A. This article applies to group health plans and to health insurance issuersoffering group health insurance coverage, and individual policies offered toemployees of small employers.
Each insurer proposing to issue individual or group accident and sicknessinsurance policies providing hospital, medical and surgical or major medicalcoverage on an expense incurred basis, each corporation providing individualor group accident and sickness subscription contracts, and each healthmaintenance organization or multiple employer welfare arrangement providinghealth care plans for health care services that offers individual or groupcoverage to the small employer market in this Commonwealth shall be subjectto the provisions of this article. Any issuer of individual coverage toemployees of a small employer shall be subject to the provisions of thisarticle if any of the following conditions are met:
1. Any portion of the premiums or benefits is paid by or on behalf of theemployer;
2. The eligible employee or dependent is reimbursed, whether through wageadjustments or otherwise, by or on behalf of the employer for any portion ofthe premium;
3. The employer has permitted payroll deduction for the covered individualand any portion of the premium is paid by the employer, provided that thehealth insurance issuer providing individual coverage under suchcircumstances shall be registered as a health insurance issuer in the smallgroup market under this article, and shall have offered small employer groupinsurance to the employer in the manner required under this article; or
4. The health benefit plan is treated by the employer or any of the coveredindividuals as part of a plan or program for the purpose of §§ 106, 125, or162 of the United States Internal Revenue Code.
B. For the purposes of this article:
"Actuarial certification" means a written statement by a member of theAmerican Academy of Actuaries or other individual acceptable to theCommission that a health insurance issuer is in compliance with theprovisions of this article based upon the person's examination, including areview of the appropriate records and of the actuarial assumptions andmethods used by the health insurance issuer in establishing premium rates forapplicable insurance coverage.
"Affiliation period" means a period which, under the terms of the healthinsurance coverage offered by a health maintenance organization, must expirebefore the health insurance coverage becomes effective. The healthmaintenance organization is not required to provide health care services orbenefits during such period and no premium shall be charged to theparticipant or beneficiary for any coverage during the period.
1. Such period shall begin on the enrollment date.
2. An affiliation period under a plan shall run concurrently with any waitingperiod under the plan.
"Beneficiary" has the meaning given such term under section 3(8) of theEmployee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (8)).
"Bona fide association" means, with respect to health insurance coverageoffered in this Commonwealth, an association which:
1. Has been actively in existence for at least five years;
2. Has been formed and maintained in good faith for purposes other thanobtaining insurance;
3. Does not condition membership in the association on any healthstatus-related factor relating to an individual (including an employee of anemployer or a dependent of an employee);
4. Makes health insurance coverage offered through the association availableto all members regardless of any health status-related factor relating tosuch members (or individuals eligible for coverage through a member);
5. Does not make health insurance coverage offered through the associationavailable other than in connection with a member of the association; and
6. Meets such additional requirements as may be imposed under the laws ofthis Commonwealth.
"Certification" means a written certification of the period of creditablecoverage of an individual under a group health plan and coverage provided bya health insurance issuer offering group health insurance coverage and thecoverage if any under such COBRA continuation provision, and the waitingperiod if any and affiliation period if applicable imposed with respect tothe individual for any coverage under such plan.
"Church plan" has the meaning given such term under section 3(33) of theEmployee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (33)).
"COBRA continuation provision" means any of the following:
1. Section 4980B of the Internal Revenue Code of 1986 (26 U.S.C. § 4980B),other than subsection (f) (1) of such section insofar as it relates topediatric vaccines;
2. Part 6 of subtitle B of Title I of the Employee Retirement Income SecurityAct of 1974 (29 U.S.C. § 1161 et seq.), other than section 609 of such Act; or
3. Title XXII of P.L. 104-191.
"Community rate" means the average rate charged for the same or similarcoverage to all small employer groups with the same area, age and gendercharacteristics. This rate shall be based on the health insurance issuer'scombined claims experience for all groups within its small employer market.
"Creditable coverage" means with respect to an individual, coverage of theindividual under any of the following:
1. A group health plan;
2. Health insurance coverage;
3. Part A or B of Title XVIII of the Social Security Act (42 U.S.C. § 1395cor § 1395);
4. Title XIX of the Social Security Act (42 U.S.C. § 1396 et seq.), otherthan coverage consisting solely of benefits under section 1928;
5. Chapter 55 of Title 10, United States Code (10 U.S.C. § 1071 et seq.);
6. A medical care program of the Indian Health Service or of a tribalorganization;
7. A state health benefits risk pool;
8. A health plan offered under Chapter 89 of Title 5, United States Code (5U.S.C. § 8901 et seq.);
9. A public health plan (as defined in federal regulations);
10. A health benefit plan under section 5 (e) of the Peace Corps Act (22U.S.C. § 2504(e)); or
11. Individual health insurance coverage.
Such term does not include coverage consisting solely of coverage of exceptedbenefits.
"Dependent" means the spouse or child of an eligible employee, subject tothe applicable terms of the policy, contract or plan covering the eligibleemployee.
"Eligible employee" means an employee who works for a small group employeron a full-time basis, has a normal work week of 30 or more hours, hassatisfied applicable waiting period requirements, and is not a part-time,temporary or substitute employee.
"Eligible individual" means such an individual in relation to the employeras shall be determined:
1. In accordance with the terms of such plan;
2. As provided by the health insurance issuer under rules of the healthinsurance issuer which are uniformly applicable to employers in the groupmarket; and
3. In accordance with all applicable law of this Commonwealth governing suchissuer and such market.
"Employee" has the meaning given such term under section 3(6) of theEmployee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (6)).
"Employer" has the meaning given such term under section 3(5) of theEmployee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (5)),except that such term shall include only employers of two or more employees.
"Enrollment date" means, with respect to an eligible individual coveredunder a group health plan or health insurance coverage, the date ofenrollment of the eligible individual in the plan or coverage or, if earlier,the first day of the waiting period for such enrollment.
"Essential and standard health benefit plans" means health benefit plansdeveloped pursuant to subsection C of this section.
"Excepted benefits" means benefits under one or more (or any combinationthereof) of the following:
1. Benefits not subject to requirements of this article:
a. Coverage only for accident, or disability income insurance, or anycombination thereof;
b. Coverage issued as a supplement to liability insurance;
c. Liability insurance, including general liability insurance and automobileliability insurance;
d. Workers' compensation or similar insurance;
e. Medical expense and loss of income benefits;
f. Credit-only insurance;
g. Coverage for on-site medical clinics; and
h. Other similar insurance coverage, specified in regulations, under whichbenefits for medical care are secondary or incidental to other insurancebenefits.
2. Benefits not subject to requirements of this article if offered separately:
a. Limited scope dental or vision benefits;
b. Benefits for long-term care, nursing home care, home health care,community-based care, or any combination thereof; and
c. Such other similar, limited benefits as are specified in regulations.
3. Benefits not subject to requirements of this article if offered asindependent, noncoordinated benefits:
a. Coverage only for a specified disease or illness; and
b. Hospital indemnity or other fixed indemnity insurance.
4. Benefits not subject to requirements of this article if offered asseparate insurance policy:
a. Medicare supplemental health insurance (as defined under section 1882 (g)(1) of the Social Security Act (42 U.S.C. § 1395ss (g) (1));
b. Coverage supplemental to the coverage provided under Chapter 55 of Title10, United States Code (10 U.S.C. § 1071 et seq.); and
c. Similar supplemental coverage provided to coverage under a group healthplan.
"Federal governmental plan" means a governmental plan established ormaintained for its employees by the government of the United States or by anagency or instrumentality of such government.
"Governmental plan" has the meaning given such term under section 3(32) ofthe Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (32))and any federal governmental plan.
"Group health insurance coverage" means in connection with a group healthplan, health insurance coverage offered in connection with such plan.
"Group health plan" means an employee welfare benefit plan (as defined insection 3 (1) of the Employee Retirement Income Security Act of 1974 (29U.S.C. § 1002 (1)), to the extent that the plan provides medical care andincluding items and services paid for as medical care to employees or theirdependents (as defined under the terms of the plan) directly or throughinsurance, reimbursement, or otherwise.
