ASSEMBLY SUBSTITUTE AMENDMENT 2,
To 1995 ASSEMBLY BILL 416
July 11, 1995 - Offered by Committee on Health.
AB416-ASA2,1,9 1An Act to repeal 635.02 (5m), 635.07, 635.17 and 635.26 (1) (b); to renumber
2635.26 (1) (a); to amend 40.51 (8), 60.23 (25), 66.184, 111.70 (1) (a), 120.13 (2)
3(g), 185.981 (4t), 185.983 (1) (intro.), 600.01 (2) (b), 628.34 (3) (a), 628.34 (3) (b),
4632.76 (2) (a) and 632.896 (4); and to create 40.51 (8m), 111.70 (4) (m), 111.91
5(2) (k), 632.745, 632.747 and 632.749 of the statutes; relating to: group health
6insurance market reform, including preexisting condition exclusions and
7limitations, guaranteed acceptance, portability and contract termination and
8renewability; collective bargaining of certain health care coverage
9requirements; and granting rule-making authority.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB416-ASA2, s. 1 10Section 1. 40.51 (8) of the statutes is amended to read:
AB416-ASA2,1,1311 40.51 (8) Every health care coverage plan offered by the state under sub. (6)
12shall comply with ss. 631.89, 631.90, 631.93 (2), 632.72 (2), 632.745 (1) to (3) and (5),
13632.747,
632.87 (3) to (5), 632.895 (5m) and (8) to (10) and 632.896.
AB416-ASA2, s. 2 14Section 2. 40.51 (8m) of the statutes is created to read:
AB416-ASA2,2,2
140.51 (8m) Every health care coverage plan offered by the group insurance
2board under sub. (7) shall comply with ss. 632.745 (1) to (3) and (5) and 632.747.
AB416-ASA2, s. 3 3Section 3. 60.23 (25) of the statutes is amended to read:
AB416-ASA2,2,74 60.23 (25) Self-insured health plans. Provide health care benefits to its
5officers and employes on a self-insured basis if the self-insured plan complies with
6ss. 631.89, 631.90, 631.93 (2), 632.745 (2), (3) and (5) (a) 2. and (b) 2., 632.747 (3),
7632.87 (4) and (5), 632.895 (9) and 632.896.
AB416-ASA2, s. 4 8Section 4. 66.184 of the statutes is amended to read:
AB416-ASA2,2,14 966.184 Self-insured health plans. If a city, including a 1st class city, or a
10village provides health care benefits under its home rule power, or if a town provides
11health care benefits, to its officers and employes on a self-insured basis, the
12self-insured plan shall comply with ss. 49.493 (3) (d), 631.89, 631.90, 631.93 (2),
13632.745 (2), (3) and (5) (a) 2. and (b) 2., 632.747 (3), 632.87 (4) and (5), 632.895 (9) and
14(10), 632.896, 767.25 (4m) (d) and 767.51 (3m) (d).
AB416-ASA2, s. 5 15Section 5. 111.70 (1) (a) of the statutes is amended to read:
AB416-ASA2,3,1116 111.70 (1) (a) "Collective bargaining" means the performance of the mutual
17obligation of a municipal employer, through its officers and agents, and the
18representatives of its employes, to meet and confer at reasonable times, in good faith,
19with the intention of reaching an agreement, or to resolve questions arising under
20such an agreement, with respect to wages, hours and conditions of employment, and
21with respect to a requirement of the municipal employer for a municipal employe to
22perform law enforcement and fire fighting services under s. 61.66, except as provided
23in sub. (4) (m) and s. 40.81 (3) and except that a municipal employer shall not meet
24and confer with respect to any proposal to diminish or abridge the rights guaranteed
25to municipal employes under ch. 164. The duty to bargain, however, does not compel

1either party to agree to a proposal or require the making of a concession. Collective
2bargaining includes the reduction of any agreement reached to a written and signed
3document. The employer shall not be required to bargain on subjects reserved to
4management and direction of the governmental unit except insofar as the manner
5of exercise of such functions affects the wages, hours and conditions of employment
6of the employes. In creating this subchapter the legislature recognizes that the
7public employer must exercise its powers and responsibilities to act for the
8government and good order of the municipality, its commercial benefit and the
9health, safety and welfare of the public to assure orderly operations and functions
10within its jurisdiction, subject to those rights secured to public employes by the
11constitutions of this state and of the United States and by this subchapter.
