AB394,27,22 20(4) Written denial required. Denial by an insurer of an application for
21coverage from an employer shall be in writing and shall state the reason or reasons
22for the denial.
AB394,28,2 23(5) Third-party administrators. A 3rd-party administrator that enters into
24a contract, agreement or other arrangement with an insurer to provide
25administrative, marketing or other services related to the offering of health benefit

1plans to employers or individuals in this state is subject to this section as if it were
2an insurer.
AB394,28,6 3(6) Insurer ceasing to issue. (a) An insurer that has in force one or more health
4benefit plans that are included in a category under s. 632.747 (3) (g) 1. to 3. shall
5actively market and issue health benefit plans in that category, as provided in s.
6632.747, unless the insurer complies with all of the following:
AB394,28,87 1. Files notice with the commissioner that the insurer is ceasing to issue health
8benefit plans in that category.
AB394,28,99 2. Ceases to issue health benefit plans in that category for not less than 5 years.
AB394,28,1210 3. Does not commence marketing or issuing health benefit plans in that
11category until the insurer files notice with the commissioner that the insurer intends
12to market and issue such health benefit plans.
AB394,28,1513 (b) An insurer may not cease to actively market or issue health benefit plans
14in all categories under s. 632.747 (3) (g) 1. to 3. unless the insurer complies with s.
15632.748 (2).
AB394,28,18 16(7) Additional standards by rule. The commissioner may by rule establish
17additional standards to provide for the fair marketing and broad availability of
18health benefit plans to employers and individuals in this state.
AB394, s. 29 19Section 29. 632.76 (2) (a) of the statutes is amended to read:
AB394,28,2520 632.76 (2) (a) No claim for loss incurred or disability commencing after 2 years
21from the date of issue of the policy may be reduced or denied on the ground that a
22disease or physical condition existed prior to the effective date of coverage, unless the
23condition was excluded from coverage by name or specific description by a provision
24effective on the date of loss. This paragraph does not apply to a health benefit plan,
25as defined in s. 632.745 (1) (d), which is subject to s. 632.745.
AB394, s. 30
1Section 30. 632.83 of the statutes is created to read:
AB394,29,6 2632.83 Regulation of certain related policies. The commissioner may by
3rule prescribe standards for specified disease policies, hospital indemnity policies,
4as defined in s. 632.895 (1) (c), or limited benefit health policies, including prohibiting
5certain specified types of products, prescribing minimum coverage and establishing
6marketing or suitability standards.
AB394, s. 31 7Section 31. 632.896 (4) of the statutes is amended to read:
AB394,29,138 632.896 (4) Preexisting conditions. Notwithstanding s. ss. 632.745 (2) and
9632.76 (2) (a), a disability insurance policy that is subject to sub. (2) and that is in
10effect when a court makes a final order granting adoption or when the child is placed
11for adoption may not exclude or limit coverage of a disease or physical condition of
12the child on the ground that the disease or physical condition existed before coverage
13is required to begin under sub. (3).
AB394, s. 32 14Section 32. 632.897 (2) (d) of the statutes is amended to read:
AB394,30,615 632.897 (2) (d) If the employer is notified to terminate the coverage for any of
16the reasons provided under par. (b), the employer shall provide the terminated
17insured written notification of the right to continue group coverage or convert to
18individual coverage and the payment amounts required for either continued or
19converted coverage including the manner, place and time in which the payments
20shall be made. This notice shall be given not more than 5 days after the employer
21receives notice to terminate coverage. The payment amount for continued group
22coverage may not exceed the group rate in effect for a group member, including an
23employer's contribution, if any, for a group policy as defined in sub. (1) (c) 1. or 1m.
24or the equivalent value of the monthly contribution of a group member to a group
25policy as defined in sub. (1) (c) 2. or the equivalent value of the monthly premium for

1franchise insurance as defined in sub. (1) (c) 3. The premium for converted coverage
2shall be determined in accordance with the insurer's table of premium rates
3applicable to the age and class of risks of each person to be covered under that policy
4and to the type and amount of coverage provided, subject to s. 632.746 and any rules
5promulgated under s. 632.7465
. The notice may be sent to the terminated insured's
6home address as shown on the records of the employer.
