THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY MATZIE, MIRABITO, DeLUCA, D. COSTA, BARRAR, BELFANTI, BRENNAN, BRIGGS, CALTAGIRONE, DALEY, FREEMAN, GEORGE, GIBBONS, HALUSKA, HORNAMAN, HOUGHTON, JOSEPHS, KORTZ, LONGIETTI, MAHONEY, MANN, McGEEHAN, MELIO, MILNE, MUNDY, M. O'BRIEN, PASHINSKI, QUINN, READSHAW, SIPTROTH, SOLOBAY, STURLA, SWANGER, J. TAYLOR, VULAKOVICH, WHITE, McILVAINE SMITH, PETRARCA, EVERETT, FRANKEL, MANDERINO, MURT, K. SMITH, WHEATLEY AND GALLOWAY, MARCH 24, 2009

AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES, APRIL 21, 2009   

AN ACT

Providing for group health policies to continue for period of

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time after termination of employment or membership in health

maintenance organizations.

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Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An

act relating to insurance; amending, revising, and

consolidating the law providing for the incorporation of

insurance companies, and the regulation, supervision, and

protection of home and foreign insurance companies, Lloyds

associations, reciprocal and inter-insurance exchanges, and

fire insurance rating bureaus, and the regulation and

supervision of insurance carried by such companies,

associations, and exchanges, including insurance carried by

the State Workmen's Insurance Fund; providing penalties; and

repealing existing laws," in health and accident insurance,

providing for group health policies to continue for period of

time after termination of employment or membership in health

maintenance organizations.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Short title.

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This act shall be known and may be cited as the Mini-COBRA

Small Employer Group Health Plan and Premium Assistance Act.

Section 2.  Legislative finds and declarations.

The General Assembly finds and declares as follows:

(1)  A major crisis exists in this Commonwealth because

of the continuing escalation of costs for health care

insurance, accompanied by an increase in unemployment.

Because of these factors, an increasingly large number of

Pennsylvania citizens have severely limited access to

appropriate and timely health care.

(2)  According to a recent survey by the Insurance

Department, more than 1,000,000 Commonwealth citizens are

without insurance and this figure can be expected to grow in

the short term.

(3)  Unemployed individuals who are involuntarily

terminated from their jobs have access to COBRA, however,

many find that the premium for COBRA is too expensive and are

unable to afford the premium.

(4)  Both the President and Congress have recognized this

problem in the American Recovery and Reinvestment Act of 2009

(Public Law 111-5, 123 Stat. 115).

(5)  Division B of the American Recovery and Reinvestment

Act of 2009, entitled Tax, Unemployment, Health, State Fiscal

Relief, and Other Provisions provides premium assistance for

COBRA benefits to assist eligible individuals who timely

elect to participate in the premium assistance program.

(6)  The premium assistance program provides relief in

the form of paying 65% of the normal COBRA premiums available

under COBRA coverage, including coverage subject to State

continuation laws or mini-COBRA laws.

(7)  It is therefore declared the policy of the

Commonwealth to enact a mini-COBRA bill providing

Commonwealth citizens the opportunity to take full advantage

of the Federal premium assistance program so the cost of

health insurance coverage for the unemployed can be minimized

when possible, and which will survive beyond the temporary

relief provided in the Federal act.

Section 3.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Administrator."  The person specifically designated by the

employer by written agreement to manage the administration of

the group policy issued to the employer or, if an administrator

is not so designated, the employer will be deemed the

administrator for purposes of this section. 

"Covered employee."  An individual who is or was provided

coverage under a group policy by virtue of the performance of

services by the individual for one or more persons maintaining

the policy, including as an employee defined in section 401(c)

(1) of the Internal Revenue Code of 1986 (Public Law 99-514, 26

U.S.C. § 1 et seq.). The term includes employees and members as

those terms are used in section 621.2 of the act of May 17, 1921

(P.L.682, No.284), known as The Insurance Company Law of 1921.

"Eligible dependent."

(1)  Regarding a covered employee under a group health

plan, an individual who, on the day before the qualifying

event for that employee, is a beneficiary under the plan as

the:

(i)  spouse of the covered employee; or

(ii)  dependent child of the employee.

The term shall include a child who is born to or placed for

adoption with the covered employee during the period of

continuation coverage under this section.

(2)  In the case of a qualifying event as defined in this

section, the term "eligible dependent" includes a covered

employee.

(3)  In the case of a qualifying event as defined in this

section, the term "eligible dependent" includes a covered

employee who had retired on or before the date of substantial

elimination of coverage and any other individual who, on the

day before such qualifying event, is a beneficiary under the

plan as the:

(i)  spouse of the covered employee;

(ii)  dependent child of the covered employee; or

(iii)  surviving spouse of the covered employee.

