0001| SENATE BILL 575
|
0002| 42ND LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION,
|
0003| 1996
|
0004| INTRODUCED BY
|
0005| GARY DON REAGAN
|
0006|
|
0007|
|
0008|
|
0009|
|
0010|
|
0011| AN ACT
|
0012| RELATING TO INSURANCE; AMENDING SECTIONS OF THE INSURANCE CODE
|
0013| PERTAINING TO HEALTH INSURANCE CONTRACTS AND GROUP HEALTH
|
0014| INSURANCE; AMENDING THE SMALL GROUP RATE AND RENEWABILITY ACT;
|
0015| REPEALING THE HEALTH INSURANCE ALLIANCE ACT AND CERTAIN SECTIONS
|
0016| OF THE NMSA 1978.
|
0017|
|
0018| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
|
0019| Section 1. Section 59A-22-5 NMSA 1978 (being Laws 1984,
|
0020| Chapter 127, Section 426, as amended) is amended to read:
|
0021| "59A-22-5. TIME LIMIT ON CERTAIN DEFENSES.--There shall be
|
0022| a provision as follows:
|
0023| A. After two years from the date of issue of this
|
0024| policy, no misstatements, except fraudulent misstatements, made
|
0025| by the applicant in the application for such policy shall be
|
0001| used to void the policy or to deny a claim for loss incurred or
|
0002| disability (as defined in the policy) commencing after the
|
0003| expiration of such two-year period.
|
0004| (The foregoing policy provision shall not be so construed
|
0005| as to affect any initial two-year period nor to limit the
|
0006| application of Sections 59A-22-17 through 59A-22-19, 59A-22-21
|
0007| and 59A-22-22 NMSA 1978 in the event of misstatement with
|
0008| respect to age or occupation or other insurance.)
|
0009| (A policy which the insured has the right to continue in
|
0010| force subject to its terms by the timely payment of premium (1)
|
0011| until at least age fifty or (2) in the case of a policy issued
|
0012| after age forty-four, for at least five years from its date of
|
0013| issue, may contain in lieu of the foregoing the following
|
0014| provision (from which the clause in parentheses may be omitted
|
0015| at the insurance company's option) under the caption
|
0016| "Incontestable":
|
0017| After this policy has been in force for a period of two
|
0018| years during the lifetime of the insured (excluding any period
|
0019| during which the insured is disabled), it shall become
|
0020| incontestable as to the statements contained in the
|
0021| application.)
|
0022| B. [For individual policies that do not reimburse or
|
pay as a result of hospitalization, medical or surgical
|
expenses] No claim for loss incurred or disability (as defined
|
0025| in the policy) shall be reduced or denied on the ground that a
|
0001| disease or physical condition disclosed on the application and
|
0002| not excluded from coverage by name or a specific description
|
0003| effective on the date of loss had existed prior to the effective
|
0004| date of coverage of this policy. [As an alternative, those
|
policies may contain provisions under which coverage may be
|
excluded for a period of six months following the effective date
|
of coverage as to a given covered insured for a preexisting
|
condition, provided that:
|
(1) the condition manifested itself within a
|
period of six months prior to the effective date of coverage in
|
such a manner as would cause a reasonably prudent person to seek
|
diagnosis, care or treatment; or
|
(2) medical advice or treatment relating to the
|
condition was recommended or received within a period of six
|
months prior to the effective date of coverage.]
|
0016| C. An individual [policies that reimburse or pay
|
as a result of hospitalization, medical or surgical expenses]
|
0018| policy may, in lieu of the provisions stated in Subsection B
|
0019| of this section, contain provisions under which coverage is
|
0020| excluded during a period of six months following the effective
|
0021| date of coverage as to a given covered insured for a preexisting
|
0022| condition, provided that:
|
0023| (1) the condition manifested itself within a
|
0024| period of six months prior to the effective date of coverage in
|
0025| such a manner as would cause a reasonably prudent person to seek
|
0001| diagnosis, care or treatment; or
|
0002| (2) medical advice or treatment relating to the
|
0003| condition was recommended or received within a period of six
|
0004| months prior to the effective date of coverage.
|
0005| [D. The preexisting condition exclusions authorized
|
in Subsections B and C of this section shall be waived to the
|
extent that similar conditions have been satisfied under any
|
prior health insurance coverage if the application for new
|
coverage is made not later than thirty-one days following the
|
termination of prior coverage. In that case, the new coverage
|
shall be effective from the date on which the prior coverage
|
terminated.