AB394, s. 33 7Section 33. 632.897 (9) (c) of the statutes is amended to read:
AB394,30,208 632.897 (9) (c) When the insurer is notified that the coverage of a spouse may
9be terminated because of a divorce or annulment, the insurer shall provide the
10former spouse written notification of the right to obtain individual coverage under
11sub. (4), the premium amounts required and the manner, place and time in which
12premiums may be paid. This notice shall be given not less than 30 days before the
13former spouse's coverage would otherwise terminate. The premium shall be
14determined in accordance with the insurer's table of premium rates applicable to the
15age and class of risk of
every person to be covered and to the type and amount of
16coverage provided, subject to s. 632.746 and any rules promulgated under s.
17632.7465
. If the former spouse tenders the first monthly premium to the insurer
18within 30 days after the notice provided by this paragraph, sub. (4) shall apply and
19the former spouse shall receive individual coverage commencing immediately upon
20termination of his or her coverage under the insured's policy.
AB394, s. 34 21Section 34. Chapter 635 (title) of the statutes is amended to read:
AB394,30,2222 CHAPTER 635
AB394,30,2423 SMALL EMPLOYER
24 HEALTH INSURANCE PLAN
AB394, s. 35
1Section 35. Subchapter I of chapter 635 [precedes 635.01.] of the statutes is
2repealed.
AB394, s. 36 3Section 36. 635.20 (intro.) of the statutes is amended to read:
AB394,31,4 4635.20 Definitions. (intro.) In this subchapter chapter:
AB394, s. 37 5Section 37. Subchapter II (title) of chapter 635 [precedes 635.20] of the
6statutes is repealed.
AB394, s. 38 7Section 38. 635.20 (1c) of the statutes is repealed and recreated to read:
AB394,31,118 635.20 (1c) "Dependent" means a spouse, an unmarried child under the age of
919 years, an unmarried child who is a full-time student under the age of 21 years and
10who is financially dependent upon the parent, or an unmarried child of any age who
11is medically certified as disabled and who is dependent upon the parent.
AB394, s. 39 12Section 39. 635.20 (1m) of the statutes is repealed and recreated to read:
AB394,31,2013 635.20 (1m) "Eligible employe" means an employe who works on a full-time
14basis and has a normal work week of 30 or more hours. "Eligible employe" includes
15a sole proprietor, a business owner, including the owner of a farm business, a partner
16of a partnership, a member of a limited liability company and an independent
17contractor if the sole proprietor, business owner, partner, member or independent
18contractor is included as an employe under a health benefit plan of a small employer,
19but "eligible employe" does not include an employe who works on a part-time,
20temporary or substitute basis.
AB394, s. 40 21Section 40. 635.20 (10) of the statutes is amended to read:
AB394,31,2422 635.20 (10) "Plan" means the health insurance plan for individuals employed
23by small employers that is created under s. 635.21 and that consists of a policy under
24this subchapter chapter containing the basic benefits.
AB394, s. 41 25Section 41. 635.20 (13) of the statutes is repealed and recreated to read:
AB394,32,9
1635.20 (13) "Small employer insurer" means an insurer that is authorized to do
2business in this state, in one or more lines of insurance that includes health
3insurance, and that offers group health benefit plans covering eligible employes of
4one or more small employers in this state, or that sells 3 or more individual health
5benefit plans to a small employer, covering eligible employes of the small employer.
6"Small employer insurer" includes a health maintenance organization, as defined in
7s. 609.01 (2), a preferred provider plan, as defined in s. 609.01 (4), and an insurer
8operating as a cooperative association organized under ss. 185.981 to 185.985, but
9does not include a limited service health organization, as defined in s. 609.01 (3).
AB394, s. 42 10Section 42. 635.25 (1) (a) (intro.) of the statutes is amended to read:
AB394,32,1211 635.25 (1) (a) (intro.) To be eligible to participate in the plan by purchasing a
12policy under this subchapter chapter containing the basic benefits, an employer:
AB394, s. 43 13Section 43. 635.25 (1) (b) of the statutes is amended to read:
AB394,32,1714 635.25 (1) (b) Except as provided in ss. 645.43 and 646.35, an employer that
15purchases a policy under this subchapter chapter containing the basic benefits and
16that ceases to be eligible to participate in the plan during a policy period shall retain
17coverage under the plan to the end of the policy period.
