PRINTER'S NO. 2074
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 20080S1422B2074 - 2 -
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 20080S1422B2074 - 3 -
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 20080S1422B2074 - 4 -
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. E19L40JKL/20080S1422B2074 - 8 -