"Group policy."  Any group health insurance policy,

subscriber contract, certificate or plan which provides health

or sickness and accident coverage which is offered by an

insurer. The term shall not include any of the following:

(1)  An accident only policy.

(2)  A credit only policy.

(3)  A long-term or disability income policy.

(4)  A specified disease policy.

(5)  A Medicare supplement policy.

(6)  A Civilian Health and Medical Program of the

Uniformed Services (CHAMPUS) supplement policy.

(7)  A fixed indemnity policy.

(8)  A dental only policy.

(9)  A vision only policy.

(10)  A workers' compensation policy.

(11)  An automobile medical payment policy under 75

Pa.C.S. (relating to vehicles).

(12)  Any other similar policies providing for limited

benefits.

"Insurer."  A company or health insurance entity licensed in

this Commonwealth to issue any health, sickness or accident

policy or subscriber contract or certificate or plan that

provides medical or health care coverage by a health care

facility or licensed health care provider that is offered or

governed under this act or any of the following:

(1)  The act of December 29, 1972 (P.L.1701, No.364),

known as the Health Maintenance Organization Act.

 (2)  40 Pa.C.S. Ch. 61 (relating to hospital plan

corporations) or 63 (relating to professional health services

plan corporations).

 (3)  Article XXIV of the act of May 17, 1921 (P.L.682,

No.284), known as The Insurance Company Law of 1921.

"Qualifying event."  With respect to any covered employee,

any of the following events which, but for the continuation of

coverage required under this act, would result in the loss of

coverage of an eligible dependent:

(1)  The death of a covered employee.

(2)  The termination, other than by reason of the

employee's gross misconduct, or reduction of hours of the

covered employee's employment.

(3)  The divorce or legal separation of the covered

employee from an eligible dependent.

(4)  The covered employee becoming entitled to benefits

under Title XVIII of the Social Security Act (49 Stat. 620,

42 U.S.C. § 301 et seq.).

(5)  A dependent child ceasing to be a dependent child

under the generally applicable requirements of the plan.

(6)  A proceeding in a case under 11 U.S.C. (relating to

bankruptcy), with respect to the employer from whose

employment the covered employee retired at any time. In the

case of an event described in this definition, a loss of

coverage includes a substantial elimination of coverage with

respect to an eligible dependent within one year before or

after the date of commencement of the proceeding.

Section 4.  Certain group policies.

A group policy delivered or issued for delivery in this

Commonwealth on or after the effective date of this act by an

insurer which insures employees or members and their eligible

dependents for hospital, surgical or major medical insurance

shall provide that covered employees or eligible dependents

whose coverage under the group policy would otherwise terminate

because of a qualifying event shall be entitled to continue

their hospital, surgical or major medical coverage under that

group policy subject to the following terms and conditions:

(1)  Continuation shall only be available to a covered

employee or eligible dependent who has been continuously

insured under the group policy, and for similar benefits

under any group policy which it replaced, during the entire

three-month period ending with the termination. If employment

is reinstated during the continuation period, then coverage

under the group policy must be reinstated for the covered

employee and any eligible dependents who were covered under

continuation.

(2)  Continuation shall not be available for any person

covered under the group policy who:

(i)  is covered or is eligible for coverage under

Medicare;

(ii)  fails to verify that he is ineligible for

employer-based group health insurance as an eligible

dependent; or

(iii)  is or could be covered by any other insured or

uninsured arrangement which provides hospital, surgical

or major medical coverage for individuals in a group and

under which the person was not covered immediately prior

to the termination, excluding the medical assistance

program established under the act of June 13, 1967

(P.L.31, No.21), known as the Public Welfare Code, or

other government health benefit program.

(3)  Continuation need not include dental, vision care or

prescription drug benefits or any other benefits provided

under the group policy in addition to its hospital, surgical

or major medical benefits, but continuation must include any

benefits mandated under this or any other act if those

benefits are provided under the group policy.

(4)  (i)  The group policy shall provide notice to each

covered employee  of the rights provided under this act.

(ii)  The employer of a covered employee under a

group policy must notify the administrator or its

designee, the covered employee and the insurer of a

qualifying event within 30 days of the date of the

qualifying event.

(iii)  Each covered employee or eligible dependent  

shall notify the administrator or its designee of the

covered employee's or eligible dependent's election of

continuation coverage under this act within 60 days after

the date of notice under subparagraph (ii). The coverage

shall be effective as of the date of the qualifying

event.

