ASSEMBLY, No. 2595

STATE OF NEW JERSEY

213th LEGISLATURE

 

INTRODUCED MAY 5, 2008

 


 

Sponsored by:

Assemblyman LOUIS D. GREENWALD

District 6 (Camden)

 

 

 

 

SYNOPSIS

     The “New Jersey Health Insurance Reform Act.”

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act concerning health benefits plans and supplementing and amending various parts of the statutory law.

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1. (New section) This act shall be known and may be cited as the “New Jersey Health Insurance Reform Act.”

 

     2. (New section) As used in this act:

     "Board" means the board of directors of the program.

     "Carrier" means any entity subject to the insurance laws and regulations of this State, or subject to the jurisdiction of the commissioner, that contracts or offers to contract to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services, including an insurance company authorized to issue health insurance, a health maintenance organization, a hospital service corporation, medical service corporation, health service corporation, or any other entity providing a plan of health insurance, health benefits, or health care services.  The term "carrier" shall not include a joint insurance fund established pursuant to State law.  For purposes of this act, carriers that are affiliated companies shall be treated as one carrier, except that any insurance company, health service corporation, hospital service corporation, or medical service corporation that is an affiliate of a health maintenance organization located in New Jersey or any health maintenance organization located in New Jersey that is affiliated with an insurance company, health service corporation, hospital service corporation, or medical service corporation shall treat the health maintenance organization as a separate carrier.

     "Commissioner" means the Commissioner of Banking and Insurance.

     "Covered person" means any person covered under an individual health benefits plan issued pursuant to P.L.1992, c.161 (C.17B:27A-2 et seq.).

     "Department" means the Department of Banking and Insurance

     "Individual health benefits plan" means a health benefits plan for individuals approved by the commissioner pursuant to P.L.1992, c.161 (C.17B:27A-2 et seq.).

     "Plan of operation" means the plan of operation of the program and includes the articles, bylaws and operating rules of the program that are adopted by the board.

     "Program" means the New Jersey Health Care Claims Reinsurance Program created pursuant to section 3 of this act.


     3. (New section) a. There is created the "New Jersey Health Care Claims Reinsurance Program."  All carriers issuing an individual health benefits plan pursuant to P.L.1992, c.161 (C.17B:27A-2 et seq.) shall participate in the program.  The program shall be administered by the board of directors established pursuant to this section.

     b.  Within 30 days of the effective date of this act, the commissioner shall give notice to all the participating carriers of the time and place for the initial organizational meeting, which shall take place within 90 days of the effective date of this act.  The board shall consist of 10 members and the commissioner or his designee who shall serve as an ex officio member.  The carriers shall elect six members of the initial board, subject to the approval of the commissioner, and the Governor shall appoint four members of the board, as provided in subsections c. and d. of this section, respectively.  Initially, four members of the board shall serve for three-year terms, three shall serve for two-year terms and three shall serve for one-year terms.  Thereafter, all board members shall serve for a term of three years.  A vacancy in the membership of the board shall be filled for an unexpired term in the manner provided for the original election or appointment, as appropriate.

     c.  The following categories shall be represented among the elected board members:

     (1)  four carriers participating in the individual market;

     (2)  a health service corporation or a domestic stock insurer which converted from a health service corporation pursuant to the provisions of P.L.2001, c.131 (C.17:48E-49 et al.) and which is primarily engaged in the business of issuing health benefits plans in this State; and

     (3)  one health maintenance organization.

     No carrier shall have more than one representative on the board.

     d.  The board shall include four members appointed by the Governor with the advice and consent of the Senate, who shall include:

     (1) two representatives of the medical provider community, such as a physician licensed to practice medicine in this State, a hospital administrator, or an advanced nurse practitioner; and

     (2) two representatives of the general public whose only affiliation with a carrier is as a covered person who has coverage through an individual health benefits plan provided by the carrier.

     e.  The commissioner shall designate one of the members of the board to serve as the chairman, who shall serve at the pleasure of the commissioner.

     f.  If the initial board is not elected at the organizational meeting, the commissioner shall appoint the members within 15 days of the organizational meeting, in accordance with the provisions of subsections c. and d. of this section.

     g.  A member of the board of directors is not liable for an action or omission performed in good faith in the performance of his powers and duties under this act, and no cause of action shall arise against a board member for the action or omission.

 

     4. (New section) a.  The program's initial board shall submit to the commissioner a plan of operation for the program that will assure the fair, reasonable, and equitable administration of the program.

     b.  In addition to the other requirements of this act, the plan of operation shall include procedures for:

     (1)  operating the program;

     (2)  creating a fund, under management of the board, for administrative expenses;

     (3)  handling and auditing of money and other assets of the program; and

     (4)  managing any other matters as may be necessary and proper for the execution of the board's powers, duties, and obligations under this act.

     c.  After notice and a hearing, the commissioner shall approve the plan of operation if it is determined that the plan assures the fair, reasonable, and equitable administration of the program.

     d.  The plan of operation shall take effect on the date it is approved by the commissioner by order.

     e.  If the initial board fails to submit a suitable plan of operation before the 180th day following appointment of the initial board, the commissioner, after notice and hearing, shall adopt all necessary and reasonable rules to provide a plan of operation for the program. The rules adopted under this subsection shall continue in effect until the initial board submits, and the commissioner approves, a plan of operation under this section.

     f.  The board may amend the plan of operation as necessary to effectuate the purposes of this act, which amendments shall not become part of the plan until approved by the commissioner.

 

     5. (New section) a.  The program shall have the general powers and authority granted under the laws of New Jersey to insurance companies, health service corporations, and health maintenance organizations licensed or approved to transact business in this State, except that the program shall not have the power to issue health benefits plans directly to either groups or individuals.

     b.  The board shall have the specific authority to:

     (1)  issue a reinsurance policy to a carrier in accordance with the requirements of this act;

     (2)  sue or be sued, including taking any legal actions necessary or proper to recover or collect assessments to the program;

     (3)  institute any legal action necessary to avoid payment of improper claims against the program, to recover any amounts erroneously or improperly paid by the program, to recover any amount paid by the program as a mistake of fact or law, or to recover other amounts due to the program;

     (4)  enter into contracts as necessary to implement the provisions of this act including, with the approval of the commissioner, entering into contracts with other programs in the State for joint performance of common administrative functions;

     (5)  appoint appropriate legal, actuarial, and other committees that are necessary to provide technical assistance in operating the program and performing any of the functions of the program; and

     (6)  employ and set the compensation of any persons necessary to assist the program in carrying out its responsibilities and functions.

     c.  Not later than June 1 of each year, the board shall make an annual report to the Governor, the commissioner and pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), the Legislature.  The report shall summarize the activities of the program in the preceding calendar year, including information regarding the amount paid to carriers in reinsurance claims, administration expenses, and the amount assessed to carriers for that calendar year.

 

     6. (New section) a.  The program may issue a reinsurance policy to a carrier covering an individual under an individual health benefits plan pursuant to P.L.1992, c.161 (C.17B:27A-2 et seq.).

     b.  Under a reinsurance policy, the program shall reimburse a carrier 90% of not less than $50,000 of aggregate benefit payments made by the carrier for health care services received by a covered person during a calendar year.  The board may annually adjust the threshold limit of assessment payments to reflect changes in the medical component of the Consumer Price Index for All Urban Consumers, as reported by the United States Department of Labor, shown as an average index for the New York-Northern New Jersey-Long Island region and the Philadelphia-Wilmington-Atlantic City region combined.

 

     7. (New section) a.  The State Auditor shall conduct annually a special audit of the program.  The State Auditor's report shall include a financial audit and an economy and efficiency audit.

     b.  The State Auditor shall report the cost of each audit conducted under this act to the board and the Treasurer, and the board shall remit that amount to the comptroller for deposit to the General Fund.

 

     8. (New section) Reinsurance policies under the New Jersey Health Care Claims Reinsurance Program shall be made available not later than July 1, 2009.

 

     9. (New section) a. (1) For the purposes of providing the funds necessary to carry out the powers and duties of the New Jersey Health Care Claims Reinsurance Program established pursuant to P.L.   c.    (C.    )(pending before the Legislature as this bill), for the fiscal  year 2009 and each fiscal year thereafter, the Commissioner of Banking and Insurance shall issue, in accordance with the provisions of this section, an annual assessment, in the amount of  two percent, on the net written premiums received by each health maintenance organization granted a certificate of authority to operate in this State pursuant to P.L.1973, c.337 (C.26:2J-1 et seq.), which shall be allocated to the New Jersey Health Care Claims Reinsurance Program.