AB416-ASA2, s. 6 12Section 6. 111.70 (4) (m) of the statutes is created to read:
AB416-ASA2,3,1613 111.70 (4) (m) Health benefit plan requirements. 1. Except as provided in subd.
142., the municipal employer is prohibited from bargaining collectively with respect to
15compliance with the health benefit plan requirements under ss. 632.745, 632.747
16and 632.749.
AB416-ASA2,3,2117 2. If a municipal employer offers its employes a health care coverage plan
18through a program offered by the group insurance board under s. 40.51 (7), the
19municipal employer is prohibited from bargaining collectively with respect to
20compliance with the health benefit plan requirements under ss. 632.745 (1) to (3) and
21(5) and 632.747 with respect to the health care coverage plan.
AB416-ASA2, s. 7 22Section 7. 111.91 (2) (k) of the statutes is created to read:
AB416-ASA2,3,2423 111.91 (2) (k) Compliance with the health benefit plan requirements under ss.
24632.745 (1) to (3) and (5) and 632.747.
AB416-ASA2, s. 8 25Section 8. 120.13 (2) (g) of the statutes is amended to read:
AB416-ASA2,4,4
1120.13 (2) (g) Every self-insured plan under par. (b) shall comply with ss.
249.493 (3) (d), 631.89, 631.90, 631.93 (2), 632.745 (2), (3) and (5) (a) 2. and (b) 2.,
3632.747 (3),
632.87 (4) and (5), 632.895 (9) and (10), 632.896, 767.25 (4m) (d) and
4767.51 (3m) (d).
AB416-ASA2, s. 9 5Section 9. 185.981 (4t) of the statutes is amended to read:
AB416-ASA2,4,86 185.981 (4t) A sickness care plan operated by a cooperative association is
7subject to ss. 252.14, 631.89, 632.72 (2), 632.745, 632.747, 632.749, 632.87 (2m), (3),
8(4) and (5), 632.895 (10) and 632.897 (10) and ch. 155.
AB416-ASA2, s. 10 9Section 10. 185.983 (1) (intro.) of the statutes is amended to read:
AB416-ASA2,4,1510 185.983 (1) (intro.) Every such voluntary nonprofit sickness care plan shall be
11exempt from chs. 600 to 646, with the exception of ss. 601.04, 601.13, 601.31, 601.41,
12601.42, 601.43, 601.44, 601.45, 611.67, 619.04, 628.34 (10), 631.89, 631.93, 632.72
13(2), 632.745, 632.747, 632.749, 632.775, 632.79, 632.795, 632.87 (2m), (3), (4) and (5),
14632.895 (5), (9) and (10), 632.896 and 632.897 (10), subch. II of ch. 619 and chs. 609,
15630, 635, 645 and 646, but the sponsoring association shall:
AB416-ASA2, s. 11 16Section 11. 600.01 (2) (b) of the statutes is amended to read:
AB416-ASA2,4,1817 600.01 (2) (b) Group or blanket insurance described in sub. (1) (b) 3. and 4. is
18not exempt from s. 632.745, 632.747 or 632.749 or ch. 633 or 635.
AB416-ASA2, s. 12 19Section 12. 628.34 (3) (a) of the statutes is amended to read:
AB416-ASA2,5,220 628.34 (3) (a) No insurer may unfairly discriminate among policyholders by
21charging different premiums or by offering different terms of coverage except on the
22basis of classifications related to the nature and the degree of the risk covered or the
23expenses involved, subject to s. ss. 632.365 and 632.745. Rates are not unfairly
24discriminatory if they are averaged broadly among persons insured under a group,

1blanket or franchise policy, and terms are not unfairly discriminatory merely
2because they are more favorable than in a similar individual policy.
AB416-ASA2, s. 13 3Section 13. 628.34 (3) (b) of the statutes is amended to read:
AB416-ASA2,5,94 628.34 (3) (b) No insurer may refuse to insure or refuse to continue to insure,
5or limit the amount, extent or kind of coverage available to an individual, or charge
6an individual a different rate for the same coverage because of a mental or physical
7disability except when the refusal, limitation or rate differential is based on either
8sound actuarial principles supported by reliable data or actual or reasonably
9anticipated experience, subject to ss. 632.745, 632.747, 632.749, 635.09 and 635.26.
