Senate Bill 0312e2

CODING: Words stricken are deletions; words underlined are additions.







    CS for SB 312                           Second Engrossed (ntc)



  1                      A bill to be entitled

  2         An act relating to health insurance; amending

  3         s. 627.6645, F.S.; revising the notice

  4         requirements for cancellation or nonrenewal of

  5         a group health insurance policy; specifying

  6         conditions under which the insurer may

  7         retroactively cancel coverage due to nonpayment

  8         of premium; amending s. 627.6675, F.S.;

  9         revising the time limits for an employee or

10         group member to apply for an individual

11         converted policy when termination of group

12         coverage is due to failure of the employer to

13         pay the premium; revising the requirements for

14         the premium for the converted policy; allowing

15         a group insurer to contract with another

16         insurer to issue an individual converted policy

17         under certain conditions; amending s. 641.3108,

18         F.S.; revising the notice requirements for

19         cancellation or nonrenewal of a health

20         maintenance organization contract; specifying

21         conditions under which the organization may

22         retroactively cancel coverage due to nonpayment

23         of premium; amending s. 641.3922, F.S.;

24         revising the time limits for an employee or

25         group member to apply for a converted contract

26         from a health maintenance organization when

27         termination of group coverage is due to failure

28         of the employer to pay the premium; revising

29         the requirements for the premium for the

30         converted contract; providing an effective

31         date.


                                  1

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 312                           Second Engrossed (ntc)



  1  Be It Enacted by the Legislature of the State of Florida:

  2

  3         Section 1.  Subsection (1) of section 627.6645, Florida

  4  Statutes, is amended and subsection (5) is added to that

  5  section to read:

  6         627.6645  Notification of cancellation, expiration,

  7  nonrenewal, or change in rates.--

  8         (1)  Every insurer delivering or issuing for delivery a

  9  group health insurance policy under the provisions of this

10  part shall give the policyholder at least 45 days' advance

11  notice of cancellation, expiration, nonrenewal, or a change in

12  rates.  Such notice shall be mailed to the policyholder's last

13  address as shown by the records of the insurer.  However, if

14  cancellation is for nonpayment of premium, only the

15  requirements of subsection (5) this section shall not apply.

16  Upon receipt of such notice, the policyholder shall forward,

17  as soon as practicable, the notice of expiration,

18  cancellation, or nonrenewal to each certificateholder covered

19  under the policy.

20         (5)  If cancellation is due to nonpayment of premium,

21  the insurer may not retroactively cancel the policy to a date

22  prior to the date that notice of cancellation was provided to

23  the policyholder unless the insurer mails notice of

24  cancellation to the policyholder prior to 45 days after the

25  date the premium was due. Such notice must be mailed to the

26  policyholder's last address as shown by the records of the

27  insurer and may provide for a retroactive date of cancellation

28  no earlier than midnight of the date that the premium was due.

29         Section 2.  Section 627.6675, Florida Statutes, 1998

30  Supplement, is amended to read:

31


                                  2

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 312                           Second Engrossed (ntc)



  1         627.6675  Conversion on termination of

  2  eligibility.--Subject to all of the provisions of this

  3  section, a group policy delivered or issued for delivery in

  4  this state by an insurer or nonprofit health care services

  5  plan that provides, on an expense-incurred basis, hospital,

  6  surgical, or major medical expense insurance, or any

  7  combination of these coverages, shall provide that an employee

  8  or member whose insurance under the group policy has been

  9  terminated for any reason, including discontinuance of the

10  group policy in its entirety or with respect to an insured

11  class, and who has been continuously insured under the group

12  policy, and under any group policy providing similar benefits

13  that the terminated group policy replaced, for at least 3

14  months immediately prior to termination, shall be entitled to

15  have issued to him or her by the insurer a policy or

16  certificate of health insurance, referred to in this section

17  as a "converted policy." A group insurer may meet the

18  requirements of this section by contracting with another

19  insurer, authorized in this state, to issue an individual

20  converted policy, which policy has been approved by the

21  department under s. 627.410. An employee or member shall not

22  be entitled to a converted policy if termination of his or her

23  insurance under the group policy occurred because he or she

24  failed to pay any required contribution, or because any

25  discontinued group coverage was replaced by similar group

26  coverage within 31 days after discontinuance.

