Services of the Department of Human Services to furnish mental health services as defined in subsection (b) of this section.

(b) The insurer or hospital and medical service corporation may establish a copayment requirement for mental illness benefits paid for inpatient, partial hospitalization, or outpatient care described in subsection (a) of this section, which may or may not differ from the copayment requirements for any other condition or illness, except that copayment requirements for mental illness shall not exceed a twenty percent (20%) copayment requirement.

(c)(1) For accident and health insurance sold to employers of fifty (50) or fewer employees, the insurer or hospital and medical service corporation shall not impose limits on benefits under subsection (a) of this section with regard to deductible amounts, lifetime maximum payments, payments per outpatient visit, or payments per day of partial hospitalization which differ from benefits for any other condition or illness, provided that the insurer or hospital and medical service corporation may impose an annual maximum benefit payable, which shall not be less than seven thousand five hundred dollars ($7,500) per calendar year.

(2) For accident and health insurance sold to employers of fifty-one (51) or more employees, the insurer or hospital and medical service corporation shall not impose limits on benefits under subsection (a) of this section with regard to deductible amounts, lifetime maximum payments, payments per outpatient visit, or payments per day of partial hospitalization which differ from benefits for any other condition or illness, provided that the insurer or hospital and medical service corporation may impose an annual maximum of eight (8) inpatient or partial hospitalization days together with forty (40) outpatient visits.

(d) No person shall disclose mental health history, diagnosis, or treatment services information received in an initial application for coverage or subsequent claims for benefits to any person, group, organization, or governmental agency without written consent of the insured, except for purposes of:

(1) Obtaining professional review and judgments of quality and appropriateness of treatment rendered;

(2) Litigation proceedings involving the insured and when ordered by a court;

(3) Reinsurance, when required;

(4) Applying over-insurance provisions or for purposes of claiming benefits for services on behalf of the insured; or

(5) Underwriting applications for insurance coverage.

(e) Nothing in this section shall be construed to prohibit an insurer, hospital and medical service corporations, a health care plan, health maintenance organization, or other person providing accident and health insurance or medical benefits to Arkansas residents from issuing or continuing to issue an accident and health insurance benefit plan, policy, or contract that provides benefits greater than the minimum benefits required to be made available under this section or from issuing any plans, policies, or contracts that provide benefits that are generally more favorable to the insured than those required to be made available under this section.

(f) The requirements of this section with respect to a group or blanket accident and health insurance benefit plan, policy, or subscriber contract shall be satisfied, if the coverage specified is made available to the master policyholder of the plan, policy, or contract.

(g)(1)(A) Every insurer or hospital and medical service corporation that issues a group accident and health insurance policy, contract, or agreement in this state that provides for mental health coverage shall offer coverage for the payment of services rendered by licensed professional counselors.

(B) The offer shall be made either at the time of application for, or upon the first renewal of, the policy, contract, or agreement after April 1, 1995.

(C) If the offer is accepted, the amount paid for services provided by licensed professional counselors shall be subject to the same limitations as set forth in the policy for mental health coverage.

(2) Nothing in this subsection shall be deemed to expand the scope of the practice of licensed professional counselors currently licensed by the Arkansas Board of Examiners in Counseling and possessing the qualifications set forth in § 17-27-301 et seq., or other applicable laws.

23-86-114. Group accident and health insurance — Continuation of coverage beyond termination of employment, change in marital status, etc.

(a) Every group accident and health insurance policy, contract, or certificate providing hospital, surgical, or major medical coverage, other than accident only or specified disease policies, shall contain a provision that any certificate holder, member, or spouse whose coverage under the policy would otherwise terminate due to termination of employment or membership or a change in marital status may continue coverage under the policy for themselves and their eligible dependents as provided in this section.

(b) The continued coverage need not include benefits for dental care, vision services, or prescription drug expenses.

(c)(1) Continuation of coverage shall be available only to individuals who have been insured continuously under the group policy during the three-month period prior to the termination of employment membership or change in marital status.

(2) Continuation of coverage shall not be available to an individual who is eligible for:

(A) Federal Medicare coverage; or

(B)(i) Full coverage under any other group accident and health policy or contract.

(ii) This coverage must provide benefits for all preexisting conditions to be considered full coverage.

(iii) Accordingly, under this subdivision (c)(2), an individual may continue his or her previous group coverage until all preexisting conditions are covered or would be covered under another group policy or contract or until termination pursuant to subsection (f) of this section or pursuant to the applicable provisions of federal law.

(d) An individual who wishes to continue coverage must request continuation in writing not later than ten (10) days after the termination of employment or membership or the change in marital status.

(e) An individual who requests continuation of coverage must pay the premium required by the policyholder on a monthly basis and in advance. Payments shall be made in accordance with the group policy.

(f) Continuation of coverage shall end upon the earliest of the following dates:

(1) One hundred twenty (120) days after continuation of coverage began;

(2) The end of the period for which the individual made a timely contribution;

(3) The contribution due date following the date the individual becomes eligible for Medicare; or

(4)(A) The date on which the policy is terminated or the group withdraws from the plan.

(B) However, if the group policy is replaced, continuation shall continue under the new coverage.

(g) At the termination of the continued coverage, an individual shall be offered the conversion policy under the group policy.