AB394, s. 44 18Section 44. 635.25 (1m) of the statutes is amended to read:
AB394,32,2119 635.25 (1m) Notwithstanding sub. (1), an employer is not eligible to participate
20in the plan if all of the individuals to be covered under the plan may be covered by
21a single one policy providing individual single or family coverage.
AB394, s. 45 22Section 45. 635.254 (1) of the statutes is amended to read:
AB394,33,223 635.254 (1) An employer that participates in the plan shall pay a premium
24contribution of not less than 50% of the premium rate on behalf of an eligible employe

1with individual single coverage and not less than 40% of the premium rate on behalf
2of an eligible employe with family coverage.
AB394, s. 46 3Section 46. 635.254 (3) of the statutes is amended to read:
AB394,33,84 635.254 (3) For an eligible employe who obtains coverage under the health
5insurance risk-sharing plan under s. 619.12 (2) (e) 2., an employer under sub. (1)
6shall pay a premium contribution to the health insurance risk-sharing plan that is
7equal to the amount that the employer would pay on behalf of the employe for
8coverage under the plan under this subchapter chapter.
AB394, s. 47 9Section 47. 635.26 (1s) of the statutes is repealed.
AB394, s. 48 10Section 48. 635.28 of the statutes is amended to read:
AB394,33,14 11635.28 Liability of state and plan board. Neither the state nor the plan
12board is liable for any obligation arising under the plan. Plan board members are
13immune from civil liability for acts or omissions while performing their duties under
14this subchapter chapter.
AB394, s. 49 15Section 49. 635.29 of the statutes is amended to read:
AB394,33,18 16635.29 (title) Applicability of health insurance mandates. The health
17insurance mandates apply to the plan under this subchapter chapter only to the
18extent determined by the plan board under s. 635.23 (1) (b).
AB394, s. 50 19Section 50. 635.31 of the statutes is amended to read:
AB394,33,22 20635.31 Chapters 600 to 655 applicable. Except as otherwise provided in this
21subchapter chapter, the plan shall comply with and be administered in compliance
22with chs. 600 to 655.
AB394, s. 51 23Section 51. 646.35 (5) of the statutes is amended to read:
AB394,34,724 646.35 (5) Rate increases. The board may increase any rates or premiums on
25policies during continuation of coverage under sub. (2) (b) or (3) (b) to the extent the

1policies permit the insurer to increase the rates or premiums and subject to s.
2632.746 and any rules promulgated under s. 632.7465
. If the board determines that
3the rates or premiums on policies which do not permit an increase or the rates or
4premiums as increased to the extent permitted by the policies are inadequate under
5s. 625.11 (3), the board may offer the policyholders the option of terminating the
6coverage or continuing the coverage at adequate rates or premiums as determined
7by the board.
AB394, s. 52 8Section 52 . Nonstatutory provisions.
AB394,34,12 9(1)   Rules on risk adjustment mechanism. The commissioner of insurance
10shall submit proposed rules required under section 632.747 (4) (a) of the statutes, as
11created by this act, to the legislative council staff for review under section 227.15 (1)
12of the statutes no later than April 1, 1996.
AB394, s. 53 13Section 53. Initial applicability.
AB394,34,21 14(1)  The treatment of sections 15.735 (1), 185.981 (4t), 185.983 (1) (intro.) and
15(1g), 600.01 (2) (b), 601.424, 625.03 (6), 625.12 (2), 625.15 (1), 625.22 (1) and (4),
16628.34 (3) (c), 628.36 (2) (b) 1., 3. and 5., 631.01 (4), 632.70, 632.745, 632.746,
17632.7465, 632.747, 632.748, 632.749, 632.76 (2) (a), 632.896 (4), 632.897 (2) (d) and
18(9) (c), 635.20 (intro.), (1c), (1m), (10) and (13), 635.25 (1) (a) (intro.) and (b), 635.26
19(1s), 635.28, 635.29, 635.31 and 646.35 (5), chapter 635 (title) and subchapter I and
20subchapter II (title) of chapter 635 of the statutes first applies to health benefit plans
21issued or renewed on October 1, 1996.
AB394, s. 54 22Section 54. Effective date. This act takes effect on October 1, 1996, except
23as follows:
AB394,35,3
1(1) The treatment of sections 619.12 (1) (intro.), 632.727, 632.747 (4) and (5)
2and 632.83 of the statutes and Section 52 (1) of this act take effect on the day after
3publication.
AB394,35,44 (End)
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