     (2)   "Net written premiums received" means direct premiums as reported on the annual financial statement submitted pursuant to section 9 of P.L.1973, c.337 (C.26:2J-9), and to the commissioner on a quarterly basis.

     b.    The commissioner shall certify the amount of the annual assessment issued to each health maintenance organization as calculated pursuant to subsection a. of this section. Each health maintenance organization shall remit the amount so certified on a quarterly basis in each fiscal year to the Department of Banking and Insurance in accordance with the procedures established in P.L.1995, c.156 (C.17:1C-19 et seq.), and as prescribed by the commissioner, who may adjust the quarterly payments from time to time as necessary to meet the current and estimated assessment obligation of each health maintenance organization in each fiscal year.

     c. (1) A health maintenance organization shall not impose any additional premium, fee or surcharge on its premium or enrollee charge to recoup any assessment paid pursuant to this section.

     (2)   The provisions of paragraph (1) of this subsection shall not apply to a health maintenance organization with respect to any federally funded program underwritten by that health maintenance organization.

 

     10.  Section 1 of P.L.1992, c.161 (C.17B:27A-2) is amended to read as follows:

     1.  As used in sections 1 through 15, inclusive, of this act:

     "Board" means the board of directors of the program.

     "Carrier" means any entity subject to the insurance laws and regulations of this State, or subject to the jurisdiction of the commissioner, that contracts or offers to contract to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services, including a sickness and accident insurance company, a health maintenance organization, a nonprofit hospital or health service corporation, or any other entity providing a plan of health insurance, health benefits or health services.  For purposes of this act, carriers that are affiliated companies shall be treated as one carrier.

     "Church plan" has the same meaning given that term under Title I, section 3 of Pub.L.93-406, the "Employee Retirement Income Security Act of 1974" (29 U.S.C. s.1002(33)).

     "Commissioner" means the Commissioner of Banking and Insurance.

     "Community rating" means a rating system in which [the premium for all persons covered by a contract is the same, based on the experience of all persons covered by that contract, without regard to age, sex, health status, occupation and geographical location] the premium rate charged by the carrier for the highest rated individual or class of individuals shall not be greater than 500% of the premium rate charged for the lowest rated individual or class of individuals purchasing the same individual health benefits plan. The rate differential among the premium rate charged to individuals covered under the same individual health benefits plans may be based upon age, gender, smoking status, and geography. The factors upon which the rate differential is applied shall be consistent with regulations promulgated by the commissioner, which shall include age classifications established, at a minimum, in five-year increments. In developing the rating structure for geography, carriers may use counties as the smallest permissible rating territory.

     There may be a reasonable differential among the premium rates charged for different family structure rating tiers within an individual health benefits plan or for different health benefits plans offered by the carrier.

     "Creditable coverage" means, with respect to an individual, coverage of the individual under any of the following: a group health plan; a group or individual health benefits plan; Part A or Part B of Title XVIII of the federal Social Security Act (42 U.S.C. s.1395 et seq.); Title XIX of the federal Social Security Act (42 U.S.C. s.1396 et seq.), other than coverage consisting solely of benefits under section 1928 of Title XIX of the federal Social Security Act (42 U.S.C. s.1396s); Chapter 55 of Title 10, United States Code (10 U.S.C. s.1071 et seq.); a medical care program of the Indian Health Service or of a tribal organization; a State health plan offered under chapter 89 of Title 5, United States Code (5 U.S.C. 8901 et seq.); a public health plan as defined by federal regulation; and a health benefits plan under section 5(e) of the "Peace Corps Act" (22 U.S.C. s.2504(e)); or coverage under any other type of plan as set forth by the commissioner by regulation.

     Creditable coverage shall not include coverage consisting solely of the following: coverage only for accident or disability income insurance, or any combination thereof; coverage issued as a supplement to liability insurance; liability insurance, including general liability insurance and automobile liability insurance; workers' compensation or similar insurance; automobile medical payment insurance; credit only insurance; coverage for on-site medical clinics; coverage, as specified in federal regulation, under which benefits for medical care are secondary or incidental to the insurance benefits; and other coverage expressly excluded from the definition of health benefits plan.

     "Department" means the Department of Banking and Insurance.

     "Dependent" means the spouse, domestic partner, as provided in P.L.2003, c.246 (C.26:8A-1 et seq.), partner in a civil union couple as provided in P.L.2006, c.103, (C.37:1-28 et al.) or child of an eligible person, subject to applicable terms of the individual health benefits plan.

     "Eligible person" means a person who is a resident who is not eligible to be covered under a group health benefits plan, group health plan, governmental plan, church plan, or Part A or Part B of Title XVIII of the Social Security Act (42 U.S.C. s.1395 et seq.).

     "Federally defined eligible individual" means an eligible person: (1) for whom, as of the date on which the individual seeks coverage under P.L.1992, c.161 (C.17B:27A-2 et seq.), the aggregate of the periods of creditable coverage is 18 or more months; (2) whose most recent prior creditable coverage was under a group health plan, governmental plan, church plan, or health insurance coverage offered in connection with any such plan; (3) who is not eligible for coverage under a group health plan, Part A or Part B of Title XVIII of the Social Security Act (42 U.S.C. s.1395 et seq.), or a State plan under Title XIX of the Social Security Act (42 U.S.C. s.1396 et seq.) or any successor program, and who does not have another health benefits plan, or hospital or medical service plan; (4) with respect to whom the most recent coverage within the period of aggregate creditable coverage was not terminated based on a factor relating to nonpayment of premiums or fraud; (5) who, if offered the option of continuation coverage under the COBRA continuation provision or a similar State program, elected that coverage; and (6) who has elected continuation coverage described in (5) above and has exhausted that continuation coverage.

     "Financially impaired" means a carrier which, after the effective date of this act, is not insolvent, but is deemed by the commissioner to be potentially unable to fulfill its contractual obligations, or a carrier which is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

     "Governmental plan" has the meaning given that term under Title I, section 3 of Pub.L.93-406, the "Employee Retirement Income Security Act of 1974" (29 U.S.C. s.1002(32)) and any governmental plan established or maintained for its employees by the Government of the United States or by any agency or instrumentality of that government.

     "Group health benefits plan" means a health benefits plan for groups of two or more persons.

     "Group health plan" means an employee welfare benefit plan, as defined in Title I, section 3 of Pub.L.93-406, the "Employee Retirement Income Security Act of 1974" (29 U.S.C. s.1002(1)), to the extent that the plan provides medical care, and including items and services paid for as medical care to employees or their dependents directly or through insurance, reimbursement, or otherwise.

     "Health benefits plan" means a hospital and medical expense insurance policy; health service corporation contract; hospital service corporation contract; medical service corporation contract; health maintenance organization subscriber contract; or other plan for medical care delivered or issued for delivery in this State.  For purposes of this act, health benefits plan shall not include one or more, or any combination of, the following:  coverage only for accident, or disability income insurance, or any combination thereof; coverage issued as a supplement to liability insurance; liability insurance, including general liability insurance and automobile liability insurance; stop loss or excess risk insurance; workers' compensation or similar insurance; automobile medical payment insurance; credit-only insurance; coverage for on-site medical clinics; and other similar insurance coverage, as specified in federal regulations, under which benefits for medical care are secondary or incidental to other insurance benefits.  Health benefits [plans] plan shall not include the following benefits if they are provided under a separate policy, certificate or contract of insurance or are otherwise not an integral part of the plan:  limited scope dental or vision benefits; benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof; and such other similar, limited benefits as are specified in federal regulations.  Health benefits plan shall not include hospital confinement indemnity coverage if the benefits are provided under a separate policy, certificate or contract of insurance, there is no coordination between the provision of the benefits and any exclusion of benefits under any group health benefits plan maintained by the same plan sponsor, and those benefits are paid with respect to an event without regard to whether benefits are provided with respect to such an event under any group health plan maintained by the same plan sponsor.  Health benefits plan shall not include the following if it is offered as a separate policy, certificate or contract of insurance:  Medicare supplemental health insurance as defined under section 1882(g)(1) of the federal Social Security Act (42 U.S.C. s.1395ss(g)(1)); and coverage supplemental to the coverage provided under chapter 55 of Title 10, United States Code (10 U.S.C. s.1071 et seq.); and similar supplemental coverage provided to coverage under a group health plan.

     "Health status-related factor" means any of the following factors: health status; medical condition, including both physical and mental illness; claims experience; receipt of health care; medical history; genetic information; evidence of insurability, including conditions arising out of acts of domestic violence; and disability.

     "Individual health benefits plan" means: a. a health benefits plan for eligible persons and their dependents; and b. a certificate issued to an eligible person which evidences coverage under a policy or contract issued to a trust or association, regardless of the situs of delivery of the policy or contract, if the eligible person pays the premium and is not being covered under the policy or contract pursuant to continuation of benefits provisions applicable under federal or State law.

