House File 790 - Introduced HOUSE FILE BY COMMITTEE ON COMMERCE (SUCCESSOR TO HF 4) Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act allowing certain association group health care plans and 2 wellness initiatives, and providing an effective date. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1583HV 82 5 av/cf/24 PAG LIN 1 1 DIVISION I ASSOCIATION GROUP HEALTH CARE PLANS 1 2 Section 1. Section 509.1, Code 2007, is amended by adding 1 3 the following new subsection: 1 4 NEW SUBSECTION. 7A. A policy of group health insurance 1 5 coverage, as defined in section 513B.2, issued by a small 1 6 employer carrier, as defined in section 513B.2, to a bona fide 1 7 association, subject to the following requirements: 1 8 a. The policy provides group health insurance coverage to 1 9 eligible employees of members of a bona fide association that 1 10 are small employers as defined in section 513B.2, and to the 1 11 spouses and dependents of such employees. 1 12 b. The policy is issued to a bona fide association. For 1 13 the purposes of this subsection, a bona fide association is an 1 14 association which meets all of the following requirements: 1 15 (1) The association is a trade, industry, or professional 1 16 association which is organized in good faith as a nonprofit 1 17 corporation under chapter 504 for purposes other than 1 18 obtaining insurance and has been in existence and actively 1 19 maintained for at least five continuous years at the time the 1 20 policy is issued. 1 21 (2) The association does not condition membership in the 1 22 association on the health status of employees of its members 1 23 or the health status of the spouses and dependents of such 1 24 employees. 1 25 (3) Group health insurance coverage offered by the 1 26 association is available to all eligible employees of its 1 27 members that are small employers as defined in section 513B.2 1 28 who choose to participate in the health insurance coverage 1 29 offered, and to the spouses and dependents of such employees, 1 30 regardless of the health status of such employees or their 1 31 spouses and dependents. 1 32 (4) Group health insurance coverage offered by the 1 33 association is available only to persons who are eligible 1 34 employees of a small employer as defined in section 513B.2 1 35 that is a member of the association, or to the spouses or 2 1 dependents of such employees. 2 2 Sec. 2. Section 509.1, subsection 8, unnumbered paragraph 2 3 1, Code 2007, is amended to read as follows: 2 4 A policy issued to a resident of this state under a group 2 5 life, accident, or health insurance policy issued to a group 2 6 other than one described in subsections 1 through77A, 2 7 subject to the following requirements: 2 8 Sec. 3. Section 513B.2, subsection 6, paragraph a, 2 9 subparagraph (3), Code 2007, is amended by striking the 2 10 subparagraph and inserting in lieu thereof the following: 2 11 (3) The coverages are provided by a policy of group health 2 12 insurance coverage through a bona fide association as provided 2 13 in section 509.1, subsection 7A, which meets the requirements 2 14 for a class of business under section 513B.4. A small 2 15 employer carrier may condition coverages under such a policy 2 16 of group health insurance coverage on any of the following 2 17 requirements: 2 18 (a) Minimum levels of participation by employees of each 2 19 member of a bona fide association that offers the coverage to 2 20 its employees. 2 21 (b) Minimum levels of contribution by each member of a 2 22 bona fide association that offers the coverage to its 2 23 employees. 2 24 (c) A specified policy term, subject to annual premium 2 25 rate adjustments as permitted by section 513B.4. 2 26 Sec. 4. Section 513B.2, subsection 6, paragraph a, Code 2 27 2007, is amended by adding the following new subparagraph: 2 28 NEW SUBPARAGRAPH. (4) The coverages are provided by a 2 29 policy of group health insurance coverage through two or more 2 30 bona fide associations as provided in section 509.1, 2 31 subsection 7A, which a small employer carrier has aggregated 2 32 as a distinct grouping that meets the requirements for a class 2 33 of business under section 513B.4. After a distinct grouping 2 34 of bona fide associations is established as a class of 2 35 business, the small group carrier shall not remove a bona fide 3 1 association from the class based on the claims experience of 3 2 that association. A small employer carrier may condition 3 3 coverages under such a policy of group health insurance 3 4 coverage on any of the following requirements: 3 5 (a) Minimum levels of participation by employees of each 3 6 member of a bona fide association in the class that offers the 3 7 coverage to its employees. 3 8 (b) Minimum levels of contribution by each member of a 3 9 bona fide association in the class that offers the coverage to 3 10 its employees. 3 11 (c) A specified policy term, subject to annual premium 3 12 rate adjustments as permitted by section 513B.4. 3 13 Sec. 5. Section 513B.2, subsection 6, paragraph b, Code 3 14 2007, is amended to read as follows: 3 15 b. A small employer carrier may establishno more than two3 16 additional groupings under each of the subparagraphs in 3 17 paragraph "a" on the basis of underwriting criteria which are 3 18 expected to produce substantial variation in the health care 3 19 costs. 3 20 DIVISION II 3 21 WELLNESS INITIATIVES 3 22 Sec. 6. Section 513B.4, Code 2007, is amended by adding 3 23 the following new subsection: 3 24 NEW SUBSECTION. 6. Notwithstanding subsection 4, a small 3 25 employer carrier may offer to transfer a small employer into a 3 26 different class of business with a lower index rate based upon 3 27 claims experience, implementation of managed care or wellness 3 28 programs, or health status improvement of the small employer 3 29 since issue. 3 30 Sec. 7. NEW SECTION. 513B.4B SMALL EMPLOYER INCENTIVES 3 31 == SUSPENSION OR MODIFICATION OF PREMIUM RATE RESTRICTIONS. 