(h) Individuals choosing to utilize the conversion privilege under the group policy may do so and thereby waive their right to continuation of coverage.

(i) This section shall not be applicable to health care plans in which the employer is self-insured.

23-86-115. Group accident and health insurance — Entitlement to conversion policy upon termination of group policy.

(a)(1) Every group policy, contract, or certificate of accident and health insurance delivered or issued for delivery in this state that provides hospital, surgical, or major medical coverage on an expense-incurred basis, other than coverage limited to expenses from accidents or specified diseases, shall provide that an employee, member, or covered dependent whose insurance under the group policy has been terminated for any reason, including the discontinuance of the group policy in its entirety, shall be entitled to have issued to him or her by the insurer a policy of accident and health insurance referred to in this section as a “conversion policy”.

(2) An employee, member, or dependent shall not be entitled to a conversion policy, if the termination of the group policy, contract, or certificate was a result of his or her failure to pay any required contribution or if the terminated policy is replaced by similar coverage within thirty-one (31) days.

(3) An individual wishing to exercise his or her conversion privilege must apply for the conversion policy in writing not later than thirty (30) days after the termination of the group coverage.

(b)(1)(A) The conversion policy shall provide coverage equal to or greater than the minimum standards established by the Insurance Commissioner.

(B) All conversion policies shall contain a wording in bold print that “the benefits in this policy do not necessarily equal or match those benefits provided in your previous group policy”.

(2) The conversion policy shall not exclude coverage for pregnancy or other illness or injury on the grounds of a preexisting condition, provided that the combination of time served under the group and the conversion policy equals or exceeds any waiting periods under the group policy or contract. Moreover, the conversion policy shall include benefits for maternity coverage for any pregnancies in existence at the time of the conversion.

(c)(1) The insurer shall not be required to offer the conversion policy to any individual who is eligible for:

(A) Medicare coverage; or

(B) Full coverage under any other group accident and health policy or contract. This coverage must provide benefits for all preexisting conditions to be considered full coverage.

(2) Accordingly, under this subsection, an individual may convert to a conversion policy and remain covered by that policy until all preexisting conditions are covered or would be covered under another group policy or contract.

(d) This section shall not be applicable to self-insured plans.

(e)(1)(A) The initial premium for the conversion policy for the first twelve (12) months and subsequent renewal premiums shall be determined in accordance with premium rates applicable to individually underwritten standard risks for the age and class of risk of each person to be covered under the conversion policy and for the type and amount of insurance provided.

(B) The experience under conversion policies shall not be an acceptable basis for establishing rates for conversion policies.

(2) For purposes of subdivision (e)(1) of this section:

(A) The phrase “premium rates applicable to individually underwritten standard risks” means the premium charged to individuals who qualify for coverage without modification, determined from a rate table based on aggregate individually underwritten policy experience;

(B) “Aggregate individually underwritten policy experience” means the policy experience is drawn from a mature combination of newly selected insureds and insureds for whom selection effects no longer exist; and

(3) If an insurer experiences incurred losses that exceed earned premiums for a period of two (2) successive years on conversion policies that have been in force for at least one (1) year, the insurer may file with the commissioner amended renewal rates for the subsequent year, which will produce a loss ratio of not less than one hundred percent (100%).

(4)(A) Even though a renewal premium is established in accordance with subdivision (e)(3) of this section, a holder of the conversion policy shall not be required to pay the full renewal premium until the beginning of the policy's fourth year.

(B) The premium for the second policy year shall be the initial premium plus thirty-three and one-third percent (33 1/3%) of the difference between the initial premium and the renewal premium in effect on the policy's first anniversary date.

(C) The premium for the third policy year shall be the initial premium plus sixty-six and two-thirds percent (66 2/3%) of the difference between the initial premium and the renewal premium in effect on the policy's second anniversary date.

(D) The premium for the fourth year shall be one hundred percent (100%) of the renewal premium in effect on the policy's third anniversary date.

(5) This subsection shall be applicable to any conversion policy issued after March 22, 1995.

23-86-116. Continuation of benefits upon termination of policy.

(a) Every group accident and health insurance policy, contract, or certificate that provides coverage for hospital or medical services or expenses shall provide that the insurer shall continue its obligation for benefits under the policy or contract for any person insured under the policy or contract who is hospitalized on the date of termination, if the policy or contract is terminated and replaced by a group health insurance policy or contract issued by another insurer or by a self-funded health care plan.

(b) Any payment required under this section is subject to all terms, limitations, and conditions of the policy or contract except those relating to termination of benefits. Any obligation by an insurer under this section continues until the hospital confinement ends or hospital benefits under the policy or contract are exhausted, whichever is earlier.

23-86-117. Standard claim form required.

(a) All accident and health insurers transacting business in this state shall use Form HCFA 1500 and Form UB-92/HCFA 1450 or in the claim format required by the Health Insurance Portability and Accountability Act of 1996 as the standard claim forms until and unless the Insurance Commissioner prescribes otherwise.

(b) Pursuant to the applicable provisions of the Arkansas Insurance Code, the commissioner may suspend or revoke the certificate of authority of any insurance company that refuses to use and accept the standard claim form required by this section, or the commissioner may utilize any remedy provided in § 23-66-210.

23-86-118. In vitro fertilization coverage required.