     Individual health benefits plan shall not include a certificate issued under a policy or contract issued to a trust, or to the trustees of a fund, which trust or fund is an employee welfare benefit plan, to the extent the "Employee Retirement Income Security Act of 1974" (29 U.S.C. s.1001 et seq.) preempts the application of P.L.1992, c.161 (C.17B:27A-2 et seq.) to that plan.

     "Medicaid" means the Medicaid program established pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.).

     "Medical care" means amounts paid: (1) for the diagnosis, care, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body; and (2) transportation primarily for and essential to medical care referred to in (1) above.

     "Member" means a carrier that issues or has in force health benefits plans in New Jersey.  Member shall not include a carrier whose combined average Medicare, Medicaid, and NJ FamilyCare [and NJ KidCare] enrollment represents more than 75% of its average total enrollment for all health benefits plans or whose combined Medicare, Medicaid, and NJ FamilyCare [and NJ KidCare] net earned premium for the two-year calculation period represents more than 75% of its total net earned premium for the two-year calculation period.

     ["Modified community rating" means a rating system in which the premium for all persons covered by a contract is formulated based on the experience of all persons covered by that contract, without regard to age, sex, occupation and geographical location, but which may differ by health status.  The term modified community rating shall apply to contracts and policies issued prior to the effective date of this act which are subject to the provisions of subsection e. of section 2 of this act.]

     "Net earned premium" means the premiums earned in this State on health benefits plans, less return premiums thereon and dividends paid or credited to policy or contract holders on the health benefits plan business.  Net earned premium shall include the aggregate premiums earned on the carrier's insured group and individual business and health maintenance organization business, including premiums from any Medicare, Medicaid, and NJ FamilyCare [or NJ KidCare] contracts with the State or federal government, but shall not include premiums earned from contracts funded pursuant to the "Federal Employee Health Benefits Act of 1959," 5 U.S.C. ss.8901-8914, any excess risk or stop loss insurance coverage issued by a carrier in connection with any self insured health benefits plan, or Medicare supplement policies or contracts.

     "NJ FamilyCare" means the NJ FamilyCare [Health Coverage] Program established pursuant to [P.L.2000, c.71 (C.30:4J-1 et seq.)] P.L.2005, c.156 (C.30:4J-8 et al.).

     ["NJ KidCare" means the Children's Health Care Coverage Program established pursuant to P.L.1997, c.272 (C.30:4I-1 et seq.).]

     "Non-group person life year" means coverage of a person for 12 months by an individual health benefits plan or conversion policy or contract subject to P.L.1992, c.161 (C.17B:27A-2 et seq.), Medicare cost or risk contract or Medicaid contract.

     "Open enrollment" means the offering of an individual health benefits plan to any eligible person on a guaranteed issue basis, pursuant to procedures established by the board.

     "Plan of operation" means the plan of operation of the program adopted by the board pursuant to this act.

     "Plan sponsor" shall have the meaning given that term under Title I, section 3 of Pub.L.93-406, the "Employee Retirement Income Security Act of 1974" (29 U.S.C. s.1002(16)(B)).

     "Preexisting condition" means a condition that, during a specified period of not more than six months immediately preceding the effective date of coverage, had manifested itself in such a manner as would cause an ordinarily prudent person to seek medical advice, diagnosis, care or treatment, or for which medical advice, diagnosis, care or treatment was recommended or received as to that condition or as to a pregnancy existing on the effective date of coverage.

     "Program" means the New Jersey Individual Health Coverage Program established pursuant to this act.

     "Resident" means a person whose primary residence is in New Jersey and who is present in New Jersey for at least six months of the calendar year, or, in the case of a person who has moved to New Jersey less than six months before applying for individual health coverage, who intends to be present in New Jersey for at least six months of the calendar year.

     "Two-year calculation period" means a two calendar year period, the first of which shall begin January 1, 1997 and end December 31, 1998.

(cf:  P.L. 2001, c.349, s.1)

 

     11.  Section 3 of P.L.1992, c.161 (C.17B:27A-4) is amended to read as follows:

     3.  a.  No later than 180 days after the effective date of [this act] P.L.    , c.    (C.      ) (pending before the Legislature as this bill), a carrier shall, as a condition of issuing small employer health benefits plans in this State, also offer individual health benefits plans. The plans shall be offered on an open enrollment, community rated basis, pursuant to the provisions of this act [; except that a carrier shall be deemed to have satisfied its obligation to provide the individual health benefits plans by paying an assessment or receiving an exemption pursuant to section 11 of this act].

     b.  A carrier shall offer to an eligible person a choice of five individual health benefits plans, any of which may contain provisions for managed care.  One plan shall be a basic health benefits plan, one plan shall be a managed care plan and three plans shall include enhanced benefits of proportionally increasing actuarial value.  A carrier may elect to convert any individual contract or policy forms in force on the effective date of this act to any of the five benefit plans, except that the carrier may not convert more than 25% of existing contracts or policies each year, and the replacement plan shall be of no less actuarial value than the policy or contract being replaced.

     Notwithstanding the provisions of this subsection to the contrary, a carrier may offer additional plans to an eligible person, as may be approved by the commissioner.

     Notwithstanding the provisions of this subsection to the contrary, at any time after three years after the effective date of this act, the board, by regulation, may reduce the number of plans required to be offered by a carrier.

     Notwithstanding the provisions of this subsection to the contrary, a health maintenance organization which is a qualified health maintenance organization pursuant to the "Health Maintenance Organization Act of 1973," Pub.L.93-222 (42 U.S.C. s.300e et seq.) shall be permitted to offer a basic health benefits plan in accordance with the provisions of that law in lieu of the five plans required pursuant to this subsection.

     c.  (1)  A basic health benefits plan shall provide the benefits set forth in section 55 of P.L.1991, c.187 (C:17:48E-22.2), section 57 of P.L.1991, c.187 (C.17B:26B-2) or section 59 of P.L.1991, c.187 (C.26:2J-4.3), as the case may be.

     (2)  Notwithstanding the provisions of this subsection or any other law to the contrary, a carrier may, with the approval of the board, modify the coverage provided for in sections 55, 57, and 59 of P.L.1991, c.187 (C.17:48E-22.2, 17B:26B-2 and 26:2J-4.3, respectively) or provide alternative benefits or services from those required by this subsection if they are within the intent of this act or if the board changes the benefits included in the basic health benefits plan.

     (3)  A contract or policy for a basic health benefits plan provided for in this section may contain or provide for coinsurance or deductibles, or both, except that no deductible shall be payable in excess of a total of $250 by an individual or $500 by a family unit during any benefit year; and no coinsurance shall be payable in excess of a total of $500 by an individual or by a family unit during any benefit year.

     (4)  Notwithstanding the provisions of paragraph (3) of this subsection or any other law to the contrary, a carrier may provide for increased deductibles or coinsurance for a basic health benefits plan if approved by the board or if the board increases deductibles or coinsurance included in the basic health benefits plan.

     (5)  The provisions of section 13 of P.L.1985, c.236 (C:17:48E-13), N.J.S.17B:26-1, and section 8 of P.L.1973, c.337 (C.26:2J-8) with respect to the filing of policy forms shall not apply to health plans issued on or after the effective date of this act.

     (6)  The provisions of section 27 of P.L.1985, c.236 (C.17:48E-27) and section 7 of P.L.1988, c.71 (C.17:48E-27.1) with respect to rate filings shall not apply to individual health plans issued on or after the effective date of this act.

     d.  Every group conversion contract or policy issued after the effective date of this act shall be issued pursuant to this section; except that this requirement shall not apply to any group conversion contract or policy in which a portion of the premium is chargeable to, or subsidized by, the group policy from which the conversion is made.

     e.  If all five of the individual health benefits plans are not established by the board by the effective date of P.L.1993, c.164 (C.17B:27A-16.1 et al.), a carrier may phase-in the offering of the five health benefits plans by offering each health benefits plan as it is established by the board; however, once the board establishes all five plans, the carrier shall be required to offer the five plans in accordance with the provisions of P.L.1992, c.161 (C.17B:27A-2 et al.).

(cf: P.L.1994, c.102, s.1) 

 

     12.  Section 11 of P.L.1992, c.161 (C.17B:27A-12) is amended to read as follows:

     11.  The board shall establish procedures for the equitable sharing of program losses among all members in accordance with their total market share as follows:

     a.  (1)  By March 1, 1999, and following the close of each two-year calculation period thereafter, or on a different date established by the board:

     (a)  every carrier issuing health benefits plans in this State shall file with the board its net earned premium for the preceding two-year calculation period; and

     (b)  every carrier issuing individual health benefits plans in the State shall file with the board the net earned premium on health benefits plans issued pursuant to paragraph (1) of subsection b. of section 2 and section 3 of this act and the claims paid. If the claims paid for all health benefits plans during the two-year calculation period exceed 115% of the net earned premium and any investment income thereon for the two-year calculation period, the amount of the excess shall be the net paid loss for the carrier that shall be reimbursable under this act.