"Health benefit plan" means any accident and health insurance policy orcertificate, health services plan contract, health maintenance organizationsubscriber contract, plan provided by a MEWA or plan provided by anotherbenefit arrangement. "Health benefit plan" does not mean accident only,credit, or disability insurance; coverage of Medicare services or federalemployee health plans, pursuant to contracts with the United Statesgovernment; Medicare supplement or long-term care insurance; Medicaidcoverage; dental only or vision only insurance; specified disease insurance;hospital confinement indemnity coverage; limited benefit health coverage;coverage issued as a supplement to liability insurance; insurance arising outof a workers' compensation or similar law; automobile medical paymentinsurance; medical expense and loss of income benefits; or insurance underwhich benefits are payable with or without regard to fault and that isstatutorily required to be contained in any liability insurance policy orequivalent self-insurance.
"Health insurance coverage" means benefits consisting of medical care(provided directly, through insurance or reimbursement, or otherwise andincluding items and services paid for as medical care) under any hospital ormedical service policy or certificate, hospital or medical service plancontract, or health maintenance organization contract offered by a healthinsurance issuer.
"Health insurance issuer" means an insurance company, or insuranceorganization (including a health maintenance organization) which is licensedto engage in the business of insurance in this Commonwealth and which issubject to the laws of this Commonwealth which regulate insurance within themeaning of section 514 (b) (2) of the Employee Retirement Income Security Actof 1974 (29 U.S.C. § 1144 (b) (2)). Such term does not include a group healthplan.
"Health maintenance organization" means:
1. A federally qualified health maintenance organization;
2. An organization recognized under the laws of this Commonwealth as a healthmaintenance organization; or
3. A similar organization regulated under the laws of this Commonwealth forsolvency in the same manner and to the same extent as such a healthmaintenance organization.
"Health status-related factor" means the following in relation to theindividual or a dependent eligible for coverage under a group health plan orhealth insurance coverage offered by a health insurance issuer:
1. Health status;
2. Medical condition (including both physical and mental illnesses);
3. Claims experience;
4. Receipt of health care;
5. Medical history;
6. Genetic information;
7. Evidence of insurability (including conditions arising out of acts ofdomestic violence); or
8. Disability.
"Individual health insurance coverage" means health insurance coverageoffered to individuals in the individual market, but does not includecoverage defined as excepted benefits. Individual health insurance coveragedoes not include short-term limited duration coverage.
"Individual market" means the market for health insurance coverage offeredto individuals other than in connection with a group health plan.
"Large employer" means, in connection with a group health plan or healthinsurance coverage with respect to a calendar year and a plan year, anemployer who employed an average of at least 51 employees on business daysduring the preceding calendar year and who employs at least two employees onthe first day of the plan year.
"Large group market" means the health insurance market under whichindividuals obtain health insurance coverage (directly or through anyarrangement) on behalf of themselves (and their dependents) through a grouphealth plan maintained by a large employer or through a health insuranceissuer.
"Late enrollee" means, with respect to coverage under a group health planor health insurance coverage provided by a health insurance issuer, aparticipant or beneficiary who enrolls under the plan other than during:
1. The first period in which the individual is eligible to enroll under theplan; or
2. A special enrollment period as required pursuant to subsections J throughM of § 38.2-3432.3.
"Medical care" means amounts paid for:
1. The diagnosis, cure, mitigation, treatment, or prevention of disease, oramounts paid for the purpose of affecting any structure or function of thebody;
2. Transportation primarily for and essential to medical care referred to insubdivision 1; and
3. Insurance covering medical care referred to in subdivisions 1 and 2.
"Network plan" means health insurance coverage of a health insurance issuerunder which the financing and delivery of medical care (including items andservices paid for as medical care) are provided, in whole or in part, througha defined set of providers under contract with the health insurance issuer.
"Nonfederal governmental plan" means a governmental plan that is not afederal governmental plan.
"Participant" has the meaning given such term under section 3(7) of theEmployee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (7)).
"Placed for adoption," or "placement" or "being placed" for adoption,in connection with any placement for adoption of a child with any person,means the assumption and retention by such person of a legal obligation fortotal or partial support of such child in anticipation of adoption of suchchild. The child's placement with such person terminates upon the terminationof such legal obligation.
"Plan sponsor" has the meaning given such term under section 3(16) (B) ofthe Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (16)(B)).
"Preexisting condition exclusion" means, with respect to coverage, alimitation or exclusion of benefits relating to a condition based on the factthat the condition was present before the date of enrollment for suchcoverage, whether or not any medical advice, diagnosis, care, or treatmentwas recommended or received before such date. Genetic information shall notbe treated as a preexisting condition in the absence of a diagnosis of thecondition related to such information.
"Premium" means all moneys paid by an employer and eligible employees as acondition of coverage from a health insurance issuer, including fees andother contributions associated with the health benefit plan.
"Rating period" means the 12-month period for which premium rates aredetermined by a health insurance issuer and are assumed to be in effect.
"Service area" means a broad geographic area of the Commonwealth in which ahealth insurance issuer sells or has sold insurance policies on or beforeJanuary 1994, or upon its subsequent authorization to do business in Virginia.
"Small employer" means in connection with a group health plan or healthinsurance coverage with respect to a calendar year and a plan year, anemployer who employed an average of at least two but not more than 50employees on business days during the preceding calendar year and who employsat least two employees on the first day of the plan year.
"Small group market" means the health insurance market under whichindividuals obtain health insurance coverage (directly or through anyarrangement) on behalf of themselves (and their dependents) through a grouphealth plan maintained by a small employer or through a health insuranceissuer.
"State" means each of the several states, the District of Columbia, PuertoRico, the Virgin Islands, Guam, American Samoa, and the Northern MarianaIslands.
"Waiting period" means, with respect to a group health plan or healthinsurance coverage provided by a health insurance issuer and an individualwho is a potential participant or beneficiary in the plan, the period thatmust pass with respect to the individual before the individual is eligible tobe covered for benefits under the terms of the plan. If an employee ordependent enrolls during a special enrollment period pursuant to subsectionsJ through M of § 38.2-3432.3 or as a late enrollee, any period before suchenrollment is not a waiting period.
C. The Commission shall adopt regulations establishing the essential andstandard plans for sale in the small employer market. Such regulations shallincorporate the recommendations of the Essential Health Services Panel,established pursuant to Chapter 847 of the 1992 Acts of Assembly. TheCommission shall modify such regulations as necessary to incorporate anyrevisions to the essential and standard plans submitted by the SpecialAdvisory Commission on Mandated Health Insurance Benefits pursuant to §2.2-2503. Every health insurance issuer shall, as a condition of transactingbusiness in Virginia with small employers, offer to small employers theessential and standard plans, subject to the provisions of § 38.2-3432.2.However, any regulation adopted by the Commission shall contain a provisionrequiring all health insurance issuers to offer an option permitting a smallemployer electing to be covered under either an essential or standard healthbenefit plan to choose coverage that does not provide dental benefits. Theregulation shall also require a small employer electing such option, as acondition of continuing eligibility for coverage pursuant to this article, topurchase separate dental coverage for all eligible employees and eligibledependents from a dental services plan authorized pursuant to Chapter 45 ofthis title. All health insurance issuers shall issue the plans to every smallemployer that elects to be covered under either one of the plans and agreesto make the required premium payments, and shall satisfy the followingprovisions:
1. Such plan may include cost containment and cost sharing features such as,but not limited to, utilization review of health care services includingreview of medical necessity of hospital and physician services; casemanagement; selective contracting with hospitals, physicians and other healthcare providers, subject to the limitations set forth in §§ 38.2-3407 and38.2-4209 and Chapter 43 (§ 38.2-4300 et seq.) of this title; reasonablebenefit differentials applicable to providers that participate or do notparticipate in arrangements using restricted network provisions; co-payment,co-insurance, deductible or other cost sharing arrangement as those terms aredefined in § 38.2-3407.12; or other managed care provisions. The essentialand standard plans for health maintenance organizations shall containbenefits and cost-sharing levels which are consistent with the basic methodof operation and benefit plans of federally qualified health maintenanceorganizations, if a health maintenance organization is federally qualified,and of nonfederally qualified health maintenance organizations, if a healthmaintenance organization is not federally qualified. The essential andstandard plans of coverage for health maintenance organizations shall beactuarial equivalents of these plans for health insurance issuers.
2. No law requiring the coverage or offering of coverage of a benefit orprovider pursuant to § 38.2-3408 or § 38.2-4221 shall apply to the essentialor standard health care plan or riders thereof.
3. Every health insurance issuer offering group health insurance coverageshall, as a condition of transacting business in Virginia with smallemployers, offer and make available to small employers an essential and astandard health benefit plan, subject to the provisions of § 38.2-3432.2.
