CHAPTER 143

FORMERLY

SENATE SUBSTITUTE NO. 1

FOR

SENATE BILL NO. 166

AS AMENDED BY SENATE AMENDMENT NO. 1

AN ACT TO AMEND TITLE 18 OF THE DELAWARE CODE, RELATING TO HEALTH INSURANCE CONCERNING MEASURES NECESSARY FOR DELAWARE TO MAINTAIN REGULATORY AUTHORITY OVER CERTAIN ASPECTS OF HEALTH CARE COVERAGE UNDER THE FEDERAL "HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996", AND, IN CONNECTION THEREWITH, MAKING DELAWARE REQUIREMENTS RELATED TO THE RENEWABILITY OF HEALTH INSURANCE POLICIES, PREEXISTING CONDITION LIMITATIONS, AND GUARANTEED ISSUE OF COVERAGE CONSISTENT WITH FEDERAL LAW.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend § 3601, Title 18, Delaware Code, by adding to the end of subsection (al the following:

"Additionally, the purpose of this chapter is to promote the availability of health insurance coverage to recently uninsured individuals regardless of their health status or claims experience and to improve the overall fairness and efficiency of the individual health insurance market."

Section 2. Amend § 3602, Title 18, Delaware Code, by adding thereto the following new paragraphs and by renumbering the existing paragraphs accordingly:

"(1) 'Affiliation period' means a period of time not to exceed two months (three months for late enrollees) during which a health maintenance organization does not collect premium and coverage issued is not effective.

(2) 'Bona fide association' means, with respect to health insurance coverage offered in Delaware, an association which:

a. Has been actively in existence for at least five years;

b. Has been formed and maintained in good faith for purposes other than obtaining insurance and does not condition membership on the purchase of association-sponsored insurance;

c. Does not condition membership in the association on any health status-related
factor relating to an individual (including an employee of an employer or a dependent of an employee) and clearly so states in all membership and application materials;

d. Makes health insurance coverage offered through the association available to all
members regardless of any health status-related factor relating to such members (or individuals eligible for coverage through a member) and clearly so states in all marketing and application materials;

e. Does not make health insurance coverage offered through the association available other than in connection with a member of the association and clearly so states in all marketing and application materials; and

f. Provides and annually updates information necessary for the Commissioner to determine whether or not an association meets the definition of a bona fide association before qualifying as a bona fide association for the purposes of this chapter.

(3) 'Carrier' means an entity subject to the insurance laws and regulations of this state, or subject to the jurisdiction of the Commissioner, that contracts or offers to contract to provide, deliver, arrange for, pay for or reimburse any of the costs of health care services, including a sickness and accident insurance company, a health maintenance organization, a nonprofit hospital and health service corporation, or any other entity providing a plan of health insurance, health benefits or health services.

(4) 'Church plan' has the meaning given such term under section 3(33) of the Employee Retirement Income Security Act of 1974.

(5) 'Creditable coverage' means, with respect to an individual, health benefits or coverage provided under any of the following:

a. A group health benefit plan;

b. An individual health benefit plan or individual insurance coverage;

c. Part A or Part B of Title XVIII of the Social Security Act;

d. Title XIX of the Social Security Act, other than coverage consisting solely of benefits under section 1928;

e. Chapter 55 of Title 10, United Slates Code;

f. A medical care program of the Indian Health Service or of a tribal organization;

g.. A State health benefits risk pool;

h. A health plan offered under chapter 89 of Title 5, United States Code;

i. A public health plan as defined in federal regulations;

j. A health benefit plan under section 5(e) of the Peace Corps Act 122 U.S.C. 2504(e)]. Such term does not include coverage consisting solely of coverage of excepted benefits as defined in 3602(10)b.

(6) 'Dependent' means a spouse, an unmarried child under the age of eighteen (18) years, an unmarried child who is a full-time student under the age of twenty-five (25) years and who is financially dependent upon the enrollee, and an unmarried child of any age who is medically certified as totally disabled and dependent upon the enrollee.

(7) 'Federally eligible individual' means an individual:

a. For whom, as of the date on which the individual seeks coverage under this Act, the aggregate of the periods of creditable coverage, as defined in this section, is 18 or more months;

b. Whose most recent prior creditable coverage was under a group health plan, governmental plan, church plan or health insurance coverage offered in connection with any such plan;

c. Who is not eligible for coverage under a group health plan, part A or part B of title XVIII of the Social Security Act, or a State plan under title XIX of such Act or any successor program, and who does not have other health insurance coverage;

d. With respect to whom the most recent coverage within the period of aggregate creditable coverage was not terminated based on a factor relating to nonpayment of premiums or fraud;

e. Who, if offered the option of continuation coverage under a COBRA continuation provision or under a similar State program, elected such coverage, and

f. Who has exhausted such continuation coverage under such provision or program, if the individual elected the continuation coverage described n subparagraph c. above.

