To repeal sections 376.421, 376.424, 376.426, 379.930, 379.934, 379.938, 379.940 and 379.952, RSMo 1994, and section 379.950, RSMo Supp. 1996, relating to compliance with the federal Health Insurance Portability and Accountability Act of 1996, and to enact in lieu thereof sixteen new sections relating to the same subject, with penalty provisions and an emergency clause.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF MISSOURI, AS FOLLOWS:

     Section A. Sections 376.421, 376.424, 376.426, 379.930, 379.934, 379.938, 379.940, and 379.952, RSMo 1994, and section 379.950, RSMo Supp. 1996, are repealed and sixteen new sections enacted in lieu thereof, to be known as sections 376.421, 376.424, 376.426, 376.771, 379.930, 379.934, 379.938, 379.940, 379.950, 379.952, 379.955, 379.957, 379.960, 379.963, 379.966 and 379.969, to read as follows:

     376.421. 1. Except as provided in subsection 2 of this section, no policy of group health insurance shall be delivered in this state unless it conforms to one of the following descriptions:

     (1) A policy issued to an employer, or to the trustees of a fund established by an employer, which employer or trustees shall be deemed the policyholder, to insure employees of the employer for the benefit of persons other than the employer, subject to the following requirements:

     (a) The employees eligible for insurance under the policy shall be all of the employees of the employer, or all of any class or classes thereof. The policy may provide that the term "employees" shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietorships or partnerships, if the business of the employer and of such affiliated corporations, proprietorships or partnerships is under common control. The policy may provide that the term "employees" shall include the individual proprietor or partners if the employer is an individual proprietorship or partnership. The policy may provide that the term "employees" shall include retired employees, former employees and directors of a corporate employer. A policy issued to insure the employees of a public body may provide that the term "employees" shall include elected or appointed officials;

     (b) The premium for the policy shall be paid either from the employer's funds or from funds contributed by the insured employees, or from both. Except as provided in paragraph (c) of this subdivision, a policy on which no part of the premium is to be derived from funds contributed by the insured employees must insure all eligible employees, except those who reject such coverage in writing; and

     (c) An insurer may exclude or limit the coverage on any person [as to whom evidence of individual insurability is not satisfactory to the insurer in a policy insuring fewer than ten employees and in a policy insuring ten or more employees if:

     a. Application is not made within thirty-one days after the date of eligibility for insurance; or

     b. The person voluntarily terminated the insurance while continuing to be eligible for insurance under the policy; or

     c. After the expiration of an open enrollment period during which the person could have enrolled for the insurance or could have elected another level of benefits under the policy] only to the extent authorized by the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191), sections 379.930 to 379.952, RSMo, or any state or federal regulations promulgated pursuant to any of these statutes;

     (2) A policy issued to a creditor or its parent holding company or to a trustee or trustees or agent designated by two or more creditors, which creditor, holding company, affiliate, trustee, trustees or agent shall be deemed the policyholder, to insure debtors of the creditor or creditors with respect to their indebtedness subject to the following requirements:

     (a) The debtors eligible for insurance under the policy shall be all of the debtors of the creditor or creditors, or all of any class or classes thereof. The policy may provide that the term "debtors" shall include:

     a. Borrowers of money or purchasers or lessees of goods, services, or property for which payment is arranged through a credit transaction;

     b. The debtors of one or more subsidiary corporations; and

     c. The debtors of one or more affiliated corporations, proprietorships or partnerships if the business of the policyholder and of such affiliated corporations, proprietorships or partnerships is under common control;

     (b) The premium for the policy shall be paid either from the creditor's funds or from charges collected from the insured debtors, or from both. Except as provided in paragraph (c) of this subdivision, a policy on which no part of the premium is to be derived from funds contributed by insured debtors specifically for their insurance must insure all eligible debtors;

     (c) An insurer may exclude any debtors as to whom evidence of individual insurability is not satisfactory to the insurer in a policy insuring fewer than ten debtors and in a policy insuring ten or more debtors if:

     a. Application is not made within thirty-one days after the date of eligibility for insurance; or

     b. The person voluntarily terminated the insurance while continuing to be eligible for insurance under the policy; or

     c. After the expiration of an open enrollment period during which the person could have enrolled for the insurance or could have elected another level of benefits under the policy;

     (d) The total amount of insurance payable with respect to an indebtedness shall not exceed the greater of the scheduled or actual amount of unpaid indebtedness to the creditor. The insurer may exclude any payments which are delinquent on the date the debtor becomes disabled as defined in the policy;

     (e) The insurance may be payable to the creditor or to any successor to the right, title, and interest of the creditor. Such payment or payments shall reduce or extinguish the unpaid indebtedness of the debtor to the extent of each such payment and any excess of insurance shall be payable to the insured or the estate of the insured;

     (f) Notwithstanding the preceding provisions of this subdivision, insurance on agricultural credit transaction commitments may be written up to the amount of the loan commitment, and insurance on educational credit transaction commitments may be written up to the amount of the loan commitment less the amount of any repayments made on the loan;