(a) All accident and health insurance companies doing business in this state shall include, as a covered expense, in vitro fertilization.

(b) Pursuant to the applicable provisions of the Arkansas Insurance Code, the Insurance Commissioner may suspend or revoke the certificate of authority of any insurance company failing to comply with the provisions of this section.

(c) After conducting appropriate studies and public hearings, the commissioner shall establish minimum and maximum levels of coverage to be provided by the accident and health insurance companies.

(d) Coverage required under this section shall include services performed at a medical facility licensed or certified by the Department of Health, those performed at a facility certified by the department that conforms to the American College of Obstetricians and Gynecologists guidelines for in vitro fertilization clinics, or those performed at a facility certified by the department that meets the American Fertility Society minimal standards for programs of in vitro fertilization.

23-86-119. Disclosure to policyholders.

(a) Upon request from a policyholder with more than twenty-five (25) insured employees under a comprehensive health insurance policy, any insurer issuing or delivering group accident and health insurance policies in this state shall provide to the policyholder the following information for the most recent twelve-month period or for the entire period of coverage, whichever is shorter:

(1) Claims incurred by month;

(2) Premiums paid by month;

(3) Number of insureds to include dependents by month; and

(4) Claims exceeding ten thousand dollars ($10,000) on any individual with diagnosis during the same period.

(b) This section does not require the insurer to disclose any information that is required by law to be confidential.

23-86-120. Hospice care coverage for terminally ill patients.

(a)(1) Every accident and health insurance company, hospital service corporation, health maintenance organization, or other health insurance provider in the State of Arkansas shall offer to each master group contract holder, coverage for hospice facilities and hospice programs as defined under § 20-7-117.

(2)(A) The offer of these benefits shall be subject to the right of the policy or contract holder to reject the coverage.

(B) The rejection by the policy or contract holder shall be in writing.

(b) The insurance coverage required in subsection (a) of this section shall provide terminally ill patients with coverage for prognosis and treatment of at least the rates of reimbursement as are provided for hospice care under Medicare and the Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965, as in effect January 1, 1999.

(c) This section does not apply to contracts or policies providing disability income insurance, specified disease insurance, hospital indemnity insurance, long-term care insurance, short-term limited duration insurance, accident only insurance, medicare supplement insurance, or all other supplemental insurance.

23-86-121. Coverage for anesthesia and hospitalization for dental procedures.

(a) As used in this section, “health benefit plan” means any policy, contract, or agreement offered by an insurance company, health maintenance organization, or hospital and medical services corporation to provide, reimburse, or pay for health care services, but does not include the following:

(1) Workers' compensation coverage;

(2) Self-funded or self-insured health plans, unless the plan is established or maintained for employees of a governmental or church entity;

(3) Health plans covering specific diseases other than dental plans;

(4) Hospital indemnity insurance;

(5) Long-term care insurance;

(6) Short-term limited duration insurance;

(7) Accident only insurance;

(8) Medicare supplement insurance; or

(9) Other supplemental insurance.

(b) Health benefit plans shall provide coverage for payment of anesthesia and hospital or ambulatory surgical facility charges for services performed in connection with dental procedures in a hospital or ambulatory surgical facility, if:

(1) The provider treating the patient certifies that because of the patient's age or condition or problem, hospitalization or general anesthesia is required in order to safely and effectively perform the procedures; and

(2) The patient is:

(A) A child under seven (7) years of age who is determined by two (2) dentists licensed under the Arkansas Dental Practice Act, § 17-82-101 et seq., to require without delay necessary dental treatment in a hospital or ambulatory surgical center for a significantly complex dental condition;

(B) A person with a diagnosed serious mental or physical condition; or

(C) A person with a significant behavioral problem as determined by the covered person's physician as licensed under the Arkansas Medical Practices Act, § 17-95-201 et seq., § 17-95-301 et seq., and § 17-95-401 et seq.

(c) The health benefit plan may apply deductibles, coinsurance, network requirements, medical necessity determinations, and other limitations as are applied to other covered services.

(d) The health benefit plan may require prior authorization for hospitalization for dental care procedures in the same manner that prior authorization is required for hospitalization for other covered medical conditions.

(e) If a person is covered under both a health benefit plan that provides dental benefits and a health benefit plan that provides medical benefits, the health benefit plan that includes dental benefits is the primary payer and the health benefit plan that provides medical benefits is the secondary payer, subject to subsections (h) and (i) of this section.

(f) This section does not apply to treatment rendered for temporomandibular joint disorders.

(g)(1) This section applies to health benefit plans that are issued, renewed, extended, or modified on and after January 1, 2006.

(2) “Renewed, extended, or modified” includes a change in premium or other financial term.

(h) This section does not require a health benefit plan that does not cover dental benefits to cover dental care for which general anesthesia or hospital or ambulatory surgical facility services, or both, are performed in connection with dental procedures.

(i) This section does not require a health benefit plan that does not cover charges for hospital or ambulatory surgical facilities generally to cover charges for hospital or ambulatory surgical facilities in connection with dental procedures described in subsection (b) of this section.

Subchapter 2

— Small-Employer Health Insurance

23-86-201. Purpose.