AB416-ASA2, s. 14 10Section 14. 632.745 of the statutes is created to read:
AB416-ASA2,5,13 11632.745 Coverage requirements for group health benefit plans. (1)
12Group health insurance market reform; definitions. In this section and ss. 632.747
13and 632.749:
AB416-ASA2,5,2014 (a) 1. Except as provided in subd. 2., "eligible employe" means an employe who
15works on a permanent basis and has a normal work week of 30 or more hours. The
16term includes a sole proprietor, a business owner, including the owner of a farm
17business, a partner of a partnership and a member of a limited liability company if
18the sole proprietor, business owner, partner or member is included as an employe
19under a health benefit plan of an employer, but the term does not include an employe
20who works on a temporary or substitute basis.
AB416-ASA2,5,2321 2. For purposes of a group health benefit plan, or a self-insured health plan,
22that is offered by the state under s. 40.51 (6) or by the group insurance board under
23s. 40.51 (7), "eligible employe" has the meaning given in s. 40.02 (25).
AB416-ASA2,5,2424 (b) "Employer" means any of the following:
AB416-ASA2,6,3
11. An individual, firm, corporation, partnership, limited liability company or
2association that is actively engaged in a business enterprise in this state, including
3a farm business.
AB416-ASA2,6,44 2. A municipality, as defined in s. 16.70 (8).
AB416-ASA2,6,55 3. The state.
AB416-ASA2,6,96 (c) "Group health benefit plan" means a health benefit plan that is issued by
7an insurer to an employer on behalf of a group consisting of eligible employes of the
8employer. The term includes individual health benefit plans covering eligible
9employes when 3 or more are sold to an employer.
AB416-ASA2,6,1810 (d) "Health benefit plan" means any hospital or medical policy or certificate.
11"Health benefit plan" does not include accident-only, credit accident or health,
12dental, vision, medicare supplement, medicare replacement, long-term care,
13disability income or short-term insurance, coverage issued as a supplement to
14liability insurance, worker's compensation or similar insurance, automobile medical
15payment insurance, individual conversion policies, specified disease policies,
16hospital indemnity policies, as defined in s. 632.895 (1) (c), policies or certificates
17issued under the health insurance risk-sharing plan or an alternative plan under
18subch. II of ch. 619 or other insurance exempted by rule of the commissioner.
AB416-ASA2,6,2519 (e) "Insurer" means an insurer that is authorized to do business in this state,
20in one or more lines of insurance that includes health insurance, and that offers
21group health benefit plans covering eligible employes of one or more employers in
22this state. The term includes a health maintenance organization, as defined in s.
23609.01 (2), a preferred provider plan, as defined in s. 609.01 (4), an insurer operating
24as a cooperative association organized under ss. 185.981 to 185.985 and a limited
25service health organization, as defined in s. 609.01 (3).
AB416-ASA2,7,2
1(f) "Qualifying coverage" means benefits or coverage provided under any of the
2following:
AB416-ASA2,7,33 1. Medicare or medicaid.
AB416-ASA2,7,64 2. A group health benefit plan or an employer-based health benefit
5arrangement that provides benefits similar to or exceeding benefits provided under
6a basic health benefit plan under subch. II of ch. 635.
AB416-ASA2,7,97 3. An individual health benefit plan that provides benefits similar to or
8exceeding benefits provided under a basic health benefit plan under subch. II of ch.
9635, if the individual health benefit plan has been in effect for at least one year.
AB416-ASA2,7,1110 (g) "Self-insured health plan" means a self-insured health plan of the state or
11a county, city, village, town or school district.
AB416-ASA2,7,17 12(2) Preexisting conditions. A group health benefit plan, or a self-insured
13health plan, may not deny, exclude or limit benefits for a covered individual for losses
14incurred more than 12 months after the effective date of the individual's coverage
15due to a preexisting condition. A group health benefit plan, or a self-insured health
16plan, may not define a preexisting condition more restrictively than any of the
17following:
AB416-ASA2,7,2118 (a) A condition that would have caused an ordinarily prudent person to seek
19medical advice, diagnosis, care or treatment during the 6 months immediately
20preceding the effective date of coverage and for which the individual did not seek
21medical advice, diagnosis, care or treatment.
AB416-ASA2,7,2422 (b) A condition for which medical advice, diagnosis, care or treatment was
23recommended or received during the 6 months immediately preceding the effective
24date of coverage.
AB416-ASA2,7,2525 (c) A pregnancy existing on the effective date of coverage.
