PRIOR PRINTER'S NO. 2074 PRINTER'S NO. 2414
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, RHOADES AND REGOLA,
MAY 22, 2008
SENATOR D. WHITE, BANKING AND INSURANCE, AS AMENDED,
SEPTEMBER 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 635.2 635.4. 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
1 an insurer which insures employes or members and their eligible
2 dependents for hospital, surgical or major medical insurance
3 shall provide that covered employes or eligible dependents whose
4 coverage under the group policy would otherwise terminate
5 because of a qualifying event shall be entitled to continue
6 their hospital, surgical or major medical coverage under that
7 group policy subject to the following terms and conditions:
8 (1) Continuation shall only be available to a covered
9 employe or eligible dependent who has been continuously insured
10 under the group policy, and for similar benefits under any group
11 policy which it replaced, during the entire three-month period
12 ending with such termination. If employment is reinstated during
13 the continuation period, then coverage under the group policy
14 must be reinstated for the covered employe and any eligible
15 dependents who were covered under continuation.
16 (2) Continuation shall not be available for any person
17 covered under the group policy who:
18 (i) is covered or is eligible for coverage under Medicare;
19 (ii) is covered or is eligible for coverage under Medicaid; <--
20 (iii) (II) fails to verify that he is ineligible for <--
21 employer-based group health insurance as an eligible dependent;
22 or
23 (iv) (III) is or could be covered by any other insured or <--
24 uninsured arrangement which provides hospital, surgical or major
25 medical coverage for individuals in a group and under which the
26 person was not covered immediately prior to such termination,
27 excluding the medical assistance program established under the
28 act of June 13, 1967 (P.L.31, No.21), known as the "Public
29 Welfare Code."
30 (3) Continuation need not include dental, vision care or
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1 prescription drug benefits or any other benefits provided under
2 the group policy in addition to its hospital, surgical or major
3 medical benefits, but continuation must include any benefits
4 mandated under this or any other act if those benefits are
5 provided under the group policy.
6 (4) (i) The group policy shall provide, at the time of
7 commencement of coverage under the plan, written notice to each
8 covered employe and adult eligible dependent of the employe, if
9 any, of the rights provided under this section.
10 (ii) The employer of a covered employe under a plan must
11 notify the administrator or its designee of a qualifying event
12 within thirty days of the date of the qualifying event.
13 (iii) Each covered employe or eligible dependent is
14 responsible for notifying the administrator or its designee of
15 the occurrence of any qualifying event within sixty days after
16 the date of the qualifying event and each eligible dependent who
17 is determined, under Title II or XVI of the Social Security Act
18 (49 Stat. 620, 42 U.S.C. § 301 et seq.), to have been disabled
19 at any time during the first sixty days of continuation coverage
20 under this section is responsible for notifying the plan
21 administrator or its designee of such determination within sixty
22 days after the date of the determination and for notifying the
23 plan administrator or its designee within thirty days after the
24 date of any final determination under Title II or XVI of the
25 Social Security Act that the eligible dependent is no longer
26 disabled.
27 (iv) The administrator or its designee shall notify, (A) in
28 the case of a qualifying event described in subsection
29 (e)(5)(i), (ii), (iv) or (vi), any eligible dependent with
30 respect to such event, and (B) in the case of a qualifying event
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1 described in subparagraph (iii) or (v) of the definition of
2 "qualifying event" in subsection (e) where the covered employe
3 notifies the administrator OR ITS DESIGNEE under subparagraph <--
4 (iii), any eligible dependent with respect to such event, of
5 such dependent's rights under this section.
6 (v) For purposes of subparagraph (iv), any notification
7 shall be made within fourteen days of the date on which the
8 administrator or its designee is notified under subparagraph
9 (ii) or (iii), whichever is applicable, and any such
10 notification to an eligible dependent who is the parent or
11 guardian of one or more eligible dependents shall be treated as
12 notification to all other eligible dependents residing with such
13 parent or guardian at the time such notification is made.
14 (vi) Except as otherwise specified in an election, any
15 election of continuation coverage by an eligible dependent shall
16 be deemed to include an election of continuation coverage on
17 behalf of any other eligible dependent who would lose coverage
18 under the plan by reason of the qualifying event. If there is a
19 choice among types of coverage under the plan, each eligible
20 dependent is entitled to make a separate selection among such
21 types of coverage.
22 (5) (i) The covered employe or eligible dependent
23 requesting the continuation of coverage must pay to the group
24 policyholder, on a monthly basis, the amount of contribution
25 required to continue the coverage.
26 (ii) The premium contribution may not be more than one
27 hundred five percent of the group rate of the insurance being
28 continued on the due date of each payment; but, if any benefits
29 are omitted as provided by paragraph (3), the premium
30 contribution shall be reduced accordingly.
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1 (iii) Nothing in this section shall require the employer to
2 contribute to the deductible of the employe holding an HSA as
3 defined in the Internal Revenue Code of 1986 (Public Law 99-514,
4 26 U.S.C. § 223(d)) as a component of the group policy after the
5 termination date as long as scheduled payments have been made.