4. All essential and standard benefit plans issued to small employers shalluse a policy form approved by the Commission providing coverage defined bythe essential and standard benefit plans. Coverages providing benefitsgreater than and in addition to the essential and standard plans may beprovided by rider, separate policy or plan provided that no rider, separatepolicy or plan shall reduce benefit or premium. A health insurance issuershall submit all policy forms, including applications, enrollment forms,policies, subscription contracts, certificates, evidences of coverage,riders, amendments, endorsements and disclosure plans to the Commission forapproval in the same manner as required by § 38.2-316. Each rider, separatepolicy or plan providing benefits greater than the essential and standardbenefit plans may require a specific premium for the benefits provided insuch rider, separate policy or plan. The premium for such riders shall bedetermined in the same manner as the premiums are determined for theessential and standard plans. The Commission at any time may, after providingnotice and an opportunity for a hearing to a health insurance issuer,disapprove the continued use by the health insurance issuer of an essentialor standard health benefit plan on the grounds that such plan does not meetthe requirements of this article.
5. No health insurance issuer offering group health insurance coverage isrequired to offer coverage or accept applications pursuant to subdivisions 3and 4 of this subsection:
a. From a small employer already covered under a health benefit plan exceptfor coverage that is to commence on the group's anniversary date, but thissubsection shall not be construed to prohibit a group from seeking coverageor a health insurance issuer offering group health insurance coverage fromissuing coverage to a group prior to its anniversary date; or
b. If the Commission determines that acceptance of an application orapplications would result in the health insurance issuer being declared animpaired insurer.
A health insurance issuer offering group health insurance coverage that doesnot offer coverage pursuant to subdivision 5 b may not offer coverage tosmall employers until the Commission determines that the health insuranceissuer is no longer impaired.
6. Every health insurance issuer offering group health insurance coverageshall uniformly apply the provisions of subdivision C 5 of this section andshall fairly market the essential and standard health benefit plans to allsmall employers in their service area of the Commonwealth. A health insuranceissuer offering group health insurance coverage that fails to fairly marketas required by this subdivision may not offer coverage in the Commonwealth tonew small employers until the later of 180 days after the unfair marketinghas been identified and proven to the Commission or the date on which thehealth insurance issuer submits and the Commission approves a plan to fairlymarket to the health insurance issuer's service area.
7. No health maintenance organization is required to offer coverage or acceptapplications pursuant to subdivisions 3 and 4 of this subsection in the caseof any of the following:
a. To small employers, where the policy would not be delivered or issued fordelivery in the health maintenance organization's approved service areas;
b. To an employee, where the employee does not reside or work within thehealth maintenance organization's approved service areas;
c. To small employers if the health maintenance organization is a federallyqualified health maintenance organization and it demonstrates to thesatisfaction of the Commission that the federally qualified healthmaintenance organization is prevented from doing so by federal requirement;however, any such exemption under this subdivision would be limited to theessential plan; or
d. Within an area where the health maintenance organization demonstrates tothe satisfaction of the Commission, that it will not have the capacity withinthat area and its network of providers to deliver services adequately to theenrollees of those groups because of its obligations to existing groupcontract holders and enrollees. A health maintenance organization that doesnot offer coverage pursuant to this subdivision may not offer coverage in theapplicable area to new employer groups with more than 50 eligible employeesuntil the later of 180 days after closure to new applications or the date onwhich the health maintenance organization notifies the Commission that it hasregained capacity to deliver services to small employers. In the case of ahealth maintenance organization doing business in the small employer marketin one service area of this Commonwealth, the rules set forth in thissubdivision shall apply to the health maintenance organization's operationsin the service area, unless the provisions of subdivision 6 of thissubsection apply.
8. In order to ensure the broadest availability of health benefit plans tosmall employers, the Commission shall set market conduct and otherrequirements for health insurance issuers, agents and third-partyadministrators, including requirements relating to the following:
a. Registration by each health insurance issuer offering group healthinsurance coverage with the Commission of its intention to offer healthinsurance coverage in the small group market under this article;
b. Publication by the Commission of a list of all health insurance issuerswho offer coverage in the small group market, including a potentialrequirement applicable to agents, third-party administrators, and healthinsurance issuers that no health benefit plan may be sold to a small employerby a health insurance issuer not so identified as a health insurance issuerin the small group market;
c. The availability of a broadly publicized toll-free telephone number forthe Commission's Bureau of Insurance for access by small employers toinformation concerning this article;
d. To the extent deemed to be necessary to ensure the fair distribution ofsmall employers among carriers, periodic reports by health insurance issuersabout plans issued to small employers; provided that reporting requirementsshall be limited to information concerning case characteristics and numbersof health benefit plans in various categories marketed or issued to smallemployers. Health insurance issuers shall maintain data relating to theessential and standard benefit plans separate from data relating toadditional benefits made available by rider for the purpose of complying withthe reporting requirements of this section; and
e. Methods concerning periodic demonstration by health insurance issuersoffering group health insurance coverage that they are marketing and issuinghealth benefit plans to small employers in fulfillment of the purposes ofthis article.
9. All essential and standard health benefits plans contracts delivered,issued for delivery, reissued, renewed, or extended in this Commonwealth onor after July 1, 1997, shall include coverage for 365 days of inpatienthospitalization for each covered individual during a 12-month period. Ifcoverage under the essential or standard health benefits plan terminateswhile a covered person is hospitalized, the inpatient hospital benefits shallcontinue to be provided until the earliest of (i) the day the maximum amountof benefit has been provided or (ii) the day the covered person is no longerhospitalized as an inpatient.
(1992, c. 800; 1993, cc. 148, 960; 1994, c. 303; 1996, c. 262; 1997, cc. 415,807, 913; 1998, cc. 24, 26; 1999, cc. 789, 815, 1004; 2003, c. 645.)
A. This article applies to group health plans and to health insurance issuersoffering group health insurance coverage, and individual policies offered toemployees of small employers.
Each insurer proposing to issue individual or group accident and sicknessinsurance policies providing hospital, medical and surgical or major medicalcoverage on an expense incurred basis, each corporation providing individualor group accident and sickness subscription contracts, and each healthmaintenance organization or multiple employer welfare arrangement providinghealth care plans for health care services that offers individual or groupcoverage to the small employer market in this Commonwealth shall be subjectto the provisions of this article. Any issuer of individual coverage toemployees of a small employer shall be subject to the provisions of thisarticle if any of the following conditions are met:
1. Any portion of the premiums or benefits is paid by or on behalf of theemployer;
2. The eligible employee or dependent is reimbursed, whether through wageadjustments or otherwise, by or on behalf of the employer for any portion ofthe premium;
3. The employer has permitted payroll deduction for the covered individualand any portion of the premium is paid by the employer, provided that thehealth insurance issuer providing individual coverage under suchcircumstances shall be registered as a health insurance issuer in the smallgroup market under this article, and shall have offered small employer groupinsurance to the employer in the manner required under this article; or
4. The health benefit plan is treated by the employer or any of the coveredindividuals as part of a plan or program for the purpose of §§ 106, 125, or162 of the United States Internal Revenue Code.
B. For the purposes of this article:
"Actuarial certification" means a written statement by a member of theAmerican Academy of Actuaries or other individual acceptable to theCommission that a health insurance issuer is in compliance with theprovisions of this article based upon the person's examination, including areview of the appropriate records and of the actuarial assumptions andmethods used by the health insurance issuer in establishing premium rates forapplicable insurance coverage.
"Affiliation period" means a period which, under the terms of the healthinsurance coverage offered by a health maintenance organization, must expirebefore the health insurance coverage becomes effective. The healthmaintenance organization is not required to provide health care services orbenefits during such period and no premium shall be charged to theparticipant or beneficiary for any coverage during the period.
1. Such period shall begin on the enrollment date.
2. An affiliation period under a plan shall run concurrently with any waitingperiod under the plan.
"Beneficiary" has the meaning given such term under section 3(8) of theEmployee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (8)).
"Bona fide association" means, with respect to health insurance coverageoffered in this Commonwealth, an association which:
1. Has been actively in existence for at least five years;
2. Has been formed and maintained in good faith for purposes other thanobtaining insurance;
3. Does not condition membership in the association on any healthstatus-related factor relating to an individual (including an employee of anemployer or a dependent of an employee);
4. Makes health insurance coverage offered through the association availableto all members regardless of any health status-related factor relating tosuch members (or individuals eligible for coverage through a member);
5. Does not make health insurance coverage offered through the associationavailable other than in connection with a member of the association; and
6. Meets such additional requirements as may be imposed under the laws ofthis Commonwealth.
"Certification" means a written certification of the period of creditablecoverage of an individual under a group health plan and coverage provided bya health insurance issuer offering group health insurance coverage and thecoverage if any under such COBRA continuation provision, and the waitingperiod if any and affiliation period if applicable imposed with respect tothe individual for any coverage under such plan.
