Senate Bill sb1210c1
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Florida Senate - 2001 CS for SB 1210
By the Committee on Banking and Insurance; and Senator Latvala
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1 A bill to be entitled
2 An act relating to health insurance; amending
3 s. 627.410, F.S.; requiring certain group
4 certificates for health insurance coverage to
5 be subject to the requirements for individual
6 health insurance policies; exempting group
7 health insurance policies insuring groups of a
8 certain size from rate filing requirements;
9 providing alternative rate filing requirements
10 for insurers with less than a specified number
11 of nationwide policyholders or members;
12 amending s. 627.411, F.S.; revising the grounds
13 for the disapproval of insurance policy forms;
14 providing that a health insurance policy form
15 may be disapproved if it results in certain
16 rate increases; specifying allowable new
17 business rates and renewal rates if rate
18 increases exceed certain levels; authorizing
19 the Department of Insurance to determine
20 medical trend for purposes of approving rate
21 filings; amending s. 627.6487, F.S.; revising
22 the types of policies that individual health
23 insurers must offer to persons eligible for
24 guaranteed individual health insurance
25 coverage; prohibiting individual health
26 insurers from applying discriminatory
27 underwriting or rating practices to eligible
28 individuals; amending s. 627.6515, F.S.;
29 requiring that coverage issued to a state
30 resident under certain group health insurance
31 policies issued outside the state be subject to
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1 the requirements for individual health
2 insurance policies; amending s. 627.6699, F.S.;
3 revising definitions used in the Employee
4 Health Care Access Act; allowing carriers to
5 separate the experience of small employer
6 groups with fewer than two employees; revising
7 the rating factors that may be used by small
8 employer carriers; amending s. 627.6741, F.S.;
9 requiring that insurers offer Medicare
10 supplement policies to certain individuals;
11 amending s. 627.9408, F.S.; authorizing the
12 department to adopt by rule certain provisions
13 of the Long-Term Care Insurance Model
14 Regulation, as adopted by the National
15 Association of Insurance Commissioners;
16 amending s. 641.31, F.S.; exempting contracts
17 of group health maintenance organizations
18 covering a specified number of persons from the
19 requirements of filing with the department;
20 specifying the standards for department
21 approval and disapproval of a change in rates
22 by a health maintenance organization; providing
23 alternative rate filing requirements for
24 organizations with less than a specified number
25 of subscribers; providing an effective date.
26
27 Be It Enacted by the Legislature of the State of Florida:
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29 Section 1. Subsection (1) and paragraph (a) of
30 subsection (6) of section 627.410, Florida Statutes, are
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1 amended, and paragraph (f) is added to subsection (7) of that
2 section, to read:
3 627.410 Filing, approval of forms.--
4 (1) No basic insurance policy or annuity contract
5 form, or application form where written application is
6 required and is to be made a part of the policy or contract,
7 or group certificates issued under a master contract delivered
8 in this state, or printed rider or endorsement form or form of
9 renewal certificate, shall be delivered or issued for delivery
10 in this state, unless the form has been filed with the
11 department at its offices in Tallahassee by or in behalf of
12 the insurer which proposes to use such form and has been
13 approved by the department. This provision does not apply to
14 surety bonds or to policies, riders, endorsements, or forms of
15 unique character which are designed for and used with relation
16 to insurance upon a particular subject (other than as to
17 health insurance), or which relate to the manner of
18 distribution of benefits or to the reservation of rights and
19 benefits under life or health insurance policies and are used
20 at the request of the individual policyholder, contract
21 holder, or certificateholder. As to group insurance policies
22 effectuated and delivered outside this state but covering
23 persons resident in this state, the group certificates to be
24 delivered or issued for delivery in this state shall be filed
25 with the department for information purposes only, except that
26 group certificates for health insurance coverage, as described
27 in s. 627.6561(5)(a)2., which require individual underwriting
28 to determine coverage eligibility or premium rates to be
29 charged, shall be considered policies issued on an individual
30 basis and are subject to and must comply with the Florida
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1 Insurance Code in the same manner as individual health
2 insurance policies issued in this state.