(9) 'Governmental plan' has the meaning given such term under section 3(32) of the Employee Retirement Income Security Act of 1974 and any Federal governmental plan.

(10) a. 'Health benefit plan' means any hospital or medical expense policy or certificate. major medical expense insurance policy or certificate, any hospital or medical service plan contract, health maintenance organization or health service corporation subscriber contract, or any other similar health contract subject to the jurisdiction of the Commissioner.

b. 'Health benefit plan' does not include: Accident only; credit; dental; vision; Medicare supplement; benefits for long term care, home health care, community-based care or any combination thereof; disability income insurance; liability insurance including general liability insurance and automobile liability insurance; coverage for on-site medical clinics; coverage issued as a supplement to liability insurance, worker's compensation or similar insurance; or automobile medical payment insurance. The term also excludes specified disease, hospital confinement indemnity, or limited benefit health insurance if such types of coverage do not provide coordination of benefits and are provided under separate policies or certificates, provided that the carrier offering such policies or certificates complies with the following:

(i) The carrier files on or before March I of each year a certification with the Commissioner that contains the statement and information_ described in Subparagraph

(ii) The certification shall contain the following:

A. A statement from the carrier certifying that policies or certificates described in this paragraph are being offered and marketed as supplemental health insurance and not as a substitute for hospital or medical expense insurance or medical expense insurance.

B. A summary description of each policy or certificate described in this paragraph, including the average annual premium rates (or range of premium rates in cases where premiums vary by age or other factors) charged for these policies and certificates in this state.

(iii) In the case of a policy or certificate that is described in this paragraph and that is offered for the first time in this state on or after July 1, 1997. the carrier files with the Commissioner the information and statement required - in Subparagraph (ii) at least thirty (30) days prior to the date the policy or certificate is issued or delivered in this state.

(12) 'Health status-related factor' means any of the following factors:

a. Health status;

b. Medical condition, including both physical and mental illnesses;

c. Claims experience;

d. Receipt of health care;

e. Medical history;

f. Genetic information;

g. Evidence of insurability, including conditions arising out of acts of domestic violence;

h. Disability.

(13) 'Medical care' means amounts paid for:

a. The diagnosis, cure, mitigation, treatment. or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body;

b. Transportation primarily for and essential to medical care referred to in paragraph a.; and

c. Insurance covering medical care referred to in paragraphs a. and b.

(14) 'Network plan' means health insurance coverage offered by a health carrier under which the financing and delivery of medical care including items and services paid for as medical care are provided, in whole or in part, through a defined set of providers under contract with the carrier.

(16) 'Waiting Period' means, with respect to an individual who is a potential participant or beneficiary in the plan, the period that must pass with respect to the individual before the individual is eligible for benefits under the terms of the plan. For purposes of calculating periods of creditable coverage, a waiting period shall not be considered a gap in coverage."

Section 3. Amend Chapter 36, Title 18, Delaware Code, by adding thereto the following new sections:

"§ 3607. Limited Guaranteed Issue.

(a) Every carrier offering individual health benefit plans in Delaware shall offer and accept for enrollment pursuant to Subsection (b) of this section every federally eligible individual who applies for coverage within sixty-three (63) days alter termination of such individual's prior coverage; except that this requirement shall not apply to carriers offering coverage only through bona fide associations or to carriers offering individual coverage only through conversion policies.

(b) A carrier shall meet the requirements of subsection (a) of this section if:

(1) The carrier offers at least two (2) different health benefit policy forms, both of which are designed for, are made generally available and actively marketed to, and enroll both federally eligible and other individuals; and

(2) The offering of policy forms includes, at a minimum:

a. The policy forms for health benefit plan coverage with the largest and next to largest premium volume of all such policy forms offered by the carrier in Delaware; or

b. A lower-level coverage policy form and a higher-level coverage policy form which include benefits substantially similar to other individual health insurance coverage offered by the carrier in Delaware and are covered under a risk adjustment, risk spreading, or financial subsidization method. As used in this subparagraph b.:

i. 'Higher-Level Coverage' means a policy form for which the actuarial value of the benefits under the coverage is at least fifteen (15%) percent greater than the actuarial value of lower-level coverage offered by the carrier in Delaware, and the actuarial value of the benefits under the coverage is at least one hundred (100%) percent but not greater than one hundred twenty (120%) percent of the policy form weighted average.

ii. 'Lower-Level Coverage' means a policy form for which the actuarial value of the benefits under the coverage is at least eight-five 185%) percent but not greater than one hundred (100%) percent of the policy form weighted average.

iii. 'Policy Form Weighted Average' means the average actuarial value of the benefits provided by all the health insurance coverage issued (as elected by the carrier) either by that carrier or, if such data are available, by all carriers in Delaware in the individual health benefit plan market during the previous year (not including coverage issued under this section) weighted by enrollment for the different coverage.