     (2)  Every member shall be liable for an assessment to reimburse carriers issuing individual health benefits plans in this State which sustain net paid losses during the two-year calculation period, unless the member has received an exemption from the board pursuant to subsection d. of this section and has written a minimum number of non-group person life years as provided for in that subsection.  The assessment of each member shall be in the proportion that the net earned premium of the member for the two-year calculation period preceding the assessment bears to the net earned premium of all members for the two-year calculation period preceding the assessment.  Notwithstanding the provisions of this subsection to the contrary, a medical service corporation or a hospital service corporation shall not be liable for an assessment to reimburse carriers which sustain net paid losses.

     (3)  A member that is financially impaired may seek from the commissioner a deferment in whole or in part from any assessment issued by the board.  The commissioner may defer, in whole or in part, the assessment of the member if, in the opinion of the commissioner, the payment of the assessment would endanger the ability of the member to fulfill its contractual obligations.  If an assessment against a member is deferred in whole or in part, the amount by which the assessment is deferred may be assessed against the other members in a manner consistent with the basis for assessment set forth in this section. The member receiving the deferment shall remain liable to the program for the amount deferred.

     b.  The participation in the program as a member, the establishment of rates, forms or procedures, or any other joint or collective action required by this act shall not be the basis of any legal action, criminal or civil liability, or penalty against the program, a member of the board or a member of the program either jointly or separately except as otherwise provided in this act.

     c.  Payment of an assessment made under this section shall be a condition of issuing health benefits plans in the State for a carrier. Failure to pay the assessment shall be grounds for forfeiture of a carrier's authorization to issue health benefits plans of any kind in the State, as well as any other penalties permitted by law.

     d.  (1) Notwithstanding the provisions of this act to the contrary, a carrier may apply to the board, by a date established by the board, for an exemption from the assessment and reimbursement for losses provided for in this section.  A carrier which applies for an exemption shall agree to cover a minimum number of non-group person life years on an open enrollment community rated basis, under a managed care or indemnity plan, as specified in this subsection, provided that any indemnity plan so issued conforms with sections 2 through 7, inclusive, of P.L.1992, c.161 (C.17B:27A-3 through 17B:27A-8).  For the purposes of this subsection, non-group persons include individually enrolled persons, conversion policies issued pursuant to this act, Medicare cost and risk lives and Medicaid recipients; except that in determining whether the carrier meets the minimum number of non-group person life years required to be covered pursuant to this subsection, the number of Medicaid recipients and Medicare cost and risk lives shall not exceed 50% of the total.  Pursuant to regulations adopted by the board, the carrier shall determine the number of non-group person life years it has covered by adding the number of non-group persons covered on the last day of each calendar quarter of the two-year calculation period, taking into account the limitations on counting Medicaid recipients and Medicare cost and risk lives, and dividing the total by eight.

     (2)  Notwithstanding the provisions of paragraph (1) of this subsection to the contrary, a health maintenance organization qualified pursuant to the "Health Maintenance Organization Act of 1973," Pub.L 93-222 (42 U.S.C. s.300e et seq.) and tax exempt pursuant to paragraph (3) of subsection (c) of section 501 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.501, may include up to one third Medicaid recipients and up to one third Medicare recipients in determining whether it meets its minimum number of non-group person life years.

     (3)  The minimum number of non-group person life years required to be covered, as determined by the board, shall equal the total number of non-group person life years of community rated, individually enrolled or insured persons, including Medicare cost and risk lives and enrolled Medicaid lives, of all carriers subject to this act for the two-year calculation period, multiplied by the proportion that carrier's net earned premium bears to the net earned premium of all carriers for that two-year calculation period, including those carriers that are exempt from the assessment.

     (4)  On  or before March 1 of the first year of each two-year calculation period, every carrier seeking an exemption pursuant to this subsection shall file with the board a statement of its net earned premium for the two-year calculation period. The board shall determine each carrier's minimum number of non-group person life years in accordance with this subsection.

     (5)  On or before March 1 of each year immediately following the close of a two-year calculation period, every carrier that was granted an exemption for the preceding two-year calculation period shall file with the board the number of non-group person life years, by category, covered for the two-year calculation period.

     To the extent that the carrier has failed to cover the minimum number of non-group person life years established by the board, the carrier shall be assessed by the board on a pro rata basis for any differential between the minimum number established by the board and the actual number covered by the carrier.

     (6)  A carrier that applies for the exemption shall be deemed to be in compliance with the requirements of this subsection if it has covered 100% of the minimum number of non-group person life years required.

     (7)  Any carrier that writes both managed care and indemnity business that is granted an exemption pursuant to this subsection may satisfy its obligation to cover a minimum number of non-group person life years by issuing either managed care or indemnity business, or both.

     e.  (Deleted by amendment, P.L.1997, c.146).

     f.  The loss assessment for the two-year calculation period in which P.L.    , c.    (C.    ) (pending before the Legislature as this bill) takes effect shall be the last loss assessment authorized under this section and no further loss assessments shall be calculated or collected; provided, however, that nothing in this subsection shall relieve a carrier of its obligations for loss assessments authorized under this section prior to the effective date of P.L.    , c.    (C.    ) (pending before the Legislature as this bill).

(cf:  P.L.1997, c.146, s.6)

 

     13. Section 3 of P.L.1992,c.162 (C.17B:27A-19) is amended to read as follows:

     3. a. Except as provided in subsection f. of this section, every small employer carrier shall, as a condition of transacting business in this State, offer to every small employer the five health [benefit] benefits plans as provided in this section.  The board shall establish a standard policy form for each of the five plans, which except as otherwise provided in subsection j. of this section, shall be the only plans offered to small groups on or after January 1, 1994.  One policy form shall contain the benefits provided for in sections 55, 57, and 59 of P.L.1991, c.187 (C.17:48E-22.2, 17B:26B-2 and 26:2J-4.3).  In the case of indemnity carriers, one policy form shall be established which contains benefits and cost sharing levels which are equivalent to the health benefits plans of health maintenance organizations pursuant to the "Health Maintenance Organization Act of 1973," Pub.L.93-222 (42 U.S.C. s.300e et seq.). The remaining policy forms shall contain basic hospital and medical-surgical benefits, including, but not limited to:

     (1)   Basic inpatient and outpatient hospital care;

     (2)   Basic and extended medical-surgical benefits;

     (3)   Diagnostic tests, including X-rays;

     (4)   Maternity benefits, including prenatal and postnatal care; and

     (5)   Preventive medicine, including periodic physical examinations and inoculations.

     At least three of the forms shall provide for major medical benefits in varying lifetime aggregates, one of which shall provide at least $1,000,000 in lifetime aggregate benefits.  The policy forms provided pursuant to this section shall contain benefits representing progressively greater actuarial values.

     Notwithstanding the provisions of this subsection to the contrary, the board also may establish additional policy forms by which a small employer carrier, other than a health maintenance organization, may provide indemnity benefits for health maintenance organization enrollees by direct contract with the enrollees' small employer through a dual arrangement with the health maintenance organization.  The dual arrangement shall be filed with the commissioner for approval.  The additional policy forms shall be consistent with the general requirements of P.L.1992, c.162 (C.17B:27A-17 et seq.).

     Notwithstanding the provisions of this subsection to the contrary, a carrier may offer additional plans to a small employer, as may be approved by the commissioner.

     b.    Initially, a carrier shall offer a plan within 90 days of the approval of such plan by the commissioner.  Thereafter, the plans shall be available to all small employers on a continuing basis. Every small employer which elects to be covered under any health benefits plan who pays the premium therefor and who satisfies the participation requirements of the plan shall be issued a policy or contract by the carrier.

     c.     The carrier may establish a premium payment plan which provides installment payments and which may contain reasonable provisions to ensure payment security, provided that provisions to ensure payment security are uniformly applied.

     d.    In addition to the five standard policies described in subsection a. of this section, the board may develop up to five rider packages.  Any such package which a carrier chooses to offer shall be issued to a small employer who pays the premium therefor, and shall be subject to the rating methodology set forth in section 9 of P.L.1992, c.162 (C.17B:27A-25).

     e.     Notwithstanding the provisions of subsection a. of this section to the contrary, the board may approve a health benefits plan containing only medical-surgical benefits or major medical expense benefits, or a combination thereof, which is issued as a separate policy in conjunction with a contract of insurance for hospital expense benefits issued by a hospital service corporation, if the health benefits plan and hospital service corporation contract combined otherwise comply with the provisions of P.L.1992, c.162 (C.17B:27A-17 et seq.).  Deductibles and coinsurance limits for the contract combined may be allocated between the separate contracts at the discretion of the carrier and the hospital service corporation.

     f.     Notwithstanding the provisions of this section to the contrary, a health maintenance organization which is a qualified health maintenance organization pursuant to the "Health Maintenance Organization Act of 1973," Pub.L.93-222 (42 U.S.C.s.300e et seq.) shall be permitted to offer health benefits plans formulated by the board and approved by the commissioner which are in accordance with the provisions of that law in lieu of the five plans required pursuant to this section.

