THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY D. WHITE, PILEGGI, O'PAKE, BAKER, GORDNER, ALLOWAY, RAFFERTY, BRUBAKER, ERICKSON, LOGAN, KASUNIC, WAUGH, BROWNE, ORIE, WONDERLING, BOSCOLA, EARLL, SCARNATI, CORMAN, STACK AND PIPPY, FEBRUARY 24, 2009

REFERRED TO BANKING AND INSURANCE, FEBRUARY 24, 2009  

AN ACT

Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An

act relating to insurance; amending, revising, and

consolidating the law providing for the incorporation of

insurance companies, and the regulation, supervision, and

protection of home and foreign insurance companies, Lloyds

associations, reciprocal and inter-insurance exchanges, and

fire insurance rating bureaus, and the regulation and

supervision of insurance carried by such companies,

associations, and exchanges, including insurance carried by

the State Workmen's Insurance Fund; providing penalties; and

repealing existing laws," in health and accident insurance,

providing for group health policies to continue for period of

time after termination of employment or membership in health

maintenance organizations.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The act of May 17, 1921 (P.L.682, No.284), known

as The Insurance Company Law of 1921, is amended by adding a

section to read:

Section 635.4.  Mini-COBRA Small Employer Group Health

Policies.--(a)  A group policy delivered or issued for delivery

in this Commonwealth after the effective date of this section by

an insurer which insures employes or members and their eligible

dependents for hospital, surgical or major medical insurance

shall provide that covered employes or eligible dependents whose

coverage under the group policy would otherwise terminate

because of a qualifying event shall be entitled to continue

their hospital, surgical or major medical coverage under that

group policy subject to the following terms and conditions:

(1)  Continuation shall only be available to a covered

employe or eligible dependent who has been continuously insured

under the group policy, and for similar benefits under any group

policy which it replaced, during the entire three-month period

ending with such termination. If employment is reinstated during

the continuation period, then coverage under the group policy

must be reinstated for the covered employe and any eligible

dependents who were covered under continuation.

(2)  Continuation shall not be available for any person

covered under the group policy who:

(i)  is covered or is eligible for coverage under Medicare;

(ii)  fails to verify that he is ineligible for employer-

based group health insurance as an eligible dependent; or

(iii)  is or could be covered by any other insured or

uninsured arrangement which provides hospital, surgical or major

medical coverage for individuals in a group and under which the

person was not covered immediately prior to such termination,

excluding the medical assistance program established under the

act of June 13, 1967 (P.L.31, No.21), known as the "Public

Welfare Code."

(3)  Continuation need not include dental, vision care or

prescription drug benefits or any other benefits provided under

the group policy in addition to its hospital, surgical or major

medical benefits, but continuation must include any benefits

mandated under this or any other act if those benefits are

provided under the group policy.

(4)  (i)  The group policy shall provide, at the time of

commencement of coverage under the plan, written notice to each

covered employe and adult eligible dependent of the employe, if

any, of the rights provided under this section.

(ii)  The employer of a covered employe under a plan must

notify the administrator or its designee of a qualifying event

within thirty days of the date of the qualifying event.

(iii)  Each covered employe or eligible dependent is

responsible for notifying the administrator or its designee of

the occurrence of any qualifying event within sixty days after

the date of the qualifying event and each eligible dependent who

is determined, under Title II or XVI of the Social Security Act

(49 Stat. 620, 42 U.S.C. § 301 et seq.), to have been disabled

at any time during the first sixty days of continuation coverage

under this section is responsible for notifying the plan

administrator or its designee of such determination within sixty

days after the date of the determination and for notifying the

plan administrator or its designee within thirty days after the

date of any final determination under Title II or XVI of the

Social Security Act that the eligible dependent is no longer

disabled.

(iv)  In the case of a qualifying event described in

subsection (e)(5)(i), (ii), (iv) or (vi), the administrator or

its designee shall notify any eligible dependent with respect to

such event, of such dependent's rights under this section.

(v)  In the case of a qualifying event described in

subsection (e)(iii) or (v) where the covered employe notifies

the administrator or its designee under subparagraph (iii), the

administrator or its designee shall notify any eligible

dependent with respect to such event of such dependent's rights

under this section.

(vi)  For purposes of subparagraph (iv) and (v), any

notification shall be made within fourteen days of the date on

which the administrator or its designee is notified under

subparagraph (ii) or (iii), whichever is applicable, and any

such notification to an eligible dependent who is the parent or

guardian of one or more eligible dependents shall be treated as

notification to all other eligible dependents residing with such

parent or guardian at the time such notification is made.

(vii)  Except as otherwise specified in an election, any

election of continuation coverage by an eligible dependent shall

be deemed to include an election of continuation coverage on

behalf of any other eligible dependent who would lose coverage

under the plan by reason of the qualifying event. If there is a

choice among types of coverage under the plan, each eligible

dependent is entitled to make a separate selection among such

types of coverage.

(5)  (i)  The covered employe or eligible dependent

requesting the continuation of coverage must pay to the group

policyholder, on a monthly basis, the amount of contribution

required to continue the coverage.

(ii)  The premium contribution may not be more than one

hundred five percent of the group rate of the insurance being

continued on the due date of each payment; but, if any benefits

are omitted as provided by paragraph (3), the premium

contribution shall be reduced accordingly.

