0001| AN ACT | 0002| RELATING TO INSURANCE; AMENDING AND ENACTING CERTAIN PROVISIONS OF THE | 0003| NEW MEXICO INSURANCE CODE REGARDING INDIVIDUAL OR GROUP HEALTH INSURANCE | 0004| POLICIES. | 0005| | 0006| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0007| Section 1. Section 59A-16-12.1 NMSA 1978 (being Laws 1991, | 0008| Chapter 111, Section 12) is amended to read: | 0009| "59A-16-12.1. DISCRIMINATION ON THE BASIS OF DETERIORATION IN | 0010| HEALTH.-- | 0011| A. No insurer shall cancel or change the premiums, benefits | 0012| or conditions of an individual health insurance policy or contract as to | 0013| one insured solely because of a deterioration in the health of that | 0014| insured occurring after the issuance or delivery of the policy or | 0015| contract. | 0016| B. No conversion of a group health insurance policy that | 0017| provides hospital, surgical and medical expense benefits shall be made | 0018| to a conversion policy that has not been approved and found by the | 0019| superintendent to provide benefits and conditions closely approximating | 0020| the coverage of the policy from which conversion is exercised. | 0021| C. No insurer or other provider of health care benefits | 0022| regulated pursuant to Section 59A, Articles 23, 44, 46 or 47 NMSA 1978 | 0023| shall exclude an individual from coverage in a group because of the | 0024| individual's health condition unless the entire group is excluded from | 0025| coverage, except that this provision shall not prohibit the insurer or | 0001| other provider of health care benefits from excluding "late enrollees or | 0002| late entrants" from coverage. For purposes of this provision, "late | 0003| enrollees or late entrants" means those individuals who did not enroll | 0004| when first eligible for coverage or during an open enrollment period." | 0005| Section 2. Section 59A-18-13.1 NMSA 1978 (being Laws 1994, | 0006| Chapter 75, Section 26) is amended to read: | 0007| "59A-18-13.1. ADJUSTED COMMUNITY RATING.-- | 0008| A. Until July 1, 1998, every insurer, fraternal benefit | 0009| society, health maintenance organization or nonprofit health care plan | 0010| that provides primary health insurance or health care coverage insuring | 0011| or covering major medical expenses shall, in determining the initial | 0012| year's premium charged for an individual, use only the rating factors of | 0013| age, gender, geographic area of the place of employment and smoking | 0014| practices; provided, however, for individual policies the rating factor | 0015| of the individual's place of residence may be used instead of the | 0016| geographic area of the individual's place of employment. In determining | 0017| the initial and any subsequent year's rate, the difference in rates in | 0018| any one age group that may be charged on the basis of a person's gender | 0019| shall not exceed another person's rates in the age group by more than | 0020| twenty percent of the lower rate, and no person's rate shall exceed the | 0021| rate of any other person with similar family composition by more than | 0022| two hundred fifty percent of the lower rate, except that the rates for | 0023| children under the age of nineteen or children aged nineteen to twenty-five who are full-time students may be lower than the bottom rates in | 0024| the two hundred fifty percent band. The rating factor restrictions | 0025| shall not prohibit an insurer, society, organization or plan from | 0001| offering rates that differ depending upon family composition. | 0002| B. Effective July 1, 1998, every insurer, fraternal benefit | 0003| society, health maintenance organization or nonprofit health care plan | 0004| that provides primary health insurance or health care coverage insuring | 0005| or covering major medical expenses shall charge the same premium for the | 0006| same coverage to each New Mexico resident, regardless of a person's | 0007| individual circumstances for medical risk, job risk or gender. The only | 0008| rating factor that may be used is whether a person is under or over the | 0009| age of nineteen. | 0010| C. The superintendent shall adopt regulations to implement | 0011| the provisions of this section." | 0012| Section 3. Section 59A-23B-6 NMSA 1978 (being Laws 1991, Chapter | 0013| 111, Section 6, as amended) is amended to read: | 0014| "59A-23B-6. FORMS AND RATES--APPROVAL OF THE SUPERINTENDENT OF | 0015| INSURANCE--ADJUSTED COMMUNITY RATING.