27         (1)  TIME LIMIT.--Written application for the converted

28  policy shall be made and the first premium must be paid to the

29  insurer, not later than 63 days after termination of the group

30  policy. However, if termination was the result of failure to

31  pay any required premium or contribution and such nonpayment


                                  3

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 312                           Second Engrossed (ntc)



  1  of premium was due to acts of an employer or policyholder

  2  other than the employee or certificateholder, written

  3  application for the converted policy must be made and the

  4  first premium must be paid to the insurer not later than 63

  5  days after notice of termination is mailed by the insurer or

  6  the employer, whichever is earlier, to the employee's or

  7  certificateholder's last address as shown by the record of the

  8  insurer or the employer, whichever is applicable. In such case

  9  of termination due to nonpayment of premium by the employer or

10  policyholder, the premium for the converted policy may not

11  exceed the rate for the prior group coverage for the period of

12  coverage under the converted policy prior to the date notice

13  of termination is mailed to the employee or certificateholder.

14  For the period of coverage after such date, the premium for

15  the converted policy is subject to the requirements of

16  subsection (3).

17         (2)  EVIDENCE OF INSURABILITY.--The converted policy

18  shall be issued without evidence of insurability.

19         (3)  CONVERSION PREMIUM; EFFECT ON PREMIUM RATES FOR

20  GROUP COVERAGE.--

21         (a)  The premium for the converted policy shall be

22  determined in accordance with premium rates applicable to the

23  age and class of risk of each person to be covered under the

24  converted policy and to the type and amount of insurance

25  provided.  However, the premium for the converted policy may

26  not exceed 200 percent of the standard risk rate as

27  established by the department, pursuant to this subsection.

28         (b)  Actual or expected experience under converted

29  policies may be combined with such experience under group

30  policies for the purposes of determining premium and loss

31


                                  4

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 312                           Second Engrossed (ntc)



  1  experience and establishing premium rate levels for group

  2  coverage.

  3         (c)  The department shall annually determine standard

  4  risk rates, using reasonable actuarial techniques and

  5  standards adopted by the department by rule. The standard risk

  6  rates must be determined as follows:

  7         1.  Standard risk rates for individual coverage must be

  8  determined separately for indemnity policies, preferred

  9  provider/exclusive provider policies, and health maintenance

10  organization contracts.

11         2.  The department shall survey insurers and health

12  maintenance organizations representing at least an 80 percent

13  market share, based on premiums earned in the state for the

14  most recent calendar year, for each of the categories

15  specified in subparagraph 1.

16         3.  Standard risk rate schedules must be determined,

17  computed as the average rates charged by the carriers

18  surveyed, giving appropriate weight to each carrier's

19  statewide market share of earned premiums.

20         4.  The rate schedule shall be determined from analysis

21  of the one county with the largest market share in the state

22  of all such carriers.

23         5.  The rate for other counties must be determined by

24  using the weighted average of each carrier's county factor

25  relationship to the county determined in subparagraph 4.

26         6.  The rate schedule must be determined for different

27  age brackets and family size brackets.

28         (4)  EFFECTIVE DATE OF COVERAGE.--The effective date of

29  the converted policy shall be the day following the

30  termination of insurance under the group policy.

31


                                  5

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 312                           Second Engrossed (ntc)



  1         (5)  SCOPE OF COVERAGE.--The converted policy shall

  2  cover the employee or member and his or her dependents who

  3  were covered by the group policy on the date of termination of

  4  insurance.  At the option of the insurer, a separate converted

  5  policy may be issued to cover any dependent.

  6         (6)  OPTIONAL COVERAGE.--The insurer shall not be

  7  required to issue a converted policy covering any person who

  8  is or could be covered by Medicare.  The insurer shall not be

  9  required to issue a converted policy covering a person if

10  paragraphs (a) and (b) apply to the person:

11         (a)  If any of the following apply to the person:

12         1.  The person is covered for similar benefits by

13  another hospital, surgical, medical, or major medical expense

14  insurance policy or hospital or medical service subscriber

15  contract or medical practice or other prepayment plan, or by

16  any other plan or program.