|
E. Nothing in this section shall be construed to
|
require the use of preexisting conditions or prohibit the use of
|
preexisting conditions that are more favorable to the insured
|
than those specified in this section]
|
0017| D. The provisions in Subsection C of this section
|
0018| shall not be construed to prohibit preexisting condition
|
0019| provisions that are more favorable to the insured."
|
0020| Section 2. Section 59A-23-3 NMSA 1978 (being Laws 1984,
|
0021| Chapter 127, Section 462, as amended) is amended to read:
|
0022| "59A-23-3. GROUP HEALTH INSURANCE.--
|
0023| A. Group health insurance is that form of health
|
0024| insurance covering groups of persons, with or without their
|
0025| dependents, and issued upon the following basis:
|
0001| (1) under a policy issued to an employer, who
|
0002| shall be deemed the policyholder, insuring at least one employee
|
0003| of such employer for the benefit of persons other than the
|
0004| employer. The term "employees", as used in this section,
|
0005| includes the officers, managers and employees of the employer,
|
0006| the partners, if the employer is a partnership, the officers,
|
0007| managers and employees of subsidiary or affiliated corporations
|
0008| of a corporation employer, and the individual proprietors,
|
0009| partners and employees of individuals and firms the business of
|
0010| which is controlled by the insured employer through stock
|
0011| ownership, contract or otherwise. The term "employer", as used
|
0012| in this section, includes any municipal or governmental
|
0013| corporation, unit, agency or department thereof and the proper
|
0014| officers, as such, or any unincorporated municipality or
|
0015| department thereof, as well as private individuals, partnerships
|
0016| and corporations. A small employer shall also be subject to the
|
0017| Small Group Rate and Renewability Act. A "small employer" means
|
0018| any person, firm, corporation, partnership or association
|
0019| actively engaged in business who, on at least fifty percent of
|
0020| its working days during the preceding year, employed no more
|
0021| than [fifty] twenty-five eligible employees. In determining
|
0022| the number of eligible employees, companies that are affiliated
|
0023| companies or that are eligible to file a combined tax return for
|
0024| purposes of state taxation shall be considered one employer;
|
0025| (2) under a policy issued to an association,
|
0001| including a labor union and an agricultural association, which
|
0002| shall have a constitution and bylaws and which has been
|
0003| organized and is maintained in good faith for purposes other
|
0004| than that of obtaining insurance, insuring at least twenty-five
|
0005| members of the association for the benefit of persons other than
|
0006| the association or its officers or trustees, as such; or
|
0007| (3) under a policy issued to any other
|
0008| substantially similar group which, in the discretion of the
|
0009| superintendent, may be subject to the issuance of a group
|
0010| sickness and accident policy or contract.
|
0011| B. Each policy, as provided by this section, shall
|
0012| contain in substance the following provisions:
|
0013| (1) a provision that the policy, the
|
0014| application of the policyholder, if such application or copy
|
0015| thereof is attached to such policy, and the individual
|
0016| applications, if any, submitted in connection with such policy
|
0017| by the employees or members shall constitute the entire contract
|
0018| between the parties, and that all statements, in the absence of
|
0019| fraud, made by any applicant or applicants shall be deemed
|
0020| representations and not warranties, and that no such statement
|
0021| shall void the insurance or reduce benefits thereunder unless
|
0022| contained in a written application for such insurance;
|
0023| (2) a provision that the insurer will furnish
|
0024| to the policyholder, for delivery to each employee or member of
|
0025| the insured group, an individual certificate setting forth in
|
0001| summary form a statement of the essential features of the
|
0002| insurance coverage of such employee or member and to whom
|
0003| benefits thereunder are payable. If dependents are included in
|
0004| the coverage, only one certificate need be issued for each
|
0005| family unit; and
|
0006| (3) a provision that to the group originally
|
0007| insured may be added from time to time eligible new employees or
|
0008| members or dependents, as the case may be, in accordance with
|
0009| the terms of the policy.
|
0010| C. For purposes of this section only, the directors
|
0011| of a corporation shall be deemed to be employees of the
|
0012| corporation."
