WSR 13-14-067 EMERGENCY RULES OFFICE OF INSURANCE COMMISSIONER [Insurance Commissioner's Docket No. R 2013-14—Filed June 28, 2013, 2:12 p.m., effective June 28, 2013, 2:12 p.m.] Effective Date of Rule: Immediately upon filing.
Purpose: Beginning January 1, 2014, the form and rating requirements for individual and small group plans require discontinuation and replacement of nongrandfathered health plans. The requirements affect not just the commercial individual and small group market, but also coverage issued through associations or member governed groups to individual and small group purchasers. The rules explain the commissioner's requirements for transitioning the market, in particular the grandfathered and nongrandfathered association and member-governed group health plans, from current coverage to the required replacement coverage.
Other Authority: 45 C.F.R. 150.101(2).
Under RCW 34.05.350 the agency for good cause finds that immediate adoption, amendment, or repeal of a rule is necessary for the preservation of the public health, safety, or general welfare, and that observing the time requirements of notice and opportunity to comment upon adoption of a permanent rule would be contrary to the public interest.
Reasons for this Finding: The rules are required for an orderly market transition from noncompliant plans that must be discontinued, to replacement plans that must be in place by the next renewal date for each group or individual after January 1, 2014. Without the transition guidance in these regulations, issuers would begin wholesale replacement of association plan policies, rather than being able to evaluate and transition groups at renewal. In order to meet the discontinuation and replacement timelines applicable under RCW 48.43.035, notices must be issued not later than ninety days before renewal. In addition, for plans offered to association members, specific guidance on how the federally preempted small group exemption does or does not apply is required in order for issuers to ensure that plans are correctly rated, and that the forms are in compliance with federal law. The rules also implement 45 C.F.R. 147.140.
Number of Sections Adopted in Order to Comply with Federal Statute: New 4, Amended 0, Repealed 0; Federal Rules or Standards: New 4, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 4, Amended 0, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 4, Amended 0, Repealed 0.
Date Adopted: June 28, 2013.
Mike Kreidler
Insurance Commissioner
NEW SECTION
WAC 284-170-950 Grandfathered health plan status. (1) An issuer must retain in its files all necessary documentation to support its determination that a purchaser's plan is grandfathered. The information must be sufficient to demonstrate that the issuer's determination of grandfathered status is credible. For purposes of this section, "grandfathered plan" means a health plan that meets the requirements of this section and as defined in RCW 48.43.005.
(2) An issuer's documentation supporting grandfathered plan designation must be made available to the commissioner or the U.S. Department of Health and Human Services for review and examination upon request, and retained for a period of not less than ten years. For each plan, the records supporting the issuer's determination must also be made available to participants and beneficiaries upon request. (3) An issuer's documentation must establish for each grandfathered plan that since March 23, 2010: (a) The plan was not amended to eliminate all or substantially all the benefits to diagnose or treat a particular condition. A list of all plan benefit amendments that eliminate benefits and the date of the amendment is the minimum level of acceptable documentation that must be available to support this criteria; (b) The cost-sharing percentage requirements, if applicable, for the plan were not increased more than three percent after March 23, 2010. A list of each cost-sharing percentage that has been in place for a grandfathered group's plan, beginning with the cost-sharing percentage on March 23, 2010, is the minimum level of acceptable documentation that must be available to support this criteria; (c) The fixed cost-sharing requirements other than copayments did not increase by a total percentage measured from March 23, 2010 to the date of change that is more than the sum of medical inflation plus fifteen percent. A list of the fixed cost-sharing requirements other than copayments that apply to a grandfathered group's plan beginning on March 23, 2010, and a record of any increase, the date and the amount of the increase, is the minimum level of documentation that must be available to support this criteria; (d) Copayments did not increase by an amount that exceeds the greater of: (i) A total percentage measured from March 23, 2010 to the date of change that is more than the sum of medical inflation plus fifteen percent, or (ii) Five dollars, adjusted annually for medical inflation measured from March 23, 2010. A record of all copayments beginning on March 23, 2010 applicable to a grandfathered group plan, and any changes in the