17         2.  The person is eligible for similar benefits,

18  whether or not actually provided coverage, under any

19  arrangement of coverage for individuals in a group, whether on

20  an insured or uninsured basis.

21         3.  Similar benefits are provided for or are available

22  to the person under any state or federal law.

23         (b)  If the benefits provided under the sources

24  referred to in subparagraph (a)1. or the benefits provided or

25  available under the sources referred to in subparagraphs (a)2.

26  and 3., together with the benefits provided by the converted

27  policy, would result in overinsurance according to the

28  insurer's standards.  The insurer's standards must bear some

29  reasonable relationship to actual health care costs in the

30  area in which the insured lives at the time of conversion and

31


                                  6

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 312                           Second Engrossed (ntc)



  1  must be filed with the department prior to their use in

  2  denying coverage.

  3         (7)  INFORMATION REQUESTED BY INSURER.--

  4         (a)  A converted policy may include a provision under

  5  which the insurer may request information, in advance of any

  6  premium due date, of any person covered thereunder as to

  7  whether:

  8         1.  The person is covered for similar benefits by

  9  another hospital, surgical, medical, or major medical expense

10  insurance policy or hospital or medical service subscriber

11  contract or medical practice or other prepayment plan or by

12  any other plan or program.

13         2.  The person is covered for similar benefits under

14  any arrangement of coverage for individuals in a group,

15  whether on an insured or uninsured basis.

16         3.  Similar benefits are provided for or are available

17  to the person under any state or federal law.

18         (b)  The converted policy may provide that the insurer

19  may refuse to renew the policy or the coverage of any person

20  only for one or more of the following reasons:

21         1.  Either the benefits provided under the sources

22  referred to in subparagraphs (a)1. and 2. for the person or

23  the benefits provided or available under the sources referred

24  to in subparagraph (a)3. for the person, together with the

25  benefits provided by the converted policy, would result in

26  overinsurance according to the insurer's standards on file

27  with the department.

28         2.  The converted policyholder fails to provide the

29  information requested pursuant to paragraph (a).

30         3.  Fraud or intentional misrepresentation in applying

31  for any benefits under the converted policy.


                                  7

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 312                           Second Engrossed (ntc)



  1         4.  Other reasons approved by the department.

  2         (8)  BENEFITS OFFERED.--

  3         (a)  An insurer shall not be required to issue a

  4  converted policy that provides benefits in excess of those

  5  provided under the group policy from which conversion is made.

  6         (b)  An insurer shall offer the benefits specified in

  7  s. 627.668 and the benefits specified in s. 627.669 if those

  8  benefits were provided in the group plan.

  9         (c)  An insurer shall offer maternity benefits and

10  dental benefits if those benefits were provided in the group

11  plan.

12         (9)  PREEXISTING CONDITION PROVISION.--The converted

13  policy shall not exclude a preexisting condition not excluded

14  by the group policy. However, the converted policy may provide

15  that any hospital, surgical, or medical benefits payable under

16  the converted policy may be reduced by the amount of any such

17  benefits payable under the group policy after the termination

18  of covered under the group policy. The converted policy may

19  also provide that during the first policy year the benefits

20  payable under the converted policy, together with the benefits

21  payable under the group policy, shall not exceed those that

22  would have been payable had the individual's insurance under

23  the group policy remained in force.

24         (10)  REQUIRED OPTION FOR MAJOR MEDICAL

25  COVERAGE.--Subject to the provisions and conditions of this

26  part, the employee or member shall be entitled to obtain a

27  converted policy providing major medical coverage under a plan

28  meeting the following requirements:

29         (a)  A maximum benefit equal to the lesser of the

30  policy limit of the group policy from which the individual

31  converted or $500,000 per covered person for all covered


                                  8

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 312                           Second Engrossed (ntc)



  1  medical expenses incurred during the covered person's

  2  lifetime.