(c). With respect to the provisions of subsection (b) of this section, a carrier that offers coverage in the individual market through a network plan may limit the individuals who may be enrolled to those that live, reside, or work within the service area of the plan. Such a carrier may deny coverage to eligible individuals if it demonstrates to the Commissioner that it will not have the capacity to deliver services adequately to additional enrollees and it is applying this subsection (c) uniformly to individuals without regard to any health status-related factor of such individuals and without regard to whether the individuals are eligible individuals.

(d) A carrier may apply to the Commissioner to suspend for a period of time its duty to issue coverage pursuant to subsection (b) of this section where continued compliance would adversely affect the financial condition of the company. Where such a suspension is granted, the carrier may not offer coverage in the individual market for 'a period of at least one hundred eighty (180) days after the suspension is granted

(e) For the purposes of this section, the term 'health benefit plan' as defined an § 3602 (10) does not include nonrenewable short term individual health benefit plans with a duration of six (6) months or less.

§ 3608. Renewability of Coverage.

(a) An individual health benefit plan shall be renewable with respect to an enrollee or dependents at the option of the enrollee, except in any of the following cases:

(1) The individual has failed to pay premiums or contributions in accordance with the terms of the health benefit plan or the health carrier has not received timely premium payments;

(2) The individual has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage;

(3) A decision by the individual carrier to discontinue offering a particular type of health benefit plan in the gate's individual insurance market. A type of health benefit plan may be discontinued by the carrier in the individual market only if the carrier:

a. Provides notice of the decision not to renew coverage to all affected individuals and to the Commissioner in each state in which an affected insured individual is known to reside at least 90 days prior to the nonrenewal of any health benefit plans by the carrier. Notice to the Commissioner under this subparagraph shall be provided at least three (3) working days prior to the notice to the affected individuals;

b. Offers to each individual provided the particular type of health benefit
plan, the option to purchase all other health benefit plans currently being offered by the carrier to individuals in the state; and

c. In exercising the option to discontinue the particular type of health benefit
plan and in offering the option of coverage under paragraph (3), the carrier acts uniformly without regard to the claims experience of any affected individual or any health status-related factor relating to any covered individuals or beneficiaries who may become eligible for the coverage.

(4) The carrier elects to discontinue offering and to 11011relleW all its individual health benefit plans delivered or issued for delivery in the state. In that case, the carrier shall provide notice of its decision not to renew coverage to all enrollees and to the Commissioner in each state in which an enrollee is known to reside at least 180 days prior to the nonrenewal of the health benefit plan by the carrier. Notice to the Commissioner under this paragraph shall be provided at least three (3) working days prior to the notice of the enrollees;

(5) The Commissioner finds that the continuation of the coverage would not be in the best interests of the enrollees, the plan is obsolete, or would impair the carrier's ability to meet its contractual obligations. Once the Commissioner has made such a finding, the carrier shall provide notice to each affected covered individual provided coverage of this type of such discontinuation and shall provide each affected covered individual the opportunity to purchase any other individual health insurance coverage being offered by the carrier. In exercising this option the carrier shall act uniformly without regard for any health status-related factor of enrolled individuals or individuals who may become eligible for such coverage.

(6) The Commissioner finds that the product form is being uniformly modified and is being replaced with comparable coverage.

(b) An individual carrier that elects not to renew all its health benefit plans under paragraph (a)(4) shall be prohibited from writing new business in the individual market in this state for a period of five (5) years from the date of the discontinuation of the last health benefit plan not so renewed.

(c) In the case of an individual carrier doing business in one established geographic service area of the state, the rules set forth in this section shall apply only to the carrier's operations in that service area.

(d) An individual carrier offering coverage through a network plan shall not be required to renew, offer coverage or accept applications pursuant to subsection (a) of this section to an eligible person who no longer resides, lives, or works in the service area, or in an area for which the carrier is not authorized to do business, but only if coverage is terminated under this paragraph uniformly without regard to any health status-related factor of covered individuals,

(e) In applying this section in the case of a health benefit plan that is made available in the individual market to individuals only through one or more bona fide associations, a reference to an 'individual' is deemed to include a reference to such an association (of which the individual is a member)."

Section 4. Amend § 7202, Title 18, Delaware Code, by striking paragraphs (15)(17) and (24) in their entirety, by substituting the following paragraphs, and by redesignating existing paragraphs accordingly:

"(2) 'Affiliation period' means a period of time not to exceed two months (three months for late enrollees) during which, a health maintenance organization does not collect premium and coverage issued is not effective.

