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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.
BUSINESS AFFAIRS & LABOR
A BILL FOR AN ACT
CONCERNING THE USE OF COMMUNITY RATING CRITERIA IN
SMALL GROUP HEALTH INSURANCE PLANS.
(Note: This summary applies to this bill as introduced
and does not necessarily reflect any amendments that may be subsequently
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
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
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.
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
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.