The intent of this subchapter is to:

(1) Promote the availability of health insurance coverage to small employers;

(2) Prevent abusive rating practices; and

(3) Improve the efficiency and fairness of the small group health insurance marketplace.

23-86-202. Definitions.

(1) “Actuarial certification” means a written statement by a member of the American Academy of Actuaries or other individuals acceptable to the Insurance Commissioner that a small employer carrier is in compliance with the provisions of § 23-86-204 based upon the person's examination, including a review of the appropriate records and of the actuarial assumptions and methods utilized by the carrier in establishing premium rates for applicable health benefit plans;

(2) “Base premium rate” means, for each class of business as to a rating period, the lowest premium rate charged or which could have been charged under a rating system for that class of business by the small employer carrier to small employers with similar case characteristics for health benefit plans with the same or similar coverage;

(3) “Carrier” means health insurance issuer, i.e., an insurance company, insurance service, or insurance organization, including a health maintenance organization that is licensed to engage in the business of insurance in a state and that is subject to Arkansas law that regulates insurance, but the term does not include a group health plan;

(4)(A) “Case characteristics” means demographic or other relevant characteristics of a small employer, as determined by a small employer carrier, that are considered by the carrier in the determination of premium rates for the small employer.

(B) Claim experience, health status, and duration of coverage since issue are not case characteristics for the purposes of this subchapter;

(5)(A) “Class of business” means all or a distinct grouping of small employers as shown on the records of the small employer carrier.

(B) A distinct grouping may only be established by the small employer carrier on the basis that the applicable health benefit plans:

(i) Are marketed and sold through individuals and organizations that are not participating in the marketing or sale of other distinct groupings of small employers for the small employer carrier;

(ii) Have been acquired from another small employer carrier as a distinct grouping of plans;

(iii) Are provided through an association with membership of not less than two (2) or more small employers that has been formed for purposes other than obtaining insurance; or

(iv) Are in a class of business that meets the requirements for exception to the restrictions related to premium rates provided in § 23-86-204(a)(1)(A).

(C) A small employer carrier may establish no more than two (2) additional groupings under each of subdivisions (5)(B)(i), (ii), (iii), and (iv) of this section on the basis of underwriting criteria that are expected to produce substantial variation in the health care costs.

(D) The commissioner may approve the establishment of additional distinct groupings upon application to the commissioner and a finding by the commissioner that such an action would enhance the efficiency and fairness of the small employer insurance marketplace;

(6) “Commissioner” means the Insurance Commissioner;

(7) “Department” means the State Insurance Department;

(8)(A) “Health benefit plan” or “plan” means health insurance coverage, i.e., benefits consisting of medical care, provided directly through insurance or reimbursement or otherwise, and including items and services paid for as medical care, under any hospital or medical service policy or certificate, hospital or medical service plan contract, or health maintenance organization contract offered by a health insurance issuer.

(B) “Health benefit plan” does not include:

(i) Accident-only, credit, dental, or disability income insurance;

(ii) Coverage issued as a supplement to liability insurance;

(iii) Workers' compensation or similar insurance; or

(iv) Automobile medical-payment insurance;

(9) “Index rate” means, for each class of business for small employers with similar case characteristics, the arithmetic average of the applicable base premium rate and the corresponding highest premium rate;

(10) “New business premium rate” means, for each class of business as to a rating period, the premium rate charged or offered by the small employer carrier to small employers with similar case characteristics for newly issued health benefit plans with the same or similar coverage;

(11) “Rating period” means the calendar period for which premium rates established by a small employer carrier are assumed to be in effect, as determined by the small employer carrier;

(12) “Small employer” means any person, firm, corporation, partnership, or association actively engaged in business who, on at least fifty percent (50%) of its working days during the preceding year, employed no fewer than two (2) nor more than twenty-five (25) eligible employees. In determining the number of eligible employees, companies that are affiliated companies or that are eligible to file a combined tax return for purposes of state taxation shall be considered one (1) employer; and

(13) “Small employer carrier” means health insurance issuer as defined in subdivision (3) of this section.

23-86-203. Health insurance plans subject to this subchapter.

(a) Except as provided in subsection (b) of this section, the provisions of this subchapter apply to any health benefit plan that provided coverage to two (2) or more employees of a small employer.

(b) The provisions of this subchapter shall not apply to individual health insurance policies that are subject to policy form and premium rate approval as provided in §§ 23-79-109 and 23-85-101 et seq.

23-86-204. Restrictions relating to premium rates.

(a) Premium rates for health benefit plans subject to this subchapter shall be subject to the following provisions:

(1) The index rate for a rating period for any class of business shall not exceed the index rate for any other class of business by more than twenty percent (20%). This subdivision (a)(1) shall not apply to a class of business if all of the following apply:

(A) The class of business is one for which the carrier does not reject, and never has rejected, small employers included within the definition of employers eligible for the class of business or otherwise eligible employees and dependents who enroll on a timely basis, based upon their claim experience or health status;

(B) The carrier does not involuntarily transfer, and never has involuntarily transferred, a health benefit plan into or out of the class of business; and

(2) For a class of business, the premium rates charged during a rating period to small employers with similar case characteristics for the same or similar coverage, or the rates which could be charged to such employers under the rating system for that class of business, shall not vary from the index rate by more than twenty-five percent (25%) of the index rate;

(3) The percentage increase in the premium rate charged to a small employer for a new rating period may not exceed the sum of the following:

(A)(i) The percentage change in the new business premium rate measured from the first day of the prior rating period to the first day of the new rating period.

