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                                                      PRINTER'S NO. 2074

THE GENERAL ASSEMBLY OF PENNSYLVANIA


SENATE BILL

No. 1422 Session of 2008


        INTRODUCED BY D. WHITE, ERICKSON, VANCE, WOZNIAK, BROWNE,
           GORDNER, BOSCOLA, SCARNATI, PILEGGI, ORIE, O'PAKE, PIPPY,
           CORMAN, KASUNIC, MADIGAN, C. WILLIAMS, PUNT, COSTA, WAUGH,
           RAFFERTY, BAKER, EARLL, STACK AND RHOADES, MAY 22, 2008

        REFERRED TO BANKING AND INSURANCE, MAY 22, 2008

                                     AN ACT

     1  Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An
     2     act relating to insurance; amending, revising, and
     3     consolidating the law providing for the incorporation of
     4     insurance companies, and the regulation, supervision, and
     5     protection of home and foreign insurance companies, Lloyds
     6     associations, reciprocal and inter-insurance exchanges, and
     7     fire insurance rating bureaus, and the regulation and
     8     supervision of insurance carried by such companies,
     9     associations, and exchanges, including insurance carried by
    10     the State Workmen's Insurance Fund; providing penalties; and
    11     repealing existing laws," in health and accident insurance,
    12     providing for group health policies to continue for period of
    13     time after termination of employment or membership in health
    14     maintenance organizations.

    15     The General Assembly of the Commonwealth of Pennsylvania
    16  hereby enacts as follows:
    17     Section 1.  The act of May 17, 1921 (P.L.682, No.284), known
    18  as The Insurance Company Law of 1921, is amended by adding a
    19  section to read:
    20     Section 635.2.  Mini-COBRA Small Employer Group Health
    21  Policies.--(a)  A group policy delivered or issued for delivery
    22  in this Commonwealth after the effective date of this section by
    23  an insurer which insures employes or members and their eligible