AB416-ASA2,8,7
1(3) Portability. (a) A group health benefit plan, or a self-insured health plan,
2shall waive any period applicable to a preexisting condition exclusion or limitation
3period with respect to particular services for the period that an individual was
4previously covered by qualifying coverage that was not sponsored by the employer
5sponsoring the group health benefit plan or the self-insured health plan and that
6provided benefits with respect to such services, if the qualifying coverage terminated
7not more than 60 days before the effective date of the new coverage.
AB416-ASA2,8,128 (b) Paragraph (a) does not prohibit the application of a waiting period to all new
9enrollees under a group health benefit plan or a self-insured health plan; however,
10a waiting period may not be applied when determining whether the qualifying
11coverage terminated not more than 60 days before the effective date of the new
12coverage.
AB416-ASA2,8,18 13(4) Minimum participation of employes. (a) Except as provided in par. (d),
14requirements used by an insurer in determining whether to provide coverage under
15a group health benefit plan to an employer, including requirements for minimum
16participation of eligible employes and minimum employer contributions, shall be
17applied uniformly among all employers that apply for or receive coverage from the
18insurer.
AB416-ASA2,8,2119 (b) An insurer may vary its minimum participation requirements and
20minimum employer contribution requirements only by the size of the employer group
21based on the number of eligible employes.
AB416-ASA2,9,222 (c) In applying minimum participation requirements with respect to an
23employer, an insurer may not count eligible employes who have other coverage that
24is qualifying coverage in determining whether the applicable percentage of
25participation is met, except that an insurer may count eligible employes who have

1coverage under another health benefit plan that is sponsored by that employer and
2that is qualifying coverage.
AB416-ASA2,9,53 (d) An insurer may not increase a requirement for minimum employe
4participation or a requirement for minimum employer contribution that applies to
5an employer after the employer has been accepted for coverage.
AB416-ASA2,9,76 (e) This subsection does not apply to a group health benefit plan offered by the
7state under s. 40.51 (6) or by the group insurance board under s. 40.51 (7).
AB416-ASA2,9,14 8(5) Prohibited coverage practices. (a) 1. Except as provided in rules
9promulgated under subd. 3., if an insurer offers a group health benefit plan to an
10employer, the insurer shall offer coverage to all of the eligible employes of the
11employer and their dependents. Except as provided in rules promulgated under
12subd. 3., an insurer may not offer coverage to only certain individuals in an employer
13group or to only part of the group, except for an eligible employe who has not yet
14satisfied an applicable waiting period, if any.
AB416-ASA2,9,2115 2. Except as provided in rules promulgated under subd. 3., if the state or a
16county, city, village, town or school district offers coverage under a self-insured
17health plan, it shall offer coverage to all of its eligible employes and their dependents.
18Except as provided in rules promulgated under subd. 3., the state or a county, city,
19village, town or school district may not offer coverage to only certain individuals in
20the employer group or to only part of the group, except for an eligible employe who
21has not yet satisfied an applicable waiting period, if any.
AB416-ASA2,9,2522 3. The secretary of employe trust funds, with the approval of the group
23insurance board, shall promulgate rules related to offering coverage to eligible
24employes under a group health benefit plan, or a self-insured health plan, offered
25by the state under s. 40.51 (6) or by the group insurance board under s. 40.51 (7). The

1rules shall conform to the intent of subds. 1. and 2. and may not allow the state or
2the group insurance board to refuse to offer coverage to an eligible employe or
3dependent for reasons related to health condition.
AB416-ASA2,10,74 (b) 1. An insurer may not modify a group health benefit plan with respect to
5an employer or an eligible employe or dependent, through riders, endorsements or
6otherwise, to restrict or exclude coverage for certain diseases or medical conditions
7otherwise covered by the group health benefit plan.
AB416-ASA2,10,118 2. The state or a county, city, village, town or school district may not modify a
9self-insured health plan with respect to an eligible employe or dependent, through
10riders, endorsements or otherwise, to restrict or exclude coverage for certain diseases
11or medical conditions otherwise covered by the self-insured health plan.
AB416-ASA2,10,1512 3. Nothing in this paragraph limits the authority of the group insurance board
13to fulfill its obligations as trustee under s. 40.03 (6) (d) or to design or modify
14procedures or provisions pertaining to enrollment, premium transmitted or coverage
15of eligible employes for health care benefits under s. 40.51 (1).
AB416-ASA2, s. 15 16Section 15. 632.747 of the statutes is created to read:
AB416-ASA2,10,22 17632.747 Guaranteed acceptance. (1) Employe becomes eligible after
18commencement of coverage.
