§ 44-5260 — Small employer, defined; group health plan; health benefit plans; requirements; filing; exceptions; preexisting condition exclusion; network plans

(1) For purposes of this
section, small employer shall mean, in connection with a group health plan
with respect to a calendar year and a plan year, any person, firm, corporation,
partnership, association, or political subdivision that is actively engaged
in business that employed an average of at least two but not more than fifty
employees on business days during the preceding calendar year and who employs
at least two employees on the first day of the plan year. All persons treated
as a single employer under subsection (b), (c), (m), or (o) of section 414
of the Internal Revenue Code shall be treated as one employer. Subsequent
to the issuance of a health benefit plan to a small employer and for the purpose
of determining continued eligibility, the size of a small employer shall be
determined annually. Except as otherwise specifically provided, provisions
of the Small Employer Health Insurance Availability Act that apply to a small
employer shall continue to apply at least until the health benefit plan anniversary
following the date the small employer no longer meets the requirements of
this definition. In the case of an employer which was not in existence throughout
the preceding calendar year, the determination of whether the employer is
a small or large employer shall be based on the average number of employees
that it is reasonably expected the employer will employ on business days in
the current calendar year. Any reference in the act to an employer shall include
a reference to any predecessor of such employer.
(2)(a) Every small employer carrier shall, as a condition of transacting
business in this state with small employers, actively offer to small employers
all health benefit plans it actively markets to small employers in this state,
including at least two health benefit plans. One health benefit plan offered
by each small employer carrier shall be a basic health benefit plan, and one
plan shall be a standard health benefit plan. A small employer carrier shall
be considered to be actively marketing a health benefit plan if it offers
that plan to any small employer not currently receiving a health benefit plan
by such small employer carrier. This
subdivision shall not require a small employer carrier to offer to small employers
a health benefit plan marketed only through a bona fide association.
(b)(i) Subject to subdivision (2)(a) of this section, a small employer
carrier shall issue any health benefit plan to any eligible small employer
that applies for the plan and agrees to make the required premium payments
and to satisfy the other reasonable provisions of the health benefit plan
not inconsistent with the Small Employer Health Insurance Availability Act.
However, no small employer carrier shall be required to issue a health benefit
plan to a self-employed individual who is covered by, or is eligible for coverage
under, a health benefit plan offered by an employer.
(ii) In the case of a small employer carrier that establishes more than
one class of business, the small employer carrier shall maintain and issue
to eligible small employers at least one basic health benefit plan and at
least one standard health benefit plan in each class of business so established.
A small employer carrier may apply reasonable criteria in determining whether
to accept a small employer into a class of business if:
(A) The criteria are not intended to discourage or prevent acceptance
of small employers applying for a basic health benefit plan or a standard
health benefit plan;
(B) The criteria are not related to the health status or claim experience
of employees or dependents of the small employer;
(C) The criteria are applied consistently to all small employers applying
for coverage in the class of business; and
(D) The small employer carrier provides for the acceptance of all eligible
small employers into one or more classes of business.
The provisions of subdivision (2)(b)(ii) of this section shall not apply
to a class of business into which the small employer carrier is no longer
enrolling new small businesses.
(3)(a) A small employer carrier shall file with the director, in a format
and manner prescribed by the director, the basic health benefit plans and
the standard health benefit plans to be used by the carrier. A health benefit
plan filed pursuant to this subsection may be used by a small employer carrier
beginning thirty days after it is filed unless the director disapproves its
use.
(b) The director at any time may, after providing notice and an opportunity
for a hearing to the small employer carrier, disapprove the continued use
by a small employer carrier of a basic health benefit plan or standard health
benefit plan on the grounds that the plan does not meet the requirements of
the act.