  3         (b)  Payment of benefits at the rate of 80 percent of

  4  covered medical expenses which are in excess of the

  5  deductible, until 20 percent of such expenses in a benefit

  6  period reaches $2,000, after which benefits will be paid at

  7  the rate of 90 percent during the remainder of the contract

  8  year unless the insured is in the insurer's case management

  9  program, in which case benefits shall be paid at the rate of

10  100 percent during the remainder of the contract year.  For

11  the purposes of this paragraph, "case management program"

12  means the specific supervision and management of the medical

13  care provided or prescribed for a specific individual, which

14  may include the use of health care providers designated by the

15  insurer.  Payment of benefits for outpatient treatment of

16  mental illness, if provided in the converted policy, may be at

17  a lesser rate but not less than 50 percent.

18         (c)  A deductible for each calendar year that must be

19  $500, $1,000, or $2,000, at the option of the policyholder.

20         (d)  The term "covered medical expenses," as used in

21  this subsection, shall be consistent with those customarily

22  offered by the insurer under group or individual health

23  insurance policies but is not required to be identical to the

24  covered medical expenses provided in the group policy from

25  which the individual converted.

26         (11)  ALTERNATIVE PLANS.--The insurer shall, in

27  addition to the option required by subsection (10), offer the

28  standard health benefit plan, as established pursuant to s.

29  627.6699(12). The insurer may, at its option, also offer

30  alternative plans for group health conversion in addition to

31  the plans required by this section.


                                  9

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 312                           Second Engrossed (ntc)



  1         (12)  RETIREMENT COVERAGE.--If coverage would be

  2  continued under the group policy on an employee following the

  3  employee's retirement prior to the time he or she is or could

  4  be covered by Medicare, the employee may elect, instead of

  5  such continuation of group insurance, to have the same

  6  conversion rights as would apply had his or her insurance

  7  terminated at retirement by reason or termination of

  8  employment or membership.

  9         (13)  REDUCTION OF COVERAGE DUE TO MEDICARE.--The

10  converted policy may provide for reduction of coverage on any

11  person upon his or her eligibility for coverage under Medicare

12  or under any other state or federal law providing for benefits

13  similar to those provided by the converted policy.

14         (14)  CONVERSION PRIVILEGE ALLOWED.--The conversion

15  privilege shall also be available to any of the following:

16         (a)  The surviving spouse, if any, at the death of the

17  employee or member, with respect to the spouse and the

18  children whose coverages under the group policy terminate by

19  reason of the death, otherwise to each surviving child whose

20  coverage under the group policy terminates by reason of such

21  death, or, if the group policy provides for continuation of

22  dependents' coverages following the employee's or member's

23  death, at the end of such continuation.

24         (b)  The former spouse whose coverage would otherwise

25  terminate because of annulment or dissolution of marriage, if

26  the former spouse is dependent for financial support.

27         (c)  The spouse of the employee or member upon

28  termination of coverage of the spouse, while the employee or

29  member remains insured under the group policy, by reason of

30  ceasing to be a qualified family member under the group

31


                                  10

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 312                           Second Engrossed (ntc)



  1  policy, with respect to the spouse and the children whose

  2  coverages under the group policy terminate at the same time.

  3         (d)  A child solely with respect to himself or herself

  4  upon termination of his or her coverage by reason of ceasing

  5  to be a qualified family member under the group policy, if a

  6  conversion privilege is not otherwise provided in this

  7  subsection with respect to such termination.

  8         (15)  BENEFIT LEVELS.--If the benefit levels required

  9  in subsection (10) exceed the benefit levels provided under

10  the group policy, the conversion policy may offer benefits

11  which are substantially similar to those provided under the

12  group policy in lieu of those required in subsection (10).

13         (16)  GROUP COVERAGE INSTEAD OF INDIVIDUAL

14  COVERAGE.--The insurer may elect to provide group insurance

15  coverage instead of issuing a converted individual policy.

16         (17)  NOTIFICATION.--A notification of the conversion

17  privilege shall be included in each certificate of coverage.

18  The insurer shall mail an election and premium notice form,

19  including an outline of coverage, on a form approved by the

20  department, within 14 days after an individual who is eligible

21  for a converted policy gives notice to the insurer that the

22  individual is considering applying for the converted policy or

23  otherwise requests such information. The outline of coverage

24  must contain a description of the principal benefits and

25  coverage provided by the policy and its principal exclusions

26  and limitations, including, but not limited to, deductibles

27  and coinsurance.

