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, PIPPY, VANCE AND WASHINGTON, FEBRUARY 24, 2009

AS AMENDED ON THIRD CONSIDERATION, MARCH 31, 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 in effect or delivered or issued

<--

for delivery in this Commonwealth on or 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 thea group policy, and or 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."Code," the children's health care program

<--

established under Article XXIII or the adult basic coverage

insurance program established under Chapter 13 of the act of

June 26, 2001 (P.L.755, No.77), known as the "Tobacco Settlement

Act," and any successors thereto.

(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

(3)  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, notice to the policyholder of the rights provided under

<--

this section. Unless already provided in the group policy, an

<--

insurer who has issued a group policy in effect as of the

effective date of this section shall provide such notice to the

policyholder within 45 days of the effective date.

(ii)  The employer of a covered employe under a plangroup

<--

policy must notify the administrator or its designee, the

<--

covered employe and the insurer of a qualifying event within

thirty days of the date of the qualifying event.qualifying

<--

event. Notice to the covered employe shall include notice of the

rights set forth in this section.

(iii)  Each covered employe or eligible dependent is

<--

responsible for notifyingshall notify 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)its election of continuation coverage under this section

<--

within thirty days of notice under subparagraph (ii). The

coverage shall be effective as of the date of the qualifying

event and shall be the same as the coverage in effect at the

time of the qualifying event or any replacement coverage.

(iv)  An administrator or its designee notified under

subparagraph (iii) of an election of continuation coverage shall

notify the insurer within fourteen days of the covered employe's

or eligible dependent's election.

(v)  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

<--

policyholderadministrator or its designee, on a monthly basis,

<--

the amount of contribution required to be paid by the covered

<--

employe or eligible dependent 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 a 

<--

health savings account as defined in the Internal Revenue Code

of 1986 (Public Law 99-514, 26 U.S.C. § 223(d)) or other medical

<--

spending account as a component of the group policy after the

termination date as long as scheduled payments have been made.

(6)(6)  (i)  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)(A)  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)(B)  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)(C)  the date on which the group policy is terminated.

<--

(ii)  A covered employe or eligible dependent shall provide

<--

written notice to the administrator or its designee within

fourteen days if, pursuant to paragraph (2), coverage should not

occur.

(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 orof insurability.

<--

(d)  In the case of a qualifying event consisting of the

<--

involuntary termination of the covered employe's employment

occurring on or after the effective date of this section and

before January 1, 2010, or such other date as specified by any

amendment to or successor of section 3001 of Division B, Title

III of the American Recovery and Reinvestment Act of 2009

(Public Law 111-5, 123 Stat. 115), a covered employe or eligible

dependent shall be entitled to premium assistance as provided in

section 3001 of Division B, Title III of the American Recovery

and Reinvestment Act of 2009, pursuant to the procedures and

requirements set forth therein.

(e)  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. 82929 U.S.C. § 1161 et seq.) or Title XXII

<--

of the Public Health Service Act (58 Stat. 682, 42 U.S.C. § 201 

<--

et seq.Public Law 99-272, 42 U.S.C. § 300bb-1 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)(f)  The department may promulgate regulations as

<--

necessary for the implementation and administration of this

section.

(g)  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)  "Administrator" means the person specifically designated

<--

by an employer by written agreement to manage the administration

of a group policy issued to an employer or, if an administrator

is not so designated, the employer.

(2)  "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.401(c)(1)). 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)  "Eligible dependent" means:

<--

(i)  With respect to a covered employe under a group health

plan, any other individual who on the day before the qualifying

event for that employe is a beneficiary under the plan:

(A)  as the spouse of the covered employe; or

(B)  as the dependent child of the employe.

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

paragraph (6)(ii), the term includes a covered employe.

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

paragraph (6)(vi), the term includes a covered employe who had

retired on or before the date of substantial elimination of

coverage and any other individual who, on the day before such

qualifying event, is a beneficiary under the plan:

(A)  as the spouse of the covered employe;

(B)  as the dependent child of the employe; or

(C)  as the surviving spouse of the covered employe.

The term shall also include a child who is born to or placed for

adoption with a covered employe during the period of

continuation coverage under this section.

(3)(4)  "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 care 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)(5)  "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 Article XXIV or other provision of 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)(ii)  40 Pa.C.S. Ch. 61 (relating to hospital plan

<--

corporations) or 63 (relating to professional health services

plan corporations).

(5)(6)  "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.

§ 3011395 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 12030 days.

<--