3 (6)(a) An insurer shall not deliver or issue for
4 delivery or renew in this state any health insurance policy
5 form until it has filed with the department a copy of every
6 applicable rating manual, rating schedule, change in rating
7 manual, and change in rating schedule; if rating manuals and
8 rating schedules are not applicable, the insurer must file
9 with the department applicable premium rates and any change in
10 applicable premium rates. This paragraph does not apply to
11 group health insurance policies insuring groups of 51 or more
12 persons, except for Medicare supplement insurance, long-term
13 care insurance, and any coverage under which the increase in
14 claim costs over the lifetime of the contract due to advancing
15 age or duration is prefunded in the premium.
16 (7)
17 (f) Insurers with fewer than 1,000 nationwide
18 policyholders or insured group members or subscribers covered
19 under any form or pooled group of forms with health insurance
20 coverage, as described in s. 627.6561(5)(a)2., excluding
21 Medicare supplement insurance coverage under part VIII, at the
22 time of a rate filing made pursuant to subparagraph (b)1., may
23 file for an annual rate increase limited to medical trend as
24 adopted by the department pursuant to s. 627.411(4). The
25 filing is in lieu of the actuarial memorandum required for a
26 rate filing prescribed by paragraph (6)(b). The filing must
27 include forms adopted by the department and a certification by
28 an officer of the company that the filing includes all similar
29 forms.
30 Section 2. Section 627.411, Florida Statutes, is
31 amended to read:
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1 627.411 Grounds for disapproval.--
2 (1) The department shall disapprove any form filed
3 under s. 627.410, or withdraw any previous approval thereof,
4 only if the form:
5 (a) Is in any respect in violation of, or does not
6 comply with, this code.
7 (b) Contains or incorporates by reference, where such
8 incorporation is otherwise permissible, any inconsistent,
9 ambiguous, or misleading clauses, or exceptions and conditions
10 which deceptively affect the risk purported to be assumed in
11 the general coverage of the contract.
12 (c) Has any title, heading, or other indication of its
13 provisions which is misleading.
14 (d) Is printed or otherwise reproduced in such manner
15 as to render any material provision of the form substantially
16 illegible.
17 (e) Is for health insurance, and:
18 1. Provides benefits that which are unreasonable in
19 relation to the premium charged;,
20 2. Contains provisions that which are unfair or
21 inequitable or contrary to the public policy of this state or
22 that which encourage misrepresentation;, or
23 3. Contains provisions that which apply rating
24 practices that which result in premium escalations that are
25 not viable for the policyholder market or result in unfair
26 discrimination pursuant to s. 626.9541(1)(g)2.; in sales
27 practices.
28 4. Results in actuarially justified rate increases on
29 an annual basis:
30 a. Attributed to the insurer reducing the portion of
31 the premium used to pay claims from the loss ratio standard
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1 certified in the last actuarial certification filed by the
2 insurer, in excess of the greater of 50 percent of annual
3 medical trend or 5 percent. At its option, the insurer may
4 file for approval of an actuarially justified new business
5 rate schedule for new insureds and a rate increase for
6 existing insureds that is equal to the greater of 150 percent
7 of annual medical trend or 10 percent. Future annual rate
8 increases for existing insureds shall be limited to the
9 greater of 150 percent of the rate increase approved for new
10 insureds or 10 percent until the two rate schedules converge;
11 b. In excess of the greater of 150 percent of annual
12 medical trend or 10 percent and the company did not comply
13 with the annual filing requirements of s. 627.410(7) or
14 department rule for health maintenance organizations pursuant
15 to s. 641.31. At its option the insurer may file for approval
16 of an actuarially justified new business rate schedule for new
17 insureds and a rate increase for existing insureds that is
18 equal to the rate increase allowed by the preceding sentence.
19 Future annual rate increases for existing insureds shall be
20 limited to the greater of 150 percent of the rate increase
21 approved for new insureds or 10 percent until the two rate
22 schedules converge; or
23 c. In excess of the greater of 150 percent of annual
24 medical trend or 10 percent on a form or block of pooled forms
25 in which no form is currently available for sale.