-- | 0016| A. All policy or plan forms, including applications, | 0017| enrollment forms, policies, plans, certificates, evidences of coverage, | 0018| riders, amendments, endorsements and disclosure forms, shall be | 0019| submitted to the insurance department for approval prior to use. | 0020| B. No policy or plan may be issued in the state unless the | 0021| rates have first been filed with and approved by the superintendent. | 0022| This subsection shall not apply to policies or plans subject to the | 0023| Small Group Rate and Renewability Act. | 0024| C. Until July 1, 1998, in determining the initial year's | 0025| premium or rate charged for coverage under a policy or plan, the only | 0001| rating factors that may be used are age, gender, geographic area of the | 0002| place of employment and smoking practices. Until July 1, 1998, in | 0003| determining the initial and any subsequent year's rate, the difference | 0004| in rates in any one age group that may be charged on the basis of a | 0005| person's gender shall not exceed another person's rates in the age group | 0006| by more than twenty percent of the lower rate, and no person's rate | 0007| shall exceed the rate of any other person with similar family | 0008| composition by more than two hundred fifty percent of the lower rate, | 0009| except that the rates for children under the age of nineteen or children | 0010| aged nineteen to twenty-five who are full-time students may be lower | 0011| than the bottom rates in the two hundred fifty percent band. The rating | 0012| factor restrictions shall not prohibit an insurer, society, organization | 0013| or plan from offering rates that differ depending upon family | 0014| composition. | 0015| D. Effective July 1, 1998, each policy or plan covered by | 0016| the Minimum Healthcare Protection Act shall charge the same premium for | 0017| the same coverage to each New Mexico resident, regardless of a person's | 0018| individual circumstances for medical risk, job risk or gender. The only | 0019| rating factor that may be used is whether a person is under or over the | 0020| age of nineteen. | 0021| E. The superintendent shall adopt regulations to implement | 0022| the provisions of this section." | 0023| Section 4. Section 59A-23C-3 NMSA 1978 (being Laws 1991, Chapter | 0024| 153, Section 3, as amended) is amended to read: | 0025| "59A-23C-3. DEFINITIONS.--As used in the Small Group Rate and | 0001| Renewability Act: | 0002| A. "actuarial certification" means a written statement by a | 0003| member of the American academy of actuaries or another individual | 0004| acceptable to the superintendent that a small employer carrier is in | 0005| compliance with the provisions of Section 59A-23C-5 NMSA 1978, based | 0006| upon the person's examination, including a review of the appropriate | 0007| records and of the actuarial assumptions and methods utilized by the | 0008| carrier in establishing premium rates for applicable health benefit | 0009| plans; | 0010| B. "base premium rate" means, for each class of business as | 0011| to a rating period, the lowest premium rate charged under a rating | 0012| system for that class of business by the small employer carrier to small | 0013| employers with similar case characteristics for health benefit plans | 0014| with the same or similar coverage; | 0015| C. "carrier" means any person who provides health insurance | 0016| in this state. For the purposes of the Small Group Rate and | 0017| Renewability Act, "carrier" or "insurer" includes a licensed insurance | 0018| company, a licensed fraternal benefit society, a prepaid hospital or | 0019| medical service plan, a health maintenance organization, a nonprofit | 0020| health care organization, a multiple employer welfare arrangement or any | 0021| other person providing a plan of health insurance subject to state | 0022| insurance regulation; | 0023| D. "case characteristics" means demographic or other | 0024| relevant characteristics of a small employer, as determined by a small | 0025| employer carrier, that are considered by the carrier in the | 0001| determination of premium rates for the small employer, but "case | 0002| characteristics" does not include claim experience, health status and | 0003| duration of coverage since issue; | 0004| E. "class of business" means all small employers as shown on | 0005| the records of the small employer carrier. A separate class of business | 0006| may be established by the small employer carrier on the basis that the | 0007| applicable health benefit plans have been acquired from another small | 0008| employer carrier as a distinct grouping of plans; | 0009| F. "department" means the department of insurance; | 0010| G. "health benefit plan" or "plan" means any hospital or | 0011| medical expense incurred policy or certificate, hospital or medical | 0012| service plan contract or health maintenance organization subscriber | 0013| contract. "Health benefit plan" does not include accident-only, credit, | 0014| dental or disability income insurance, medicare supplement coverage, | 0015| coverage issued as a supplement to liability insurance, workers' | 0016| compensation or similar insurance or automobile medical-payment | 0017| insurance; | 