3 32 1. In order to encourage voluntary participation in 3 33 wellness or disease management programs, a small employer 3 34 carrier may offer premium credits or discounts to a small 3 35 employer for the benefit of eligible employees of that small 4 1 employer who participate in such a program. An employee shall 4 2 not be penalized in any way for not participating in such a 4 3 program. 4 4 2. The commissioner shall adopt, by rule or order, 4 5 provisions allowing suspension or modification of premium rate 4 6 restrictions to enable a small employer carrier to provide 4 7 premium credits or discounts to a small employer based on 4 8 measurable reductions in costs of that small employer, 4 9 including but not limited to tobacco use cessation, 4 10 participation in established wellness or disease management 4 11 programs, and reduced administrative or distribution costs. 4 12 DIVISION III 4 13 EFFECTIVE DATE 4 14 Sec. 8. EFFECTIVE DATE. This Act, being deemed of 4 15 immediate importance, takes effect upon enactment. 4 16 EXPLANATION 4 17 This bill allows certain association group health care 4 18 plans and wellness initiatives. 4 19 DIVISION I == ASSOCIATION GROUP HEALTH CARE PLANS. The 4 20 bill creates Code section 509.1, subsection 7A, which 4 21 authorizes issuance of a group health insurance policy issued 4 22 by a small employer carrier, as defined in Code section 4 23 513B.2, to a bona fide association to provide health insurance 4 24 coverage to employees of association members and to the 4 25 spouses and dependents of such employees. 4 26 The bill defines what constitutes a bona fide association 4 27 to whom such a policy may be issued. The bill requires that a 4 28 bona fide association for the purposes of this type of policy 4 29 must be a trade, industry, or professional association which 4 30 is organized in good faith as a nonprofit corporation under 4 31 Code chapter 504 for purposes other than obtaining insurance 4 32 and has been in existence and actively maintained for at least 4 33 five continuous years at the time the policy is issued; not 4 34 condition membership in the association on the health status 4 35 of employees of members or their spouses or dependents; make 5 1 coverage offered by the association available to all eligible 5 2 employees and their spouses and dependents, of its members 5 3 that are small employers who choose to participate in the 5 4 coverage; and make the coverage offered available only to 5 5 persons who are eligible employees and their spouses and 5 6 dependents, of a small employer that is a member of the 5 7 association. 5 8 For the purposes of Code section 509.1, subsection 7A, a 5 9 "small employer" means a person actively engaged in business 5 10 who, on at least 50 percent of the employer's working days 5 11 during the preceding year, employed not less than two and not 5 12 more than 50 full=time equivalent, eligible employees. 5 13 The bill provides that coverages provided by a group health 5 14 insurance policy through a bona fide association pursuant to 5 15 Code section 509.1, subsection 7A, can constitute a class of 5 16 business and a small employer carrier may condition coverages 5 17 under such a policy on minimum levels of participation by 5 18 employees of each association member, minimum levels of 5 19 contribution by each association member that offers the 5 20 coverage to its employees, and a specified policy term, 5 21 subject to annual premium rate adjustments as permitted by 5 22 Code section 513B.4. 5 23 The bill also provides that coverages provided by a group 5 24 health insurance policy through two or more bona fide 5 25 associations as provided in Code section 509.1, subsection 7A, 5 26 which a small employer carrier has aggregated as a distinct 5 27 grouping can constitute a class of business and a small 5 28 employer carrier may condition coverages under such a policy 5 29 as set forth above. A small employer carrier cannot remove a 5 30 bona fide association from such a class based on the claims 5 31 experience of that association. 5 32 The bill also allows a small employer carrier to establish 5 33 more than two additional groupings as classes of business 5 34 under Code section 513B.2, subsection 6, paragraph "a", on the 5 35 basis of underwriting criteria which are expected to produce 6 1 substantial variation in the health care costs. 6 2 Code section 513B.4 is amended to prohibit the portion of a 6 3 percentage increase, in the premium rate charged to a small 6 4 employer for a new rating period attributable to the claims 6 5 experience, health status, or duration of coverage of the 6 6 employees or dependents of the small employer, from exceeding 6 7 an increase of more than 15 percent annually. 6 8 DIVISION II == WELLNESS INITIATIVES. The bill allows a 6 9 small employer carrier to transfer a small employer into a 6 10 different class of business with a lower index rate based upon 6 11 claims experience, implementation of managed care or wellness 6 12 programs, or health status improvement of the small employer 6 13 since issuance of the policy. 6 14 The bill also allows a small employer carrier to offer 6 15 premium credits or discounts to a small employer for the 6 16 benefit of eligible employees of that employer who voluntarily 6 17 participate in wellness or disease management programs. The 6 18 bill requires the commissioner of insurance to adopt rules or 6 19 orders allowing suspension or modification of premium rate 6 20 restrictions to enable a small employer carrier to provide 6 21 such premium credits or discounts to a small employer based on 6 22 measurable reductions in costs of that small employer, 6 23 including but not limited to tobacco use cessation, 6 24 participation in established wellness or disease management 6 25 programs, and reduced administrative or distribution costs. 6 26 The bill prohibits an employee from being penalized in any way 6 27 for not participating in a wellness or disease management 6 28 program. 6 29 DIVISION III == EFFECTIVE DATE. The bill takes effect upon 6 30 enactment. 6 31 LSB 1583HV 82 6 32 av:rj/cf/24