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Second Regular Session

Sixty-first General Assembly

LLS NO. 98­0231.01 DHG HOUSE BILL 98­1142

STATE OF COLORADO

BY REPRESENTATIVE Owen;

also SENATOR Ament.

REENGROSSED

BUSINESS AFFAIRS & LABOR

A BILL FOR AN ACT

CONCERNING THE USE OF COMMUNITY RATING CRITERIA IN SMALL GROUP HEALTH INSURANCE PLANS.

Bill Summary

(Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.)

Allows the premium rate adjustment factor used by small group sickness and accident insurers for health plans issued or renewed on or after July 1, 1998, to be based on claims experience and health status.


Be it enacted by the General Assembly of the State of Colorado:

SECTION 1.  10­16­102 (6), Colorado Revised Statutes, is amended to read:

10­16­102.  Definitions. As used in this article, unless the context otherwise requires:

(6) (a)  "Business group of one" means, for purposes of initial qualification, an individual, a sole proprietor, or a single full­time employee of a subchapter S corporation, C corporation, nonprofit corporation, limited liability company, or partnership who has carried on significant business activity for a period of at least one year prior to application for coverage, has taxable income as indicated on federal internal revenue service forms 1040, schedule C, F, or SE, or other forms recognized by the federal internal revenue service for income reporting purposes which generated taxable income in one of the two previous years or from which that individual, sole proprietor, or single full­time employee has derived at least a substantial part of such individual's income for one year out of any consecutive three­year period. This definition shall be met by an individual certifying in an individual affidavit signed under oath that such individual meets the definition set forth in this paragraph (a).

(b)  "Business group of one" includes a full­time household employee who works twenty­four hours or more a week on a permanent basis as a household employee, if that employee has derived at least a substantial part of such employee's earned income for one year out of the preceding three­year period from household employment, and if the employee's employer, on at least fifty percent of the days in a normal work week during the preceding calendar quarter, employed at least one household employee.

(c)  Carriers may require whatever information is reasonably necessary ANY TWO OF THE FOLLOWING FORMS OF DOCUMENTATION to determine whether or not a household employee PERSON meets the requirements of this paragraph (b), including SUBSECTION (6):

(I)  Employment­related tax and withholding information, INCLUDING, WITHOUT LIMITATION, A FEDERAL INTERNAL REVENUE SERVICE FORM 1099; AND

(II)  FEDERAL AND STATE TAX RETURNS OR A CERTIFICATION BY AN ATTORNEY OR CERTIFIED PUBLIC ACCOUNTANT THAT FEDERAL AND STATE TAX RETURNS HAVE BEEN FILED AS A BUSINESS.

SECTION 2. 10-16-105 (8) (a) (I) and (8) (a) (VII), Colorado Revised Statutes, are amended to read:

10­16­105.  Small group sickness and accident insurance ­ guaranteed issue ­ mandated provisions for basic and standard health benefit plans. (8) (a) (I) (A)   The premium rate charged during a rating period to small employers shall be based on a single, same index rate, applicable to all small employers, adjusted for case characteristics and coverage; except that the index rate may be multiplied by a rate adjustment factor for each small employer group pursuant to subparagraphs (III) to (VII) of this paragraph (a) to calculate a different premium. The rate adjustment factor shall only be based on actual claims experience on the small employer carrier's plan, industry, and class of business; except that, for health benefit plans issued prior to July 1, 1994, the rate adjustment factor may also be based on duration of coverage since the original issue date and gender mix AND FOR HEALTH BENEFIT PLANS ISSUED OR RENEWED ON OR AFTER JULY 1, 1998, THE RATE ADJUSTMENT FACTOR MAY BE BASED ON CLAIMS EXPERIENCE AND HEALTH STATUS. THE RATE ADJUSTMENT FACTOR SHALL BE NO LOWER THAN 0.65 AND NO HIGHER THAN 1.35.

(B)  For the purposes of this subsection (8), small employer carriers may put all those small employers that have contracts with an employee leasing company, as defined in section 8­70­114 (2) (a) (I), C.R.S., into a single industry category called "small employers that have employee leasing company contracts". Small employer carriers shall apply the rate adjustment factors uniformly with respect to all small employers.

(VII) For health benefit plans newly issued and all health benefit plans renewed on and after January 1, 1998, no rate adjustment factor shall be used, except as provided in subparagraph (X) of this paragraph (a).

SECTION 3.  Effective date ­ applicability. This act shall take effect July 1, 1998, and shall apply to policies newly issued or renewed on or after said date.

SECTION 4.  Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.