     Notwithstanding the provisions of this section to the contrary, a health maintenance organization which is approved pursuant to P.L.1973, c.337 (C.26:2J-1 et seq.) shall be permitted to offer health benefits plans formulated by the board and approved by the  commissioner which are in accordance with the provisions of that law in lieu of the five plans required pursuant to this section, except that the plans shall provide the same level of benefits as required for a federally qualified health maintenance organization, including any requirements concerning copayments by enrollees.

     g.     A carrier shall not be required to own or control a health maintenance organization or otherwise affiliate with a health maintenance organization in order to comply with the provisions of this section, but the carrier shall be required to offer the five health benefits plans which are formulated by the board and approved by the commissioner, including one plan which contains benefits and cost sharing levels that are equivalent to those required for health maintenance organizations.

     h.     Notwithstanding the provisions of subsection a. of this section to the contrary, the board may modify the benefits provided for in sections 55, 57 and 59 of P.L.1991, c.187 (C.17:48E-22.2, 17B:26B-2 and 26:2J-4.3).

     i. (1) In addition to the rider packages provided for in subsection d. of this section, every carrier may offer, in connection with the five health benefits plans required to be offered by this section, any number of riders which may revise the coverage offered by the five plans in any way, provided, however, that any form of such rider or amendment thereof which decreases benefits or decreases the actuarial value of one of the five plans shall be filed for informational purposes with the board and for approval by the commissioner before such rider may be sold.  Any rider or amendment thereof which adds benefits or increases the actuarial value of one of the five plans shall be filed with the board for informational purposes before such rider may be sold.

     The commissioner shall disapprove any rider filed pursuant to this subsection that is unjust, unfair, inequitable, unreasonably discriminatory, misleading, contrary to law or the public policy of this State.  The commissioner shall not approve any rider which reduces benefits below those required by sections 55, 57 and 59 of P.L.1991, c.187 (C.17:48E-22.2, 17B:26B-2 and 26:2J-4.3) and required to be sold pursuant to this section.  The commissioner's determination shall be in writing and shall be appealable.

     (2)   The benefit riders provided for in paragraph (1) of this subsection shall be subject to the provisions of section 2, subsection b. of section 3, and sections 6, 7, 8, 9 and 11 of P.L.1992, c.162 (C.17B:27A-18, 17B:27A-19, 17B:27A-22, 17B:27A-23, 17B:27A-24, 17B:27A-25, and 17B:27A-27).

     j.  (1) Notwithstanding the provisions of P.L.1992, c.162 (C.17B:27A-17 et seq.) to the contrary, a health benefits plan issued by or through a carrier, association, or multiple employer arrangement prior to January 1, 1994 or, if the requirements of subparagraph (c) of paragraph (6) of this subsection are met, issued by or through an out-of-State trust prior to January 1, 1994, at the option of a small employer policy or contract holder, may be renewed or continued after February 28, 1994, or in the case of such a health benefits plan whose anniversary date occurred between March 1, 1994 and the effective date of P.L.1994, c.11 (C.17B:27A-19.1 et al.), may be reinstated within 60 days of that anniversary date and renewed or continued if, beginning on the first 12-month anniversary date occurring on or after the sixtieth day after the board adopts regulations concerning the implementation of the rating factors permitted by section 9 of P.L.1992, c.162 (C.17B:27A-25) and, regardless of the situs of delivery of the health benefits plan, the health benefits plan renewed, continued or reinstated pursuant to this subsection complies with the provisions of section 2, subsection b. of section 3, and sections 6, 7, 8, 9 and 11 of P.L.1992, c.162 (C.17B:27A-18, 17B:27A-19, 17B:27A-22, 17B:27A-23, 17B:27A-24, 17B:27A-25 and 17B:27A-27) and section 7 of P.L.1995, c.340 (C.17B:27A-19.3).

     Nothing in this subsection shall be construed to require an association, multiple employer arrangement or out-of-State trust to provide health benefits coverage to small employers that are not contemplated by the organizational documents, bylaws, or other regulations governing the purpose and operation of the association, multiple employer arrangement or out-of-State trust. Notwithstanding the foregoing provision to the contrary, an association, multiple employer arrangement or out-of-State trust that offers health benefits coverage to its members' employees and dependents:

     (a)   shall offer coverage to all eligible employees and their dependents within the membership of the association, multiple employer arrangement or out-of-State trust;

     (b)   shall not use actual or expected health status in determining its membership; and

     (c)   shall make available to its small employer members at least one of the standard benefits plans, as determined by the commissioner, in addition to any health benefits plan permitted to be renewed or continued pursuant to this subsection.

     (2)   Notwithstanding the provisions of this subsection to the contrary, a carrier or out-of-State trust which writes the health benefits plans required pursuant to subsection a. of this section shall be required to offer those plans to any small employer, association or multiple employer arrangement.

     (3) (a) A carrier, association, multiple employer arrangement or out-of-State trust may withdraw a health benefits plan marketed to small employers that was in effect on December 31, 1993 with the approval of the commissioner.  The commissioner shall approve a request to withdraw a plan, consistent with regulations adopted by the commissioner, only on the grounds that retention of the plan would cause an unreasonable financial burden to the issuing carrier, taking into account the rating provisions of section 9 of P.L.1992, c.162 (C.17B:27A-25) and section 7 of P.L.1995, c.340 (C.17B:27A-19.3).

     (b)   A carrier which has renewed, continued or reinstated a health benefits plan pursuant to this subsection that has not been newly issued to a new small employer group since January 1, 1994, may, upon approval of the commissioner, continue to establish its rates for that plan based on the loss experience of that plan if the carrier does not issue that health benefits plan to any new small employer groups.

     (4)   (Deleted by amendment, P.L.1995, c.340).

     (5)   A health benefits plan that otherwise conforms to the requirements of this subsection shall be deemed to be in compliance with this subsection, notwithstanding any change in the plan's deductible or copayment.

     (6) (a) Except as otherwise provided in subparagraphs (b) and (c) of this paragraph, a health benefits plan renewed, continued or reinstated pursuant to this subsection shall be filed with the commissioner for informational purposes within 30 days after its renewal date.  No later than 60 days after the board adopts regulations concerning the implementation of the rating factors permitted by section 9 of P.L.1992, c.162 (C.17B:27A-25) the filing shall be amended to show any modifications in the plan that are necessary to comply with the provisions of this subsection.  The commissioner shall monitor compliance of any such plan with the requirements of this subsection, except that the board shall enforce the loss ratio requirements.

     (b)   A health benefits plan filed with the commissioner pursuant to subparagraph (a) of this paragraph may be amended as to its benefit structure if the amendment does not reduce the actuarial value and benefits coverage of the health benefits plan below that of the lowest standard health benefits plan established by the board pursuant to subsection a. of this section.  The amendment shall be filed with the commissioner for approval pursuant to the terms of sections 4, 8, 12 and 25 of P.L.1995, c.73 (C.17:48-8.2, 17:48A-9.2, 17:48E-13.2 and 26:2J-43), N.J.S.17B:26-1 and N.J.S.17B:27-49, as applicable, and shall comply with the provisions of sections 2 and 9 of P.L.1992, c.162 (C.17B:27A-18 and 17B:27A-25) and section 7 of P.L.1995, c.340 (C.17B:27A-19.3).

     (c)   A health benefits plan issued by a carrier through an out-of-State trust shall be permitted to be renewed or continued pursuant to paragraph (1) of this subsection upon approval by the commissioner and only if the benefits offered under the plan are at least equal to the actuarial value and benefits coverage of the lowest standard health benefits plan established by the board pursuant to subsection a. of this section.  For the purposes of meeting the requirements of this subparagraph, carriers shall be required to file with the commissioner the health benefits plans issued through an out-of-State trust no later than 180 days after the date of enactment of P.L.1995, c.340.  A health benefits plan issued by a carrier through an out-of-State trust that is not filed with the commissioner pursuant to this subparagraph, shall not be permitted to be continued or renewed after the 180-day period.