If an insurer provides coverage under a group health
19benefit plan, the insurer shall provide coverage under the group health benefit plan
20to an eligible employe who becomes eligible for coverage after the commencement of
21the employer's coverage, and to the eligible employe's dependents, regardless of
22health condition or claims experience, if all of the following apply:
AB416-ASA2,10,2323 (a) The employe has satisfied any applicable waiting period.
AB416-ASA2,10,2524 (b) The employer agrees to pay the premium required for coverage of the
25employe under the group health benefit plan.
AB416-ASA2,11,6
1(2) Employe waived coverage previously. If an insurer provides coverage
2under a group health benefit plan, the insurer shall provide coverage under the
3group health benefit plan to an eligible employe who waived coverage during an
4enrollment period during which the employe was entitled to enroll in the group
5health benefit plan, regardless of health condition or claims experience, if all of the
6following apply:
AB416-ASA2,11,87 (a) The eligible employe was covered as a dependent under qualifying coverage
8when he or she waived coverage under the group health benefit plan.
AB416-ASA2,11,139 (b) The eligible employe's coverage under the qualifying coverage has
10terminated or will terminate due to a divorce from the insured under the qualifying
11coverage, the death of the insured under the qualifying coverage, loss of employment
12by the insured under the qualifying coverage or involuntary loss of coverage under
13the qualifying coverage by the insured under the qualifying coverage.
AB416-ASA2,11,1614 (c) The eligible employe applies for coverage under the group health benefit
15plan not more than 30 days after termination of his or her coverage under the
16qualifying coverage.
AB416-ASA2,11,1817 (d) The employer agrees to pay the premium required for coverage of the
18employe under the group health benefit plan.
AB416-ASA2,11,24 19(3) State or municipal self-insured plans. If the state or a county, city, village,
20town or school district provides coverage under a self-insured health plan, it shall
21provide coverage under the self-insured health plan to an eligible employe who
22waived coverage during an enrollment period during which the employe was entitled
23to enroll in the self-insured health plan, regardless of health condition or claims
24experience, if all of the following apply:
AB416-ASA2,12,2
1(a) The eligible employe was covered as a dependent under qualifying coverage
2when he or she waived coverage under the self-insured health plan.
AB416-ASA2,12,73 (b) The eligible employe's coverage under the qualifying coverage has
4terminated or will terminate due to a divorce from the insured under the qualifying
5coverage, the death of the insured under the qualifying coverage, loss of employment
6by the insured under the qualifying coverage or involuntary loss of coverage under
7the qualifying coverage by the insured under the qualifying coverage.
AB416-ASA2,12,108 (c) The eligible employe applies for coverage under the self-insured health plan
9not more than 30 days after termination of his or her coverage under the qualifying
10coverage.
AB416-ASA2, s. 16 11Section 16. 632.749 of the statutes is created to read:
AB416-ASA2,12,17 12632.749 Contract termination and renewability. (1) Midterm
13cancellation.
Notwithstanding s. 631.36 (2) to (4m), a group health benefit plan
14may not be canceled by an insurer before the expiration of the agreed term, and shall
15be renewable to the policyholder and all insureds and dependents eligible under the
16terms of the group health benefit plan at the expiration of the agreed term at the
17option of the policyholder, except for any of the following reasons:
AB416-ASA2,12,1818 (a) Failure to pay a premium when due.
AB416-ASA2,12,2019 (b) Fraud or misrepresentation by the policyholder, or, with respect to coverage
20for an insured individual, fraud or misrepresentation by that insured individual.
AB416-ASA2,12,2121 (c) Substantial breaches of contractual duties, conditions or warranties.
AB416-ASA2,12,2322 (d) The number of individuals covered under the group health benefit plan is
23less than the number required by the group health benefit plan.
AB416-ASA2,12,2524 (e) The employer to which the group health benefit plan is issued is no longer
25actively engaged in a business enterprise.
AB416-ASA2,13,2
1(2) Nonrenewal. Notwithstanding sub. (1), an insurer may elect not to renew
2a group health benefit plan if the insurer complies with all of the following:
AB416-ASA2,13,43 (a) The insurer ceases to renew all other group health benefit plans issued by
4the insurer.
AB416-ASA2,13,75 (b) The insurer provides notice to all affected policyholders and to the
6commissioner in each state in which an affected insured individual resides at least
7one year before termination of coverage.
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