SB 1011

SENATE BILL NO. 1011
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
(MCL 500.100 to 500.8302) by adding chapter 71A.
the people of the state of michigan enact:
CHAPTER 71A
SMALL
BUSINESS HEALTH COVERAGE
Sec. 7100. As used in this
chapter:
(a)
"Affordable care act" or "ACA" means the patient protection
and affordable care act, Public Law 111-148, as amended by the health care and
education reconciliation act of 2010, Public Law 111-152.
(b)
"Bona fide sponsoring association" means a Michigan-domiciled
nonprofit business association to which all of the following apply:
(i) Has operated continuously in this state for at least 5
years and maintains a principal office in this state.
(ii) Has at least 1 substantial business purpose other than
providing health coverage, such as advocacy, education, or economic
development.
(iii) Admits employer members based on geographic commonality
within this state, by region, without regard to the NAIC, or admits members of
a single trade or industry.
(iv) Is governed by a board of directors or trustees under
bylaws meeting the department's fiduciary and conflict-of-interest standards.
(v) Has maintained at least 1,000 dues-paying employer
members or represented 10,000 workers within this state over the previous 5
years, with audited financial statements showing positive net assets.
(c) "Commonality
of interest" means either of the following:
(i) Geographic commonality, where members' principal place of
business is located in this state, even if in different industries.
(ii) Industry commonality, where members share the same trade
or profession.
(d)
"Eligible employer" means a small business to which all of the
following apply:
(i) Employs fewer than 500 employees in total across all
operations and affiliated entities. A business health pool may include both
small and mid-sized employers, including those subject to the affordable care
act's applicable-large-employer provisions.
(ii) Maintains its principal place of business in this state
or conducts a majority of its operations within this state.
(iii) Is a member in good standing of a bona fide sponsoring
association.
(iv) Meets participation and contribution standards adopted by
the director.
(e)
"Eligible self-employed individual" means a Michigan-based sole
proprietor or independent contractor to whom all of the following apply:
(i) Has operated the business for at least 2 consecutive
years.
(ii) Demonstrates positive net self-employment income for the
most recent tax year.
(iii) Works at least 20 hours per week or 80 hours per month in
the business.
(iv) Is not eligible for coverage as an employee under another
employer plan.
(f)
"Fully insured pool" means covered lives under the insurance policy
issued by an insurer, under which the insurer assumes the financial risk for
the payment of claims.
(g)
"Level-funded pool" means a health arrangement in which the sponsor
entity pays a fixed monthly amount but retains claims risk up to a stop-loss
threshold.
(h) "Multiple
employer welfare arrangement" or "MEWA" means that term as
defined in section 7001.
(i)
"Plan" means an employee benefit plan of a multiple employer welfare
arrangement authorized under chapter 70.
(j)
"Pool", when used in reference to a multiple employer welfare
arrangement, means the collective group of covered employees and dependents
whose health care claims and associated financial risk are combined and
administered under the MEWA's employee welfare benefit plan.
(k)
"Program" means the small employer catastrophic reinsurance program
established under section 7105.
(l) "Self-funded pool" means a group of covered
individuals whose health care claims are paid directly from the assets of a
health benefit plan or arrangement, and for which the plan sponsor or
sponsoring entity retains primary financial responsibility for claims.
(m)
"Small business health pool" means a state-regulated multiple
employer welfare arrangement licensed under this chapter to provide health
coverage to eligible employers and self-employed individuals through a bona
fide sponsoring association.
Sec. 7101. (1) Each pool shall
provide coverage that includes all essential health benefits required under
federal law.
(2) A plan
shall comply with mental-health parity, maternity, preventive-services, and
dependent-coverage standards equivalent to ACA-compliant small-group coverage.
(3) A plan
sponsor of a MEWA may offer a pool as fully insured, level-funded, or
self-funded arrangements, subject to solvency and reserve requirements
determined by the director.
Sec. 7102. (1) Premiums must be
actuarially justified and filed with the director for review in accordance with
existing law. Prior approval of rates by the department is not required. The
director may require the filing of an actuarial memorandum or certification
demonstrating that rating methodologies are consistent with sound actuarial
principles and this chapter.
(2) Rating
factors may include industry class, geography, age, and family composition, but
must not include individual health status or claims history.
(3) The
director may review rating methodologies that use industry class factors
uniformly applied across all employers, even if employers are in different NAIC
codes, to verify that the factors described under this subsection are
actuarially justified and applied on a nondiscriminatory basis.
(4)
Employers shall enroll at least 75% of eligible employees and contribute at
least 50% of the employee-only premium.
Sec. 7103. (1) A sponsoring
association shall not condition membership or access to the pool on health
status, claims experience, or genetic information.
(2)
Membership criteria may include only neutral factors such as Michigan location,
payment of dues, or adherence to bylaws.
(3) Each
pool shall furnish enrollees with clear summaries of benefits, grievance
procedures, and financial statements as required by the director.
(4) The
department may place any insolvent or noncompliant pool into receivership to
protect enrollees.
Sec. 7104. (1) A pool must obtain
a license from the department before enrolling members. The director's
oversight under this chapter is limited to verifying solvency, compliance, and
consumer-protection requirements. The director shall not approve or disapprove
rates except as otherwise required by existing law for fully insured products.
(2) A fully
insured pool shall meet carrier solvency and rate-filing requirements
applicable to the insurer issuing coverage.
(3) A
level-funded pool shall maintain stop-loss coverage and reserves as prescribed
by the director to ensure payment of covered claims.
(4)
Self-funded pools shall maintain reserves adequate to cover projected claims
and a surplus of at least $500,000.00, subject to adjustment by the director
based on enrollment and claims experience.
(5) A pool
shall file audited annual financial statements and actuarial certifications of
solvency with the department in the form and manner prescribed by rule.
Sec. 7105. (1) The small employer
catastrophic reinsurance program is established in the department to reimburse
60% of eligible claims between $75,000.00 and $250,000.00 per covered life per
plan year.
(2) The
program is funded entirely by state appropriation. An insurer or employer assessment
must not be imposed.
(3) The
department shall issue an annual actuarial and economic-impact report on the
program's operation, cost, and effect on small-business premiums.
(4) The
program's purpose is to stabilize small-business premiums, expand coverage, and
encourage participation in Michigan-based pools.
Sec. 7106. (1) The department may
examine, audit, and enforce compliance for all pools.
(2) The
director may adopt rules for licensing, reserves, and reporting to protect
enrollees.
(3) The
director shall report annually to the legislature on enrollment, financial
performance, and program outcomes under this chapter.
Sec. 7107. (1) A pool authorized
under this chapter is a MEWA and this state expressly exercises jurisdiction
preserved under 29 USC 1114(b)(A)(ii).
(2) The
geographic-based commonality and multi-industry eligibility under this chapter
are state insurance standards and do not depend on any federal redefinition of
employer.
(3) This
chapter does not diminish any federal right or requirement applicable to health
coverage under the public health service act, 42 USC 201 to 300, the affordable
care act, or the employee retirement income security act of 1974, Public Law
93-406, 88 Stat 829.