     (7)   Notwithstanding the provisions of P.L.1992, c.162 (C.17B:27A-17 et seq.) to the contrary, an association, multiple employer arrangement or out-of-State trust may offer a health benefits plan authorized to be renewed, continued or reinstated pursuant to this subsection to small employer groups that are otherwise eligible pursuant to paragraph (1) of subsection j. of this section during the period for which such health benefits plan is otherwise authorized to be renewed, continued or reinstated.

     (8)   Notwithstanding the provisions of P.L.1992, c.162 (C.17B:27A-17 et seq.) to the contrary, a carrier, association, multiple employer arrangement or out-of-State trust may offer coverage under a health benefits plan authorized to be renewed, continued or reinstated pursuant to this subsection to new employees of small employer groups covered by the health benefits plan in accordance with the provisions of paragraph (1) of this subsection.

     (9)   Notwithstanding the provisions of P.L.1992, c.162 (C.17B:27A-17 et seq.) or P.L.1992, c.161 (C.17B:27A-2 et seq.) to the contrary, any individual, who is eligible for small employer coverage under a policy issued, renewed, continued or reinstated pursuant to this subsection, but who would be subject to a preexisting condition exclusion under the small employer health benefits plan, or who is a member of a small employer group who has been denied coverage under the small employer group health benefits plan for health reasons, may elect to purchase or continue coverage under an individual health benefits plan until such time as the group health benefits plan covering the small employer group of which the individual is a member complies with the provisions of P.L.1992, c.162 (C.17B:27A-17 et seq.).

     (10) In a case in which an association made available a health benefits plan on or before March 1, 1994 and subsequently changed the issuing carrier between March 1, 1994 and the effective date of P.L.1995, c.340, the new issuing carrier shall be deemed to have been eligible to continue and renew the plan pursuant to paragraph (1) of this subsection.

     (11) In a case in which an association, multiple employer arrangement or out-of-State trust made available a health benefits plan on or before March 1, 1994 and subsequently changes the issuing carrier for that plan after the effective date of P.L.1995, c.340, the new issuing carrier shall file the health benefits plan with the commissioner for approval in order to be deemed eligible to continue and renew that plan pursuant to paragraph (1) of this subsection.

     (12) In a case in which a small employer purchased a health benefits plan directly from a carrier on or before March 1, 1994 and subsequently changes the issuing carrier for that plan after the effective date of P.L.1995, c.340, the new issuing carrier shall file the health benefits plan with the commissioner for approval in order to be deemed eligible to continue and renew that plan pursuant to paragraph (1) of this subsection.

     Notwithstanding the provisions of subparagraph (b) of paragraph (6) of this subsection to the contrary, a small employer who changes its health benefits plan's issuing carrier pursuant to the provisions of this paragraph, shall not, upon changing carriers, modify the benefit structure of that health benefits plan within six months of the date the issuing carrier was changed.

     k.    Effective immediately for a health benefits plan issued on or after the effective date of P.L.2005, c.248 (C.17:48E-35.27 et al.) and effective on the first 12-month anniversary date of a health benefits plan in effect on the effective date of P.L.2005, c.248 (C.17:48E-35.27 et al.), the health benefits plans required pursuant to this section, including any plans offered by a State approved or federally qualified health maintenance organization, shall contain benefits for expenses incurred in the following:

     (1)   Screening by blood lead measurement for lead poisoning for children, including confirmatory blood lead testing as specified by the Department of Health and Senior Services pursuant to section 7 of P.L.1995, c.316 (C.26:2-137.1); and medical evaluation and any necessary medical follow-up and treatment for lead poisoned children.

     (2)   All childhood immunization as recommended by the Advisory Committee on Immunization Practices of the United States Public Health Service and the Department of Health and Senior Services pursuant to section 7 of P.L.1995, c.316 (C.26:2-137.1).  A carrier shall notify its insureds, in writing, of any change in the health care services provided with respect to childhood immunizations and any related changes in premium.  Such notification shall be in a form and manner to be determined by the Commissioner of Banking and Insurance.

     (3)   Screening for newborn hearing loss by appropriate electrophysiologic screening measures and periodic monitoring of infants for delayed onset hearing loss, pursuant to P.L.2001, c.373 (C.26:2-103.1 et al.). Payment for this screening service shall be separate and distinct from payment for routine new baby care in the form of a newborn hearing screening fee as negotiated with the provider and facility.

     The benefits provided pursuant to this subsection shall be provided to the same extent as for any other medical condition under the health benefits plan, except that a deductible shall not be applied for benefits provided pursuant to this subsection; however, with respect to a small employer health benefits plan that qualifies as a high deductible health plan for which qualified medical expenses are paid using a health savings account established pursuant to section 223 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.223), a deductible shall not be applied for any benefits that represent preventive care as permitted by that federal law, and shall not be applied as provided pursuant to section 16 of P.L.2005, c.248 (C.17B:27A-19.14).  This subsection shall apply to all small employer health benefits plans in which the carrier has reserved the right to change the premium.

     l.      The board shall consider including benefits for speech-language pathology and audiology services, as rendered by speech-language pathologists and audiologists within the scope of their practices, in at least one of the five standard policies and in at least one of the five riders to be developed under this section.

     m.    Effective immediately for a health benefits plan issued on or after the effective date of P.L.2001, c.361 (C.17:48-6z et al.) and effective on the first 12-month anniversary date of a health benefits plan in effect on the effective date of P.L.2001, c.361 (C.17:48-6z et al.), the health benefits plans required pursuant to this section that provide benefits for expenses incurred in the purchase of prescription drugs shall provide benefits for expenses incurred in the purchase of specialized non-standard infant formulas, when the covered infant's physician has diagnosed the infant as having multiple food protein intolerance and has determined such formula to be medically necessary, and when the covered infant has not been responsive to trials of standard non-cow milk-based formulas, including soybean and goat milk.  The coverage may be subject to utilization review, including periodic review, of the continued medical necessity of the specialized infant formula.

     The benefits shall be provided to the same extent as for any other prescribed items under the health benefits plan.

     This subsection shall apply to all small employer health benefits plans in which the carrier has reserved the right to change the premium.

     n.     Effective immediately for a health benefits plan issued on or after the effective date of P.L.2005, c.248 (C.17:48E-35.27 et al.) and effective on the first 12-month anniversary date of a small employer health benefits plan in effect on the effective date of P.L.2005, c.248 (C.17:48E-35.27 et al.), the health benefits plans required pursuant to this section that qualify as high deductible health plans for which qualified medical expenses are paid using a health savings account established pursuant to section 223 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.223), including any plans offered by a State approved or federally qualified health maintenance organization, shall contain benefits for expenses incurred in connection with any medically necessary benefits provided in-network that represent preventive care as permitted by that federal law.

     The benefits provided pursuant to this subsection shall be provided to the same extent as for any other medical condition under the health benefits plan, except that no deductible shall be applied for benefits provided pursuant to this subsection.  This subsection shall apply to all small employer health benefits plans in which the carrier has reserved the right to change the premium.

(cf: P.L.2005, c.248, s.15)

 

     14.  Section 6 of P.L.1992, c.162 (C.17B:27A-22) is amended to read as follows:

     6.  a. [No] A health benefits plan subject to this act shall not include any provision excluding coverage for a preexisting condition regardless of the cause of the condition, provided that a preexisting condition provision may apply to a late enrollee or to any group [of two to five persons] if such provision excludes coverage for a period of no more than [180 days] 12 months following the effective date of coverage of such enrollee, and relates only to conditions, whether physical or mental, manifesting themselves during the six months immediately preceding the enrollment date of such enrollee and for which medical advice, diagnosis, care, or treatment was recommended or received during the six months immediately preceding the effective date of coverage; provided that, if 10 or more late enrollees request enrollment during any 30-day enrollment period, then no preexisting condition provision shall apply to any such enrollee.

     b.  In determining whether a preexisting condition provision applies to an eligible employee or dependent, all health benefits plans shall credit the time that person was covered under creditable coverage if the creditable coverage was continuous to a date not more than 90 days prior to the effective date of the new coverage, exclusive of any applicable waiting period under such plan.  A carrier shall provide credit pursuant to this provision in one of the following methods:

     (1)  A carrier shall count a period of creditable coverage without regard to the specific benefits covered during the period; or

     (2)  A carrier shall count a period of creditable coverage based on coverage of benefits within each of several classes or categories of benefits specified in federal regulation rather than the method provided in paragraph (1) of this subsection. This election shall be made on a uniform basis for all covered persons.  Under this election, a carrier shall count a period of creditable coverage with respect to any class or category of benefits if any level of benefits is covered within that class or category.  A carrier which elects to provide credit pursuant to this provision shall comply with all federal notice requirements.

     c.  A health benefits plan shall not impose a preexisting condition exclusion for the following:

     (1)  A newborn child who, as of the last date of the 30-day period beginning with the date of birth, is covered under creditable coverage;

     (2)  A child who is adopted or placed for adoption before attaining 18 years of age and who, as of the last day of the 30-day period beginning on the date of the adoption or placement for adoption, is covered under creditable coverage.  This provision shall not apply to coverage before the date of the adoption or placement for adoption; or

     (3)  Pregnancy as a preexisting condition.

