Bill Summary for S 86 (2019-2020)

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Summary date: 

Aug 6 2019

Bill Information:

View NCGA Bill Details2019-2020 Session
Senate Bill 86 (Public) Filed Tuesday, February 19, 2019
Intro. by Bishop, Krawiec, Edwards.

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Bill summary

House committee substitute to the 3rd edition deletes the provisions of the previous edition and replaces it with the following. 

Includes whereas clauses.

Enacts Article 50A, Association Health Plans and Multiple Employer Welfare Arrangements, to GS Chapter 58. Requires all group health plans offered by a sponsoring association in the state to be in compliance with GS Chapter 58, regardless of the domicile of the sponsoring association receiving the policy. Defines sponsoring association to mean an association of two or more employer members that offers an employee welfare benefit plan as a Path 2 MEWA, as defined; deemed to be a large employer under the Article. Defines employer member to mean a person or entity acting directly as the employer of at least one employee, or a working owner, either of whom is a participant covered under a Path 2 MEWA. Defines Path 2 MEWA to mean a MEWA established or maintained by an association of employers classified by the US Department of Labor as a bona fide group or association under specified federal law and formed by a sponsoring association that meets three criteria, including (1) having a governing constitution or bylaws that provide for regular meetings, membership dues, and a board of trustees that consists of a representative of at least one employer member; (2) having at least one substantial business purpose unrelated to the offering and providing of health insurance or other employee benefits to its employer members and their employees; and (3) having a commonality of interest shared among the employers comprising the Path 2 MEWA based on the same trade or business or being a statewide organization, as specified. Defines employee welfare benefit plan and multiple employer welfare arrangement (MEWA) as defined in specified federal law, qualified with doing business with employers in the State, as specified.

Specifies that nothing in new Article 50A regulates or prohibits any group health insurance policy not offered by a sponsoring association. Prohibits any insurer from delivering or issuing for delivery a group health plan (plan) to a sponsoring association or an employer member of a sponsoring association unless the sponsoring association meets the requirements of a Path 2 MEWA. Limits the provision of coverage to eligible employees and working owners. Allows providing coverage to the spouse or dependent children of any eligible individual. Requires employer members to commit to remaining members of the sponsoring association and receiving and paying for benefits under the plan for at least one twelve-month policy period.

Sets four criteria a plan must meet, including that the plan can neither be offered nor advertised to the public generally, and the plan must provide a level of coverage that is at least 60% of the actuarial value of allowed costs for covered benefits. 

Requires a sponsoring association to meet five specified solvency requirements before it can be delivered or issued for delivery of a plan.

Prohibits a sponsoring association from conditioning eligibility for coverage on any health-status factor, including claims experience, evidence of insurability, and disability, among others. Permits an insurer or sponsoring association to make rating distinctions among its employer members on factors other than health-status factors, so long as the rating distinction is not directed at individual beneficiaries or based on a health factor specifically identified by the statute. Prohibits plans from imposing limitations based on preexisting conditions. Clarifies that the statute does not require a sponsoring association or insurer to provide particular benefits other than those provided in the plan's terms, or otherwise required by law, nor prevents the plan from establishing limitations or restrictions on the amount, level, extent, or nature of the benefits or coverage for similarly situated individuals enrolled in the plan. 

Prohibits an insurer or sponsoring association from requiring any individual, as a condition of initial or continued enrollment in the plan, to pay a premium or contribution greater than the premium or contribution for a similarly situated individual enrolled in the plan on the basis of any health-status factor in relation to the individual or to an individual enrolled in the plan as a spouse or dependent of the individual. Clarifies that the statute does not restrict the amount an insurer can charge for coverage under a plan to a sponsoring association, or prevent an insurer from establishing premium discounts or modifying otherwise applicable co-payments or deductibles for a group health plan offered to a sponsoring association in return for adherence to programs of health promotion and disease prevention.

Specifies that Article 50A does not preclude a sponsoring association from engaging a broker or agent licensed to sell insurance in the state for purposes of reviewing and considering any plan.

Recodifies the following statutes concerning MEWAs under new Article 50A: GS 58-49-30, GS 58-49-35, GS 58-49-40, GS 58-49-45, GS 58-49-50, GS 58-49-55, GS 58-49-60, and GS 58-49-65. Makes conforming changes.

Further amends GS 58-49-40, recodified by the act as GS 58-50A-70, to modify the MEWA licensure requirements. Now requires the MEWA to be organized or maintained in good faith for a continuous period of three rather than five years for purposes other than that of obtaining or providing insurance, or alternatively, be a Path 2 MEWA.

Makes conforming changes to GS 58-51-80 and GS 58-50-115.

Amends GS 58-50-130 to allow small employer carriers, insurers, subsidiaries of insurers, or controlled individuals of insurance holding companies to provide stop loss, catastrophic, or reinsurance coverage to small employers who employ fewer than 20 eligible employees (was, 26 eligible employees) so long as the coverage complies with the underwriting, rating, and other standards of the North Carolina Small Employer Group Health Coverage Reform Act (Article 50, Part 5, GS Chapter 58). Applies to contracts entered into, amended, or renewed on or after October 1, 2019.

Authorizes the Department of Insurance (DOI) to adopt temporary implementing rules.

Directs DOI to study the feasibility of submitting a 1332 waiver to request the federal Department of Health and Human Services with the goal of allowing working owners, and employers with a principal place of business in the state or a metro area that is partially in the state, to participate in a group health plan subject to large group market requirements. Requires DOI to report to the specified NCGA committee no later than 90 days from the effective date of the section, conditioned on a final judicial order striking down the US Department of Labor rules at issue in the identified case pending hearing by the US Court of Appeals for the D.C. Circuit. 

Authorizes the Revisor of Statutes to make any necessary changes.

Includes a severability clause.

Effective October 1, 2019, and applies to contracts entered into, amended, or renewed on or after January 1, 2020.

Amends the act's long title.