26 (f) Excludes coverage for human immunodeficiency virus
27 infection or acquired immune deficiency syndrome or contains
28 limitations in the benefits payable, or in the terms or
29 conditions of such contract, for human immunodeficiency virus
30 infection or acquired immune deficiency syndrome which are
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1 different than those which apply to any other sickness or
2 medical condition.
3 (2) In determining whether the benefits are reasonable
4 in relation to the premium charged, the department, in
5 accordance with reasonable actuarial techniques, shall
6 consider:
7 (a) Past loss experience and prospective loss
8 experience within and without this state.
9 (b) Allocation of expenses.
10 (c) Risk and contingency margins, along with
11 justification of such margins.
12 (d) Acquisition costs.
13 (3) If a health insurance rate filing changes the
14 established rate relationships between insureds, the aggregate
15 effect of such change shall be revenue-neutral. The change to
16 the new relationship shall be phased-in over a period not to
17 exceed 3 years as approved by the department. The rate filing
18 may also include increases based on overall experience or
19 annual medical trend, or both, which portions shall not be
20 phased-in over any period.
21 (4) In determining medical trend for application of
22 subparagraph (1)(e)4., the department shall semiannually
23 determine medical trend for each health care market, using
24 reasonable actuarial techniques and standards. The trend must
25 be adopted by the department by rule and determined as
26 follows:
27 (a) Trend must be determined separately for medical
28 expense; preferred provider organization; Medicare supplement;
29 health maintenance organization; and other coverage for
30 individual, small group, and large group, where applicable.
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1 (b) The department shall survey insurers and health
2 maintenance organizations currently issuing products and
3 representing at least an 80-percent market share based on
4 premiums earned in the state for the most recent calendar year
5 for each of the categories specified in paragraph (a).
6 (c) Trend must be computed as the average annual
7 medical trend approved for the carriers surveyed, giving
8 appropriate weight to each carrier's statewide market share of
9 earned premiums.
10 (d) The annual trend is the annual change in claims
11 cost per unit of exposure. Trend includes the combined effect
12 of medical provider price changes, changes in utilization, new
13 medical procedures, and technology and cost shifting.
14 Section 3. Subsections (4) and (8) of section
15 627.6487, Florida Statutes, are amended to read:
16 627.6487 Guaranteed availability of individual health
17 insurance coverage to eligible individuals.--
18 (4)(a) The health insurance issuer may elect to limit
19 the coverage offered under subsection (1) if the issuer offers
20 at least two different policy forms of health insurance
21 coverage, both of which:
22 1. Are designed for, made generally available to,
23 actively marketed to, and enroll both eligible and other
24 individuals by the issuer; and
25 2. Meet the requirement of paragraph (b).
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27 For purposes of this subsection, policy forms that have
28 different cost-sharing arrangements or different riders are
29 considered to be different policy forms.
30 (b) The requirement of this subsection is met for
31 health insurance coverage policy forms offered by an issuer in
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1 the individual market if the issuer offers the basic and
2 standard health benefit plans as established pursuant to s.
3 627.6699(12). policy forms for individual health insurance
4 coverage with the largest, and next to largest, premium volume
5 of all such policy forms offered by the issuer in this state
6 or applicable marketing or service area, as prescribed in
7 rules adopted by the department, in the individual market in
8 the period involved. To the greatest extent possible, such
9 rules must be consistent with regulations adopted by the
10 United States Department of Health and Human Services.
11 (8) This section does not:
12 (a) Restrict the issuer from applying the same
13 nondiscriminatory underwriting and rating practices that are
14 applied by the issuer to other individuals applying for
15 coverage amount of the premium rates that an issuer may charge
16 an individual for individual health insurance coverage; or
17 (b) Prevent a health insurance issuer that offers
18 individual health insurance coverage from establishing premium
19 discounts or rebates or modifying otherwise applicable
20 copayments or deductibles in return for adherence to programs
21 of health promotion and disease prevention.
22 Section 4. Subsection (9) is added to section
23 627.6515, Florida Statutes, to read:
24 627.6515 Out-of-state groups.--
25 (9) Notwithstanding any other provision of this
26 section, any group health insurance policy or group
27 certificate for health insurance, as described in s.