0018| H. "index rate" means, for each class of business for small | 0019| employers with similar case characteristics, the arithmetic average of | 0020| the applicable base premium rate and the corresponding highest premium | 0021| rate; | 0022| I. "new business premium rate" means, for each class of | 0023| business as to a rating period, the premium rate charged or offered by | 0024| the small employer carrier to small employers with similar case | 0025| characteristics for newly issued health benefit plans with the same or | 0001| similar coverage; | 0002| J. "rating period" means the calendar period for which | 0003| premium rates established by a small employer carrier are assumed to be | 0004| in effect, as determined by the small employer carrier; | 0005| K. "small employer" means any person, firm, corporation, | 0006| partnership or association actively engaged in business who, on at least | 0007| fifty percent of its working days during the preceding year, employed no | 0008| less than two and no more than fifty eligible employees; provided that: | 0009| (1) in determining the minimum number of eligible | 0010| employees, the spouse or dependent of an employee may, at the employer's | 0011| discretion, be counted as a separate employee; and | 0012| (2) companies that are affiliated companies or that | 0013| are eligible to file a combined tax return for purposes of state income | 0014| taxation shall be considered one employer; | 0015| L. "small employer carrier" means any insurer that offers | 0016| health benefit plans covering the employees of a small employer; and | 0017| M. "superintendent" means the superintendent of insurance." | 0018| Section 5. Section 59A-23C-5 NMSA 1978 (being Laws 1991, Chapter | 0019| 153, Section 5, as amended) is amended to read: | 0020| "59A-23C-5. RESTRICTIONS RELATING TO PREMIUM RATES.-- | 0021| A. Premium rates for health benefit plans subject to the | 0022| Small Group Rate and Renewability Act shall be subject to the following | 0023| provisions: | 0024| (1) the index rate for a rating period for any class | 0025| of business shall not exceed the index rate for any other class of | 0001| business by more than twenty percent; | 0002| (2) for a class of business, the premium rates charged | 0003| during a rating period to small employers with similar case | 0004| characteristics for the same or similar coverage, or the rates that | 0005| could be charged to those employers under the rating system for that | 0006| class of business, shall not vary from the index rate by more than | 0007| twenty percent of the index rate; | 0008| (3) the percentage increase in the premium rate | 0009| charged to a small employer for a new rating period may not exceed the | 0010| sum of the following: | 0011| (a) the percentage change in the new business | 0012| premium rate measured from the first day of the prior rating period to | 0013| the first day of the new rating period. In the case of a class of | 0014| business for which the small employer carrier is not issuing new | 0015| policies, the carrier shall use the percentage change in the base | 0016| premium rate; | 0017| (b) an adjustment, not to exceed ten percent | 0018| annually and adjusted pro rata for rating periods of less than one year | 0019| due to the claim experience, health status or duration of coverage of | 0020| the employees or dependents of the small employer as determined from the | 0021| carrier's rate manual for the class of business; and | 0022| (c) any adjustment due to change in coverage or | 0023| change in the case characteristics of the small employer as determined | 0024| from the carrier's rate manual for the class of business; and | 0025| (4) in the case of health benefit plans issued prior | 0001| to the effective date of the Small Group Rate and Renewability Act, a | 0002| premium rate for a rating period may exceed the ranges described in | 0003| Paragraph (1) or (2) of this subsection for a period of five years | 0004| following the effective date of the Small Group Rate and Renewability | 0005| Act. In that case, the percentage increase in the premium rate charged | 0006| to a small employer in that class of business for a new rating period | 0007| may not exceed the sum of the following: | 0008| (a) the percentage change in the new business | 0009| premium rate measured from the first day of the prior rating period to | 0010| the first day of the new rating period. In the case of a class of | 0011| business for which the small employer carrier is not issuing new | 0012| policies, the carrier shall use the percentage change in the base | 0013| premium rate; and | 0014| (b) any adjustment due to change in coverage or | 0015| change in the case characteristics of the small employer as determined | 0016| from the carrier's rate manual for the class of business. | 