(4) Health benefit plans covering small employers shall comply with
the following provisions:
(a) A health benefit plan shall not deny, exclude, or limit benefits
for a covered individual for losses incurred more than twelve months, or eighteen
months in the case of a late enrollee, following the enrollment date of the
individual's coverage due to a preexisting condition or the first date of
the waiting period for enrollment if that date is earlier than the enrollment
date. A health benefit plan shall not define a preexisting condition more
restrictively than as defined in section 44-5246.02 . A health benefit plan
shall not impose any preexisting condition exclusion relating to pregnancy
as a preexisting condition;
(b) A health benefit plan shall not impose any preexisting condition
exclusion:
(i) To an individual who, as of the last day of the thirty-day period
beginning with the date of birth, is covered under creditable coverage, and
the individual had creditable coverage that was continuous to a date not more
than sixty-three days prior to the enrollment date of new coverage; or
(ii) To a child less than eighteen years of age who is adopted or placed
for adoption and who, as of the last day of the thirty-day period beginning
on the date of the adoption or placement for adoption, is covered under creditable
coverage, and the child had creditable coverage that was continuous to a date
not more than sixty-three days prior to the enrollment date of new coverage;
(c)(i) A small employer carrier shall waive any time period applicable
to a preexisting condition exclusion or limitation period with respect to
particular services in a health benefit plan for the aggregate period of time
an individual was previously covered by creditable coverage that provided
benefits with respect to such services if the creditable coverage was continuous
to a date not more than sixty-three days prior to the enrollment date of new
coverage. The period of continuous coverage shall not include any waiting
period or affiliation period for the effective date of the new coverage applied
by the employer or the carrier. This subdivision shall not preclude application
of any waiting period applicable to all new enrollees under the health benefit
plan.
(ii) A small employer carrier that does not use preexisting condition
limitations in any of its health benefit plans may impose an affiliation period:
(A) That does not exceed sixty days for new entrants and does not exceed
ninety days for late enrollees;
(B) During which the carrier charges no premiums and the coverage issued
is not effective; and
(C) That is applied uniformly, without regard to any health-status-related
factor.
(iii) This subdivision does not preclude application of any waiting
period applicable to all enrollees under the health benefit plan if any carrier
waiting period is no longer than sixty days.
(iv)(A) In lieu of the requirements of subdivision (4)(c)(i) of this
section, a small employer carrier may elect to reduce the period of any preexisting
condition exclusion based on coverage of benefits within each of several classes
or categories of benefits specified in federal regulations.
(B) A small employer electing to reduce the period of any preexisting
condition exclusion using the alternative method described in subdivision
(4)(c)(iv)(A) of this section shall make the election on a uniform basis for
all enrollees and count a period of creditable coverage with respect to any
class or category of benefits if any level of benefits is covered within the
class or category.
(C) A small employer carrier electing to reduce the period of any preexisting
condition exclusion using the alternative method described in subdivision
(4)(c)(iv)(A) of this section shall prominently state that the election has
been made in any disclosure statements concerning coverage under the health
benefit plan to each enrollee at the time of enrollment under the plan and
to each small employer at the time of the offer or sale of the coverage and
include in the disclosure statements the effect of the election;
(d)(i) A small employer carrier shall permit an eligible employee or
dependent, who requests enrollment following the open enrollment opportunity,
to enroll, and the eligible employee or dependent shall not be considered
a late enrollee if the eligible employee or dependent:
(A) Was covered under another health benefit plan at the time the eligible
employee or dependent was eligible to enroll;
(B) Stated in writing at the time of the open enrollment period that
coverage under another health benefit plan was the reason for declining enrollment
but only if the health benefit plan or health carrier required such a written
statement and provided a notice of the consequences of such written statement;
(C) Has lost coverage under another health benefit plan as a result
of the termination of employment, the termination of the other health benefit
plan's coverage, death of a spouse, legal separation, or divorce or was under
a continuation-of-coverage policy or contract available under federal law
and the coverage was exhausted; and
(D) Requests enrollment within thirty days after the termination of
coverage under the other health benefit plan.
(ii)(A) If a small employer carrier issues a health benefit plan and
makes coverage available to a dependent of an eligible employee and such dependent
becomes a dependent of the eligible employee through marriage, birth, adoption,
or placement for adoption, then such health benefit plan shall provide for
a dependent special enrollment period during which the dependent may be enrolled
under the health benefit plan and, in the case of the birth or adoption of
a child, the spouse of an eligible employee may be enrolled if otherwise eligible
for coverage.
(B) A dependent special enrollment period shall be a period of not less
than thirty days and shall begin on the later of (I) the date such dependent
coverage is available or (II) the date of the marriage, birth, adoption, or
placement for adoption.
(C) If an eligible employee seeks to enroll a dependent during the first
thirty days of such a dependent special enrollment period, the coverage of
the dependent shall become effective:
(I) In the case of marriage, not later than the first day of the first
month beginning after the date the completed request for enrollment is received;
(II) In the case of the birth of a dependent, as of the date of birth;
and
(III) In the case of a dependent's adoption or placement for adoption,
the date of such adoption or placement for adoption;
(e)(i) Except as provided in subdivision (4)(e)(iv) of this section,
requirements used by a small employer carrier in determining whether to provide
coverage to a small employer, including requirements for minimum participation
of eligible employees and minimum employer contributions, shall be applied
uniformly among all small employers with the same number of eligible employees
applying for coverage or receiving coverage from the small employer carrier.