28 627.6561(5)(a)2., which is issued to a resident of this state
29 and requires individual underwriting to determine coverage
30 eligibility or premium rates to be charged shall be considered
31 a policy issued on an individual basis and is subject to and
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1 must comply with the Florida Insurance Code in the same manner
2 as individual insurance policies issued in this state.
3 Section 5. Paragraphs (i) and (n) of subsection (3)
4 and paragraph (b) of subsection (6) of section 627.6699,
5 Florida Statutes, are amended to read:
6 627.6699 Employee Health Care Access Act.--
7 (3) DEFINITIONS.--As used in this section, the term:
8 (i) "Established geographic area" means the county or
9 counties, or any portion of a county or counties, within which
10 the carrier provides or arranges for health care services to
11 be available to its insureds, members, or subscribers.
12 (n) "Modified community rating" means a method used to
13 develop carrier premiums which spreads financial risk across a
14 large population; allows the use of separate rating factors
15 for age, gender, family composition, tobacco usage, and
16 geographic area as determined under paragraph (5)(j); and
17 allows adjustments for: claims experience, health status, or
18 credits based on the duration that the of coverage has been in
19 force as permitted under subparagraph (6)(b)6. subparagraph
20 (6)(b)5.; and administrative and acquisition expenses as
21 permitted under subparagraph (6)(b)5. A carrier may separate
22 the experience of small employer groups with less than two
23 eligible employees from the experience of small employer
24 groups with two through 50 eligible employees.
25 (6) RESTRICTIONS RELATING TO PREMIUM RATES.--
26 (b) For all small employer health benefit plans that
27 are subject to this section and are issued by small employer
28 carriers on or after January 1, 1994, premium rates for health
29 benefit plans subject to this section are subject to the
30 following:
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1 1. Small employer carriers must use a modified
2 community rating methodology in which the premium for each
3 small employer must be determined solely on the basis of the
4 eligible employee's and eligible dependent's gender, age,
5 family composition, tobacco use, or geographic area as
6 determined under paragraph (5)(j) and in which the premium may
7 be adjusted as permitted by subparagraphs 5., and 6., and 7.
8 2. Rating factors related to age, gender, family
9 composition, tobacco use, or geographic location may be
10 developed by each carrier to reflect the carrier's experience.
11 The factors used by carriers are subject to department review
12 and approval.
13 3. If the modified community rate is determined from
14 two experience pools as authorized by paragraph (5)(n), the
15 rate to be charged to small employer groups of less than two
16 eligible employees may not exceed 150 percent of the rate
17 determined for groups of two through 50 eligible employees;
18 however, the carrier may charge excess losses of the
19 less-than-two-eligible-employee experience pool to the
20 experience pool of the two through 50 eligible employees so
21 that all losses are allocated and the 150-percent rate limit
22 on the less-than-two-eligible-employee experience pool is
23 maintained. Notwithstanding the provisions of s.
24 627.411(1)(e)4. and (3), the rate to be charged to a small
25 employer group of fewer than 2 eligible employees insured as
26 of July 1, 2001, may be up to 125 percent of the rate
27 determined for groups of 2 through 50 eligible employees for
28 the first annual renewal and 150 percent for subsequent annual
29 renewals.
30 4.3. Small employer carriers may not modify the rate
31 for a small employer for 12 months from the initial issue date
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1 or renewal date, unless the composition of the group changes
2 or benefits are changed. However, a small employer carrier may
3 modify the rate one time prior to 12 months after the initial
4 issue date for a small employer who enrolls under a previously
5 issued group policy that has a common anniversary date for all
6 employers covered under the policy if:
7 a. The carrier discloses to the employer in a clear
8 and conspicuous manner the date of the first renewal and the
9 fact that the premium may increase on or after that date.
10 b. The insurer demonstrates to the department that
11 efficiencies in administration are achieved and reflected in
12 the rates charged to small employers covered under the policy.