(7) 'Bona fide association' means, with respect to health insurance coverage offered in Delaware, an association which:

a. Has been actively in existence for at least five years;

b. Has been formed and maintained in good faith for purposes other than obtaining insurance and does not condition membership on the purchase of association-sponsored insurance;

c. Does not condition membership in the association on any health status-related factor relating to an individual (including an employee of an employer or a dependent of an employee) and clearly so states in all membership and application materials;

d. Makes health insurance coverage offered through the association available to all members regardless of any health status-related factor relating to such members (or individuals eligible for coverage through a member) and clearly so states in all marketing and application materials;

e. Does not make health insurance coverage offered through the association available other than in connection with a member of the association and clearly so states in all marketing and application materials; and

f. Provides and annually updates information necessary for the Commissioner to determine whether or not an association meets the definition of a bona fide association before qualifying as a bona fide association for the purposes of this chapter.

(14) 'Creditable coverage' means, with respect to an individual, health benefits or coverage provided under any of the following:

a. A group health benefit plan;

b. An individual health benefit plan or individual insurance coverage;

c. Part A or Part B of Title XVIII of the Social Security Act;

d. Title XIX of the Social Security Act, other than coverage consisting solely of benefits under section 1928;

e. Chapter 55 of Title 10, United States Code;

f. A medical care program of the Indian Health Service or of a tribal organization.

g. A State health benefits risk pool;

h. A health plan offered under chapter 89 of Title 5, United States Code;

i. A public health plan as defined in federal regulations;

j. A health benefit plan under section 5(c) of the Peace Corps Act [22 U.S.('
2504(c)].

(18) 'Health benefit plan' means any hospital or medical expense policy or certificate, hospital or medical service corporation contract, health maintenance organization or health service corporation subscriber contract, or any other similar health contract, including a high deductible medical expense policy used in conjunction with a medical savings account, subject to the jurisdiction of the Commissioner available for use, offered, or sold to an individual in the Slate of Delaware. This term includes a bona fide association plan if such plan provides coverage to one or more eligible employees of a small employer in Delaware.

'Health benefit plan does not include: Accident only; credit; dental; vision; Medicare supplement; benefits for long term care, home health care, community-based care or any combination thereof; disability income insurance; liability insurance including general liability insurance and automobile liability insurance; coverage for on-site medical clinics; coverage issued as a supplement to liability insurance, worker's compensation or similar insurance; or automobile medical payment insurance. The term also excludes specified disease, hospital confinement indemnity, or limited benefit health insurance if such types of coverage do not provide coordination of benefits and arc provided under separate policies or certificates, provided that the carrier offering such policies or certificates complies with the following:

a. The carrier files on or before March I of each year a certification with the Commissioner that contains the statement and information described in Subparagraph b.

b. The certification shall contain the following:

(i) A statement from the carrier certifying that policies or certificates described in this paragraph are being offered and marketed as supplemental health insurance and not as a substitute for hospital or medical expense insurance or major medical expense insurance.

(ii) A summary description of each policy or certificate described in this paragraph, including the average annual premium rates (or range of premium rates in cases where premiums vary by age or other factors) charged for these policies and certificates in this state.

c. In the case of a policy or certificate that is described in this paragraph and that is

offered for the first time in this state on or after the effective date of the Act, the carrier files with the Commissioner the information and statement required in Subparagraph b at least thirty (30) days prior to the date the policy or certificate is issued or delivered in this state.

(19) 'Health status-related factor' means any of the following factors:

a. Health status;

b. Medical condition, including both physical and mental illnesses;

c. Claims experience;

d. Receipt of health care;

e. Medical history;

f. Genetic information;

g. Evidence of insurability, including conditions arising out of acts or domestic violence;

h. Disability.

(21 ) 'Late enrollee' means an eligible employee or dependent who requests enrollment in a group health benefit plan following the initial enrollment period during which such individual is entitled to enroll under the terms of the health benefit plan, if such initial enrollment period is a period of at least thirty days. An eligible employee or dependent shall not be considered a late enrollee if:

a. The individual:

(i) Was covered under other creditable coverage at the time of the initial
enrollment period and, if required by the employer, policyholder, canicr or issuer, the employee stated at the time of initial enrollment that this was the reason for declining enrollment;

(ii) Lost coverage under the other creditable coverage as a result of - termination of employment or eligibility, reduction in the number of hours of employment, the involuntary termination of the creditable coverage, death of a spouse, legal separation or divorce, or employer contributions towards such coverage was terminated; and

(iii) Requests enrollment within thirty days after termination of the other creditable coverage; or

b. The individual is employed by an employer that offers multiple health benefit plans and elects a different plan during an open enrollment period;

c. A court has ordered that coverage be provided for a dependent tinder a covered employee's health benefit plan and the request for enrollment is made within thirty days after issuance of such court order; or

d. A person becomes a dependent of a covered person through marriage, birth. adoption, or placement for adoption and requests enrollment no later than thirty days after becoming such a dependent. In such ease, coverage shall commence on the date the person becomes a dependent if a request for enrollment is received in a timely fashion before such date.