(iv)  The administrator or its designee notified

under subparagraph (ii) shall notify the insurer within

14 days of the covered employee's or eligible dependent's

election.

(v)  Except as otherwise specified in an election,

any election of continuation coverage by an eligible

dependent shall be deemed to include an election of

continuation coverage on behalf of any other eligible

dependent who would lose coverage under the plan by

reason of the qualifying event. If there is a choice

among types of coverage under the plan, each eligible

dependent is entitled to make a separate selection among

the types of coverage.

(5)  (i)  The covered employee or eligible dependent

requesting the continuation of coverage must pay to the

group policyholder, on a monthly basis, the amount of

contribution required to continue the coverage for the

covered employee or eligible dependent.

(ii)  The premium contribution may not be more than

102% of the group rate of the insurance being continued

on the due date of each payment; but, if any benefits are

omitted as provided by paragraph (3), the premium

contribution shall be reduced accordingly.

(iii)  Nothing in this act shall require the employer

to contribute to the deductible of the employee holding a

health savings account as defined in the Internal Revenue

Code of 1986 (Public Law 99-514, 26 U.S.C. § 223(d)) as a

component of the group policy after the termination date

as long as scheduled payments have been made.

(6)  Continuation of coverage under the group policy for

any covered employee or eligible dependent shall terminate

upon failure to satisfy paragraph (2) or, if earlier, at the

first to occur of the following:

(i)  the date nine months after the date the covered

employee's or eligible dependent's coverage under the

group would have terminated because of a qualifying

event;

(ii)  if the employee or member fails to make timely

payment of a required premium contribution, the end of

the period for which contributions were made; or

(iii)  the date on which the group policy is

terminated. A covered employee or eligible dependent

shall provide written notice to the administrator or its

designee within 14 days if under paragraph (2) the

coverage is not available.

Section 5.  Conversion policy. 

A covered employee shall be entitled to obtain a conversion

policy as stated in section 621.2 of the act of May 17, 1921

(P.L.682, No.284), known as The Insurance Company Law of 1921.

The right to a converted policy pursuant to this act for a

covered employee or eligible dependent entitled to continuation

of coverage under this act shall commence upon termination of

the continued coverage provided for under this act.

Section 6.  Prohibition.

Coverage as required by this act may not be conditioned upon,

or discriminated on, the basis of lack of evidence or

insurability.

Section 7.  Election period and premium assistance.

In the case of a qualifying event consisting of the

involuntary termination of the covered employee's employment

occurring on or after September 1, 2008, and before January 1,

2010, or other date as specified by amendment or modification of

section 3001 of the American Recovery and Reinvestment Act of

2009 (Public Law 111-5, 123 Stat. 115) or successor legislation,

a covered employee or eligible dependent shall be entitled to an

election period and premium assistance  as provided for by the

American Recovery and Reinvestment Act of 2009, under the

procedures and requirements set forth in that act.

Section 8.  Applicability.

(a)  Criteria.--This act shall only apply to those persons

who satisfy both of the following criteria:

(1)  Persons who are not subject to the continuation and

conversion provisions set forth in Title 1, Subtitle B, Part

6 of the Employee Retirement Income Security Act of 1974

(Public Law 93-406, 88 Stat. 829) or Title XXII of the Public

Health Service Act (58 Stat. 682, 42 U.S.C. § 201 et seq.).

(2)  Persons, and the eligible dependents of the persons,

who are employed by an employer that normally employed

between two and nineteen employees on a typical business day

during the preceding year.

(b)  Assistance eligible individuals.--This act shall apply

to assistance eligible individuals as defined in section 3001(a)

(3) of the American Recovery and Reinvestment Act of 2009

(Public Law 111-5, 123 Stat. 115).

Section 9.  Regulations.

The Insurance Department may promulgate regulations as

necessary for the implementation and administration of this act.

Section 10.  Effect of expiration of certain premium benefits.

This act shall remain in effect after the expiration of

premium assistance for COBRA benefits provided for in the

American Recovery and Reinvestment Act of 2009 (Public Law

111-5, 123 Stat. 115).

Section 20.  Effective date.

This act shall take effect immediately.

Section 1.  The act of May 17, 1921 (P.L.682, No.284), known

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as The Insurance Company Law of 1921, is amended by adding a

section to read:

Section 635.4.  Mini-COBRA Small Employer Group Health

Policies.--(a)  A group policy in effect or delivered or issued

for delivery in this Commonwealth on or after the effective date

of this section by an insurer which insures employes and their

eligible dependents for hospital, surgical or major medical

insurance shall provide that covered employes or eligible

dependents whose coverage under the group policy would otherwise

terminate because of a qualifying event shall be entitled to

continue their hospital, surgical or major medical coverage

under that group policy subject to the following terms and

conditions:

(1)  Continuation shall only be available to a covered

employe or eligible dependent who has been continuously insured

under a group policy or for similar benefits under any group

policy which it replaced, during the entire three-month period

ending with such termination. If employment is reinstated during

the continuation period, then coverage under the group policy

must be reinstated for the covered employe and any eligible

dependents who were covered under continuation.