0017| B. Nothing in this section is intended to affect the use by | 0018| a small employer carrier of legitimate rating factors other than claim | 0019| experience, health status or duration of coverage in the determination | 0020| of premium rates. Small employer carriers shall apply rating factors, | 0021| including case characteristics, consistently with respect to all small | 0022| employers in a class of business. | 0023| C. A small employer carrier shall not involuntarily transfer | 0024| a small employer into or out of a class of business. A small employer | 0025| carrier shall not offer to transfer a small employer into or out of a | 0001| class of business unless the offer is made to transfer all small | 0002| employers in the class of business without regard to case | 0003| characteristics, claim experience, health status or duration since | 0004| issue. | 0005| D. Prior to usage and June 14, 1991, each carrier shall file | 0006| with the superintendent the rate manuals and any updates thereto for | 0007| each class of business. A rate filing fee is payable under Subsection U | 0008| of Section 59A-6-1 NMSA 1978 for the filing of each update. The | 0009| superintendent shall disapprove within sixty days of receipt of a | 0010| complete filing or the filing is deemed approved. If the superintendent | 0011| disapproves any such form during the sixty-day review period, he shall | 0012| give the carrier written notice of the disapproval stating the ground | 0013| thereof. At any time, the superintendent, after a hearing thereof, may | 0014| disapprove a form or withdraw a previous approval. The superintendent's | 0015| order on such hearing shall state the grounds for disapproval or | 0016| withdrawal of a previous approval and the date not less than twenty days | 0017| later when disapproval or withdrawal becomes effective." | 0018| Section 6. Section 59A-23C-5.1 NMSA 1978 (being Laws 1994, | 0019| Chapter 75, Section 33) is amended to read: | 0020| "59A-23C-5.1. ADJUSTED COMMUNITY RATING.-- | 0021| A. Until July 1, 1998, a health benefit plan that is offered | 0022| by a carrier to a small employer shall be offered without regard to the | 0023| health status of any individual in the group, except as provided in the | 0024| Small Group Rate and Renewability Act. The only rating factors that may | 0025| be used to determine the initial year's premium charged a group, subject | 0001| to the maximum rate variation provided in this section for all rating | 0002| factors, are the group members': | 0003| (1) ages; | 0004| (2) gender; | 0005| (3) geographic area of the place of employment; or | 0006| (4) smoking practices. | 0007| B. Until July 1, 1998, in determining the initial and any | 0008| subsequent year's rate, the difference in rates in any one age group | 0009| that may be charged on the basis of a person's gender shall not exceed | 0010| another person's rates in the age group by more than twenty percent of | 0011| the lower rate, and no person's rate shall exceed the rate of any other | 0012| person with similar family composition by more than two hundred fifty | 0013| percent of the lower rate, except that the rates for children under the | 0014| age of nineteen or children aged nineteen to twenty-five who are full-time students may be lower than the bottom rates in the two hundred | 0015| fifty percent band. The rating factor restrictions shall not prohibit a | 0016| carrier from offering rates that differ depending upon family | 0017| composition. | 0018| C. Effective July 1, 1998, a health benefit plan that is | 0019| offered by a carrier to a small employer shall charge the same premium | 0020| for the same coverage to each New Mexico resident, regardless of a | 0021| person's individual circumstances for medical risk, job risk or gender. | 0022| The only rating factor that may be used is whether a person is under or | 0023| over the age of nineteen. | 0024| D. The superintendent shall adopt regulations to implement | 0025| the provisions of this section." | 0001| Section 7. A new section of Chapter 59A, Article 23 is enacted to | 0002| read: | 0003| "OUT-OF-STATE ASSOCIATIONS AND TRUSTS.--Unless the rate applicable | 0004| to the certificate or coverage of an out-of-state association or trust | 0005| complies with the requirements of Section 59A-18-13.1 or 59A-23C-5.1 | 0006| NMSA 1978, the out-of-state association or trust may not: | 0007| A. advertise in the state as a benefit of membership for any | 0008| group health insurance policy available to its members or beneficiaries; | 0009| B. issue a certificate for delivery in New Mexico to any | 0010| resident of the state; or | 0011| C. solicit membership in the state on the basis of the | 0012| existence or availability of such health insurance coverage." | 0013| | 0014| | 0015| HB | 0016| 297 | 0017| Page  |