Legislative Report Addresses Small Business Healthcare Bill Concerns

A newly released legislative report addresses misconceptions surrounding a bill that provides much-needed healthcare insurance relief for Connecticut small businesses.

The General Assembly’s nonpartisan Office of Legislative Research released an 11-page analysis March 30 of HB 6710, which provides nonprofit groups, trade associations, and employer members two pathways to more affordable, higher quality health insurance.

The legislature’s Insurance and Real Estate Committee approved the association health plan bill last month with overwhelming bipartisan support, advancing it to the state House of Representatives.

“The OLR report resolves a range of issues raised by opponents of the bill,” said CBIA’s Wyatt Bosworth.

“Critically, it supports key provisions of the bill that protect federal and state health benefit mandates and allow for state regulatory oversight.”

Consumer Protections

HB 6710 does two things:

1. Authorizes trade associations with a homogenous membership (i.e. one industry) to band together and purchase ACA-compliant fully insured large group health insurance as one entity; and
2. Authorizes trade and industry associations of significant scale to band together and form a self-funded health benefit plan rigorously regulated by the Connecticut Insurance Department.

"I am encouraged by the bipartisan support the bill has attracted," says @CTWBDC CEO @francinepastore. And it addresses real issues and concerns that I share with our thousands of clients around value, quality, equity, and oversight." #healthcare #smallbiz https://t.co/EEgYxGOp2g

— CBIA (@CBIANews) March 29, 2023

For fully insured and self funded association health plans, both are subject to existing federal consumer protection laws that currently regulate employer-sponsored health plans.

These laws include key sections of the Public Health Service Act, Health Insurance Portability and Accountability Act, Newborns’ Act, Mental Health Parity Act, Women’s Health and Cancer Rights Act, and Genetic Information Nondiscrimination Act.

ACA Health Benefits

The OLR report confirms that fully insured AHPs must follow the same laws and regulations that apply to single-employer large group plans today.

For example, under the bill a fully insured multiple employer welfare arrangement must:

• Comply with all pertinent DOL regulations or standards
• Qualify as a large group market plan subject to all state health insurance benefits, mandates, and all large group market regulations under the federal Public Health Service Act
• Adhere to all federal ACA requirements applicable to large group plans
• Not limit or exclude coverage for individuals based on preexisting conditions
• Cover the ACA’s essential health benefits
• Offer coverage that meets at least a 60% actuarial value
• Be available only to participating employers

The OLR report confirmed that plans cannot discriminate based on health status for plan eligibility, premiums, or contribution requirements.

The OLR report also confirmed that self-funded association plans must:

• Offer coverage with a minimum of 60% actuarial value (i.e. an IRS requirement for all employer-sponsored health plans)
• Cover inpatient hospital services and physician services
• Not limit or exclude coverage based on preexisting conditions
• Not discriminate based on health status for health benefit plan eligibility, premiums, or contribution requirements
• Make health benefit plans available to all employer members, regardless of any employer or employee health status factors (i.e. guaranteed issue and renewable)

ERISA

Both fully insured and self-funded association MEWAs are also subject to several requirements under Title 1 of ERISA that require the plans to:

• Provide summary plan documents to enrollees
• Meet certain fiduciary standards and requirements relating to plan administration
• Provide certain remedies for participants who believe the plan has violated ERISA requirements
• Provide continuation of coverage (i.e. COBRA) benefits
• Prohibit discrimination based on preexisting conditions
• Provide special enrollment periods to eligible individuals
• Prohibit charging individuals higher premiums based on health factors
• Include guaranteed renewability provisions
• Cover specified benefits (e.g., maternity and newborn benefits, mental health parity, breast reconstruction, preventive services)

State, Federal Compliance

The OLR report also details how self-funded plans must abide by a number of state insurance laws.

Traditional self-funded employer-sponsored plans are not subject to state insurance laws; only MEWAs can be subject to state insurance laws provided there’s no conflict with Title I of ERISA.

These requirements include:

• Coverage for the ACA’s essential health benefits
• Coverage for all state mandated health insurance coverage requirements
• Compliance with existing state law’s utilization and benefit determination requirements

Regulatory Guardrails

Self-funded association plans are also subject to a number of regulatory guardrails that protect policy holders and their employers.

For example, only a trust is authorized to sell health benefit plans to the employer members if the trust:

1. Is subject to ERISA and any regulations or standards required by the U.S. Department of Labor
2. Annually files Form M-1 with DOL

The plans are also subject to a number of requirements that ensure solvency and positive cash flow.

HB 6710 gives CID tremendous latitude to adopt regulations, including requirements for licensing, financial condition and actuarial standards, solvency and insolvency, transparency, and reporting and filing.

The trust is also required to purchase and maintain stop-loss insurance with retention levels equivalent to state-licensed insurers; maintain fiduciary liability insurance and a bond; and maintain reserves at a level prescribed by CID.

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For more information, contact CBIA’s Wyatt Bosworth (860.244.1155) | @WyattBosworthCT.