(ii) In the case of a class of business for which the small employer carrier is not issuing new policies, the carrier shall use the percentage change in the base premium rate;

(B) An adjustment, not to exceed fifteen percent (15%) annually and adjusted pro rata for rating periods of less than one (1) year, due to the claim experience, health status, or duration of coverage of the employees or dependents of the small employer as determined from the carrier's rate manual for the class of business; and

(C) Any adjustment due to change in coverage or change in the case characteristics of the small employer as determined from the carrier's rate manual for the class of business; and

(4) In the case of health benefit plans issued prior to January 1, 1992, a premium rate for a rating period may exceed the ranges described in subsection (a)(1) or (2) of this section for a period of five (5) years following January 1, 1992. In such a case, the percentage increase in the premium rate charged to a small employer in such a class of business for a new rating period may not exceed the sum of the following:

(A)(i) The percentage change in the new business premium rate measured from the first day of the prior rating period to the first day of the new rating period.

(ii) In the case of a class of business for which the small employer carrier is not issuing new policies, the carrier shall use the percentage change in the base premium rate; and

(B) Any adjustment due to change in coverage or change in the case characteristics of the small employer as determined from the carrier's rate manual for the class of business.

(b)(1) Nothing in this section is intended to affect the use by a small employer carrier of legitimate rating factors other than claim experience, health status, or duration of coverage in the determination of premium rates.

(2) Small employer carriers shall apply rating factors, including case characteristics, consistently with respect to all small employers in a class of business.

(c)(1) A small employer carrier shall not involuntarily transfer a small employer into or out of a class of business.

(2) A small employer carrier shall not offer to transfer a small employer into or out of a class of business unless the offer is made to transfer all small employers in the class of business without regard to case characteristics, claim experience, health status, or duration since issue.

23-86-205, 23-86-206. [Repealed.]

23-86-207. Maintenance of records.

(a) Each small employer carrier shall maintain at its principal place of business a complete and detailed description of its rating practices and renewal underwriting practices, including information and documentation which demonstrate that its rating methods and practices are based upon commonly accepted actuarial assumptions and are in accordance with sound actuarial principles.

(b) Each small employer carrier shall file each March 1 with the Insurance Commissioner an actuarial certification that the carrier is in compliance with this section and that the rating methods of the carrier are actuarially sound. A copy of the certification shall be retained by the carrier at its principal place of business.

(c) A small employer carrier shall make the information and documentation described in subsection (a) of this section available to the commissioner upon request. The information shall be considered proprietary and trade secret information and shall not be subject to disclosure by the commissioner to persons outside of the State Insurance Department except as agreed to by the carrier or as ordered by a court of competent jurisdiction.

23-86-208. Discretion of the commissioner.

The Insurance Commissioner may suspend all or any part of § 23-86-204 as to the premium rates applicable to one (1) or more small employers for one (1) or more rating periods upon a filing by the small employer carrier and a finding by the commissioner that either the suspension is reasonable in light of the financial condition of the carrier or that the suspension would enhance the efficiency and fairness of the marketplace for small employer health insurance.

23-86-209. Effective date.

(a) The provisions of this subchapter shall apply to each health benefit plan for a small employer that is delivered, issued for delivery, renewed, or continued in this state after July 1, 1997.

(b) For purposes of this section, the date a plan is continued is the first rating period which commences after July 1, 1997.

Subchapter 3

— Arkansas Health Insurance Portability and Accountability Act of 1997

23-86-301. Title.

This subchapter may be cited as the “Arkansas Health Insurance Portability and Accountability Act of 1997”.

23-86-302. Effective date — Limitation of actions — Applicability.

(a) In General. Except as provided in this section, this subchapter and the amendments made by this section shall apply with respect to group health plans for plan years beginning after June 30, 1997.

(b) Determination of Creditable Coverage.

(1) Period of Coverage — In General. Subject to subdivision (b)(2)(A) of this section, no period before July 1, 1996, shall be taken into account in determining creditable coverage.

(2) Certifications.

(A) In General. Subject to subdivisions (b)(2)(B) and (C) of this section, § 23-86-304(e) shall apply to events occurring after June 30, 1996.

(B) No Certification Required to be Provided Before June 1, 1997. In no case is a certification required to be provided under § 23-86-304(e) before June 1, 1997.

(C) Certification Only on Written Request for Events Occurring Before October 1, 1996. In the case of an event occurring after June 30, 1996, and before October 1, 1996, a certification is not required to be provided under § 23-86-304(e) unless an individual with respect to whom the certification is otherwise required to be made requests the certification in writing.

(3) Transitional Rule. In the case of an individual who seeks to establish creditable coverage for any period for which certification is not required because it relates to an event occurring before June 30, 1996:

(A) The individual may present other credible evidence of the coverage in order to establish the period of creditable coverage; and

(B) A group health plan and a health insurance issuer shall not be subject to any penalty or enforcement action with respect to the plan's or issuer's crediting or not crediting the coverage if the plan or issuer has sought to comply in good faith with the applicable requirements of this section.