(22) 'Medical care' means amounts paid for:

a. The diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body;

b. Transportation primarily for and essential to medical care referred to 111 paragraph (a); and

c. Insurance covering medical care referred to in paragraphs (a) and (b).

(29) `Qualifying previous coverage' and 'qualifying existing coverage' shall have the same meaning as the term "creditable coverage". Provided, however, for purposes of determining a participation requirement, 'qualifying previous coverage' and 'qualifying existing coverage' means benefits or coverage provided under:

a. Medicare or Medicaid;

b. An employer-based health insurance or health benefit arrangement that provides benefits similar to or exceeding benefits provided under the basic health benefit plan; or

c. An individual health insurance policy (including coverage issued by a health maintenance organization, health service organization and fraternal benefit society) that provides benefits similar to or exceeding the benefits provided under the basic health benefit plan, provided that such policy has been in effect for one (I) year.

(37) 'Waiting Period' means, with respect to a group health plan and an individual who is a potential participant in or beneficiary of the plan, the period that must pass with respect to the individual before the individual is eligible for benefits under the terms of the plan. For purposes of calculating periods of creditable coverage, a waiting period shall not be considered a gap in coverage,"

Section 5. Amend § 7202, Title 18, Delaware Code, by adding to the end of the definition of "small employer carrier" the following;

"In the case of an employer that was not in existence throughout the preceding calendar quarter, the determination of whether such employer is a small or large employer shall be based on the average number of employees that is reasonably expected such employer will employ on business days in the current calendar year." ,

Section 6. Amend § 7205(4), Title 18, Delaware Code, by adding to the end thereof the following:

"This prohibition shall not be construed to prevent a carrier from establishing premium discounts or rebates or modifying otherwise applicable co-payments or deductibles in return for adherence to programs of health promotion and disease prevention, if otherwise allowed by law,"

Section 7. Amend § 7206, Title 18, Delaware Code, by striking the word "or" that appears at the end of subparagraph (a )(6)1). thereof and by adding to § 7206(a) new subparagraphs to read as allows.

"(8) With respect to a carrier that offers a health benefit plan through a managed care plan, there is no longer any enrollee in connection with such plan that lives, resides, or works in the service area of the carrier;

(9) An employer is no longer actively engaged in the business in which it was engaged on the effective date of the plan; or

(10) With- respect to coverage that is made available only through one or more bona fide associations, the membership of an employer ceases."

Section 8. Amend § 7207(c)( I ), Title 18, Delaware Code, by striking the first sentence thereof and by ;substituting in lieu thereof the following:

"A health benefit plan shall not deny, exclude or limit benefits fin: a covered individual for losses due to a preexisting condition where such were incurred more than twelve (12) months following the date of enrollment in such plan or, if earlier, the first day of the waiting period for such enrollment."

Section 9. Amend § 7207(c)( 1 ), Title 18, Delaware Code, by striking the word ", or" as it appears the -end of subparagraph b. thereof, by adding to the end of paragraph a. thereof the word "or" and h!, ,inking in its entirety subparagraph c. thereof.

Section 10. Amend § 7207(e)(2), Title 18, Delaware Code, by striking the number "60" as it appears therein and by substituting in lieu thereof "sixty-three (63)".

Section 11. Amend § 7207(c), Title 18, Delaware Code, by redesignating the existing paragraphs "2","(3)","(4)" and "(5)" as "(3)", "(4)", "(5)" and "(6)"; by striking the number "3" as it appears in the newly designated paragraph (6)a thereof, and by substituting in lieu thereof the number "4"; and by inserting a new paragraph (2) to read as follows:

"(2) a. A health benefit plan shall not impose any preexisting condition exclusion relating to pregnancy or in the ease of a child who is adopted or placed for adoption before attaining eighteen years of age and who, as of the last day of the 30-day period beginning on the date of the adoption or placement for adoption, is covered under creditable coverage. The previous sentence shall not apply to coverage before the date of such adoption or placement for adoption.

b. If a health maintenance organization does not utilize preexisting condition limitations in any health benefit plan, it may impose an affiliation period. An affiliation period shall run concurrently with any waiting period imposed. Such a health maintenance organization may, in lieu of an affiliation period, use an alternative method to address adverse selection with the prior approval of the Insurance Commissioner."

Section 12. Amend §7207, Title 18, Delaware Code, by adding thereto new subsections to read as follows:

"(f.) Effective July I, 1997, every small employer carrier shall also offer to small employers a choice of all the other small group plans the carrier markets in Delaware; except that this requirement shall not apply to:

(1) A health benefit plan offered by a carrier if such plan is made available in the
small group market only through one or more bona fide association plans; or

(2) A business group of one where the business group of one does not meet the carrier's actuarially-based underwriting criteria.