"Church plan" has the meaning given such term under section 3(33) of theEmployee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (33)).
"COBRA continuation provision" means any of the following:
1. Section 4980B of the Internal Revenue Code of 1986 (26 U.S.C. § 4980B),other than subsection (f) (1) of such section insofar as it relates topediatric vaccines;
2. Part 6 of subtitle B of Title I of the Employee Retirement Income SecurityAct of 1974 (29 U.S.C. § 1161 et seq.), other than section 609 of such Act; or
3. Title XXII of P.L. 104-191.
"Community rate" means the average rate charged for the same or similarcoverage to all small employer groups with the same area, age and gendercharacteristics. This rate shall be based on the health insurance issuer'scombined claims experience for all groups within its small employer market.
"Creditable coverage" means with respect to an individual, coverage of theindividual under any of the following:
1. A group health plan;
2. Health insurance coverage;
3. Part A or B of Title XVIII of the Social Security Act (42 U.S.C. § 1395cor § 1395);
4. Title XIX of the Social Security Act (42 U.S.C. § 1396 et seq.), otherthan coverage consisting solely of benefits under section 1928;
5. Chapter 55 of Title 10, United States Code (10 U.S.C. § 1071 et seq.);
6. A medical care program of the Indian Health Service or of a tribalorganization;
7. A state health benefits risk pool;
8. A health plan offered under Chapter 89 of Title 5, United States Code (5U.S.C. § 8901 et seq.);
9. A public health plan (as defined in federal regulations);
10. A health benefit plan under section 5 (e) of the Peace Corps Act (22U.S.C. § 2504(e)); or
11. Individual health insurance coverage.
Such term does not include coverage consisting solely of coverage of exceptedbenefits.
"Dependent" means the spouse or child of an eligible employee, subject tothe applicable terms of the policy, contract or plan covering the eligibleemployee.
"Eligible employee" means an employee who works for a small group employeron a full-time basis, has a normal work week of 30 or more hours, hassatisfied applicable waiting period requirements, and is not a part-time,temporary or substitute employee.
"Eligible individual" means such an individual in relation to the employeras shall be determined:
1. In accordance with the terms of such plan;
2. As provided by the health insurance issuer under rules of the healthinsurance issuer which are uniformly applicable to employers in the groupmarket; and
3. In accordance with all applicable law of this Commonwealth governing suchissuer and such market.
"Employee" has the meaning given such term under section 3(6) of theEmployee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (6)).
"Employer" has the meaning given such term under section 3(5) of theEmployee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (5)),except that such term shall include only employers of two or more employees.
"Enrollment date" means, with respect to an eligible individual coveredunder a group health plan or health insurance coverage, the date ofenrollment of the eligible individual in the plan or coverage or, if earlier,the first day of the waiting period for such enrollment.
"Essential and standard health benefit plans" means health benefit plansdeveloped pursuant to subsection C of this section.
"Excepted benefits" means benefits under one or more (or any combinationthereof) of the following:
1. Benefits not subject to requirements of this article:
a. Coverage only for accident, or disability income insurance, or anycombination thereof;
b. Coverage issued as a supplement to liability insurance;
c. Liability insurance, including general liability insurance and automobileliability insurance;
d. Workers' compensation or similar insurance;
e. Medical expense and loss of income benefits;
f. Credit-only insurance;
g. Coverage for on-site medical clinics; and
h. Other similar insurance coverage, specified in regulations, under whichbenefits for medical care are secondary or incidental to other insurancebenefits.
2. Benefits not subject to requirements of this article if offered separately:
a. Limited scope dental or vision benefits;
b. Benefits for long-term care, nursing home care, home health care,community-based care, or any combination thereof; and
c. Such other similar, limited benefits as are specified in regulations.
3. Benefits not subject to requirements of this article if offered asindependent, noncoordinated benefits:
a. Coverage only for a specified disease or illness; and
b. Hospital indemnity or other fixed indemnity insurance.
4. Benefits not subject to requirements of this article if offered asseparate insurance policy:
a. Medicare supplemental health insurance (as defined under section 1882 (g)(1) of the Social Security Act (42 U.S.C. § 1395ss (g) (1));
b. Coverage supplemental to the coverage provided under Chapter 55 of Title10, United States Code (10 U.S.C. § 1071 et seq.); and
c. Similar supplemental coverage provided to coverage under a group healthplan.
"Federal governmental plan" means a governmental plan established ormaintained for its employees by the government of the United States or by anagency or instrumentality of such government.
"Governmental plan" has the meaning given such term under section 3(32) ofthe Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (32))and any federal governmental plan.
"Group health insurance coverage" means in connection with a group healthplan, health insurance coverage offered in connection with such plan.
"Group health plan" means an employee welfare benefit plan (as defined insection 3 (1) of the Employee Retirement Income Security Act of 1974 (29U.S.C. § 1002 (1)), to the extent that the plan provides medical care andincluding items and services paid for as medical care to employees or theirdependents (as defined under the terms of the plan) directly or throughinsurance, reimbursement, or otherwise.
"Health benefit plan" means any accident and health insurance policy orcertificate, health services plan contract, health maintenance organizationsubscriber contract, plan provided by a MEWA or plan provided by anotherbenefit arrangement. "Health benefit plan" does not mean accident only,credit, or disability insurance; coverage of Medicare services or federalemployee health plans, pursuant to contracts with the United Statesgovernment; Medicare supplement or long-term care insurance; Medicaidcoverage; dental only or vision only insurance; specified disease insurance;hospital confinement indemnity coverage; limited benefit health coverage;coverage issued as a supplement to liability insurance; insurance arising outof a workers' compensation or similar law; automobile medical paymentinsurance; medical expense and loss of income benefits; or insurance underwhich benefits are payable with or without regard to fault and that isstatutorily required to be contained in any liability insurance policy orequivalent self-insurance.
"Health insurance coverage" means benefits consisting of medical care(provided directly, through insurance or reimbursement, or otherwise andincluding items and services paid for as medical care) under any hospital ormedical service policy or certificate, hospital or medical service plancontract, or health maintenance organization contract offered by a healthinsurance issuer.
"Health insurance issuer" means an insurance company, or insuranceorganization (including a health maintenance organization) which is licensedto engage in the business of insurance in this Commonwealth and which issubject to the laws of this Commonwealth which regulate insurance within themeaning of section 514 (b) (2) of the Employee Retirement Income Security Actof 1974 (29 U.S.C. § 1144 (b) (2)). Such term does not include a group healthplan.
"Health maintenance organization" means:
1. A federally qualified health maintenance organization;
2. An organization recognized under the laws of this Commonwealth as a healthmaintenance organization; or
3. A similar organization regulated under the laws of this Commonwealth forsolvency in the same manner and to the same extent as such a healthmaintenance organization.
"Health status-related factor" means the following in relation to theindividual or a dependent eligible for coverage under a group health plan orhealth insurance coverage offered by a health insurance issuer:
1. Health status;
2. Medical condition (including both physical and mental illnesses);
3. Claims experience;
4. Receipt of health care;
5. Medical history;
6. Genetic information;
7. Evidence of insurability (including conditions arising out of acts ofdomestic violence); or
8. Disability.
"Individual health insurance coverage" means health insurance coverageoffered to individuals in the individual market, but does not includecoverage defined as excepted benefits. Individual health insurance coveragedoes not include short-term limited duration coverage.
"Individual market" means the market for health insurance coverage offeredto individuals other than in connection with a group health plan.
"Large employer" means, in connection with a group health plan or healthinsurance coverage with respect to a calendar year and a plan year, anemployer who employed an average of at least 51 employees on business daysduring the preceding calendar year and who employs at least two employees onthe first day of the plan year.
"Large group market" means the health insurance market under whichindividuals obtain health insurance coverage (directly or through anyarrangement) on behalf of themselves (and their dependents) through a grouphealth plan maintained by a large employer or through a health insuranceissuer.