(ii) A small employer carrier may vary application of minimum participation
requirements and minimum employer contribution requirements only by the size
of the small employer group.
(iii)(A) Except as provided in subdivision (4)(e)(iii)(B) of this section,
in applying minimum participation requirements with respect to a small employer,
a small employer carrier shall not consider employees or dependents who have
creditable coverage in determining whether the applicable percentage of participation
is met.
(B) With respect to a small employer with ten or fewer eligible employees,
a small employer carrier may consider employees or dependents who have coverage
under another health benefit plan sponsored by such small employer in applying
minimum participation requirements.
(iv) A small employer carrier shall not increase any requirement for
minimum employee participation or any requirement for minimum employer contribution
applicable to a small employer at any time after the small employer has been
accepted for coverage; and
(f)(i) If a small employer carrier offers coverage to a small employer,
the small employer carrier shall offer coverage to all of the eligible employees
of a small employer and their dependents who apply for enrollment during the
period in which the employee first becomes eligible to enroll under the terms
of the plan. A small employer carrier shall not offer coverage to only certain
individuals in a small employer group or to only part of the group except
in the case of late enrollees as provided in subdivision (4)(a) of this section.
(ii) Except as permitted under subdivisions (a) and (d) of this subsection,
a small employer carrier shall not modify a health benefit plan with respect
to a small employer or any eligible employee or dependent, through riders,
endorsements, or otherwise, to restrict or exclude coverage or benefits for
specific diseases, medical conditions, or services otherwise covered by the
plan.
(iii) A small employer carrier shall not place any restriction in regard
to any health-status-related factor on an eligible employee or dependent with
respect to enrollment or plan participation.
(5) A small employer carrier shall not be required to offer coverage
or accept applications pursuant to subsection (2) of this section in the case
of the following:
(a) To an employee if previous basic health benefit plans or standard
health benefit plans have, in the aggregate, paid one million dollars in benefits
on behalf of the employee. Benefits paid on behalf of the employee in the
immediately preceding two calendar years by prior small employer carriers
under basic and standard plans shall be included when calculating the lifetime
maximum benefits payable under the succeeding basic or standard plans. In
any situation in which a determination of the total amount of benefits paid
by prior small employer carriers is required by the succeeding carrier, prior
carriers shall furnish a statement of the total benefits paid under basic
and standard plans at the succeeding carrier's request; or
(b) Within an area where the small employer carrier reasonably anticipates,
and demonstrates to the satisfaction of the director, that it will not have
the capacity within its established geographic service area to deliver service
adequately to the members of such groups because of its obligations to existing
group policyholders and enrollees.
(6)(a) A small employer carrier offering coverage through a network
plan shall not be required to offer coverage or accept applications pursuant
to subsection (2) of this section to or from a small employer as defined in
subsection (1) of this section:
(i) If the small employer does not have eligible employees who live,
work, or reside in the service area for such network plan; or
(ii) If the small employer does have eligible employees who live, work,
or reside in the service area for such network plan, the carrier has demonstrated,
if required, to the director that it will not have the capacity to deliver
services adequately to enrollees of any additional groups because of its obligations
to existing group contract holders and enrollees and that it is applying subdivision
(6)(a)(ii) of this section uniformly to all employers without regard to the
claims experience of those employers and their employees and their dependents
or any health-status-related factor relating to such employees and dependents.
(b) A small employer carrier, upon denying health insurance coverage
in any service area in accordance with subdivision (6)(a)(ii) of this section,
shall not offer coverage in the small employer market within such service
area for a period of one hundred eighty days after the date such coverage
is denied.
(7) A small employer carrier shall not be required to provide coverage
to small employers pursuant to subsection (2) of this section for any period
of time for which the director determines that requiring the acceptance of
small employers in accordance with the provisions of such subsection would
place the small employer carrier in a financially impaired condition.

Legislative History

Source: Laws 1994, LB 1222, § 38; Laws 1995, LB 837, § 4; Laws 1997, LB 862, § 46; Laws 2002, LB 1139, § 33; Laws 2009, LB192, § 8.