(g) A health benefit plan shall not establish rules for eligibility for any individual to enroll under the plan based on any health status-related factors in relation to the individual or a dependent of the individual."

Section 13. Amend § 72I7(a), Title 18, Delaware Code, by adding thereto a new paragraph to read as follows:

"(5) The benefits available under all health benefit plans for which the employer is qualified."

Section 14. Amend chapter 35, title 18, Delaware Code by adding thereto a new subchapter to read as follows:

"Subchapter IV. Large Employer Health Insurance Standards

§ 3560. Definitions.

As used in this subsection:

(1) 'Affiliation period' means a period of time not to exceed two months (three months for late enrollees) during which a health maintenance organization does not collect premium and coverage issued is not effective.

(2) 'Bona fide association' means, with respect to health insurance coverage offered in Delaware, an association which:

a. Has been actively in existence for at least five years;

b. Has been formed and maintained in good faith for purposes other than obtaining insurance and does not condition membership on the purchase of association-sponsored insurance;

c. Does not condition membership in the association on any health status-related factor relating to an employee of an employer or a dependent of an employee and clearly so states in all membership and application materials;

d. Makes health insurance coverage offered through the association available to all members regardless of any health status-related factor relating to such members (or individuals eligible for coverage through a member) and clearly so states in all marketing and application materials;

e. Does not make health insurance coverage offered through the association available other than in connection with a member of the association and clearly so states in all marketing and application materials; and

f. Provides and annually updates information necessary for the Commissioner to determine whether or not an association meets the definition of a bona tide association before qualifying as a bona fide association for the purposes of this chapter.

(3) 'Creditable coverage' means, with respect to an individual, health benefits or coverage provided under any of the following:

a. A group health benefit plan;

b. A health benefit plan;

c. Part A or Part B of Title XVIII of the Social Security Act;

d. Title XIX of the Social Security Act, other than coverage consisting solely of benefits under section 1928;

e. Chapter 55 of Title 10, United States Code;

f. A medical care program of the Indian Health Service or of a tribal organization;

g. A State health benefits risk pool;

h. A health plan offered under chapter 89 of Title 5, United States Code;

i. A public health plan as defined in federal regulations;

j. A health benefit plan under section 5(e) of the Peace Corps Act [22 U.S.C.2504(e)].

(4) ‘Health benefit plan’ means any hospital or medical policy or certificate, major medical expense insurance policy or certificate, any hospital or medical service plan contract, health maintenance organization or health service corporation subscriber contract, or any other similar health contract subject to the jurisdiction of the Commissioner.

‘Health benefit plan’ does not include: Accident only; credit;, dental; vision; Medicare supplement; benefits for long term care, home health care, community-based care o any combination thereof; disability income insurance; liability insurance including general liability insurance and automobile liability insurance; coverage for on-site medical clinics; coverage issued as a supplement to liability insurance, worker’s compensation or similar insurance; or automobile medical payment insurance. The term also excludes specified disease, hospital confinement indemnity, or limited benefit health insurance if such types of coverage do not provide coordination of benefits and are provided under separate policies or certificates, provided that the carrier offering such policies or certificates complies with the following:

a. The carrier files on or before March 1 of each year a certification with the Commissioner that contains the statement and information described in subparagraph b.

b. The certification shall contain the following:

(i) A statement from the carrier certifying that policies or certificates described in this paragraph are being offered and marketed as supplemental health insurance and not as a substitute for hospital or medical expense insurance or major medical expense insurance.

Health status;

(ii) A summary description of each policy or certificate described in this paragraph, including the average annual premium rates (or range of premium rates in cases where premiums vary by age or other factors) charged for these policies and certificates in this state.

c. In the case of a policy or certificate that is described in this paragraph and that is offered for the first time in this state on or after July 1, 1997, the carrier files with the Commissioner the information and statement required in Subparagraph (b) at least thirty (30) days prior to the date the policy or certificate is issued or delivered in this state:

(5) ‘Health status-related factor’ means any of the following factors:

a. Health status;

b. Medical condition, including both physical and mental illnesses;

c. Claims experience;

d. Receipt of health care;

e. Medical history;

f. Genetic information;

g. Evidence of insurability, including conditions arising out of acts of domestic violence;

h.. Disability.

(6) 'Large employer' means any person, firm, corporation, partnership or association that is actively engaged in business that, on at least 50 percent of its working days during the preceding calendar quarter, employed more than 50 eligible employees, as defined in §7202 of this Title the majority of whom were employed within this State. In determining the number of eligible employees, companies that are affiliated companies, or that are eligible to file a combined tax return for purposes of stale taxation, shall be considered I employer. In the case of an employer that was not in existence throughout the preceding calendar quarter, the determination of ‘‘ holier such employer is a small or large employer shall be based on the average number of employees that is reasonably expected such employer will employ on business dins in the current calendar year.