     1  dependents for hospital, surgical or major medical insurance
     2  shall provide that covered employes or eligible dependents whose
     3  coverage under the group policy would otherwise terminate
     4  because of a qualifying event shall be entitled to continue
     5  their hospital, surgical or major medical coverage under that
     6  group policy subject to the following terms and conditions:
     7     (1)  Continuation shall only be available to a covered
     8  employe or eligible dependent who has been continuously insured
     9  under the group policy, and for similar benefits under any group
    10  policy which it replaced, during the entire three-month period
    11  ending with such termination. If employment is reinstated during
    12  the continuation period, then coverage under the group policy
    13  must be reinstated for the covered employe and any eligible
    14  dependents who were covered under continuation.
    15     (2)  Continuation shall not be available for any person
    16  covered under the group policy who:
    17     (i)  is covered or is eligible for coverage under Medicare;
    18     (ii)  is covered or is eligible for coverage under Medicaid;
    19     (iii)  fails to verify that he is ineligible for employer-
    20  based group health insurance as an eligible dependent; or
    21     (iv)  is or could be covered by any other insured or
    22  uninsured arrangement which provides hospital, surgical or major
    23  medical coverage for individuals in a group and under which the
    24  person was not covered immediately prior to such termination,
    25  excluding the medical assistance program established under the
    26  act of June 13, 1967 (P.L.31, No.21), known as the "Public
    27  Welfare Code."
    28     (3)  Continuation need not include dental, vision care or
    29  prescription drug benefits or any other benefits provided under
    30  the group policy in addition to its hospital, surgical or major
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     1  medical benefits, but continuation must include any benefits
     2  mandated under this or any other act if those benefits are
     3  provided under the group policy.
     4     (4)  (i)  The group policy shall provide, at the time of
     5  commencement of coverage under the plan, written notice to each
     6  covered employe and adult eligible dependent of the employe, if
     7  any, of the rights provided under this section.
     8     (ii)  The employer of a covered employe under a plan must
     9  notify the administrator or its designee of a qualifying event
    10  within thirty days of the date of the qualifying event.
    11     (iii)  Each covered employe or eligible dependent is
    12  responsible for notifying the administrator or its designee of
    13  the occurrence of any qualifying event within sixty days after
    14  the date of the qualifying event and each eligible dependent who
    15  is determined, under Title II or XVI of the Social Security Act
    16  (49 Stat. 620, 42 U.S.C. § 301 et seq.), to have been disabled
    17  at any time during the first sixty days of continuation coverage
    18  under this section is responsible for notifying the plan
    19  administrator or its designee of such determination within sixty
    20  days after the date of the determination and for notifying the
    21  plan administrator or its designee within thirty days after the
    22  date of any final determination under Title II or XVI of the
    23  Social Security Act that the eligible dependent is no longer
    24  disabled.
    25     (iv)  The administrator or its designee shall notify, (A) in
    26  the case of a qualifying event described in subsection
    27  (e)(5)(i), (ii), (iv) or (vi), any eligible dependent with
    28  respect to such event, and (B) in the case of a qualifying event
    29  described in subparagraph (iii) or (v) of the definition of
    30  "qualifying event" in subsection (e) where the covered employe
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     1  notifies the administrator under subparagraph (iii), any
     2  eligible dependent with respect to such event, of such
     3  dependent's rights under this section.
     4     (v)  For purposes of subparagraph (iv), any notification
     5  shall be made within fourteen days of the date on which the
     6  administrator or its designee is notified under subparagraph
     7  (ii) or (iii), whichever is applicable, and any such
     8  notification to an eligible dependent who is the parent or
     9  guardian of one or more eligible dependents shall be treated as
    10  notification to all other eligible dependents residing with such
    11  parent or guardian at the time such notification is made.
    12     (vi)  Except as otherwise specified in an election, any
    13  election of continuation coverage by an eligible dependent shall
    14  be deemed to include an election of continuation coverage on
    15  behalf of any other eligible dependent who would lose coverage
    16  under the plan by reason of the qualifying event. If there is a
    17  choice among types of coverage under the plan, each eligible
    18  dependent is entitled to make a separate selection among such
    19  types of coverage.
    20     (5)  (i)  The covered employe or eligible dependent
    21  requesting the continuation of coverage must pay to the group
    22  policyholder, on a monthly basis, the amount of contribution
    23  required to continue the coverage.
    24     (ii)  The premium contribution may not be more than one
    25  hundred five percent of the group rate of the insurance being
    26  continued on the due date of each payment; but, if any benefits
    27  are omitted as provided by paragraph (3), the premium
    28  contribution shall be reduced accordingly.
    29     (iii)  Nothing in this section shall require the employer to
    30  contribute to the deductible of the employe holding an HSA as
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     1  defined in the Internal Revenue Code of 1986 (Public Law 99-514,
     2  26 U.S.C. § 223(d)) as a component of the group policy after the
     3  termination date as long as scheduled payments have been made.
     4     (6)  Continuation of coverage under the group policy for any
     5  covered employe or eligible dependent shall terminate upon
     6  failure to satisfy paragraph (2) or, if earlier, at the first to
     7  occur of the following:
     8     (i)  the date nine months after the date the covered
     9  employe's or eligible dependent's coverage under the group would
    10  have terminated because of a qualifying event;
    11     (ii)  if the employe or member fails to make timely payment
    12  of a required premium contribution, the end of the period for
    13  which contributions were made;
    14     (iii)  the date on which the group policy is terminated.
    15     (b) A covered employe shall be entitled to obtain a
    16  conversion policy as stated in section 621.2. The right to a
    17  converted policy pursuant to this act for a covered employe or
    18  eligible dependent entitled to continuation of coverage under
    19  this act shall commence upon termination of the continued
    20  coverage provided for under this act.
    21     (c)  Coverage as required by this section may not be
    22  conditioned upon, or discriminated on, the basis of lack of
    23  evidence or insurability.
    24     (d)  This section shall only apply to those persons who
    25  satisfy both of the following criteria:
    26     (1)  Persons who are not subject to the continuation and
    27  conversion provisions set forth in Title 1, Subtitle B, Part 6
    28  of the Employment Retirement Income Security Act of 1974 (Public
    29  Law 93-406, 88 Stat. 829) or Title XXII of the Public Health
    30  Service Act (58 Stat. 682, 42 U.S.C. § 201 et seq.).
    20080S1422B2074                  - 5 -     