(2)  Continuation shall not be available for any person

covered under the group policy who:

(i)  is covered or is eligible for coverage under Medicare;

(ii)  fails to verify that he is ineligible for employer-

based group health insurance as an eligible dependent; or

(iii)  is or could be covered by any other insured or

uninsured arrangement which provides hospital, surgical or major

medical coverage for individuals in a group and under which the

person was not covered immediately prior to such termination,

excluding the medical assistance program established under the

act of June 13, 1967 (P.L.31, No.21), known as the "Public

Welfare Code," the children's health care program established

under Article XXIII or the adult basic coverage insurance

program established under Chapter 13 of the act of June 26, 2001

(P.L.755, No.77), known as the "Tobacco Settlement Act," and any

successors thereto.

(3)  Continuation must include any benefits provided under

the group policy.

(4)  (i)  The group policy shall provide notice to the

policyholder of the rights provided under this section. Unless

already provided in the group policy, an insurer who has issued

a group policy in effect as of the effective date of this

section shall provide such notice to the policyholder within 45

days of the effective date.

(ii)  The employer of a covered employe under a group policy

must notify the administrator or its designee, the covered

employe and the insurer of a qualifying event within thirty days

of the qualifying event. Notice to the covered employe shall

include notice of the rights set forth in this section.

(iii)  Each covered employe or eligible dependent shall

notify the administrator or its designee of its election of

continuation coverage under this section within thirty days of

notice under subparagraph (ii). The coverage shall be effective

as of the date of the qualifying event and shall be the same as

the coverage in effect at the time of the qualifying event or

any replacement coverage.

(iv)  An administrator or its designee notified under

subparagraph (iii) of an election of continuation coverage shall

notify the insurer within fourteen days of the covered employe's

or eligible dependent's election.

(v)  Except as otherwise specified in an election, any

election of continuation coverage by an eligible dependent shall

be deemed to include an election of continuation coverage on

behalf of any other eligible dependent who would lose coverage

under the plan by reason of the qualifying event.

(5)  (i)  The covered employe or eligible dependent

requesting the continuation of coverage must pay to the

administrator or its designee, on a monthly basis, the amount of

contribution required to be paid by the covered employe or

eligible dependent to continue the coverage.

(ii)  The premium contribution may not be more than one

hundred five percent of the group rate of the insurance being

continued on the due date of each payment.

(iii)  Nothing in this section shall require the employer to

contribute to the deductible of the employe holding a health

savings account as defined in the Internal Revenue Code of 1986

(Public Law 99-514, 26 U.S.C. § 223(d)) or other medical

spending account as a component of the group policy after the

termination date as long as scheduled payments have been made.

(6)  (i)  Continuation of coverage under the group policy for

any covered employe or eligible dependent shall terminate upon

failure to satisfy paragraph (2) or, if earlier, at the first to

occur of the following:

(A)  the date nine months after the date the covered

employe's or eligible dependent's coverage under the group would

have terminated because of a qualifying event;

(B)  if the employe or member fails to make timely payment of

a required premium contribution, the end of the period for which

contributions were made;

(C)  the date on which the group policy is terminated.

(ii)  A covered employe or eligible dependent shall provide

written notice to the administrator or its designee within

fourteen days if, pursuant to paragraph (2), coverage should not

occur.

(b)  A covered employe shall be entitled to obtain a

conversion policy as stated in section 621.2. The right to a

converted policy pursuant to this act for a covered employe or

eligible dependent entitled to continuation of coverage under

this act shall commence upon termination of the continued

coverage provided for under this act.

(c)  Coverage as required by this section may not be

conditioned upon, or discriminated on, the basis of lack of

evidence of insurability.

(d)  In the case of a qualifying event consisting of the

involuntary termination of the covered employe's employment

occurring on or after the effective date of this section and

before January 1, 2010, or such other date as specified by any

amendment to or successor of section 3001 of Division B, Title

III of the American Recovery and Reinvestment Act of 2009

(Public Law 111-5, 123 Stat. 115), a covered employe or eligible

dependent shall be entitled to premium assistance as provided in

section 3001 of Division B, Title III of the American Recovery

and Reinvestment Act of 2009, pursuant to the procedures and

requirements set forth therein.

