635.11 Disclosure of rating factors and renewability provisions.
635.13 Annual certification of compliance.
635.15 Temporary suspension of rate regulation.
635.17 Coverage requirements for small employer plans.
635.18 Fair marketing standards.
SUBCHAPTER II
SMALL EMPLOYER HEALTH INSURANCE PLAN
635.21 Establishment of plan.
635.23 Duties of plan board.
635.25 Eligibility for participation in plan.
635.254 Employer premium contribution.
635.272 Payments to health care providers.
635.28 Liability of state and plan board.
635.29 Exemption from required coverage.
635.31 Chapters
600 to
655 applicable.
Ch. 635 Annotation
Cross-references: See definitions in ss. 600.03 and 628.02.
GENERAL PROVISIONS
635.01
635.01
Scope. This subchapter applies to all group health insurance plans, policies or certificates, written on risks or operations in this state, providing coverage for employes of a small employer, or employes of a small employer and the employer, and to individual health insurance policies, written on risks or operations in this state, providing coverage for employes of a small employer, or employes of a small employer and the employer when 3 or more are sold to a small employer.
635.01 History
History: 1991 a. 39.
635.02
635.02
Definitions. In this subchapter:
635.02(1)
(1) "Base premium rate" means the lowest premium rate chargeable under a rating system to small employers with similar case characteristics and the same or similar benefit design characteristics in the same class of business.
635.02(1c)
(1c) "Basic health benefit plan" means the small employer health insurance plan under
subch. II.
635.02(1m)
(1m) "Benefit design characteristics" means covered services, cost sharing, utilization management, managed care networks and other features that differentiate plan or coverage designs.
635.02(2)
(2) "Case characteristics" means the demographic, actuarially based characteristics of the employes of a small employer, and the employer, if covered, such as age, sex, geographic location and occupation, used by a small employer insurer to determine premium rates for a small employer. "Case characteristics" does not include loss or claim history, health status, duration of coverage or other factors related to claim experience.
635.02(3)
(3) "Class of business" means all or a distinct grouping of small employers determined in accordance with rules promulgated by the commissioner under
s. 635.05 (4).
635.02(3c)
(3c) "Dependent" means a spouse, an unmarried child under the age of 19 years, an unmarried child who is a full-time student under the age of 21 years and who is financially dependent upon the parent, or an unmarried child of any age who is medically certified as disabled and who is dependent upon the parent.
635.02(3f)
(3f) "Eligible employe" means an employe who works on a full-time basis and has a normal work week of 30 or more hours. The term includes a sole proprietor, a business owner, including the owner of a farm business, a partner of a partnership, a member of a limited liability company and an independent contractor if the sole proprietor, business owner, partner, member or independent contractor is included as an employe under a health benefit plan of a small employer, but the term does not include an employe who works on a part-time, temporary or substitute basis.
635.02(3j)
(3j) "Established geographic service area" means a geographic area within which a small employer insurer provides coverage and that has been approved by the commissioner.
635.02(3m)
(3m) "Health benefit plan" means any hospital or medical policy or certificate. "Health benefit plan" does not include accident-only, credit, dental, vision, medicare supplement, long-term care, or disability income insurance, coverage issued as a supplement to liability insurance, worker's compensation or similar insurance, automobile medical payment insurance or other insurance exempted by rule of the commissioner.
635.02(4m)
(4m) "Midpoint rate" means the arithmetic average of the base premium rate and the corresponding highest premium rate.
635.02(5)
(5) "New business premium rate" means the premium rate charged or offered to small employers with similar case characteristics in the same class of business for newly issued health insurance with the same or similar benefit design characteristics.
635.02(5m)(a)(a) "Qualifying coverage" means benefits or coverage provided under any of the following:
635.02(5m)(a)2.
2. An employer-based health insurance or health benefit arrangement that provides benefits similar to or exceeding benefits provided under a basic health benefit plan.
635.02(5m)(a)3.
3. An individual health insurance policy that provides benefits similar to or exceeding benefits provided under a basic health benefit plan, if the policy has been in effect for at least one year.
635.02(5m)(b)
(b) Notwithstanding
par. (a) 2. and
3., "qualifying coverage" does not include a high cost-share health plan, as defined in
s. 632.898 (1) (c), that is linked to a medical savings account, as described in
s. 632.898, if any of the following applies:
635.02(5m)(b)1.
1. The health benefit plan that is the individual's new coverage and the health benefit plan that is the individual's previous coverage are provided by the same small employer.
635.02(5m)(b)2.
2. The health benefit plan that is the individual's new coverage is provided by a small employer that is not the same employer that provided the health benefit plan that was the individual's previous coverage, the small employer that provides the individual's new coverage offers its eligible employes a choice of health benefit plan options that includes a high cost-share health plan, as defined in
s. 632.898 (1) (c), and the individual's new coverage is not a high cost-share health plan.
635.02(6)
(6) "Rating period" means the period, determined by a small employer insurer, during which a premium rate established by the small employer insurer remains in effect.
635.02(6m)
(6m) "Restricted network provision" means a provision of a health benefit plan that conditions the payment of benefits, in whole or in part, on obtaining services or articles from health care providers that have contracted with the small employer insurer to provide health care services or articles to covered individuals.
635.02(7)
(7) "Small employer" means any of the following:
635.02(7)(a)
(a) An individual, firm, corporation, partnership, limited liability company or association that is actively engaged in a business enterprise in this state, including a farm business, and that employs in this state not fewer than 2 nor more than 25 eligible employes. In determining the number of eligible employes, employers that are affiliated, or that are eligible to file a combined tax return for purposes of state taxation, shall be considered one employer.
