Insurance Division Bulletin INS 2008-5
TO: Health Insurers and Health Care Service Contractors
RE: Prohibition Against Use of Health Status for Underwriting Associations with Small Employer Groups and Allowable Rating Practices for Associations with Small Employer Groups
This bulletin replaces Insurance Division Bulletin 2008-4.
The purpose of this Bulletin is to ensure that carriers consistently apply ORS 743.733 to 743.737 and ORS 743.751 and 743.752 to associations holding group health benefit plans that include small employer groups. Laws relating to this topic were amended in the 2007 regular session of the Legislative Assembly. See ch. 752, Oregon Laws 2007. This bulletin applies to trusts, discretionary groups and multiple employer welfare associations, as well as to associations generally.
For purposes of this Bulletin:
A small employer has the meaning given that term in ORS 743.730. The definition of general applicability is as follows: “An employer that employed an average of at least two but not more than 50 employees on business days during the preceding calendar year, the majority of whom are employed within this state, and that employs at least two eligible employees on the date on which coverage takes effect under a health benefit plan issued by a small employer carrier.” Please note the exceptions in the statutory definition for a person that is treated as a single employer under provisions of the Internal Revenue Code and for an employer who was not in existence throughout the preceding calendar year.
“Association” means an association as that term is used in the definition of "group health insurance" in ORS 743.522, and includes a trust, discretionary group or multiple employer welfare association.
Enrollment in Associations
Use of Health Statements or Other Method to Reveal Health Status
A carrier may not use health statements or any other method to determine actual or expected health status when quoting or offering health benefit plans to any group. Thus, when a carrier insures an association, the insurer, the association and any group within the association may not determine or use health status of individual members for any of the following purposes:
A carrier offering group health benefit plans may use a health statement only for the purpose of determining whether a preexisting condition exists with respect to a late enrollee or to provide services or arrange for the provision of services under a health benefit plan.
Use of Claims Experience
A carrier may not use claims experience, except for premium rating as provided herein, to underwrite a small employer group, whether separately or as a part of an association health benefit plan. (See ORS 743.734, 743.751 and 743.752.) A carrier may not use any method to determine the actual or expected health status of an eligible prospective enrollee before or after enrollment in a group health benefit plan. Claims experience is one such prohibited method for underwriting.
A carrier offering group health benefit plans may not use claims experience to underwrite or identify individuals within a small employer group, to underwrite or identify a small employer group or to underwrite or identify subgroups of a small employer group.
A carrier offering health benefit plans to associations may use risk status, claims experience and the financial condition of the association as a whole as a criterion for declination of the association as a whole. As a whole means as one group with no subgroups within the group, but only if an association as a whole does not meet the definition of a small employer group.
This discussion under “Enrollment in Associations” applies to all health benefit plans issued or renewed to an association on and after January 1, 2008.
Premium Rating of Associations
A carrier offering a health benefit plan to an association with small employer group members has three options for rating the association and its small employer group members:
Risk status, claims experience or financial condition may not be used as a criterion for premium rating of individual enrollees within a group of any size.
This discussion under “Premium Rating of Associations” applies to all health benefit plans issued or renewed to an association on or after January 1, 2008.
This bulletin takes effect immediately.
This bulletin is dated the 28th day of August 2008 at Salem, Oregon.