(7) 'Late enrollee' means an eligible employee or dependent who requests enrollment in a group health benefit plan following the initial enrollment period during which such individual is entitled to enroll under the terms of the health benefit plan, if such initial enrollment period is a period of at least thirty days. An eligible employee or dependent shall not be considered a late enrollee if:

a. The individual:

(i) Was covered under other creditable coverage at the time of the initial enrollment period and, if required by the carrier or issuer, the employee stated at the time of initial enrollment that this was the reason for declining enrollment;

(ii) Lost coverage tinder the other creditable coverage as a result of termination of employment or eligibility, reduction in the number of hours of employment, the involuntary termination of the creditable coverage. death of a spouse, legal separation or divorce, or employer contributions towards such coverage was terminated; and

(iii) Requests enrollment within thirty (30) days after termination of the oilier creditable coverage; or

b. The individual is employed by an employer that offers multiple health benefit plans and elects a different plan during an open enrollment period; or

c. A court has ordered that coverage be provided for a dependent under a covered employee's health benefit plan and the request for enrollment is made within thirty days after issuance of such court order; or

d. A person becomes a dependent of a covered person through marriage, birth, adoption, or placement for adoption and requests enrollment no later than thirty days idler becoming such a dependent. In such case, coverage shall commence on the date the person becomes a dependent if a request for enrollment is received in a timely fashion before such date.

(8) 'Medical care' means amounts paid for:

a. The diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function oldie body;

b. Transportation primarily for and essential to medical care referred to in paragraph (a); and

c. Insurance covering medical care referred to in paragraphs (a) and (b).

(9) 'Waiting Period means, with respect to a group health plan and an individual who is a potential participant or beneficiary in 11w plan, the period that must pass with respect to the individual before the individual is eligible for benefits under the terms of the plan. For purposes of calculating periods of creditable coverage, a waiting period shall not he considered a gap in coverage.

§3561. Limitations on Preexisting Condition Limitations.

A health benefit plan that covers a large group in this state:

(1) Shall not deny, exclude, or limit benefits for a covered individual because of a preexisting condition for losses incurred more than Its dye months following the date of enrollment of the individual in such plan or, if earlier, the first day of the waiting period for such enrollment;

(2) May impose a preexisting condition exclusion only if such exclusion relates to a condition (whether physical or mental), regardless of the cause of the condition for which medical advice, diagnosis, cure, or treatment was recommended or received within six months immediately preceding the effective date of coverage;

(3) Shall not impose any preexisting condition exclusion 'elating to pregnancy or in the case of a child who is adopted or placed for adoption before attaining eighteen (18) years of age and who, as of the last day of the 30-day period beginning on the date of the adoption or placement for adoption, is covered under creditable coverage. The previous sentence shall not apply to coverage before the date of such adoption or placement for adoption.

(4) May impose an affiliation period, if it does not utilize preexisting condition limitations. An affiliation period shall run concurrently with any waiting period. A health maintenance organization may, in lieu of an affiliation period, use an alternative method to address adverse selection with the prior approval of the Commissioner;

(5) Shall waive any affiliation period or time period applicable to a preexisting condition exclusion or limitation for the period of time an individual was previously covered by creditable coverage, if such creditable coverage was continuous to a date not more than sixty-three (63) days prior to the effective date of the new coverage. For purposes of calculating continuous coverage, a waiting period shall not he considered a gap in coverage. This paragraph (5) shall not preclude application of any waiting period applicable to all new enrollees under the plan. The method of crediting and certifying coverage shall lie determined by the Commissioner by regulation; and

(6) May exclude coverage for late enrollees for no more than an eighteen (18) month preexisting condition exclusion; except that, if both a waiting period and a preexisting condition exclusion are applicable to a late enrollee, the combined period shall not exceed eighteen (18) months from the date the individual enrolls for coverage under the health benefit plan. Health maintenance organizations that do not use preexisting condition exclusion periods in any of their plans may impose up to a three (3) months affiliation period in lieu of the eighteen (1S) months preexisting condition period.

(7) A health benefit plan shall not establish rules for eligibility for any individual to enroll under the plan based on any health status-related factors in relation to the individual or a dependent of the individual.

§ 3562. Renewability of Coverage.

(a) A health benefit plan shall be renewable with respect to an enrollee or dependents at the option of the enrollee, except in any of the following cases:

(1) The policyholder fails to comply with participation or contribution rules;

(2) With respect to a network plan, there is no longer any enrollee in connection with such plan that lives, resides, or works in the service area of the carrier;

(3) With respect to a coverage that is made available only through one or more bona fide associations, the membership of the employer ceases.