(iii)  Nothing in this section shall require the employer to

contribute to the deductible of the employe holding an HSA as

defined in the Internal Revenue Code of 1986 (Public Law 99-514,

26 U.S.C. § 223(d)) as a component of the group policy after the

termination date as long as scheduled payments have been made.

(6)  Continuation of coverage under the group policy for any

covered employe or eligible dependent shall terminate upon

failure to satisfy paragraph (2) or, if earlier, at the first to

occur of the following:

(i)  the date nine months after the date the covered

employe's or eligible dependent's coverage under the group would

have terminated because of a qualifying event;

(ii)  if the employe or member fails to make timely payment

of a required premium contribution, the end of the period for

which contributions were made;

(iii)  the date on which the group policy is terminated.

(b)  A covered employe shall be entitled to obtain a

conversion policy as stated in section 621.2. The right to a

converted policy pursuant to this act for a covered employe or

eligible dependent entitled to continuation of coverage under

this act shall commence upon termination of the continued

coverage provided for under this act.

(c)  Coverage as required by this section may not be

conditioned upon, or discriminated on, the basis of lack of

evidence or insurability.

(d)  This section shall only apply to those persons who

satisfy both of the following criteria:

(1)  Persons who are not subject to the continuation and

conversion provisions set forth in Title 1, Subtitle B, Part 6

of the Employee Retirement Income Security Act of 1974 (Public

Law 93-406, 88 Stat. 829) or Title XXII of the Public Health

Service Act (58 Stat. 682, 42 U.S.C. § 201 et seq.).

(2)  Persons, and the eligible dependents of such persons,

who are employed by an employer that normally employed between

two and nineteen employes on a typical business day during the

preceding year.

(e)  For purposes of this section, the following words and

phrases shall have the meanings given to them in this subsection

unless the context clearly indicates otherwise:

(1)  "Covered employe" means an individual who is or was

provided coverage under a group policy by virtue of the

performance of services by the individual for one or more

persons maintaining the policy, including as an employe defined

in section 401(c)(1) of the Internal Revenue Code of 1986

(Public Law 99-514, 26 U.S.C. § 1 et seq.). Such term includes

employes and members as those terms are used in section 621.2.

(2)  "Election period" means the period which:

(i)  begins not later than the date on which coverage

terminates under the plan by reason of a qualifying event;

(ii)  is of at least sixty days' duration; and

(iii)  ends not earlier than sixty days after the later of:

(A)  the date described in subparagraph (i); or

(B)  in the case of any eligible dependent who receives

notice under subsection (a)(4)(iv), the date of such notice.

(3)  "Group policy" means any group health insurance policy,

subscriber contract, certificate or plan which provides health

or sickness and accident coverage which is offered by an

insurer. The term shall not include any of the following:

(i)  An accident only policy.

(ii)  A credit only policy.

(iii)  A long-term or disability income policy.

(iv)  A specified disease policy.

(v)  A Medicare supplement policy.

(vi)  A Civilian Health and Medical Program of the Uniformed

Services (CHAMPUS) supplement policy.

(vii)  A fixed indemnity policy.

(viii)  A dental only policy.

(ix)  A vision only policy.

(x)  A workers' compensation policy.

(xi)  An automobile medical payment policy under 75 Pa.C.S. 

(relating to vehicles).

(xii)  Any other similar policies providing for limited

benefits.

(4)  "Insurer" means a company or health insurance entity

licensed in this Commonwealth to issue any health, sickness or

accident policy or subscriber contract or certificate or plan

that provides medical or health care coverage by a health care

facility or licensed health care provider that is offered or

governed under this act or any of the following:

(i)  The act of December 29, 1972 (P.L.1701, No.364), known

as the "Health Maintenance Organization Act."

(ii)  The act of May 18, 1976 (P.L.123, No.54), known as the

"Individual Accident and Sickness Insurance Minimum Standards

Act."

(iii)  40 Pa.C.S. Ch. 61 (relating to hospital plan

corporations) or 63 (relating to professional health services

plan corporations).

(5)  "Qualifying event" means, with respect to any covered

employe, any of the following events which, but for the

continuation of coverage required under this section, would

result in the loss of coverage of an eligible dependent:

(i)  The death of a covered employe.

(ii)  The termination, other than by reason of such employe's

gross misconduct, or reduction of hours of the covered employe's

employment.

(iii)  The divorce or legal separation of the covered employe

from an eligible dependent.

(iv)  The covered employe becoming entitled to benefits under

Title XVIII of the Social Security Act (49 Stat. 620, 42 U.S.C.

§ 301 et seq.).

(v)  A dependent child ceasing to be a dependent child under

the generally applicable requirements of the plan.

(vi)  A proceeding in a case under 11 U.S.C. (relating to

bankruptcy), with respect to the employer from whose employment

the covered employe retired at any time. In the case of an event

described in this subparagraph, a loss of coverage includes a

substantial elimination of coverage with respect to an eligible

dependent within one year before or after the date of

commencement of the proceeding.

(f)  The department may promulgate regulations as necessary

for the implementation and administration of this section.

Section 2.  This act shall take effect in 120 days.