28         (18)  OUTSIDE CONVERSIONS.--A converted policy that is

29  delivered outside of this state must be on a form that could

30  be delivered in the other jurisdiction as a converted policy

31  had the group policy been issued in that jurisdiction.


                                  11

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 312                           Second Engrossed (ntc)



  1         (19)  APPLICABILITY.--This section does not require

  2  conversion on termination of eligibility for a policy or

  3  contract that provides benefits for specified diseases, or for

  4  accidental injuries only, disability income, Medicare

  5  supplement, hospital indemnity, limited benefit,

  6  nonconventional, or excess policies.

  7         (20)  Nothing in this section or in the incorporation

  8  of it into insurance policies shall be construed to require

  9  insurers to provide benefits equal to those provided in the

10  group policy from which the individual converted, provided,

11  however, that comprehensive benefits are offered which shall

12  be subject to approval by the Insurance Commissioner.

13         Section 3.  Section 641.3108, Florida Statutes, is

14  amended to read:

15         641.3108  Notice of cancellation of contract.--

16         (1)  Except for nonpayment of premium or termination of

17  eligibility, no health maintenance organization may cancel or

18  otherwise terminate or fail to renew a health maintenance

19  contract without giving the subscriber at least 45 days'

20  notice in writing of the cancellation, termination, or

21  nonrenewal of the contract. The written notice shall state the

22  reason or reasons for the cancellation, termination, or

23  nonrenewal.  All health maintenance contracts shall contain a

24  clause which requires that this notice be given.

25         (2)  If cancellation is due to nonpayment of premium,

26  the health maintenance organization may not retroactively

27  cancel the contract to a date prior to the date that notice of

28  cancellation was provided to the subscriber unless the

29  organization mails notice of cancellation to the subscriber

30  prior to 45 days after the date the premium was due. Such

31  notice must be mailed to the subscriber's last address as


                                  12

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 312                           Second Engrossed (ntc)



  1  shown by the records of the organization and may provide for a

  2  retroactive date of cancellation no earlier than midnight of

  3  the date that the premium was due.

  4         (3)  In the case of a health maintenance contract

  5  issued to an employer or person holding the contract on behalf

  6  of the subscriber group, the health maintenance organization

  7  may make the notification through the employer or group

  8  contract holder, and, if the health maintenance organization

  9  elects to take this action through the employer or group

10  contract holder, the organization shall be deemed to have

11  complied with the provisions of this section upon notifying

12  the employer or group contract holder of the requirements of

13  this section and requesting the employer or group contract

14  holder to forward to all subscribers the notice required

15  herein.

16         Section 4.  Subsection (1) of section 641.3922, Florida

17  Statutes, 1998 Supplement, is amended to read:

18         641.3922  Conversion contracts; conditions.--Issuance

19  of a converted contract shall be subject to the following

20  conditions:

21         (1)  TIME LIMIT.--Written application for the converted

22  contract shall be made and the first premium paid to the

23  health maintenance organization not later than 63 days after

24  such termination. However, if termination was the result of

25  failure to pay any required premium or contribution and such

26  nonpayment of premium was due to acts of an employer or group

27  contract holder other than the employee or individual

28  subscriber, written application for the contract must be made

29  and the first premium must be paid not later than 63 days

30  after notice of termination is mailed by the organization or

31  the employer, whichever is earlier, to the employee's or


                                  13

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 312                           Second Engrossed (ntc)



  1  individual's last address as shown by the record of the

  2  organization or the employer, whichever is applicable. In such

  3  case of termination due to non-payment of premium by the

  4  employer or group contract holder, the premium for the

  5  converted contract may not exceed the rate for the prior group

  6  coverage for the period of coverage under the converted

  7  contract prior to the date notice of termination is mailed to

  8  the employee or individual subscriber. For the period of

  9  coverage after such date, the premium for the converted

10  contract is subject to the requirements of subsection (3).

11         Section 5.  This act shall take effect October 1, 1999,

12  and shall apply to policies and contracts issued or renewed on

13  or after that date.

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31


                                  14