|
0013| Section 3. Section 59A-23C-3 NMSA 1978 (being Laws 1991,
|
0014| Chapter 153, Section 3, as amended) is amended to read:
|
0015| "59A-23C-3. DEFINITIONS.--As used in the Small Group Rate
|
0016| and Renewability Act:
|
0017| A. "actuarial certification" means a written
|
0018| statement by a member of the American academy of actuaries or
|
0019| another individual acceptable to the superintendent that a small
|
0020| employer carrier is in compliance with the provisions of Section
|
0021| 59A-23C-5 NMSA 1978, based upon the person's examination,
|
0022| including a review of the appropriate records and of the
|
0023| actuarial assumptions and methods [utilized] used by the
|
0024| carrier in establishing premium rates for applicable health
|
0025| benefit plans;
|
0001| B. "base premium rate" means, for each class of
|
0002| business as to a rating period, the lowest premium rate charged
|
0003| under a rating system for that class of business by the small
|
0004| employer carrier to small employers with similar case
|
0005| characteristics for health benefit plans with the same or
|
0006| similar coverage;
|
0007| C. "carrier" means any person who provides health
|
0008| insurance in this state. For the purposes of the Small Group
|
0009| Rate and Renewability Act, "carrier" or "insurer" includes a
|
0010| licensed insurance company, a licensed fraternal benefit
|
0011| society, a prepaid hospital or medical service plan, a health
|
0012| maintenance organization, a nonprofit health care organization,
|
0013| a multiple employer welfare arrangement or any other person
|
0014| providing a plan of health insurance subject to state insurance
|
0015| regulation;
|
0016| D. "case characteristics" means demographic or other
|
0017| relevant characteristics of a small employer, as determined by a
|
0018| small employer carrier, that are considered by the carrier in
|
0019| the determination of premium rates for the small employer, but
|
0020| ["case characteristics" does not include] claim experience,
|
0021| health status and duration of coverage since issue are not
|
0022| "case characteristics" for the purpose of the law;
|
0023| E. "class of business" means all or a distinct
|
0024| grouping of small employers as shown on the records of the
|
0025| small employer carrier. A [separate class of business may]
|
0001| distinct grouping may only be established by the small
|
0002| employer carrier on the basis that the applicable health benefit
|
0003| plans [have been acquired from another small employer carrier
|
as a distinct grouping of plans]:
|
0005| (1) are marketed and sold through individuals
|
0006| and organizations that are not participating in the marketing or
|
0007| sale of other distinct grouping of small employers for such
|
0008| small employer carrier;
|
0009| (2) have been acquired from another small
|
0010| employer carrier as a distinct grouping of plans;
|
0011| (3) are provided through an association with
|
0012| membership of not fewer than three small employers that has been
|
0013| formed for purposes other than obtaining insurance; or
|
0014| (4) are in a class of business that meets the
|
0015| requirements for exception to the restrictions related to
|
0016| premium rates provided in Subparagraph (a) of Paragraph (1) of
|
0017| Subsection A of Section 59A-23C-5 NMSA 1978;
|
0018| F. "department" means the department of insurance;
|
0019| G. "health benefit plan" or "plan" means any
|
0020| hospital or medical expense incurred policy or certificate,
|
0021| hospital or medical service plan contract or health maintenance
|
0022| organization subscriber contract. "Health benefit plan" does
|
0023| not include accident-only, credit, dental or disability income
|
0024| insurance, medicare supplement coverage, coverage issued as a
|
0025| supplement to liability insurance, workers' compensation or
|
0001| similar insurance or automobile medical-payment insurance;
|
0002| H. "index rate" means, for each class of business
|
0003| for small employers with similar case characteristics, the
|
0004| arithmetic average of the applicable base premium rate and the
|
0005| corresponding highest premium rate;
|
0006| I. "new business premium rate" means, for each class
|
0007| of business as to a rating period, the premium rate charged or
|
0008| offered by the small employer carrier to small employers with
|
0009| similar case characteristics for newly issued health benefit
|
0010| plans with the same or similar coverage;
|
0011| J. "rating period" means the calendar period for
|
0012| which premium rates established by a small employer carrier are
|
0013| assumed to be in effect, as determined by the small employer
|
0014| carrier;
|
0015| K. "small employer" means any person, firm,
|
0016| corporation, partnership or association actively engaged in
|
0017| business who, on at least fifty percent of its working days
|
0018| during the preceding year, employed no less than two and no more
|
0019| than [fifty] twenty-five eligible employees. [provided
|
that:
|
(1)] In determining the number of eligible
|
0022| employees, [the spouse or dependent of an employee may, at the
|
employer's discretion, be counted as a separate employee; and (2)] companies that are affiliated companies
|
0024| or that are eligible to file a combined tax return for purposes
|
0025| of state [income] taxation shall be considered one employer;
|
0001| L. "small employer carrier" means any insurer that
|
0002| offers health benefit plans covering the employees of a small
|
0003| employer; and
|
0004| M. "superintendent" means the superintendent of
|
0005| insurance."