"Late enrollee" means, with respect to coverage under a group health planor health insurance coverage provided by a health insurance issuer, aparticipant or beneficiary who enrolls under the plan other than during:
1. The first period in which the individual is eligible to enroll under theplan; or
2. A special enrollment period as required pursuant to subsections J throughM of § 38.2-3432.3.
"Medical care" means amounts paid for:
1. The diagnosis, cure, mitigation, treatment, or prevention of disease, oramounts paid for the purpose of affecting any structure or function of thebody;
2. Transportation primarily for and essential to medical care referred to insubdivision 1; and
3. Insurance covering medical care referred to in subdivisions 1 and 2.
"Network plan" means health insurance coverage of a health insurance issuerunder which the financing and delivery of medical care (including items andservices paid for as medical care) are provided, in whole or in part, througha defined set of providers under contract with the health insurance issuer.
"Nonfederal governmental plan" means a governmental plan that is not afederal governmental plan.
"Participant" has the meaning given such term under section 3(7) of theEmployee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (7)).
"Placed for adoption," or "placement" or "being placed" for adoption,in connection with any placement for adoption of a child with any person,means the assumption and retention by such person of a legal obligation fortotal or partial support of such child in anticipation of adoption of suchchild. The child's placement with such person terminates upon the terminationof such legal obligation.
"Plan sponsor" has the meaning given such term under section 3(16) (B) ofthe Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (16)(B)).
"Preexisting condition exclusion" means, with respect to coverage, alimitation or exclusion of benefits relating to a condition based on the factthat the condition was present before the date of enrollment for suchcoverage, whether or not any medical advice, diagnosis, care, or treatmentwas recommended or received before such date. Genetic information shall notbe treated as a preexisting condition in the absence of a diagnosis of thecondition related to such information.
"Premium" means all moneys paid by an employer and eligible employees as acondition of coverage from a health insurance issuer, including fees andother contributions associated with the health benefit plan.
"Rating period" means the 12-month period for which premium rates aredetermined by a health insurance issuer and are assumed to be in effect.
"Service area" means a broad geographic area of the Commonwealth in which ahealth insurance issuer sells or has sold insurance policies on or beforeJanuary 1994, or upon its subsequent authorization to do business in Virginia.
"Small employer" means in connection with a group health plan or healthinsurance coverage with respect to a calendar year and a plan year, anemployer who employed an average of at least two but not more than 50employees on business days during the preceding calendar year and who employsat least two employees on the first day of the plan year.
"Small group market" means the health insurance market under whichindividuals obtain health insurance coverage (directly or through anyarrangement) on behalf of themselves (and their dependents) through a grouphealth plan maintained by a small employer or through a health insuranceissuer.
"State" means each of the several states, the District of Columbia, PuertoRico, the Virgin Islands, Guam, American Samoa, and the Northern MarianaIslands.
"Waiting period" means, with respect to a group health plan or healthinsurance coverage provided by a health insurance issuer and an individualwho is a potential participant or beneficiary in the plan, the period thatmust pass with respect to the individual before the individual is eligible tobe covered for benefits under the terms of the plan. If an employee ordependent enrolls during a special enrollment period pursuant to subsectionsJ through M of § 38.2-3432.3 or as a late enrollee, any period before suchenrollment is not a waiting period.
C. The Commission shall adopt regulations establishing the essential andstandard plans for sale in the small employer market. Such regulations shallincorporate the recommendations of the Essential Health Services Panel,established pursuant to Chapter 847 of the 1992 Acts of Assembly. TheCommission shall modify such regulations as necessary to incorporate anyrevisions to the essential and standard plans submitted by the SpecialAdvisory Commission on Mandated Health Insurance Benefits pursuant to §2.2-2503. Every health insurance issuer shall, as a condition of transactingbusiness in Virginia with small employers, offer to small employers theessential and standard plans, subject to the provisions of § 38.2-3432.2.However, any regulation adopted by the Commission shall contain a provisionrequiring all health insurance issuers to offer an option permitting a smallemployer electing to be covered under either an essential or standard healthbenefit plan to choose coverage that does not provide dental benefits. Theregulation shall also require a small employer electing such option, as acondition of continuing eligibility for coverage pursuant to this article, topurchase separate dental coverage for all eligible employees and eligibledependents from a dental services plan authorized pursuant to Chapter 45 ofthis title. All health insurance issuers shall issue the plans to every smallemployer that elects to be covered under either one of the plans and agreesto make the required premium payments, and shall satisfy the followingprovisions:
1. Such plan may include cost containment and cost sharing features such as,but not limited to, utilization review of health care services includingreview of medical necessity of hospital and physician services; casemanagement; selective contracting with hospitals, physicians and other healthcare providers, subject to the limitations set forth in §§ 38.2-3407 and38.2-4209 and Chapter 43 (§ 38.2-4300 et seq.) of this title; reasonablebenefit differentials applicable to providers that participate or do notparticipate in arrangements using restricted network provisions; co-payment,co-insurance, deductible or other cost sharing arrangement as those terms aredefined in § 38.2-3407.12; or other managed care provisions. The essentialand standard plans for health maintenance organizations shall containbenefits and cost-sharing levels which are consistent with the basic methodof operation and benefit plans of federally qualified health maintenanceorganizations, if a health maintenance organization is federally qualified,and of nonfederally qualified health maintenance organizations, if a healthmaintenance organization is not federally qualified. The essential andstandard plans of coverage for health maintenance organizations shall beactuarial equivalents of these plans for health insurance issuers.
2. No law requiring the coverage or offering of coverage of a benefit orprovider pursuant to § 38.2-3408 or § 38.2-4221 shall apply to the essentialor standard health care plan or riders thereof.
3. Every health insurance issuer offering group health insurance coverageshall, as a condition of transacting business in Virginia with smallemployers, offer and make available to small employers an essential and astandard health benefit plan, subject to the provisions of § 38.2-3432.2.
4. All essential and standard benefit plans issued to small employers shalluse a policy form approved by the Commission providing coverage defined bythe essential and standard benefit plans. Coverages providing benefitsgreater than and in addition to the essential and standard plans may beprovided by rider, separate policy or plan provided that no rider, separatepolicy or plan shall reduce benefit or premium. A health insurance issuershall submit all policy forms, including applications, enrollment forms,policies, subscription contracts, certificates, evidences of coverage,riders, amendments, endorsements and disclosure plans to the Commission forapproval in the same manner as required by § 38.2-316. Each rider, separatepolicy or plan providing benefits greater than the essential and standardbenefit plans may require a specific premium for the benefits provided insuch rider, separate policy or plan. The premium for such riders shall bedetermined in the same manner as the premiums are determined for theessential and standard plans. The Commission at any time may, after providingnotice and an opportunity for a hearing to a health insurance issuer,disapprove the continued use by the health insurance issuer of an essentialor standard health benefit plan on the grounds that such plan does not meetthe requirements of this article.
5. No health insurance issuer offering group health insurance coverage isrequired to offer coverage or accept applications pursuant to subdivisions 3and 4 of this subsection:
a. From a small employer already covered under a health benefit plan exceptfor coverage that is to commence on the group's anniversary date, but thissubsection shall not be construed to prohibit a group from seeking coverageor a health insurance issuer offering group health insurance coverage fromissuing coverage to a group prior to its anniversary date; or
b. If the Commission determines that acceptance of an application orapplications would result in the health insurance issuer being declared animpaired insurer.
A health insurance issuer offering group health insurance coverage that doesnot offer coverage pursuant to subdivision 5 b may not offer coverage tosmall employers until the Commission determines that the health insuranceissuer is no longer impaired.
6. Every health insurance issuer offering group health insurance coverageshall uniformly apply the provisions of subdivision C 5 of this section andshall fairly market the essential and standard health benefit plans to allsmall employers in their service area of the Commonwealth. A health insuranceissuer offering group health insurance coverage that fails to fairly marketas required by this subdivision may not offer coverage in the Commonwealth tonew small employers until the later of 180 days after the unfair marketinghas been identified and proven to the Commission or the date on which thehealth insurance issuer submits and the Commission approves a plan to fairlymarket to the health insurance issuer's service area.