(cf:  P.L.1997, c.146, s.9)

 

     15.  Section 7 of P.L.1992, c.162 (C.17B:27A-23) is amended to read as follows:

     7.  Every policy or contract issued to small employers in this State pursuant to P.L.1992, c.162 (C.17B:27A-17 et seq.) shall be renewable with respect to all eligible employees or dependents at the option of the policy or contract holder, or small employer except that a carrier may discontinue or not renew a health benefits plan in accordance with the provisions of this section:

     a.  A carrier may discontinue such coverage only if:

     (1) The policyholder, contract holder, or employer has failed to pay premiums or contributions in accordance with the terms of the health benefits plan or the carrier has not received timely premium payments; or

     (2) The policyholder, contract holder, or employer has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage;

     b.  (Deleted by amendment, P.L.1997, c.146).

     c.  The number of employees covered under the health benefits plan is less than the number or percentage of employees required by participation requirements under the health benefits policy or contract;

     d.  Noncompliance with a carrier's employment contribution requirements;

     e.  Any carrier doing business pursuant to the provisions of this act ceases doing business in the small employer [market] and individual health benefits plan markets, if the following conditions are satisfied:

     (1) The carrier gives notice to cease doing business in the small employer [market] and individual health benefits plan markets to the commissioner not later than eight months prior to the date of the planned withdrawal from the small [group market] employer and individual health benefits plan markets, during which time the carrier shall continue to be governed by this act with respect to business written pursuant to this act.  For the purposes of this subsection, "date of withdrawal" means the date upon which the first notice to small employers and individual policyholders is sent by the carrier pursuant to paragraph (2) of this subsection;

     (2) No later than two months following the date of the notification to the commissioner that the carrier intends to cease doing business in the small employer [market] and individual health benefits plan markets, the carrier shall mail a notice to every small business employer and individual policyholder insured by the carrier, and all covered persons, that the policy or contract of insurance will not be renewed.  This notice shall be sent by certified mail to the small business employer or individual policyholder not less than six months in advance of the effective date of the nonrenewal date of the policy or contract;

     (3) Any carrier that ceases to do business pursuant to this act [shall] may be prohibited from writing new business in the small employer [market] and individual health benefits plan markets for a period of five years from the date of termination of the last health insurance coverage not so renewed;

     f.  In the case of policies or contracts issued in connection with membership in an association or trust of employers, an employer ceases to maintain its membership in the association or trust, but only if such coverage is terminated under this provision uniformly without regard to any health status-related factor relating to any covered individual.

     g.  (Deleted by amendment, P.L.1995, c.50).

     h.  A decision by the small employer carrier to cease offering and not renew a particular type of group health benefits plan in the small employer market, if the board discontinues a standard health benefits plan or as permitted or required pursuant to subsection j. of section 3 of P.L.1992, c.162 (C.17B:27A-19), and pursuant to regulations adopted by the commissioner;

     i.  In the case of a health maintenance organization plan issued to a small employer:

     (1) an eligible person who no longer resides, lives, or works in the carrier's approved service area, but only if coverage is terminated under this paragraph uniformly without regard to any health status-related factor of covered individuals; or

     (2) a small employer that no longer has any enrollee in connection with such plan who lives, resides, or works in the service area of the carrier and the carrier would deny enrollment with respect to such plan pursuant to subsection a. of section 10 of P.L.1992, c.162 (C.17B:27A-26).

(cf: P.L.1997, c.146, s.10)

     16.  Section 8 of P.L.1992, c.162 (C.17B:27A-24) is amended to read as follows:

     8.  Any small employer carrier may require a reasonable specified minimum participation of eligible employees, which shall not exceed 75%, or reasonable minimum employer contributions in determining whether to accept a small group pursuant to this act. The standards so established by the carrier shall be first approved by the board and shall be applied uniformly to all small groups, except that in no event shall a carrier require an employer to contribute more than 10% to the annual cost of the policy or contract, or an amount as otherwise provided by the board, and any minimum participation standards established by the carrier shall be reasonable.  In establishing the percentage of employee participation, a one-to-one credit shall be given for each employee covered by a spouse's health benefits coverage, Medicare, Medicaid, NJ FamilyCare or another group health benefits plan. In calculating an employer's participation, the carrier shall include all [insured] employees insured by that carrier under no more than two plans, [ ,regardless of whether the employees chose an indemnity plan or a health maintenance organization, or a combination thereof] .

(cf: P.L.2005, c.166, s.1)

 

     17.  Section 9 of P.L.1992, c.162 (C.17B:27A-25) is amended to read as follows:

     9. a. (1) (Deleted by amendment, P.L.1997, c.146).

     (2)   (Deleted by amendment, P.L.1997, c.146).

     (3)   For all policies or contracts providing health benefits plans for small employers issued pursuant to section 3 of P.L.1992, c.162 (C.17B:27A-19), and including policies or contracts offered by a carrier to a small employer who is a member of a Small Employer Purchasing Alliance pursuant to the provisions of P.L.2001, c.225 (C.17B:27A-25.1 et al.) the premium rate charged by a carrier to the highest rated small group purchasing a small employer health benefits plan issued pursuant to section 3 of P.L.1992, c.162 (C.17B:27A-19) shall not be greater than [200%] 350% of the premium rate charged for the lowest rated small group purchasing that same health benefits plan; provided, however, that the only factors upon which the rate differential may be based are age, gender , smoking status, and geography, and provided further, that such factors are applied in a manner consistent with regulations adopted by the board.  For the purposes of this paragraph (3), policies or contracts offered by a carrier to a small employer who is a member of a Small Employer Purchasing Alliance shall be rated separately from the carrier's other small employer health benefits policies or contracts.

     A health benefits plan issued pursuant to subsection j. of section 3 of P.L.1992, c.162 (C.17B:27A-19) shall be rated in accordance with the provisions of section 7 of P.L.1995, c.340 (C.17B:27A-19.3), for the purposes of meeting the requirements of this paragraph.

     (4)   (Deleted by amendment, P.L.1994, c.11).

     (5)   Any policy or contract issued after January 1, 1994 to a small employer who was not previously covered by a health benefits plan issued by the issuing small employer carrier, shall be subject to the same premium rate restrictions as provided in paragraph (3) of this subsection, which rate restrictions shall be effective on the date the policy or contract is issued.

     (6)   The board shall establish, pursuant to section 17 of P.L.1993, c.162 (C.17B:27A-51):

     (a)   [up to six] geographic territories, none of which is smaller than a county; and

     (b)   age classifications which, at a minimum, shall be in five-year increments.

     b.    (Deleted by amendment, P.L.1993, c.162).

     c.     (Deleted by amendment, P.L.1995, c.298).

     d.    Notwithstanding any other provision of law to the contrary, this act shall apply to a carrier which provides a health benefits plan to one or more small employers through a policy issued to an association or trust of employers.

     A carrier which provides a health benefits plan to one or more small employers through a policy issued to an association or trust of employers after the effective date of P.L.1992, c.162 (C.17B:27A-17 et seq.), shall be required to offer small employer health benefits plans to non-association or trust employers in the same manner as any other small employer carrier is required pursuant to P.L.1992, c.162 (C.17B:27A-17 et seq.).

     e.     Nothing contained herein shall prohibit the use of premium rate structures to establish different premium rates for individuals and family units.

     f.     No insurance contract or policy subject to this act, including a contract or policy entered into with a small employer who is a member of a Small Employer Purchasing Alliance pursuant to the provisions of P.L.2001, c.225 (C.17B:27A-25.1 et al.), may be entered into unless and until the carrier has made an informational filing with the commissioner of a schedule of premiums, not to exceed 12 months in duration, to be paid pursuant to such contract or policy, of the carrier's rating plan and classification system in connection with such contract or policy, and of the actuarial assumptions and methods used by the carrier in establishing premium rates for such contract or policy.

     g. (1) Beginning January 1, 1995, a carrier desiring to increase or decrease premiums for any policy form or benefit rider offered pursuant to subsection i. of section 3 of P.L.1992, c.162 (C.17B:27A-19) subject to this act may implement such increase or decrease upon making an informational filing with the commissioner of such increase or decrease, along with the actuarial assumptions and methods used by the carrier in establishing such increase or decrease, provided that the anticipated minimum loss ratio for all policy forms shall not be less than 75% of the premium therefor as provided in paragraph (2) of this subsection.  Until December 31, 1996, the informational filing shall also include the carrier's rating plan and classification system in connection with such increase or decrease.