(c) Limitation on Actions. No enforcement action shall be taken pursuant to this section against a group health plan or health insurance issuer with respect to a violation of a requirement imposed by this section before January 1, 1998, or, if later, the date of issuance of regulations by the Secretary of Labor, if the plan or issuer has sought to comply in good faith with such requirements.

(d) Applicability.

(1) The provisions of this subchapter shall be applicable to all accident and health insurers, health maintenance organizations, hospital and medical service corporations, and fraternal benefit societies that are licensed and authorized by the Insurance Commissioner to transact business in the State of Arkansas.

(2) The provisions of this subchapter shall be applicable to all licensed or state-regulated multiple employer welfare arrangements, licensed or state-regulated health benefit plans, licensed or state-regulated multiple employer trusts, or other licensed or state-regulated persons providing a plan of group health insurance coverage in this state.

23-86-303. Definitions.

As used in this subchapter:

(1) “Affiliation period” means a period that, under the terms of the coverage offered by the health maintenance organization, must expire before the coverage becomes effective;

(2) “Bona fide association” means, with respect to health insurance coverage offered in Arkansas, an association that:

(A) Has been actively in existence for at least five (5) years;

(B) Has been formed and maintained in good faith for purposes other than obtaining insurance;

(C) Does not condition membership in the association on any health status-related factor relating to an individual, including an employee of an employer or a dependent of an employee;

(D) Makes health insurance coverage offered through the association available to all members regardless of any health status-related factor relating to the members or individuals eligible for coverage through a member;

(E) Does not make health insurance coverage offered through the association available other than in connection with a member of the association; and

(F) Meets the additional requirements that may be imposed under Arkansas law;

(3) “Church plan” has the meaning given the term under section 3(33) of the Employee Retirement Income Security Act of 1974 (ERISA);

(4) “COBRA continuation provision” means any of the following:

(A) Part 6 of Subtitle B of Title 1 of the Employee Retirement Income Security Act of 1974, other than section 609 of the act;

(B) Section 4980B of the Internal Revenue Code of 1986, other than subsection (f)(1) of the section insofar as it relates to pediatric vaccines;

(5) “Commissioner” means the Insurance Commissioner;

(6) “Creditable coverage” means, with respect to an individual, coverage of the individual under any of the following:

(A) A group health plan;

(B) Health insurance coverage;

(D) Title XIX of the Social Security Act, other than coverage consisting solely of benefits under section 1928;

(E) Chapter 55 of Title 10, United States Code;

(F) A medical care program of the Indian Health Service or of a tribal organization;

(G) A state health benefits risk pool;

(H) A health plan offered under Chapter 89 of Title 5, United States Code;

(I) A public health plan as defined in regulations;

(J) A health benefit plan under section 5(e) of the Peace Corps Act, 22 U.S.C. § 2504(e). The term does not include coverage consisting solely of coverage of excepted benefits as defined in § 23-86-310;

(7) “Department” means the State Insurance Department unless the context requires otherwise;

(8) “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, such an individual in relation to the employer as shall be determined:

(A) In accordance with the terms of the plan;

(B) As provided by the issuer under rules of the issuer that are uniformly applicable in Arkansas to small employers in the small group market; and

(9)(A) “Employee” has the meaning given the term under section 3(6) of the Employee Retirement Income Security Act of 1974.

(B) To the extent not in conflict with the Employee Retirement Income Security Act of 1974, the term “employee” also means a person who is employed by an employer for thirty (30) or more hours a week and includes an employee who is employed by a client of a professional employer organization for thirty (30) or more hours a week under a professional employer organization arrangement as governed under the Arkansas Professional Employer Organization Recognition and Licensing Act, § 23-92-401 et seq.;

(10) “Employer” has the meaning given the term under section 3(5) of the Employee Retirement Income Security Act of 1974, except that the term shall include only employers of two (2) or more employees;

(11) “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;

(12) “Enrollment date” means, with respect to an individual covered under a group health plan or health insurance coverage, the date of coverage of the individual in the plan or, if earlier, the first day of the waiting period for the coverage;

(13) “Federal governmental plan” means a governmental plan established or maintained for its employees by the United States Government or by any agency or instrumentality of the government;

(14) “Governmental plan” has the meaning given the term under section 3(32) of the Employee Retirement Income Security Act of 1974 and any federal governmental plan;

(15) “Group health insurance coverage” means, in connection with a group health plan, health insurance coverage offered in connection with the plan;

(16) “Group health plan” means an employee welfare benefit plan to the extent that the plan provides medical care as defined in this section and including items and services paid for as medical care, to employees or their dependents as defined under the terms of the plan directly or through insurance, reimbursement, or otherwise;

(17) “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;

(18) “Health insurance coverage” means benefits consisting of medical care, provided directly, through insurance or reimbursement or otherwise and including items and services paid for as medical care, under any hospital or medical service policy or certificate, hospital or medical service plan contract, or health maintenance organization contract offered by a health insurance issuer;

(19) “Health insurance issuer” means an insurance company, insurance service, or insurance organization including a health maintenance organization as defined in this section that is licensed to engage in the business of insurance in a state and that is subject to Arkansas law that regulates insurance. The term does not include a group health plan;

(20) “Health maintenance organization” means:

(A) A federally qualified health maintenance organization as defined in section 1301(a) of the Public Health Service Act, 42 U.S.C. § 300e(a);

(B) An organization recognized under state law as a health maintenance organization; or

(C) A similar organization regulated under state law for solvency in the same manner and to the same extent as a health maintenance organization;

(21) “Health status-related factor” means any of the factors described in § 23-86-306(a)(1);

(22) “Individual market” means the market for health insurance coverage offered to individuals other than in connection with a group health plan;

(23) “Large employer” means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least fifty-one (51) employees on business days during the preceding calendar year and who employs at least two (2) employees on the first day of the plan year;

(24) “Large-group market” means the health insurance market under which individuals obtain health insurance coverage directly or through any arrangement on behalf of themselves and their dependents through a group health plan maintained by a large employer;

(25) “Late enrollee” means, with respect to coverage under a group health plan, a participant or beneficiary who enrolls under the plan other than during:

(A) The first period in which the individual is eligible to enroll under the plan; or

(B) A special enrollment period under § 23-86-304(f);

(26) “Medical care” means amounts paid for or services provided for:

(A) The diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body;

(B) Amounts paid for transportation primarily for and essential to medical care referred to in subdivision (26)(A) of this section; and

(27) “Network plan” means health insurance coverage offered by a health insurance issuer under which the financing and delivery of medical care, including items and services paid for as medical care are provided, in whole or in part, through a defined set of providers under contract with the issuer;

(28) “Nonfederal governmental plan” means a governmental plan that is not a federal governmental plan;

(29) “Participant” has the meaning given the term under section 3(7) of the Employee Retirement Income Security Act of 1974;

(30) “Placement”, or being “placed”, for adoption, in connection with any placement for adoption of a child with any person, means the assumption and retention by the person of a legal obligation for total or partial support of the child in anticipation of adoption of the child. The child's placement with the person terminates upon the termination of the legal obligation;

(31) “Plan sponsor” has the meaning given the term under section 3(16)(B) of the Employee Retirement Income Security Act of 1974;

(32) “Preexisting condition exclusion” means, with respect to coverage, a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for the coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before that date;

(33) “Regulations” means rules and regulations promulgated by the Insurance Commissioner unless the context requires otherwise;

(34) “Small employer” means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least two (2) but not more than fifty (50) employees on business days during the preceding calendar year and who employs at least two (2) employees on the first day of the plan year;

(35) “Small-group market” means the health insurance market under which individuals obtain health insurance coverage directly or through any arrangement on behalf of themselves and their dependents through a group health plan maintained by a small employer;

(36) “State” means each of the several states, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands;

(37)(A) “State law” includes all laws, decisions, rules, regulations, or other state action having the effect of law, of any state.

(B) A law of the United States applicable only to the District of Columbia shall be treated as a state law rather than a law of the United States; and

(38) “Waiting period” means, with respect to a group health plan and an individual who is a potential participant or beneficiary in the plan, the period that must pass with respect to the individual before the individual is eligible to be covered for benefits under the terms of the plan.

23-86-304. Increased portability through limitation on preexisting conditions exclusions.

(a) Limitation on Preexisting Condition Exclusion Period — Crediting for Periods of Previous Coverage. Subject to subsection (d) of this section, a group health plan and a health insurance issuer offering group health insurance coverage may, with respect to a participant or beneficiary, impose a preexisting condition exclusion only if:

(1) The exclusion relates to a condition, whether physical or mental, regardless of the cause of the condition, for which medical advice, diagnosis, care, or treatment was recommended or received within the six-month period ending on the enrollment date;

(2) The exclusion extends for a period of not more than twelve (12) months, or eighteen (18) months in the case of a late enrollee, after the enrollment date; and

(3) The period of any such preexisting condition exclusion is reduced by the aggregate of the periods of creditable coverage, if any, as defined in subdivision (c)(1) of this section, applicable to the participant or beneficiary as of the enrollment date.

(b) Treatment of Genetic Information. Genetic information shall not be treated as a condition described in subdivision (a)(1) of this section in the absence of a diagnosis of the condition related to that information.

(1) Not Counting Periods Before Significant Breaks in Coverage.

(A) In General. A period of creditable coverage shall not be counted, with respect to enrollment of an individual under a group health plan, if, after such a period and before the enrollment date, there was a sixty-three-day period during all of which the individual was not covered under any creditable coverage.

(B) Waiting Period Not Treated as a Break in Coverage. For purposes of subdivisions (c)(1)(A) and (d)(4) of this section, any period that an individual is in a waiting period for any coverage under a group health plan or for group health insurance coverage or is in an affiliation period as defined in § 23-86-303(1) shall not be taken into account in determining the continuous period under subdivision (c)(1)(A) of this section.

(2) Method of Crediting Coverage.

(A) Standard Method. Except as otherwise provided under subdivision (c)(2)(B) of this section, for purposes of applying subdivision (a)(3) of this section, a group health plan and a health insurance issuer offering group health insurance coverage shall count a period of creditable coverage without regard to the specific benefits covered during the period.

(B) Election of Alternative Method.

(i) A group health plan or a health insurance issuer offering group health insurance coverage may elect to apply subdivision (a)(3) of this section based on coverage of benefits within each of several classes or categories of benefits specified in regulations rather than as provided under subdivision (c)(2)(A) of this section.