7. No health maintenance organization is required to offer coverage or acceptapplications pursuant to subdivisions 3 and 4 of this subsection in the caseof any of the following:
a. To small employers, where the policy would not be delivered or issued fordelivery in the health maintenance organization's approved service areas;
b. To an employee, where the employee does not reside or work within thehealth maintenance organization's approved service areas;
c. To small employers if the health maintenance organization is a federallyqualified health maintenance organization and it demonstrates to thesatisfaction of the Commission that the federally qualified healthmaintenance organization is prevented from doing so by federal requirement;however, any such exemption under this subdivision would be limited to theessential plan; or
d. Within an area where the health maintenance organization demonstrates tothe satisfaction of the Commission, that it will not have the capacity withinthat area and its network of providers to deliver services adequately to theenrollees of those groups because of its obligations to existing groupcontract holders and enrollees. A health maintenance organization that doesnot offer coverage pursuant to this subdivision may not offer coverage in theapplicable area to new employer groups with more than 50 eligible employeesuntil the later of 180 days after closure to new applications or the date onwhich the health maintenance organization notifies the Commission that it hasregained capacity to deliver services to small employers. In the case of ahealth maintenance organization doing business in the small employer marketin one service area of this Commonwealth, the rules set forth in thissubdivision shall apply to the health maintenance organization's operationsin the service area, unless the provisions of subdivision 6 of thissubsection apply.
8. In order to ensure the broadest availability of health benefit plans tosmall employers, the Commission shall set market conduct and otherrequirements for health insurance issuers, agents and third-partyadministrators, including requirements relating to the following:
a. Registration by each health insurance issuer offering group healthinsurance coverage with the Commission of its intention to offer healthinsurance coverage in the small group market under this article;
b. Publication by the Commission of a list of all health insurance issuerswho offer coverage in the small group market, including a potentialrequirement applicable to agents, third-party administrators, and healthinsurance issuers that no health benefit plan may be sold to a small employerby a health insurance issuer not so identified as a health insurance issuerin the small group market;
c. The availability of a broadly publicized toll-free telephone number forthe Commission's Bureau of Insurance for access by small employers toinformation concerning this article;
d. To the extent deemed to be necessary to ensure the fair distribution ofsmall employers among carriers, periodic reports by health insurance issuersabout plans issued to small employers; provided that reporting requirementsshall be limited to information concerning case characteristics and numbersof health benefit plans in various categories marketed or issued to smallemployers. Health insurance issuers shall maintain data relating to theessential and standard benefit plans separate from data relating toadditional benefits made available by rider for the purpose of complying withthe reporting requirements of this section; and
e. Methods concerning periodic demonstration by health insurance issuersoffering group health insurance coverage that they are marketing and issuinghealth benefit plans to small employers in fulfillment of the purposes ofthis article.
9. All essential and standard health benefits plans contracts delivered,issued for delivery, reissued, renewed, or extended in this Commonwealth onor after July 1, 1997, shall include coverage for 365 days of inpatienthospitalization for each covered individual during a 12-month period. Ifcoverage under the essential or standard health benefits plan terminateswhile a covered person is hospitalized, the inpatient hospital benefits shallcontinue to be provided until the earliest of (i) the day the maximum amountof benefit has been provided or (ii) the day the covered person is no longerhospitalized as an inpatient.
(1992, c. 800; 1993, cc. 148, 960; 1994, c. 303; 1996, c. 262; 1997, cc. 415,807, 913; 1998, cc. 24, 26; 1999, cc. 789, 815, 1004; 2003, c. 645.)
A. This article applies to group health plans and to health insurance issuersoffering group health insurance coverage, and individual policies offered toemployees of small employers.
Each insurer proposing to issue individual or group accident and sicknessinsurance policies providing hospital, medical and surgical or major medicalcoverage on an expense incurred basis, each corporation providing individualor group accident and sickness subscription contracts, and each healthmaintenance organization or multiple employer welfare arrangement providinghealth care plans for health care services that offers individual or groupcoverage to the small employer market in this Commonwealth shall be subjectto the provisions of this article. Any issuer of individual coverage toemployees of a small employer shall be subject to the provisions of thisarticle if any of the following conditions are met:
1. Any portion of the premiums or benefits is paid by or on behalf of theemployer;
2. The eligible employee or dependent is reimbursed, whether through wageadjustments or otherwise, by or on behalf of the employer for any portion ofthe premium;
3. The employer has permitted payroll deduction for the covered individualand any portion of the premium is paid by the employer, provided that thehealth insurance issuer providing individual coverage under suchcircumstances shall be registered as a health insurance issuer in the smallgroup market under this article, and shall have offered small employer groupinsurance to the employer in the manner required under this article; or
4. The health benefit plan is treated by the employer or any of the coveredindividuals as part of a plan or program for the purpose of §§ 106, 125, or162 of the United States Internal Revenue Code.
B. For the purposes of this article:
"Actuarial certification" means a written statement by a member of theAmerican Academy of Actuaries or other individual acceptable to theCommission that a health insurance issuer is in compliance with theprovisions of this article based upon the person's examination, including areview of the appropriate records and of the actuarial assumptions andmethods used by the health insurance issuer in establishing premium rates forapplicable insurance coverage.
"Affiliation period" means a period which, under the terms of the healthinsurance coverage offered by a health maintenance organization, must expirebefore the health insurance coverage becomes effective. The healthmaintenance organization is not required to provide health care services orbenefits during such period and no premium shall be charged to theparticipant or beneficiary for any coverage during the period.
1. Such period shall begin on the enrollment date.
2. An affiliation period under a plan shall run concurrently with any waitingperiod under the plan.
"Beneficiary" has the meaning given such term under section 3(8) of theEmployee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (8)).
"Bona fide association" means, with respect to health insurance coverageoffered in this Commonwealth, an association which:
1. Has been actively in existence for at least five years;
2. Has been formed and maintained in good faith for purposes other thanobtaining insurance;
3. Does not condition membership in the association on any healthstatus-related factor relating to an individual (including an employee of anemployer or a dependent of an employee);
4. Makes health insurance coverage offered through the association availableto all members regardless of any health status-related factor relating tosuch members (or individuals eligible for coverage through a member);
5. Does not make health insurance coverage offered through the associationavailable other than in connection with a member of the association; and
6. Meets such additional requirements as may be imposed under the laws ofthis Commonwealth.
"Certification" means a written certification of the period of creditablecoverage of an individual under a group health plan and coverage provided bya health insurance issuer offering group health insurance coverage and thecoverage if any under such COBRA continuation provision, and the waitingperiod if any and affiliation period if applicable imposed with respect tothe individual for any coverage under such plan.
"Church plan" has the meaning given such term under section 3(33) of theEmployee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (33)).
"COBRA continuation provision" means any of the following:
1. Section 4980B of the Internal Revenue Code of 1986 (26 U.S.C. § 4980B),other than subsection (f) (1) of such section insofar as it relates topediatric vaccines;
2. Part 6 of subtitle B of Title I of the Employee Retirement Income SecurityAct of 1974 (29 U.S.C. § 1161 et seq.), other than section 609 of such Act; or
3. Title XXII of P.L. 104-191.
"Community rate" means the average rate charged for the same or similarcoverage to all small employer groups with the same area, age and gendercharacteristics. This rate shall be based on the health insurance issuer'scombined claims experience for all groups within its small employer market.
"Creditable coverage" means with respect to an individual, coverage of theindividual under any of the following:
1. A group health plan;
2. Health insurance coverage;
3. Part A or B of Title XVIII of the Social Security Act (42 U.S.C. § 1395cor § 1395);
4. Title XIX of the Social Security Act (42 U.S.C. § 1396 et seq.), otherthan coverage consisting solely of benefits under section 1928;
5. Chapter 55 of Title 10, United States Code (10 U.S.C. § 1071 et seq.);
6. A medical care program of the Indian Health Service or of a tribalorganization;
7. A state health benefits risk pool;
8. A health plan offered under Chapter 89 of Title 5, United States Code (5U.S.C. § 8901 et seq.);
9. A public health plan (as defined in federal regulations);
10. A health benefit plan under section 5 (e) of the Peace Corps Act (22U.S.C. § 2504(e)); or
11. Individual health insurance coverage.
Such term does not include coverage consisting solely of coverage of exceptedbenefits.
"Dependent" means the spouse or child of an eligible employee, subject tothe applicable terms of the policy, contract or plan covering the eligibleemployee.
"Eligible employee" means an employee who works for a small group employeron a full-time basis, has a normal work week of 30 or more hours, hassatisfied applicable waiting period requirements, and is not a part-time,temporary or substitute employee.
"Eligible individual" means such an individual in relation to the employeras shall be determined:
1. In accordance with the terms of such plan;
2. As provided by the health insurance issuer under rules of the healthinsurance issuer which are uniformly applicable to employers in the groupmarket; and
3. In accordance with all applicable law of this Commonwealth governing suchissuer and such market.
"Employee" has the meaning given such term under section 3(6) of theEmployee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (6)).
"Employer" has the meaning given such term under section 3(5) of theEmployee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (5)),except that such term shall include only employers of two or more employees.