13 5.4. A carrier may issue a group health insurance
14 policy to a small employer health alliance or other group
15 association with rates that reflect a premium credit for
16 expense savings attributable to administrative activities
17 being performed by the alliance or group association if such
18 expense savings are specifically documented in the insurer's
19 rate filing and are approved by the department. Any such
20 credit may not be based on different morbidity assumptions or
21 on any other factor related to the health status or claims
22 experience of any person covered under the policy. Nothing in
23 this subparagraph exempts an alliance or group association
24 from licensure for any activities that require licensure under
25 the insurance code. A carrier issuing a group health insurance
26 policy to a small employer health alliance or other group
27 association shall allow any properly licensed and appointed
28 agent of that carrier to market and sell the small employer
29 health alliance or other group association policy. Such agent
30 shall be paid the usual and customary commission paid to any
31 agent selling the policy.
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1 6.5. Any adjustments in rates for claims experience,
2 health status, or credits based on the duration of coverage
3 may not be charged to individual employees or dependents. For
4 a small employer's policy, such adjustments may not result in
5 a rate for the small employer which deviates more than 15
6 percent from the carrier's approved rate. Any such adjustment
7 must be applied uniformly to the rates charged for all
8 employees and dependents of the small employer. A small
9 employer carrier may make an adjustment to a small employer's
10 renewal premium, not to exceed 10 percent annually, due to the
11 claims experience, health status, or credits based on the
12 duration of coverage of the employees or dependents of the
13 small employer. Semiannually, small group carriers shall
14 report information on forms adopted by rule by the department,
15 to enable the department to monitor the relationship of
16 aggregate adjusted premiums actually charged policyholders by
17 each carrier to the premiums that would have been charged by
18 application of the carrier's approved modified community
19 rates. If the aggregate resulting from the application of such
20 adjustment exceeds the premium that would have been charged by
21 application of the approved modified community rate by 5
22 percent for the current reporting period, the carrier shall
23 limit the application of such adjustments only to minus
24 adjustments beginning not more than 60 days after the report
25 is sent to the department. For any subsequent reporting
26 period, if the total aggregate adjusted premium actually
27 charged does not exceed the premium that would have been
28 charged by application of the approved modified community rate
29 by 5 percent, the carrier may apply both plus and minus
30 adjustments. A small employer carrier may provide a credit to
31 a small employer's premium based on administrative and
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1 acquisition expense differences resulting from the size of the
2 group. Group size administrative and acquisition expense
3 factors may be developed by each carrier to reflect the
4 carrier's experience and are subject to department review and
5 approval.
6 7.6. A small employer carrier rating methodology may
7 include separate rating categories for one dependent child,
8 for two dependent children, and for three or more dependent
9 children for family coverage of employees having a spouse and
10 dependent children or employees having dependent children
11 only. A small employer carrier may have fewer, but not
12 greater, numbers of categories for dependent children than
13 those specified in this subparagraph.
14 8.7. Small employer carriers may not use a composite
15 rating methodology to rate a small employer with fewer than 10
16 employees. For the purposes of this subparagraph, a "composite
17 rating methodology" means a rating methodology that averages
18 the impact of the rating factors for age and gender in the
19 premiums charged to all of the employees of a small employer.
20 Section 6. Subsection (1) of section 627.6741, Florida
21 Statutes, is amended to read:
22 627.6741 Issuance, cancellation, nonrenewal, and
23 replacement.--
24 (1) An insurer issuing Medicare supplement policies in
25 this state shall offer the opportunity of enrolling in a
26 Medicare supplement policy, without conditioning the issuance
27 or effectiveness of the policy on, and without discriminating
28 in the price of the policy based on, the medical or health
29 status or receipt of health care by the individual:
30 (a) To any individual who is 65 years of age or older,
31 or under 65 years of age and eligible for Medicare by reason
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1 of disability, and who resides in this state, upon the request
2 of the individual during the 6-month period beginning with the
3 first month in which the individual has attained 65 years of
4 age and is enrolled in Medicare part B, or during the 6-month
5 period beginning with the first month in which the individual
6 is eligible for Medicare by reason of disability and is
7 enrolled in Medicare part B; or
8 (b) To any individual who is 65 years of age or older,
9 or under 65 years of age and eligible for Medicare by reason
10 of disability, and is enrolled in Medicare part B, who resides
11 in this state, upon the request of the individual during the
12 2-month period following termination of coverage under a group
13 health insurance policy.