(4) The policyholder has failed to pay premiums or contributions in accordance with the terms of the health benefit plan or the health carrier has not received timely premium payments;

(5) The policyholder has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage;

(6) A decision by the carrier to discontinue offering a particular type of group health benefit plan in the state's large group insurance market. A type of health benefit plan may be discontinued by the carrier in the large group market only if the carrier:

a. Provides notice of the decision not to renew coverage to all affected enrollees and to the Commissioner in each state in which an affected enrollee is known to reside at least 90 days prior to the nonrenewal of any health benefit plans by the carrier. Notice to the Commissioner under this subparagraph shall be provided at least three (3) working days prior to the notice to the affected individuals;

b. Offers to each large employer provided the particular type of health benefit plan, the option to purchase any other health benefit plans currently being offered by the carrier to large employers in the state; and

c. In exercising the option to discontinue the particular type of health benefit plan and in offering the option of coverage under paragraph b, the carrier acts uniformly without regard to the claims experience of any affected individual or any health status-related factor relating to any covered individuals or beneficiaries who may become eligible for the coverage.

(7) The carrier elects to discontinue offering and to nonrenew all its health benefit plans delivered or issued for delivery in the state. In that case, the carrier shall provide notice of the decision not to renew coverage to all enrollees and to the Commissioner in each state in which an enrollee is known to reside at least 180 days prior to the nonrenewal of the health benefit plan by the carrier. Notice to the Commissioner under this paragraph shall be provided at least three (3) working days prior to the notice of the enrollees;

(b) A carrier that elects not to renew all its health benefit plans under paragraph (a)(5) shall be prohibited from writing new business in the large group market in this slate for a period of five (5) years from the date of the discontinuation of the last health benefit plan not so renewed.

(c) A carrier may modify a large group health benefit plan if all those large groups covered by the same policy form are uniformly modified."

§ 3563. Rate Regulation.

A carrier offering a large group health benefit plan may not require any individual (as a condition of enrollment or continued enrollment under the plan) to pay a men-titan or contribution that is greater than such premium or contribution for a similarly situated individual enrolled in the plan on the basis of any health status-related factor in relation to the individual or to an individual enrolled under the plan as a dependent of the individual. This prohibition shall not be construed to restrict the amount that an employer may he charged for coverage under a large group health benefit plan or to prevent a carrier from establishing premium discounts or rebates or modifying otherwise applicable copayments or deductibles in return for adherence to programs of health promotion and disease prevention, if not otherwise prohibited by law.

§ 3564. Mental Health Parity.

A carrier offering a large group health plan shall comply with the provisions of 42 USCA § 300gg-5, Public Law 104-204 and any subsequent changes in federal law.

§ 3565. Newborns and Mothers Health Protection.

A carrier offering a health benefit plan shall comply with the provisions of 42 USCA § 300m-4 and any subsequent changes in federal law."

Section 15. Amend § 3506, Title 18, Delaware Code by striking same and by substituting in lieu thereof the following:

§ 3506. Association groups.

(a) 'Bona fide association' means, with respect to health insurance coverage offered in Delaware, an association which:

(1) Has been actively in existence for at least five years;

(2) Has been formed and maintained in good faith for purposes other than obtaining insurance and does not condition membership on the purchase of association-sponsored insurance;

(3) Does not condition membership in the association on any health status-related factor relating to an individual (including an employee of an employer or a dependent of an employee) and clearly so states in all membership and application materials;

(4) Makes health insurance coverage offered through the association available to all members regardless of any health status-related factor relating to such members (or individuals eligible for coverage through a member) and clearly so states in all marketing and application materials;

(5) Does not make health insurance coverage offered through the association available other than in connection with a member of the association and clearly so states in all marketing and application materials; and

(6) Provides and annually updates information necessary for the Commissioner to determine whether or not an association meets the definition of a bona Cute association before qualifying as a bona fide association for the purposes of this chapter.

(b) An association policy shall be subject to the following requirements:

(1) The policy may insure members of such association or associations, employees thereof or employees of members, or 1 or more of the preceding or all of any class or classes thereof for the benefit of persons other than the employer.

(2) The premium for the policy shall be paid from funds contributed by the association or associations, or by the employer members, or by both, or from funds contributed by the covered persons or from both the covered persons and the association, associations or employer members.

(3) A policy on which no part of the premium is to be derived from funds contributed by the covered persons specifically for their insurance must insure all eligible persons, except those who reject such coverage in writing."

Section 16. Amend Chapter 33, Title 18, Delaware Code by adding a new section to read as follows:

"§ 3340. Newborns and Mothers Health Protection.

A carrier offering a health benefit plan shall comply with the provisions of 42 IJSCA § 300gg-51 and any subsequent changes in federal law."

Section 17. Effective Date - Applicability.

This Act shall take effect and apply to health benefit plans issued, renewed, extended, or modified on or after July 1, 1997.

Section 18. Severability.

If any provision of this Act or its application to any person or circumstances is for any reason held to be invalid, the remainder of the Act and the application of its provisions to other persons or circumstances shall not be affected thereby.

Approved July 3, 1997