     1     (2)  Persons, and the eligible dependents of such persons,
     2  who are employed by an employer that normally employed between
     3  two and nineteen employes on a typical business day during the
     4  preceding year.
     5     (e)  For purposes of this section, the following words and
     6  phrases shall have the meanings given to them in this subsection
     7  unless the context clearly indicates otherwise:
     8     (1)  "Covered employe" means an individual was is or was
     9  provided coverage under a group policy by virtue of the
    10  performance of services by the individual for one or more
    11  persons maintaining the policy, including as an employe defined
    12  in section 401(c)(1) of the Internal Revenue Code of 1986
    13  (Public Law 99-514, 26 U.S.C. § 1 et seq.). Such term includes
    14  employes and members as those terms are used in section 621.2.
    15     (2)  "Election period" means the period which:
    16     (i)  begins not later than the date on which coverage
    17  terminates under the plan by reason of a qualifying event;
    18     (ii)  is of at least sixty days' duration; and
    19     (iii)  ends not earlier than sixty days after the later of:
    20     (A)  the date described in subparagraph (i); or
    21     (B)  in the case of any eligible dependent who receives
    22  notice under subsection (a)(4)(iv), the date of such notice.
    23     (3)  "Group policy" means any group health insurance policy,
    24  subscriber contract, certificate or plan which provides health
    25  or sickness and accident coverage which is offered by an
    26  insurer. The term shall not include any of the following:
    27     (i)  An accident only policy.
    28     (ii)  A credit only policy.
    29     (iii)  A long-term or disability income policy.
    30     (iv)  A specified disease policy.
    20080S1422B2074                  - 6 -     

     1     (v)  A Medicare supplement policy.
     2     (vi)  A Civilian Health and Medical Program of the Uniformed
     3  Services (CHAMPUS) supplement policy.
     4     (vii)  A fixed indemnity policy.
     5     (viii)  A dental only policy.
     6     (ix)  A vision only policy.
     7     (x)  A workers' compensation policy.
     8     (xi)  An automobile medical payment policy under 75 Pa.C.S.
     9  (relating to vehicles).
    10     (xii)  Any other similar policies providing for limited
    11  benefits.
    12     (4)  "Insurer" means a company or health insurance entity
    13  licensed in this Commonwealth to issue any health, sickness or
    14  accident policy or subscriber contract or certificate or plan
    15  that provides medical or health care coverage by a health care
    16  facility or licensed health care provider that is offered or
    17  governed under this act or any of the following:
    18     (i)  The act of December 29, 1972 (P.L.1701, No.364), known
    19  as the "Health Maintenance Organization Act."
    20     (ii)  The act of May 18, 1976 (P.L.123, No.54), known as the
    21  Individual Accident and Sickness Insurance Minimum Standards
    22  Act.
    23     (iii)  40 Pa.C.S. Ch. 61 (relating to hospital plan
    24  corporations) or 63 (relating to professional health services
    25  plan corporations).
    26     (5)  "Qualifying event" means, with respect to any covered
    27  employe, any of the following events which, but for the
    28  continuation of coverage required under this section, would
    29  result in the loss of coverage of an eligible dependent:
    30     (i)  The death of a covered employe.
    20080S1422B2074                  - 7 -     

     1     (ii)  The termination, other than by reason of such employe's
     2  gross misconduct, or reduction of hours of the covered employe's
     3  employment.
     4     (iii)  The divorce or legal separation of the covered employe
     5  from an eligible dependent.
     6     (iv)  The covered employe becoming entitled to benefits under
     7  Title XVIII of the Social Security Act (49 Stat. 620, 42 U.S.C.
     8  § 301 et seq.).
     9     (v)  A dependent child ceasing to be a dependent child under
    10  the generally applicable requirements of the plan.
    11     (vi)  A proceeding in a case under 11 U.S.C. (relating to
    12  bankruptcy), with respect to the employer from whose employment
    13  the covered employe retired at any time. In the case of an event
    14  described in this subparagraph, a loss of coverage includes a
    15  substantial elimination of coverage with respect to an eligible
    16  dependent within one year before or after the date of
    17  commencement of the proceeding.
    18     (f)  The department may promulgate regulations as necessary
    19  for the implementation and administration of this section.
    20     Section 2.  This act shall take effect in 60 days.







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