|
0006| Section 4. Section 59A-23C-5 NMSA 1978 (being Laws 1991,
|
0007| Chapter 153, Section 5, as amended) is amended to read:
|
0008| "59A-23C-5. RESTRICTIONS RELATING TO PREMIUM RATES.--
|
0009| A. Premium rates for health benefit plans subject to
|
0010| the Small Group Rate and Renewability Act shall be subject to
|
0011| the following provisions:
|
0012| (1) the index rate for a rating period for any
|
0013| class of business shall not exceed the index rate for any other
|
0014| class of business by more than twenty percent, provided that
|
0015| the provisions of this paragraph shall not apply to a class of
|
0016| business if:
|
0017| (a) the class of business is one for
|
0018| which the carrier does not reject, and never has rejected, small
|
0019| employers included within the definition of employers eligible
|
0020| for the class of business or otherwise eligible employees and
|
0021| dependents who enroll on a timely basis, based upon their claim
|
0022| experience or health status;
|
0023| (b) the carrier does not involuntarily
|
0024| transfer, and never has involuntarily transferred, a health
|
0025| benefit plan into or out of the class of business; and
|
0001| (c) the class of business is currently
|
0002| available for purchase;
|
0003| (2) for a class of business, the premium rates
|
0004| charged during a rating period to small employers with similar
|
0005| case characteristics for the same or similar coverage, or the
|
0006| rates that could be charged to those employers under the rating
|
0007| system for that class of business, shall not vary from the index
|
0008| rate by more than [twenty] twenty-five percent of the index
|
0009| rate;
|
0010| (3) the percentage increase in the premium rate
|
0011| charged to a small employer for a new rating period may not
|
0012| exceed the sum of the following:
|
0013| (a) the percentage change in the new
|
0014| business premium rate measured from the first day of the prior
|
0015| rating period to the first day of the new rating period. In the
|
0016| case of a class of business for which the small employer carrier
|
0017| is not issuing new policies, the carrier shall use the
|
0018| percentage change in the base premium rate;
|
0019| (b) an adjustment, not to exceed ten
|
0020| percent annually and adjusted pro rata for rating periods of
|
0021| less than one year due to the claim experience, health status or
|
0022| duration of coverage of the employees or dependents of the small
|
0023| employer as determined from the carrier's rate manual for the
|
0024| class of business; and
|
0025| (c) any adjustment due to change in
|
0001| coverage or change in the case characteristics of the small
|
0002| employer as determined from the carrier's rate manual for the
|
0003| class of business; and
|
0004| (4) in the case of health benefit plans issued
|
0005| prior to the effective date of the Small Group Rate and
|
0006| Renewability Act, a premium rate for a rating period may exceed
|
0007| the ranges described in Paragraph (1) or (2) of this subsection
|
0008| for a period of five years following the effective date of the
|
0009| Small Group Rate and Renewability Act. In that case, the
|
0010| percentage increase in the premium rate charged to a small
|
0011| employer in that class of business for a new rating period may
|
0012| not exceed the sum of the following:
|
0013| (a) the percentage change in the new
|
0014| business premium rate measured from the first day of the prior
|
0015| rating period to the first day of the new rating period. In the
|
0016| case of a class of business for which the small employer carrier
|
0017| is not issuing new policies, the carrier shall use the
|
0018| percentage change in the base premium rate; and
|
0019| (b) any adjustment due to change in
|
0020| coverage or change in the case characteristics of the small
|
0021| employer as determined from the carrier's rate manual for the
|
0022| class of business.
|
0023| B. Nothing in this section is intended to affect the
|
0024| use by a small employer carrier of legitimate rating factors
|
0025| other than claim experience, health status or duration of
|
0001| coverage in the determination of premium rates. Small employer
|
0002| carriers shall apply rating factors, including case
|
0003| characteristics, consistently with respect to all small
|
0004| employers in a class of business.