"Enrollment date" means, with respect to an eligible individual coveredunder a group health plan or health insurance coverage, the date ofenrollment of the eligible individual in the plan or coverage or, if earlier,the first day of the waiting period for such enrollment.
"Essential and standard health benefit plans" means health benefit plansdeveloped pursuant to subsection C of this section.
"Excepted benefits" means benefits under one or more (or any combinationthereof) of the following:
1. Benefits not subject to requirements of this article:
a. Coverage only for accident, or disability income insurance, or anycombination thereof;
b. Coverage issued as a supplement to liability insurance;
c. Liability insurance, including general liability insurance and automobileliability insurance;
d. Workers' compensation or similar insurance;
e. Medical expense and loss of income benefits;
f. Credit-only insurance;
g. Coverage for on-site medical clinics; and
h. Other similar insurance coverage, specified in regulations, under whichbenefits for medical care are secondary or incidental to other insurancebenefits.
2. Benefits not subject to requirements of this article if offered separately:
a. Limited scope dental or vision benefits;
b. Benefits for long-term care, nursing home care, home health care,community-based care, or any combination thereof; and
c. Such other similar, limited benefits as are specified in regulations.
3. Benefits not subject to requirements of this article if offered asindependent, noncoordinated benefits:
a. Coverage only for a specified disease or illness; and
b. Hospital indemnity or other fixed indemnity insurance.
4. Benefits not subject to requirements of this article if offered asseparate insurance policy:
a. Medicare supplemental health insurance (as defined under section 1882 (g)(1) of the Social Security Act (42 U.S.C. § 1395ss (g) (1));
b. Coverage supplemental to the coverage provided under Chapter 55 of Title10, United States Code (10 U.S.C. § 1071 et seq.); and
c. Similar supplemental coverage provided to coverage under a group healthplan.
"Federal governmental plan" means a governmental plan established ormaintained for its employees by the government of the United States or by anagency or instrumentality of such government.
"Governmental plan" has the meaning given such term under section 3(32) ofthe Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (32))and any federal governmental plan.
"Group health insurance coverage" means in connection with a group healthplan, health insurance coverage offered in connection with such plan.
"Group health plan" means an employee welfare benefit plan (as defined insection 3 (1) of the Employee Retirement Income Security Act of 1974 (29U.S.C. § 1002 (1)), to the extent that the plan provides medical care andincluding items and services paid for as medical care to employees or theirdependents (as defined under the terms of the plan) directly or throughinsurance, reimbursement, or otherwise.
"Health benefit plan" means any accident and health insurance policy orcertificate, health services plan contract, health maintenance organizationsubscriber contract, plan provided by a MEWA or plan provided by anotherbenefit arrangement. "Health benefit plan" does not mean accident only,credit, or disability insurance; coverage of Medicare services or federalemployee health plans, pursuant to contracts with the United Statesgovernment; Medicare supplement or long-term care insurance; Medicaidcoverage; dental only or vision only insurance; specified disease insurance;hospital confinement indemnity coverage; limited benefit health coverage;coverage issued as a supplement to liability insurance; insurance arising outof a workers' compensation or similar law; automobile medical paymentinsurance; medical expense and loss of income benefits; or insurance underwhich benefits are payable with or without regard to fault and that isstatutorily required to be contained in any liability insurance policy orequivalent self-insurance.
"Health insurance coverage" means benefits consisting of medical care(provided directly, through insurance or reimbursement, or otherwise andincluding items and services paid for as medical care) under any hospital ormedical service policy or certificate, hospital or medical service plancontract, or health maintenance organization contract offered by a healthinsurance issuer.
"Health insurance issuer" means an insurance company, or insuranceorganization (including a health maintenance organization) which is licensedto engage in the business of insurance in this Commonwealth and which issubject to the laws of this Commonwealth which regulate insurance within themeaning of section 514 (b) (2) of the Employee Retirement Income Security Actof 1974 (29 U.S.C. § 1144 (b) (2)). Such term does not include a group healthplan.
"Health maintenance organization" means:
1. A federally qualified health maintenance organization;
2. An organization recognized under the laws of this Commonwealth as a healthmaintenance organization; or
3. A similar organization regulated under the laws of this Commonwealth forsolvency in the same manner and to the same extent as such a healthmaintenance organization.
"Health status-related factor" means the following in relation to theindividual or a dependent eligible for coverage under a group health plan orhealth insurance coverage offered by a health insurance issuer:
1. Health status;
2. Medical condition (including both physical and mental illnesses);
3. Claims experience;
4. Receipt of health care;
5. Medical history;
6. Genetic information;
7. Evidence of insurability (including conditions arising out of acts ofdomestic violence); or
8. Disability.
"Individual health insurance coverage" means health insurance coverageoffered to individuals in the individual market, but does not includecoverage defined as excepted benefits. Individual health insurance coveragedoes not include short-term limited duration coverage.
"Individual market" means the market for health insurance coverage offeredto individuals other than in connection with a group health plan.
"Large employer" means, in connection with a group health plan or healthinsurance coverage with respect to a calendar year and a plan year, anemployer who employed an average of at least 51 employees on business daysduring the preceding calendar year and who employs at least two employees onthe first day of the plan year.
"Large group market" means the health insurance market under whichindividuals obtain health insurance coverage (directly or through anyarrangement) on behalf of themselves (and their dependents) through a grouphealth plan maintained by a large employer or through a health insuranceissuer.
"Late enrollee" means, with respect to coverage under a group health planor health insurance coverage provided by a health insurance issuer, aparticipant or beneficiary who enrolls under the plan other than during:
1. The first period in which the individual is eligible to enroll under theplan; or
2. A special enrollment period as required pursuant to subsections J throughM of § 38.2-3432.3.
"Medical care" means amounts paid for:
1. The diagnosis, cure, mitigation, treatment, or prevention of disease, oramounts paid for the purpose of affecting any structure or function of thebody;
2. Transportation primarily for and essential to medical care referred to insubdivision 1; and
3. Insurance covering medical care referred to in subdivisions 1 and 2.
"Network plan" means health insurance coverage of a health insurance issuerunder which the financing and delivery of medical care (including items andservices paid for as medical care) are provided, in whole or in part, througha defined set of providers under contract with the health insurance issuer.
"Nonfederal governmental plan" means a governmental plan that is not afederal governmental plan.
"Participant" has the meaning given such term under section 3(7) of theEmployee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (7)).
"Placed for adoption," or "placement" or "being placed" for adoption,in connection with any placement for adoption of a child with any person,means the assumption and retention by such person of a legal obligation fortotal or partial support of such child in anticipation of adoption of suchchild. The child's placement with such person terminates upon the terminationof such legal obligation.
"Plan sponsor" has the meaning given such term under section 3(16) (B) ofthe Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1002 (16)(B)).
"Preexisting condition exclusion" means, with respect to coverage, alimitation or exclusion of benefits relating to a condition based on the factthat the condition was present before the date of enrollment for suchcoverage, whether or not any medical advice, diagnosis, care, or treatmentwas recommended or received before such date. Genetic information shall notbe treated as a preexisting condition in the absence of a diagnosis of thecondition related to such information.
"Premium" means all moneys paid by an employer and eligible employees as acondition of coverage from a health insurance issuer, including fees andother contributions associated with the health benefit plan.
"Rating period" means the 12-month period for which premium rates aredetermined by a health insurance issuer and are assumed to be in effect.
"Service area" means a broad geographic area of the Commonwealth in which ahealth insurance issuer sells or has sold insurance policies on or beforeJanuary 1994, or upon its subsequent authorization to do business in Virginia.
"Small employer" means in connection with a group health plan or healthinsurance coverage with respect to a calendar year and a plan year, anemployer who employed an average of at least two but not more than 50employees on business days during the preceding calendar year and who employsat least two employees on the first day of the plan year.
"Small group market" means the health insurance market under whichindividuals obtain health insurance coverage (directly or through anyarrangement) on behalf of themselves (and their dependents) through a grouphealth plan maintained by a small employer or through a health insuranceissuer.
"State" means each of the several states, the District of Columbia, PuertoRico, the Virgin Islands, Guam, American Samoa, and the Northern MarianaIslands.
"Waiting period" means, with respect to a group health plan or healthinsurance coverage provided by a health insurance issuer and an individualwho is a potential participant or beneficiary in the plan, the period thatmust pass with respect to the individual before the individual is eligible tobe covered for benefits under the terms of the plan. If an employee ordependent enrolls during a special enrollment period pursuant to subsectionsJ through M of § 38.2-3432.3 or as a late enrollee, any period before suchenrollment is not a waiting period.