copayment since that date is the minimum level of documentation that must be available to support this criterion. (e) The employer's contribution rate toward any tier of coverage for any class of similarly situated individuals did not decrease by more than five percent below the contribution rate in place on March 23, 2010, expressed as a percentage of the total cost of coverage. The total cost of coverage must be determined using the methodology for determining applicable COBRA premiums. If the employer's contribution rate is based on a formula such as hours worked, a decrease of more than five percent in the employer's contributions under the formula will cause the plan to lose grandfathered status. The issuer must retain a record of the employer's contribution rate for each tier of coverage, and any changes in that contribution rate, beginning March 23, 2010 as the minimum level of documentation that must be available to support this criteria; (f) On or after March 23, 2010, the plan was not amended to impose an overall annual limit on the dollar value of benefits that was not in the applicable plan documents on March 23, 2010; (g) On or after March 23, 2010, the plan was not amended to adopt an overall annual limit at a dollar value that is lower than the dollar value of the lifetime limit for all benefits that was in effect on March 23, 2010; and (h) The plan was not amended to decrease the dollar value of the annual limit, regardless of whether the plan or health insurance coverage also imposes an overall lifetime limit on the dollar value of all benefits. (4) In addition to documentation establishing that none of the prohibited changes described in subsection (3) of this section have occurred, an issuer must also make available to the commissioner upon request the following information for each grandfathered plan: (a) Enrollment records of new employees and members added to the plan after March 23, 2010; (b) Underwriting rules and guidelines applied to enrollees on or after March 23, 2010; and (c) Proof of notification to the individual or group of its plan's grandfathered status designation for each year for which the status is claimed. (5) A change made to a plan before March 23, 2010 but that became effective after March 23, 2010 is permitted without negating a plan's grandfathered status if the change was adopted pursuant to a legally binding contract, state insurance department filing or written plan amendment. If the plan change resulted from a merger, acquisition or similar business action where one of the principal purposes is covering new individuals from the merged or acquired group under a grandfathered health plan, the plan may not be designated as grandfathered. (6) An issuer may delegate the administrative functions related to documenting or determining grandfathered status designation to a third party. Such delegation does not relieve the issuer of its obligation to ensure that the designation is correctly made, that replacement plans are issued in a timely and compliant manner as required by state or federal law, and that all requisite documentation is kept by the issuer. (7) If the commissioner determines that an issuer incorrectly designated a group plan as grandfathered, the plan is non-grandfathered, and must be discontinued and replaced with a plan that complies with all relevant market requirements within thirty days. This section does not preclude additional enforcement action. (8) An issuer must designate whether a plan is grandfathered or nongrandfathered as required by the Washington State SERFF filing instructions.
NEW SECTION
WAC 284-170-952 Market conduct requirements related to grandfathered status. (1) An issuer may allow a group covered by grandfathered health insurance coverage to add new employees to its health benefit plan, and move employees between benefit options at open enrollment without affecting grandfathered status, as long as the group's plan does not change in any way that triggers the loss of grandfathered status as set forth in 45 CFR 147.140.
(2) An issuer must provide a statement in the plan materials provided to participants or beneficiaries describing the benefits provided under the plan, explaining that the group health plan believes it is a grandfathered health plan within the meaning of Section 1251 of the Affordable Care Act, and include contact information for questions and complaints that conforms to the model notice language found in 45 CFR 147.140. (3) An issuer must not restrict group eligibility to purchase a non-grandfathered plan offered through an association or member-governed group because the group is not affiliated with or does not participate in the association or member-governed group, unless the association or member-governed group meets the one of the requirements of WAC 284-170-958((1). (4) WAC 284-170-950 through WAC 284-170-958 does not prohibit an issuer from discontinuing a grandfathered plan design and replacing it with a non-grandfathered plan. (5) An issuer must not limit eligibility based on health status for either grandfathered or nongrandfathered health plans.