     (2)   Each calendar year, a carrier shall return, in the form of aggregate benefits for all of the five standard policy forms offered by the carrier pursuant to subsection a. of section 3 of P.L.1992, c.162 (C.17B:27A-19), at least 75% of the aggregate premiums collected for all of the standard policy forms, other than alliance policy forms, and at least 75% of the aggregate premiums collected for all of the non-standard policy forms during that calendar year.  A carrier shall return at least 75% of the premiums collected for all of the alliances during that calendar year, which loss ratio may be calculated in the aggregate for all of the alliances or separately for each alliance.  Carriers shall annually report, no later than August 1st of each year, the loss ratio calculated pursuant to this section for all of the standard, other than alliance policy forms, non-standard policy forms and alliance policy forms for the previous calendar year, provided that a carrier may annually report the loss ratio calculated pursuant to this section for all of the alliances in the aggregate or separately for each alliance.  In each case where the loss ratio fails to substantially comply with the 75% loss ratio requirement, the carrier shall issue a dividend or credit against future premiums for all policyholders with the standard, other than alliance policy forms, nonstandard policy forms or alliance policy forms, as applicable, in an amount sufficient to assure that the aggregate benefits paid in the previous calendar year plus the amount of the dividends and credits shall equal 75% of the aggregate premiums collected for the respective policy forms in the previous calendar year.  All dividends and credits must be distributed by December 31 of the year following the calendar year in which the loss ratio requirements were not satisfied.  The annual report required by this paragraph shall include a carrier's calculation of the dividends and credits applicable to standard, other than alliance policy forms, non-standard policy forms and alliance policy forms, as well as an explanation of the carrier's plan to issue dividends or credits.  The instructions and format for calculating and reporting loss ratios and issuing dividends or credits shall be specified by the commissioner by regulation.  Such regulations shall include provisions for the distribution of a dividend or credit in the event of cancellation or termination by a policyholder.  For purposes of this paragraph, "alliance policy forms" means policies purchased by small employers who are members of Small Employer Purchasing Alliances.

     (3)   The loss ratio of a health benefits plan issued pursuant to subsection j. of section 3 of P.L.1992, c.162 (C.17B:27A-19) shall be calculated in accordance with the provisions of section 7 of P.L.1995, c.340 (C.17B:27A-19.3), for the purposes of meeting the requirements of this subsection.

     h.     (Deleted by amendment, P.L.1993, c.162).

     i.      The provisions of this act shall apply to health benefits plans which are delivered, issued for delivery, renewed or continued on or after January 1, 1994.

     j.     (Deleted by amendment, P.L.1995, c.340).

     k.    A carrier who negotiates a reduced premium rate with a Small Employer Purchasing Alliance for members of that alliance shall provide a reduction in the premium rate filed in accordance with paragraph (3) of subsection a. of this section, expressed as a percentage, which reduction shall be based on volume or other efficiencies or economies of scale and shall not be based on health status-related factors.

(cf: P.L.2003, c.163, s.1)

 

     18. Section 3 of P.L.2004, c.49 (C.26:2J-47) is amended to read as follows:

     3. a. (1) For the fiscal  years 2005 and 2006, the Commissioner of Banking and Insurance shall issue, in accordance with the provisions of this section, a special interim assessment of one percent, and in fiscal year 2007 [and each fiscal year thereafter] , an annual assessment, in the amount of  two percent, on the net written premiums received by each health maintenance organization granted a certificate of authority to operate in this State pursuant to P.L.1973, c.337 (C.26:2J-1 et seq.), to be allocated to the Health Care Subsidy Fund established pursuant to section 8 of P.L.1992, c.160 (C.26:2H-18.58) for the purpose of providing charity care payments to hospitals in accordance with the formula used for the distribution of charity care subsidies that are provided pursuant to P.L.1992, c.160 (C.26:2H-18.51 et al.).

     (2)   "Net written premiums received" means direct premiums as reported on the annual financial statement submitted pursuant to section 9 of P.L.1973, c.337 (C.26:2J-9), and to the commissioner on a quarterly basis.

     b.    The commissioner shall certify the amount of the annual assessment issued to each health maintenance organization as calculated pursuant to subsection a. of this section.  Each health maintenance organization shall remit the amount so certified on a quarterly basis in each fiscal year to the Department of Banking and Insurance in accordance with the procedures established in P.L.1995, c.156 (C.17:1C-19 et seq.), and as prescribed by the commissioner, who may adjust the quarterly payments from time to time as necessary to meet the current and estimated assessment obligation of each health maintenance organization in each fiscal year.

     c.     Amounts collected by the commissioner shall be allocated to the Health Care Subsidy Fund established pursuant to section 8 of P.L.1992, c.160 (C.26:2H-18.58) and used solely for the purpose of providing charity care payments to hospitals in accordance with the formula used for the distribution of charity care subsidies that are provided pursuant to P.L.1992, c.160 (C.26:2H-18.51 et al.).

     d. (1) A health maintenance organization shall not impose any additional premium, fee or surcharge on its premium or enrollee charge to recoup any assessment paid pursuant to this section.

     (2)   The provisions of paragraph (1) of this subsection shall not apply to a health maintenance organization with respect to any federally funded program underwritten by that health maintenance organization.

(cf: P.L.2006, c.43, s.1)

 

     19.  This act shall take effect on the 120th day following enactment and shall apply to all contracts and policies that are delivered, issued, executed or renewed or approved for issuance or renewal in this State on or after the effective date.

 

 

STATEMENT

 

     This bill, designated the “New Jersey Health Insurance Reform Act,” represents a major restructuring of the health insurance marketplace in this State in order to stabilize costs of, and enrollment in, individual and small employer health benefits plans.

     This bill establishes the "New Jersey Health Care Claims Reinsurance Program" for carriers that participate in the New Jersey Individual Health Coverage Program, to replace the current loss assessment mechanism, although carriers are not relieved of their obligations for loss assessments authorized prior to the effective date of the bill.

     As provided in the bill, the reinsurance program, operated by a board of directors, can issue reinsurance policies to carriers that issue individual health benefits plans in this State. Under the reinsurance policy, the program shall reimburse a carrier 90% of aggregate benefit payments of $50,000 or more for health care expenses incurred by a carrier for a covered person during a calendar year. The program is funded through a reallocation of an annual assessment in the amount of two percent on the net written premiums on health maintenance organizations that is currently provided to the Health Care Subsidy Fund.

     The program's board of directors consists of 11 members, including the commissioner who shall serve as an ex officio member, six carrier representatives elected by the carriers subject to approval by the commissioner, and four individuals appointed by the Governor, with advice and consent from the Senate.  The board shall submit a plan of operation to the commissioner for the management of the program and shall oversee the operation of the program.  The board shall submit an annual report to the Governor, the Legislature, and the commissioner summarizing the activities of the program. The bill also directs the State Auditor to conduct a financial audit and an economy and efficiency audit of the program each year.

      The bill revises the community rating permitted for individual health benefits plans so that the premium rate charged by a carrier for a standard plan for the highest rated individual shall not be greater than 500% of the premium rate charged for the lowest rated individual. The rating differential may be based on age, gender, smoking status, and geography. These factors must be applied in a manner consistent with regulations promulgated and adopted by the Commissioner of Banking and Insurance, which include age classifications in a minimum of five-year increments. In developing the rating structure for geography, carriers may use counties as the smallest rating territory.

     The bill revises community rating permitted for small employer health benefits plans so that the premium rate charged by a carrier for a standard plan for the highest rated individual shall not be greater than 350% of the premium rate charged for the lowest rated individual. The rating differential may be based on smoking status, in addition to the rating factors currently allowed by law. The bill also provides that a small employer must include all its employees insured by a carrier under no more than two plans.

     The bill allows exclusions of preexisting conditions in small employer health benefits plans, provided that the plan excludes coverage for no more than 12 months following the effective date of coverage of the enrollee, instead of the six months currently provided by law.

     The bill permits carriers to offer plans in the individual and small employer markets, as may be approved by the commissioner, in addition to the five plans that a carrier in either of these markets must offer, as a condition of transacting business in the State in that particular market.

     Finally, as a condition of issuing small employer health benefits plans in this State, carriers must issue individual health benefits plans.