(e)  This section shall only apply to those persons who

satisfy both of the following criteria:

(1)  Persons who are not subject to the continuation and

conversion provisions set forth in Title 1, Subtitle B, Part 6

of the Employee Retirement Income Security Act of 1974 (Public

Law 93-406, 29 U.S.C. § 1161 et seq.) or Title XXII of the

Public Health Service Act Public Law 99-272, 42 U.S.C. § 300bb-1

et seq.).

(2)  Persons, and the eligible dependents of such persons,

who are employed by an employer that normally employed between

two and nineteen employes on a typical business day during the

preceding year.

(f)  The department may promulgate regulations as necessary

for the implementation and administration of this section.

(g)  For purposes of this section, the following words and

phrases shall have the meanings given to them in this subsection

unless the context clearly indicates otherwise:

(1)  "Administrator" means the person specifically designated

by an employer by written agreement to manage the administration

of a group policy issued to an employer or, if an administrator

is not so designated, the employer.

(2)  "Covered employe" means an individual who is or was

provided coverage under a group policy by virtue of the

performance of services by the individual for one or more

persons maintaining the policy, including as an employe defined

in section 401(c)(1) of the Internal Revenue Code of 1986

(Public Law 99-514, 26 U.S.C. § 401(c)(1)). Such term includes

employes and members as those terms are used in section 621.2.

(3)  "Eligible dependent" means:

(i)  With respect to a covered employe under a group health

plan, any other individual who on the day before the qualifying

event for that employe is a beneficiary under the plan:

(A)  as the spouse of the covered employe; or

(B)  as the dependent child of the employe.

(ii)  In the case of a qualifying event described in

paragraph (6)(ii), the term includes a covered employe.

(iii)  In the case of a qualifying event described in

paragraph (6)(vi), the term includes a covered employe who had

retired on or before the date of substantial elimination of

coverage and any other individual who, on the day before such

qualifying event, is a beneficiary under the plan:

(A)  as the spouse of the covered employe;

(B)  as the dependent child of the employe; or

(C)  as the surviving spouse of the covered employe.

The term shall also include a child who is born to or placed

for adoption with a covered employe during the period of

continuation coverage under this section.

(4)  "Group policy" means any group health insurance policy,

subscriber contract, certificate or plan which provides health

or sickness and accident coverage which is offered by an

insurer. The term shall not include any of the following:

(i)  An accident only policy.

(ii)  A credit only policy.

(iii)  A long-term care or disability income policy.

(iv)  A specified disease policy.

(v)  A Medicare supplement policy.

(vi)  A Civilian Health and Medical Program of the Uniformed

Services (CHAMPUS) supplement policy.

(vii)  A fixed indemnity policy.

(viii)  A dental only policy.

(ix)  A vision only policy.

(x)  A workers' compensation policy.

(xi)  An automobile medical payment policy under 75 Pa.C.S. 

(relating to vehicles).

(xii)  Any other similar policies providing for limited

benefits.

(5)  "Insurer" means a company or health insurance entity

licensed in this Commonwealth to issue any health, sickness or

accident policy or subscriber contract or certificate or plan

that provides medical or health care coverage by a health care

facility or licensed health care provider that is offered or

governed under Article XXIV or other provision of this act or

any of the following:

(i)  The act of December 29, 1972 (P.L.1701, No.364), known

as the "Health Maintenance Organization Act."

(ii)  40 Pa.C.S. Ch. 61 (relating to hospital plan

corporations) or 63 (relating to professional health services

plan corporations).

(6)  "Qualifying event" means, with respect to any covered

employe, any of the following events which, but for the

continuation of coverage required under this section, would

result in the loss of coverage of an eligible dependent:

(i)  The death of a covered employe.

(ii)  The termination, other than by reason of such employe's

gross misconduct, or reduction of hours of the covered employe's

employment.

(iii)  The divorce or legal separation of the covered employe

from an eligible dependent.

(iv)  The covered employe becoming entitled to benefits under

Title XVIII of the Social Security Act (49 Stat. 620, 42 U.S.C.

§ 1395 et seq.).

(v)  A dependent child ceasing to be a dependent child under

the generally applicable requirements of the plan.

(vi)  A proceeding in a case under 11 U.S.C. (relating to

bankruptcy), with respect to the employer from whose employment

the covered employe retired at any time. In the case of an event

described in this subparagraph, a loss of coverage includes a

substantial elimination of coverage with respect to an eligible

dependent within one year before or after the date of

commencement of the proceeding.

Section 2.  This act shall take effect in 30 days.