Reviser's note: The typographical errors in the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040. NEW SECTION
WAC 284-170-955 Association health plan compliance with plan requirement changes based on statute or regulation. (1) An issuer offering plans through an association or member-governed group must implement all new federal or state health plan market requirements when they become effective. An issuer providing such plans must discontinue non-compliant plans, and offer replacement plans effective on the renewal date of the master group contract. These requirements also apply to member employer groups of less than two or to individual member purchasers. In the event the master group contract and the member group do not have the same renewal date, replacement plans must be offered as follows:
(a) An issuer must provide notice of the discontinuation and replacement of the plan to the affected association member group or plan sponsor, and each enrollee in the affected member group, ninety days prior to the member's anniversary or renewal date notice, which ever is earlier. If an issuer does not have a replacement plan approved by the Commissioner to offer in place of the discontinued plan, the issuer must assist each enrollee in identifying a replacement option offered by another issuer. (b) Replacement requirements for this section apply based whether the purchaser is classified as an individual, small group or large group purchaser. For purposes of this section, "purchaser" means the group whose eligibility for the plan is based in whole or in part on membership in the association or member-governed group. (c) For purposes of this section, the anniversary date means the initial or first date on which the health benefit plan became effective with the issuer, regardless of whether the issuer is subject to other agreements, contracts or trust documents that establish requirements related to the purchaser's coverage in addition to the health benefit plan. (d) An issuer must not adjust the renewal or anniversary date to delay or prevent application of any federal or state health plan market requirement.
Reviser's note: The typographical error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040. NEW SECTION
WAC 284-170-958 Transition of plans purchased by association members. (1) An issuer must treat a plan issued to individuals or small groups through an association or member-governed group as a large group plan only if the plan meets one of the following definitions:
(a) The plan is offered to government employees only; (b) The group is exempt from this regulation as a multiple employer welfare trust; (c) The association or member group to whom the plan is issued constitutes an employer under 29 USC § 1002(5) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.), as amended; or (d) The size of the purchasing group is larger than a small group as defined in RCW 48.43.005. (2) An issuer must make a good faith effort to ensure that any association or member-governed group to whom it issues a large group plan meets the requirements of subsection (1) of this section prior to submitting its form and rate filings to the Commissioner, and prior to issuing such coverage. An issuer may reasonably rely upon an opinion from the Department of Labor as reasonable proof that the requirements of 29 USC 1002(5) are met by the association or member-governed group. (3) For plans offered to association or member-governed groups that do not meet the requirements of subsection (1) of this section, the following specific requirements apply: (a) An issuer must treat grandfathered plans issued under those purchasing arrangements as a closed pool, and file a single case closed pool rate filing. For purposes of this section, a single case closed pool rate filing means a rate filing which includes the rates and the rate filing information only for the issuer's closed pool enrollees. (b) For each single case closed pool rate filing, an issuer must file a certification from an officer of the issuer attesting that: (i) The employer groups covered by the filing joined the association prior to or on March 23, 2010; (ii) The issuer can establish with documentation in its files that none of the conditions triggering termination of grandfathered status set forth in WAC 284-170-950 or in 45 CFR 2590.715-1251(g) have occurred for any plan members. (4) For each grandfathered plan issued to an association or member governed group under section (3), the issuer must include the following items in its rate filing: (a) Plan Number; (b) Identification number assigned to each employer group, including employer groups of less than two; (c) Initial contract or certificate date; (d) Number of employees for each employer group, pursuant to RCW 48.43.005(11); (e) Number of enrolled employees for each employer group for the prior calendar year; (f) Current and proposed rate schedule for each employer group; and (g) Description of the rating methodology and rate change for each employer group. (5) WAC 284-43-950 applies for a single case rate closed pool under this section.
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