6 (6) Continuation of coverage under the group policy for any
7 covered employe or eligible dependent shall terminate upon
8 failure to satisfy paragraph (2) or, if earlier, at the first to
9 occur of the following:
10 (i) the date nine months after the date the covered
11 employe's or eligible dependent's coverage under the group would
12 have terminated because of a qualifying event;
13 (ii) if the employe or member fails to make timely payment
14 of a required premium contribution, the end of the period for
15 which contributions were made;
16 (iii) the date on which the group policy is terminated.
17 (b) A covered employe shall be entitled to obtain a
18 conversion policy as stated in section 621.2. The right to a
19 converted policy pursuant to this act for a covered employe or
20 eligible dependent entitled to continuation of coverage under
21 this act shall commence upon termination of the continued
22 coverage provided for under this act.
23 (c) Coverage as required by this section may not be
24 conditioned upon, or discriminated on, the basis of lack of
25 evidence or insurability.
26 (d) This section shall only apply to those persons who
27 satisfy both of the following criteria:
28 (1) Persons who are not subject to the continuation and
29 conversion provisions set forth in Title 1, Subtitle B, Part 6
30 of the Employment Retirement Income Security Act of 1974 (Public
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1 Law 93-406, 88 Stat. 829) or Title XXII of the Public Health
2 Service Act (58 Stat. 682, 42 U.S.C. § 201 et seq.).
3 (2) Persons, and the eligible dependents of such persons,
4 who are employed by an employer that normally employed between
5 two and nineteen employes on a typical business day during the
6 preceding year.
7 (e) For purposes of this section, the following words and
8 phrases shall have the meanings given to them in this subsection
9 unless the context clearly indicates otherwise:
10 (1) "Covered employe" means an individual was WHO is or was <--
11 provided coverage under a group policy by virtue of the
12 performance of services by the individual for one or more
13 persons maintaining the policy, including as an employe defined
14 in section 401(c)(1) of the Internal Revenue Code of 1986
15 (Public Law 99-514, 26 U.S.C. § 1 et seq.). Such term includes
16 employes and members as those terms are used in section 621.2.
17 (2) "Election period" means the period which:
18 (i) begins not later than the date on which coverage
19 terminates under the plan by reason of a qualifying event;
20 (ii) is of at least sixty days' duration; and
21 (iii) ends not earlier than sixty days after the later of:
22 (A) the date described in subparagraph (i); or
23 (B) in the case of any eligible dependent who receives
24 notice under subsection (a)(4)(iv), the date of such notice.
25 (3) "Group policy" means any group health insurance policy,
26 subscriber contract, certificate or plan which provides health
27 or sickness and accident coverage which is offered by an
28 insurer. The term shall not include any of the following:
29 (i) An accident only policy.
30 (ii) A credit only policy.
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1 (iii) A long-term or disability income policy.
2 (iv) A specified disease policy.
3 (v) A Medicare supplement policy.
4 (vi) A Civilian Health and Medical Program of the Uniformed
5 Services (CHAMPUS) supplement policy.
6 (vii) A fixed indemnity policy.
7 (viii) A dental only policy.
8 (ix) A vision only policy.
9 (x) A workers' compensation policy.
10 (xi) An automobile medical payment policy under 75 Pa.C.S.
11 (relating to vehicles).
12 (xii) Any other similar policies providing for limited
13 benefits.
14 (4) "Insurer" means a company or health insurance entity
15 licensed in this Commonwealth to issue any health, sickness or
16 accident policy or subscriber contract or certificate or plan
17 that provides medical or health care coverage by a health care
18 facility or licensed health care provider that is offered or
19 governed under this act or any of the following:
20 (i) The act of December 29, 1972 (P.L.1701, No.364), known
21 as the "Health Maintenance Organization Act."
22 (ii) The act of May 18, 1976 (P.L.123, No.54), known as the
23 Individual Accident and Sickness Insurance Minimum Standards
24 Act.
25 (iii) 40 Pa.C.S. Ch. 61 (relating to hospital plan
26 corporations) or 63 (relating to professional health services
27 plan corporations).
28 (5) "Qualifying event" means, with respect to any covered
29 employe, any of the following events which, but for the
30 continuation of coverage required under this section, would
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1 result in the loss of coverage of an eligible dependent:
2 (i) The death of a covered employe.
3 (ii) The termination, other than by reason of such employe's
4 gross misconduct, or reduction of hours of the covered employe's
5 employment.
6 (iii) The divorce or legal separation of the covered employe
7 from an eligible dependent.
8 (iv) The covered employe becoming entitled to benefits under
9 Title XVIII of the Social Security Act (49 Stat. 620, 42 U.S.C.
10 § 301 et seq.).
11 (v) A dependent child ceasing to be a dependent child under
12 the generally applicable requirements of the plan.
13 (vi) A proceeding in a case under 11 U.S.C. (relating to
14 bankruptcy), with respect to the employer from whose employment
15 the covered employe retired at any time. In the case of an event
16 described in this subparagraph, a loss of coverage includes a
17 substantial elimination of coverage with respect to an eligible
18 dependent within one year before or after the date of
19 commencement of the proceeding.
20 (f) The department may promulgate regulations as necessary
21 for the implementation and administration of this section.
22 Section 2. This act shall take effect in 60 120 days. <--
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