C. The Commission shall adopt regulations establishing the essential andstandard plans for sale in the small employer market. Such regulations shallincorporate the recommendations of the Essential Health Services Panel,established pursuant to Chapter 847 of the 1992 Acts of Assembly. TheCommission shall modify such regulations as necessary to incorporate anyrevisions to the essential and standard plans submitted by the SpecialAdvisory Commission on Mandated Health Insurance Benefits pursuant to §2.2-2503. Every health insurance issuer shall, as a condition of transactingbusiness in Virginia with small employers, offer to small employers theessential and standard plans, subject to the provisions of § 38.2-3432.2.However, any regulation adopted by the Commission shall contain a provisionrequiring all health insurance issuers to offer an option permitting a smallemployer electing to be covered under either an essential or standard healthbenefit plan to choose coverage that does not provide dental benefits. Theregulation shall also require a small employer electing such option, as acondition of continuing eligibility for coverage pursuant to this article, topurchase separate dental coverage for all eligible employees and eligibledependents from a dental services plan authorized pursuant to Chapter 45 ofthis title. All health insurance issuers shall issue the plans to every smallemployer that elects to be covered under either one of the plans and agreesto make the required premium payments, and shall satisfy the followingprovisions:
1. Such plan may include cost containment and cost sharing features such as,but not limited to, utilization review of health care services includingreview of medical necessity of hospital and physician services; casemanagement; selective contracting with hospitals, physicians and other healthcare providers, subject to the limitations set forth in §§ 38.2-3407 and38.2-4209 and Chapter 43 (§ 38.2-4300 et seq.) of this title; reasonablebenefit differentials applicable to providers that participate or do notparticipate in arrangements using restricted network provisions; co-payment,co-insurance, deductible or other cost sharing arrangement as those terms aredefined in § 38.2-3407.12; or other managed care provisions. The essentialand standard plans for health maintenance organizations shall containbenefits and cost-sharing levels which are consistent with the basic methodof operation and benefit plans of federally qualified health maintenanceorganizations, if a health maintenance organization is federally qualified,and of nonfederally qualified health maintenance organizations, if a healthmaintenance organization is not federally qualified. The essential andstandard plans of coverage for health maintenance organizations shall beactuarial equivalents of these plans for health insurance issuers.
2. No law requiring the coverage or offering of coverage of a benefit orprovider pursuant to § 38.2-3408 or § 38.2-4221 shall apply to the essentialor standard health care plan or riders thereof.
3. Every health insurance issuer offering group health insurance coverageshall, as a condition of transacting business in Virginia with smallemployers, offer and make available to small employers an essential and astandard health benefit plan, subject to the provisions of § 38.2-3432.2.
4. All essential and standard benefit plans issued to small employers shalluse a policy form approved by the Commission providing coverage defined bythe essential and standard benefit plans. Coverages providing benefitsgreater than and in addition to the essential and standard plans may beprovided by rider, separate policy or plan provided that no rider, separatepolicy or plan shall reduce benefit or premium. A health insurance issuershall submit all policy forms, including applications, enrollment forms,policies, subscription contracts, certificates, evidences of coverage,riders, amendments, endorsements and disclosure plans to the Commission forapproval in the same manner as required by § 38.2-316. Each rider, separatepolicy or plan providing benefits greater than the essential and standardbenefit plans may require a specific premium for the benefits provided insuch rider, separate policy or plan. The premium for such riders shall bedetermined in the same manner as the premiums are determined for theessential and standard plans. The Commission at any time may, after providingnotice and an opportunity for a hearing to a health insurance issuer,disapprove the continued use by the health insurance issuer of an essentialor standard health benefit plan on the grounds that such plan does not meetthe requirements of this article.
5. No health insurance issuer offering group health insurance coverage isrequired to offer coverage or accept applications pursuant to subdivisions 3and 4 of this subsection:
a. From a small employer already covered under a health benefit plan exceptfor coverage that is to commence on the group's anniversary date, but thissubsection shall not be construed to prohibit a group from seeking coverageor a health insurance issuer offering group health insurance coverage fromissuing coverage to a group prior to its anniversary date; or
b. If the Commission determines that acceptance of an application orapplications would result in the health insurance issuer being declared animpaired insurer.
A health insurance issuer offering group health insurance coverage that doesnot offer coverage pursuant to subdivision 5 b may not offer coverage tosmall employers until the Commission determines that the health insuranceissuer is no longer impaired.
6. Every health insurance issuer offering group health insurance coverageshall uniformly apply the provisions of subdivision C 5 of this section andshall fairly market the essential and standard health benefit plans to allsmall employers in their service area of the Commonwealth. A health insuranceissuer offering group health insurance coverage that fails to fairly marketas required by this subdivision may not offer coverage in the Commonwealth tonew small employers until the later of 180 days after the unfair marketinghas been identified and proven to the Commission or the date on which thehealth insurance issuer submits and the Commission approves a plan to fairlymarket to the health insurance issuer's service area.
7. No health maintenance organization is required to offer coverage or acceptapplications pursuant to subdivisions 3 and 4 of this subsection in the caseof any of the following:
a. To small employers, where the policy would not be delivered or issued fordelivery in the health maintenance organization's approved service areas;
b. To an employee, where the employee does not reside or work within thehealth maintenance organization's approved service areas;
c. To small employers if the health maintenance organization is a federallyqualified health maintenance organization and it demonstrates to thesatisfaction of the Commission that the federally qualified healthmaintenance organization is prevented from doing so by federal requirement;however, any such exemption under this subdivision would be limited to theessential plan; or
d. Within an area where the health maintenance organization demonstrates tothe satisfaction of the Commission, that it will not have the capacity withinthat area and its network of providers to deliver services adequately to theenrollees of those groups because of its obligations to existing groupcontract holders and enrollees. A health maintenance organization that doesnot offer coverage pursuant to this subdivision may not offer coverage in theapplicable area to new employer groups with more than 50 eligible employeesuntil the later of 180 days after closure to new applications or the date onwhich the health maintenance organization notifies the Commission that it hasregained capacity to deliver services to small employers. In the case of ahealth maintenance organization doing business in the small employer marketin one service area of this Commonwealth, the rules set forth in thissubdivision shall apply to the health maintenance organization's operationsin the service area, unless the provisions of subdivision 6 of thissubsection apply.
8. In order to ensure the broadest availability of health benefit plans tosmall employers, the Commission shall set market conduct and otherrequirements for health insurance issuers, agents and third-partyadministrators, including requirements relating to the following:
a. Registration by each health insurance issuer offering group healthinsurance coverage with the Commission of its intention to offer healthinsurance coverage in the small group market under this article;
b. Publication by the Commission of a list of all health insurance issuerswho offer coverage in the small group market, including a potentialrequirement applicable to agents, third-party administrators, and healthinsurance issuers that no health benefit plan may be sold to a small employerby a health insurance issuer not so identified as a health insurance issuerin the small group market;
c. The availability of a broadly publicized toll-free telephone number forthe Commission's Bureau of Insurance for access by small employers toinformation concerning this article;
d. To the extent deemed to be necessary to ensure the fair distribution ofsmall employers among carriers, periodic reports by health insurance issuersabout plans issued to small employers; provided that reporting requirementsshall be limited to information concerning case characteristics and numbersof health benefit plans in various categories marketed or issued to smallemployers. Health insurance issuers shall maintain data relating to theessential and standard benefit plans separate from data relating toadditional benefits made available by rider for the purpose of complying withthe reporting requirements of this section; and
e. Methods concerning periodic demonstration by health insurance issuersoffering group health insurance coverage that they are marketing and issuinghealth benefit plans to small employers in fulfillment of the purposes ofthis article.
9. All essential and standard health benefits plans contracts delivered,issued for delivery, reissued, renewed, or extended in this Commonwealth onor after July 1, 1997, shall include coverage for 365 days of inpatienthospitalization for each covered individual during a 12-month period. Ifcoverage under the essential or standard health benefits plan terminateswhile a covered person is hospitalized, the inpatient hospital benefits shallcontinue to be provided until the earliest of (i) the day the maximum amountof benefit has been provided or (ii) the day the covered person is no longerhospitalized as an inpatient.
(1992, c. 800; 1993, cc. 148, 960; 1994, c. 303; 1996, c. 262; 1997, cc. 415,807, 913; 1998, cc. 24, 26; 1999, cc. 789, 815, 1004; 2003, c. 645.)