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15 A Medicare supplement policy issued to an individual under
16 paragraph (a) or paragraph (b) may not exclude benefits based
17 on a preexisting condition if the individual has a continuous
18 period of creditable coverage, as defined in s. 627.6561(5),
19 of at least 6 months as of the date of application for
20 coverage. Paragraphs (a) and (b) do not apply to end-stage
21 renal disease beneficiaries before they attain 65 years of
22 age. For those individuals otherwise eligible under paragraph
23 (a) or paragraph (b) who first enrolled in Medicare part B
24 before July 1, 2001, the 6-month period shall begin on July 1,
25 2001. A Medicare supplemental policy issued to an individual
26 under paragraph (a) or paragraph (b) who is less than 65 years
27 of age and who is eligible for Medicare by reason of
28 disability shall be issued at the premium rate for persons 65
29 years of age.
30 Section 7. Section 627.9408, Florida Statutes, is
31 amended to read:
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1 627.9408 Rules.--
2 (1) The department may has authority to adopt rules
3 pursuant to ss. 120.536(1) and 120.54 to administer implement
4 the provisions of this part.
5 (2) The department may adopt by rule the provisions of
6 the Long-Term Care Insurance Model Regulation adopted by the
7 National Association of Insurance Commissioners in the second
8 quarter of the year 2000 which are not in conflict with the
9 Florida Insurance Code.
10 Section 8. Paragraphs (b) and (d) of subsection (3) of
11 section 641.31, Florida Statutes, are amended, and paragraph
12 (f) is added to that subsection, to read:
13 641.31 Health maintenance contracts.--
14 (3)
15 (b) Any change in the rate is subject to paragraph (d)
16 and requires at least 30 days' advance written notice to the
17 subscriber. In the case of a group member, there may be a
18 contractual agreement with the health maintenance organization
19 to have the employer provide the required notice to the
20 individual members of the group. This paragraph does not apply
21 to a group contract covering 51 or more persons unless the
22 rate is for any coverage under which the increase in claim
23 costs over the lifetime of the contract due to advancing age
24 or duration is prefunded in the premium.
25 (d) Any change in rates charged for the contract must
26 be filed with the department not less than 30 days in advance
27 of the effective date. At the expiration of such 30 days, the
28 rate filing shall be deemed approved unless prior to such time
29 the filing has been affirmatively approved or disapproved by
30 order of the department pursuant to s. 627.411. The approval
31 of the filing by the department constitutes a waiver of any
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1 unexpired portion of such waiting period. The department may
2 extend by not more than an additional 15 days the period
3 within which it may so affirmatively approve or disapprove any
4 such filing, by giving notice of such extension before
5 expiration of the initial 30-day period. At the expiration of
6 any such period as so extended, and in the absence of such
7 prior affirmative approval or disapproval, any such filing
8 shall be deemed approved.
9 (f) A health maintenance organization with fewer than
10 1,000 covered subscribers under all individual or group
11 contracts, at the time of a rate filing, may file for an
12 annual rate increase limited to annual medical trend, as
13 adopted by the department. The filing is in lieu of the
14 actuarial memorandum otherwise required for the rate filing.
15 The filing must include forms adopted by the department and a
16 certification by an officer of the company that the filing
17 includes all similar forms.
18 Section 9. This act shall take effect July 1, 2001.
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1 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
2 SB 1210
3
4 Deletes the provisions of the bill that would have prohibited
small group carriers from considering health status or claims
5 experience in establishing premiums.
6 Provides that for small employers with fewer than two
employees insured on July 1, 2001, the rate may be up to 125
7 percent of the rate for small employers with two through fifty
employees for the first annual renewal and 150 percent for
8 subsequent annual renewals. This provision would control over
any lower limit that would be imposed under s. 627.411, F.S.,
9 as amended.
10 Provides that small group carriers may only provide credits
(not surcharges) due to duration of coverage (the time period
11 that a small employer has been insured with the carrier).
12 Provides that the time period for Medicare supplement policies
to be offered on a guarantee-issue basis to individuals who
13 are eligible for Medicare by reason of disability is the
six-month period after the first month in which the person is
14 eligible for Medicare and enrolled in Medicare Part B.
15 Clarifies the criteria under which the Department of Insurance
my disapprove health insurance rates.
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