(ii) The election shall be made on a uniform basis for all participants and beneficiaries.

(iii) Under the election, a group health plan or issuer shall count a period of creditable coverage with respect to any class or category of benefits if any level of benefits is covered within the class or category.

(C) Plan Notice. In the case of an election with respect to a group health plan under subdivision (c)(2)(B) of this section, whether or not health insurance coverage is provided in connection with such a plan, the plan shall:

(i) Prominently state in any disclosure statements concerning the plan, and state to each enrollee at the time of enrollment under the plan, that the plan has made such an election; and

(ii) Include in such statements a description of the effect of this election.

(D) Issuer Notice. In the case of an election under subdivision (c)(2)(B) of this section with respect to health insurance coverage offered by an issuer in the small or large group market, the issuer:

(i) Shall prominently state in any disclosure statements concerning the coverage, and to each employer at the time of the offer or sale of the coverage, that the issuer has made such an election; and

(ii) Shall include in such statements a description of the effect of such an election.

(3) Establishment of Period. Periods of creditable coverage with respect to an individual shall be established through presentation of certifications described in subsection (e) of this section or in such other manner as may be specified in regulations.

(d) Exceptions.

(1) Exclusion Not Applicable to Certain Newborns. Subject to subdivision (d)(4) of this section, a group health plan and a health insurance issuer offering group health insurance coverage may not impose any preexisting condition exclusion in the case of an individual who, as of the last day of the thirty-day period beginning with the date of birth, is covered under creditable coverage.

(2) Exclusion Not Applicable to Certain Adopted Children.

(A) Subject to subdivision (d)(4) of this section, a group health plan and a health insurance issuer offering group health insurance coverage may not impose any preexisting condition exclusion in the case of a child who is adopted or placed for adoption before attaining eighteen (18) years of age and who, as of the last day of the thirty-day period beginning on the date of the adoption or placement for adoption, is covered under creditable coverage.

(B) Subdivision (d)(2)(A) of this section shall not apply to coverage before the date of the adoption or placement for adoption.

(3) Exclusion Not Applicable to Pregnancy. A group health plan and health insurance issuer offering group health insurance coverage may not impose any preexisting condition exclusion relating to pregnancy as a preexisting condition.

(4) Loss if Break in Coverage. Subdivisions (d)(1) and (2) of this section shall no longer apply to an individual after the end of the first sixty-three-day period during all of which the individual was not covered under any creditable coverage.

(e) Certifications and Disclosure of Coverage.

(1) Requirement for Certification of Period of Creditable Coverage.

(A) In General. A group health plan, and a health insurance issuer offering group health insurance coverage, shall provide the certification described in subdivision (e)(1)(B) of this section:

(i) At the time an individual ceases to be covered under the plan or otherwise becomes covered under a COBRA continuation provision;

(ii) In the case of an individual becoming covered under such a provision, at the time the individual ceases to be covered under such a provision; and

(iii)(a) At the request on behalf of an individual made not later than twenty-four (24) months after the date of cessation of the coverage described in subdivision (e)(1)(A)(i) or (ii) of this section, whichever is later.

(b) The certification under subdivision (e)(1)(A)(i) of this section may be provided, to the extent practicable, at a time consistent with notices required under any applicable COBRA continuation provision.

(B) Certification. The certification described in subdivision (e)(1)(A) of this section is a written certification of:

(i) The period of creditable coverage of the individual under such a plan and the coverage, if any, under the COBRA continuation provision; and

(ii) The waiting period, if any, and affiliation period, if applicable, imposed with respect to the individual for any coverage under such a plan.

(C) Issuer Compliance. To the extent that medical care under a group health plan consists of group health insurance coverage, the plan is deemed to have satisfied the certification requirement under this section if the health insurance issuer offering the coverage provides for such certification in accordance with this section.

(2) Disclosure of Information on Previous Benefits. In the case of an election described in subdivision (c)(2)(B) of this section by a group health plan or health insurance issuer, if the plan or issuer enrolls an individual for coverage under the plan and the individual provides a certification of coverage of the individual under subdivision (e)(1) of this section:

(A) Upon request of the plan or issuer, the entity which issued the certification provided by the individual shall promptly disclose to the requesting plan or issuer information on coverage of classes and categories of health benefits available under the entity's plan or coverage; and

(B) The entity may charge the requesting plan or issuer for the reasonable cost of disclosing the information.

(f) Special Enrollment Periods.

(1) Individuals Losing Other Coverage. A group health plan and a health insurance issuer offering group health insurance coverage in connection with a group health plan shall permit an employee who is eligible, but not enrolled, for coverage under the terms of the plan or a dependent of such an employee if the dependent is eligible, but not enrolled, for coverage under such terms to enroll for coverage under the terms of the plan if each of the following conditions is met:

(A) The employee or dependent was covered under a group health plan or had health insurance coverage at the time coverage was previously offered to the employee or dependent;

(B) The employee stated in writing at such time that coverage under a group health plan or health insurance coverage was the reason for declining enrollment, but only if the plan sponsor or issuer if applicable required such a statement at that time and provided the employee with notice of the requirement and the consequences of such a requirement at that time;

(i) Was under a COBRA continuation provision and the coverage under such a provision was exhausted; or