|
0005| C. A small employer carrier shall not involuntarily
|
0006| transfer a small employer into or out of a class of business. A
|
0007| small employer carrier shall not offer to transfer a small
|
0008| employer into or out of a class of business unless the offer
|
0009| is made to transfer all small employers in the class of business
|
0010| without regard to case characteristics, claim experience, health
|
0011| status or duration since issue.
|
0012| D. Prior to usage and [the effective date of the
|
Small Group Rate and Renewability Act] June 14, 1991, each
|
0014| carrier [shall] must file with the superintendent the rate
|
0015| manuals and any updates thereto for each class of business. A
|
0016| rate filing fee is payable under Subsection U of Section 59A-6-1
|
0017| NMSA 1978 for the filing of each update. The superintendent
|
0018| shall disapprove within sixty days of receipt of a complete
|
0019| filing or the filing is deemed approved. If the superintendent
|
0020| disapproves any such form during the sixty-day review period, he
|
0021| shall give the carrier written notice of the disapproval stating
|
0022| the ground thereof. At any time, the superintendent, after a
|
0023| hearing thereof, may disapprove a form or withdraw a previous
|
0024| approval. The superintendent's order on such hearing shall
|
0025| state the grounds for disapproval or withdrawal of a previous
|
0001| approval and the date not less than twenty days later when
|
0002| disapproval or withdrawal becomes effective."
|
0003| Section 5. Section 59A-47-33 NMSA 1978 (being Laws 1984,
|
0004| Chapter 127, Section 879.32, as amended by Laws 1994, Chapter
|
0005| 64, Section 10 and also by Laws 1994, Chapter 75, Section 34) is
|
0006| amended to read:
|
0007| "59A-47-33. OTHER PROVISIONS APPLICABLE.--The provisions
|
0008| of the Insurance Code other than Chapter 59A, Article 47 NMSA
|
0009| 1978 shall not apply to health care plans except as expressly
|
0010| provided in the Insurance Code and that article. To the extent
|
0011| reasonable and not inconsistent with the provisions of that
|
0012| article, the following articles and provisions of the Insurance
|
0013| Code shall also apply to health care plans, their promoters,
|
0014| sponsors, directors, officers, employees, agents, solicitors and
|
0015| other representatives; and, for the purposes of such
|
0016| applicability, a health care plan may therein be referred to as
|
0017| an "insurer":
|
0018| A. Chapter 59A, Article 1 NMSA 1978;
|
0019| B. Chapter 59A, Article 2 NMSA 1978;
|
0020| C. Chapter 59A, Article 4 NMSA 1978;
|
0021| D. Subsection C of Section 59A-5-22 NMSA 1978;
|
0022| E. Sections 59A-6-2 through 59A-6-4 and
|
0023| 59A-6-6 NMSA 1978;
|
0024| F. Section 59A-7-11 NMSA 1978;
|
0025| G. Chapter 59A, Article 8 NMSA 1978;
|
0001| H. Chapter 59A, Article 10 NMSA 1978;
|
0002| I. Section 59A-12-22 NMSA 1978;
|
0003| J. Chapter 59A, Article 16 NMSA 1978;
|
0004| K. Chapter 59A, Article 18 NMSA 1978;
|
0005| L. Chapter 59A, Article 19 NMSA 1978;
|
0006| [M. Subsections B through E of Section
|
59A-22-5 NMSA 1978;
|
N.] M. Section 59A-22-34.1 NMSA 1978;
|
0009| [O.] N. Section 59A-22-39 NMSA 1978;
|
0010| [P.] O. Section 59A-22-40 NMSA 1978;
|
0011| [Q.] P. Sections 59A-34-9 through 59A-34-13
|
0012| [NMSA 1978] and [Section] 59A-34-23 NMSA 1978;
|
0013| [R.] Q. Chapter 59A, Article 37 NMSA 1978,
|
0014| except Section 59A-37-7 NMSA 1978; and
|
0015| [S.] R. Section 59A-46-15 NMSA 1978."
|
0016| Section 6. REPEAL.--Sections 59A-18-13.1, 59A-23C-5.1,
|
0017| 59A-23C-7.1 and 59A-56-1 through 59A-56-25 NMSA 1978 (being Laws
|
0018| 1994, Chapter 75, Sections 26, 33, 32 and 1 through 25) are
|
0019| repealed.
|
0020|
|