635.02(7)(b)
(b) A village or town that provides or that is eligible under
s. 635.25 (1) to provide coverage to its eligible employes under a basic health benefit plan.
635.02(8)
(8) "Small employer insurer" means an insurer that is authorized to do business in this state, in one or more lines of insurance that includes health insurance, and that offers group health benefit plans covering eligible employes of one or more small employers in this state, or that sells 3 or more individual health benefit plans to a small employer, covering eligible employes of the small employer. The term includes a health maintenance organization, as defined in
s. 609.01 (2), a preferred provider plan, as defined in
s. 609.01 (4), and an insurer operating as a cooperative association organized under
ss. 185.981 to
185.985, but does not include a limited service health organization, as defined in
s. 609.01 (3).
635.05
635.05
Rate regulation. Notwithstanding
ch. 625, the commissioner shall promulgate rules:
635.05(1)
(1) Establishing restrictions on premium rates that a small employer insurer may charge a small employer such that the premium rates charged to small employers with similar case characteristics for the same or similar benefit design characteristics do not vary from the midpoint rate for those small employers by more than 35% of that midpoint rate.
635.05(2)
(2) Establishing restrictions on increases in premium rates that a small employer insurer may charge a small employer such that:
635.05(2)(a)
(a) The percentage increase in the premium rate for a new rating period does not exceed the sum of the following:
635.05(2)(a)1.
1. The percentage change in the new business premium rate measured from the first day of the prior rating period to the first day of the new rating period, or the percentage change in the base premium rate in the case of a class of business for which the small employer insurer is not issuing new policies.
635.05(2)(a)2.
2. An adjustment, not to exceed 15% per year, adjusted proportionally for rating periods of less than one year, for such rating factors as claim experience, health status and duration of coverage, determined in accordance with the small employer insurer's rate manual or rating procedures.
635.05(2)(a)3.
3. An adjustment for a change in case characteristics or in benefit design characteristics, determined in accordance with the small employer insurer's rate manual or rating procedures.
635.05(2)(b)
(b) The percentage increase in the premium rate for a new rating period for a policy issued before August 15, 1991, does not exceed the sum of
par. (a) 1. and
3., unless premium rates are in compliance with the rules promulgated under
sub. (1).
635.05(3)
(3) Requiring the premium rate of a policy issued before August 15, 1991, to comply with the rules promulgated under
sub. (1) no later than 3 years after August 15, 1991.
635.05(4)
(4) Defining the terms necessary for compliance with this section.
635.05(5)
(5) Ensuring that small employers are classified using objective criteria.
635.05(6)
(6) Ensuring that rating factors are applied objectively and consistently within a class of business.
635.05 History
History: 1991 a. 39,
250.
635.07
635.07
Contract termination and renewability. 635.07(1)
(1) Notwithstanding
s. 631.36 (2) to
(4m), a plan or policy subject to this subchapter may not be canceled by an insurer before the expiration of the agreed term, and shall be renewable to the employer and all employes and dependents eligible under the terms of the plan or policy at the expiration of the agreed term at the option of the small employer, except for any of the following reasons:
635.07(1)(b)
(b) Fraud or misrepresentation by the small employer, or, with respect to coverage for an insured individual, fraud or misrepresentation by the insured individual.
635.07(1)(c)
(c) Substantial breaches of contractual duties, conditions or warranties.
635.07(1)(d)
(d) The number of individuals covered under the plan or policy is less than the number required by the plan or policy.
635.07(1)(e)
(e) The small employer is no longer actively engaged in a business enterprise.
635.07(2)
(2) Notwithstanding
sub. (1), a small employer insurer may elect not to renew a health insurance plan or policy subject to this subchapter if the small employer insurer complies with all of the following:
635.07(2)(a)
(a) The small employer insurer ceases to renew all plans or policies subject to this subchapter that are issued to all other small employers in the same class of business.
635.07(2)(b)
(b) The small employer insurer provides notice to all affected small employers and to the commissioner in each state in which an affected insured individual resides not later than one year before termination of coverage.
635.07(2)(c)
(c) The small employer insurer does not establish a new class of business earlier than 5 years after the nonrenewal of the plans or policies.
635.07(2)(d)
(d) The small employer insurer does not transfer or otherwise provide coverage to a small employer from the nonrenewed class of business unless the small employer insurer offers to transfer or provide coverage to all affected small employers from the nonrenewed class of business without regard to case characteristics, claim experience, health status or duration of coverage.
635.07(3)
(3) This section does not apply to a plan or policy subject to this subchapter if the small employer insurer that issued the policy is in liquidation.
635.07 History
History: 1991 a. 39,
250;
1995 a. 289.
635.09
635.09
Prohibited denial of coverage. No small employer insurer may refuse to provide coverage for employes of a small employer solely on the basis of the occupation of the employes or the type of business in which the small employer is engaged.
635.09 History
History: 1991 a. 39,
250.
635.11
635.11
Disclosure of rating factors and renewability provisions. Before the sale of a plan or policy subject to this subchapter, a small employer insurer shall disclose to a small employer all of the following:
635.11(1)
(1) The small employer insurer's right to increase premium rates and the factors limiting the amount of increase.
635.11(2)
(2) The extent to which benefit design characteristics and case characteristics affect premium rates.
635.11(3)
(3) The extent to which rating factors and changes in benefit design characteristics and case characteristics affect changes in premium rates.
635.11(4)
(4) The small employer's renewability rights.
635.11 History
History: 1991 a. 39,
250,
315.
635.13
635.13 Annual certification of compliance. 635.13(1)(1)
Records. A small employer insurer shall maintain at its principal place of business complete and detailed records relating to its rating methods and practices and its renewal underwriting methods and practices, and shall make the records available to the commissioner and the small employer insurance board upon request.
