Small employer group rates must be certified actuarially sound for the 12-month period preceding the certification.

The effective date of 2003 PA 88 (Chapter 37) is January 23, 2004. All new business written by a small employer carrier on or after that date must meet the requirements of Chapter 37. If the small employer carrier has renewal business for which it has rates approved to be effective January 1, 2004, the small employer carrier may use that rate for small employer group renewal business only through the entire first quarter. However, on or after April 1, 2004 all plans and all rates used by small employer carriers for renewal business must comply with the chapter.

A small employer means any person, firm, corporation, partnership, limited liability company, or association actively engaged in business who, on at least 50% of its working days during the preceding or current calendar years, employed at least 2 but not more than 50 eligible employees. Companies that are affiliated companies or that are eligible to file a combined tax return for state taxation purposes will be considered 1 employer.

Although there may be a contract between an association and a carrier, the rates charged to each employer within the association generally vary based on the case characteristics of each employer within the association. Therefore, rates charged to each employer group with 50 or fewer eligible employees within an association are subject to the requirements of Chapter 37.

No, a MEWA with a Michigan certificate of authority is not subject to the requirements of Chapter 37. Section 7000 of the Insurance Code lists the chapters of the Insurance Code to which MEWAs are subject and Chapter 37 is not one of those chapters listed.

The federal HIPAA regulations only apply to groups with 2-50 eligible employees, not sole proprietors. Chapter 37 requires Blue Cross Blue Shield of Michigan (BCBSM) to continue to offer coverage to sole proprietors subject to the guarantee issue provisions of that chapter. Additionally, a small employer carrier other than BCBSM may choose to offer coverage and contract with sole proprietors [a self-employed individual with no eligible employees - see definition in section 3701(r)]. However, if a small employer carrier chooses to offer coverage to sole proprietors, it would then become subject to the provisions of Chapter 37 [see section 3703(3)].

Since only BCBSM is required to contract with sole proprietors, other carriers can cease writing new sole proprietor business before the effective date of Chapter 37. However, sole proprietors currently covered by a carrier have, and will continue to have, guaranteed renewability rights to their current coverage.

An "eligible" employee is a full-time employee who works 30 or more hours a week for a given employer. The employer may choose to count employees who work 17.5 hours to 30 hours per week as full time employees as long as this criterion is applied uniformly among all of the employer's employees and without regard to health status.

An index rate is the weighted average premium charged during a rating period for a given benefit plan in a given geographic area by each small employer carrier. The rate for the health benefit plan used to develop the index rate must include all applicable riders offered in each employers plan.

- 10 or fewer eligible employees, 100% enrollment may be required of those employees seeking health care coverage through the small employer.
- 11 to 25 eligible employees, up to 75% of the eligible employees seeking health care coverage through the small employer.
- 26 to 50 eligible employees, up to 50% of the employees seeking health care coverage through the small employer.

If used, a small employer carrier may waive these participation requirements for any small employer. However, once the participation requirement has been waived, the small employer carrier may never again impose any participation requirement for that small employer.

The employer size is based on the number of eligible employees, regardless of how many employees are seeking coverage through the employer. In the example above, although only 9 employees are seeking coverage, a small employer carrier can only require 75% participation because the employer has between 11 and 25 eligible employees.

No, claims experience of the small employer is not one of the allowable case characteristics under Chapter 37 for any type of small employer carrier. For commercial carriers, however, health status of individuals within a small employer group can be considered, within the rate band limits.

No, the small employer carrier may only use the case characteristics described in section 3705(2)(a) to rate their small employer group policies. Rates charged to any given small employer may vary by family size (1 person, 2 person, 3+ person family), but all 1 person contracts must be charged the same rate, as well as all 2 person, and all family contracts within a small employer group. Rates cannot vary by employee due to that employee's age or health status.

The plain language reading of section 3716 only exempts the Archer medical savings account plan from the chapter. All other health benefit plans that meet the definition contained in section 3701(k), including high deductible plans offered to small employers, must meet the requirements of the chapter.

No, under laws in place prior to the passage of Chapter 37, neither BCBSM nor health maintenance organizations were allowed to impose waiting/exclusionary periods for pre-existing conditions. Under Chapter 37, all small employer carriers, regardless of the company type, are prohibited from imposing such waiting periods.

As defined in Chapter 37, a waiting period "means, with respect to a health benefit plan and an individual who is a potential enrollee in the plan, the period that must pass with respect to the individual before the individual is eligible to be covered for benefits under the terms of the plan. As mentioned in FAQ 15 above, subsequent to the passage of section 3707(2), all small employer carriers are not allowed to institute a waiting period.

An affiliation period is the period of time that must pass before a new or late enrollee is eligible to sign up for the employer group health plan. The affiliation period can be no longer than 2 months for a regular enrollee or 3 months for a late enrollee. During the affiliation period, the employer (purchaser) may not be charged a premium for the employee who is not yet eligible for coverage. Small employer carriers may offer plans to small employers that contain affiliation periods, but all eligible employees of the employer must be treated uniformly under the plan.

No, Chapter 37 does not allow small employer carriers to require a contribution level that must be paid by the employer sponsor.

Yes.

A company must send the Commissioner a letter indicating how it meets the criteria or requirements for receiving a suspension as defined in section 3717(1) or an exemption as defined in section 3717(2). The letter should also indicate, in general terms, what rating methodology or guidelines the company will use during the period of the suspension or exemption including a range for rate increases. Lastly, the company should indicate how it will regularly monitor that it is not utilizing the suspension or exemption to take an unfair competitive advantage in the small group market. OFIR would like to see the company develop a policy that indicates it will monitor quarterly its premium volume, patterns, location and contour of its small group business.

A small group carrier that has a parent-subsidiary relationship with another small group carrier is a separate legal entity from the parent-subsidiary and the two must, therefore, be separate for all purposes under section 3701, et seq. Two small group carriers with other types of affiliations are also separate entities. Each carrier must determine whether the enrollment of a particular employer meets the participation requirements found in section 3709. If the participation requirements are not met, each small employer carrier may (or may not) individually waive the requirement. However, if any individual small employer carrier waives a minimum participation rule for a small employer, that carrier cannot later enforce that minimum participation rule for that small employer.