     (3) A policy issued to a labor union or similar employee organization, which shall be deemed to be the policyholder, to insure members of such union or organization for the benefit of persons other than the union or organization or any of its officials, representatives, or agents, subject to the following requirements:

     (a) The members eligible for insurance under the policy shall be all of the members of the union or organization, or all of any class or classes thereof;

     (b) The premium for the policy shall be paid either from funds of the union or organization or from funds contributed by the insured members specifically for their insurance, or from both. Except as provided in paragraph (c) of this subdivision, a policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance must insure all eligible members, except those who reject such coverage in writing;

     (c) An insurer may exclude or limit the coverage on any person [as to whom evidence of individual insurability is not satisfactory to the insurer in a policy insuring fewer than ten members and in a policy insuring ten or more members if:

     a. Application is not made within thirty-one days after the date of eligibility for insurance; or

     b. The person voluntarily terminated the insurance while continuing to be eligible for insurance under the policy; or

     c. After the expiration of an open enrollment period during which the person could have enrolled for the insurance or could have elected another level of benefits under the policy] only to the extent authorized by the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191), sections 379.930 to 379.952, RSMo, or any state or federal regulations promulgated pursuant to any of these statutes;

     (4) A policy issued to a trust, or to the trustee of a fund, established or adopted by two or more employers, or by one or more labor unions or similar employee organizations, or by one or more employers and one or more labor unions or similar employee organizations, which trust or trustee shall be deemed the policyholder, to insure employees of the employers or members of the unions or organizations for the benefit of persons other than the employers or the unions or organizations, subject to the following requirements:

     (a) The persons eligible for insurance shall be all of the employees of the employers or all of the members of the unions or organizations, or all of any class or classes thereof. The policy may provide that the term "employees" shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietorships or partnerships if the business of the employer and of such affiliated corporations, proprietorships or partnerships is under common control. The policy may provide that the term "employees" shall include the individual proprietor or partners if the employer is an individual proprietorship or partnership. The policy may provide that the term "employees" shall include retired employees, former employees and directors of a corporate employer. The policy may provide that the term "employees" shall include the trustees or their employees, or both, if their duties are principally connected with such trusteeship;

     (b) The premium for the policy shall be paid from funds contributed by the employer or employers of the insured persons or by the union or unions or similar employee organizations, or by both, or from funds contributed by the insured persons or from both the insured persons and the employer or union or similar employee organization. Except as provided in paragraph (c) of this subdivision, a policy on which no part of the premium is to be derived from funds contributed by the insured persons specifically for their insurance, must insure all eligible persons except those who reject such coverage in writing;

     (c) An insurer may exclude or limit the coverage on any person [as to whom evidence of individual insurability is not satisfactory to the insurer] only to the extent authorized by the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191), sections 379.930 to 379.952, RSMo, or any state or federal regulations promulgated pursuant to any of these statutes;

     (5) A policy issued to an association or to a trust or to the trustees of a fund established, created and maintained for the benefit of members of one or more associations. The association or associations shall have at the outset a minimum of one hundred persons or the number required in section 379.930 for a bona fide association; shall have been organized and maintained in good faith for purposes other than that of obtaining insurance; shall have been in active existence for at least two years or five years in the case of a bona fide association as defined in section 379.930, RSMo; shall have a constitution and bylaws which provide that the association or associations shall hold regular meetings not less than annually to further the purposes of the members; shall, except for credit unions, collect dues or solicit contributions from members; and shall provide the members with voting privileges and representation on the governing board and committees. The policy shall be subject to the following requirements:

     (a) The policy may insure members of such association or associations, employees thereof, or employees of members, or one or more of the preceding, or all of any class or classes thereof for the benefit of persons other than the employee's employer;

     (b) The premium for the policy shall be paid from funds contributed by the association or associations or by employer members, or by both, or from funds contributed by the covered persons or from both the covered persons and the association, associations, or employer members;

     (c) Except as provided in paragraph (d) of this subdivision, a policy on which no part of the premium is to be derived from funds contributed by the covered persons specifically for their insurance must insure all eligible persons, except those who reject such coverage in writing;

     (d) An insurer may exclude or limit the coverage on any person [as to whom evidence of individual insurability is not satisfactory to the insurer] only to the extent authorized by the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191), sections 379.930 to 379.952, RSMo, or any state or federal regulations promulgated pursuant to any of these statutes;

     (6) A policy issued to a credit union or to a trustee or trustees or agent designated by two or more credit unions, which credit union, trustee, trustees or agent shall be deemed the policyholder, to insure members of such credit union or credit unions for the benefit of persons other than the credit union or credit unions, trustee or trustees, or agent or any of their officials, subject to the following requirements:

     (a) The members eligible for insurance shall be all of the members of the credit union or credit unions, or all of any class or classes thereof;

     (b) The premium for the policy shall be paid by the policyholder from the credit union's funds and, except as provided in paragraph (c) of this subdivision, must insure all eligible members;

     (c) An insurer may exclude or limit the coverage on any member [as to whom evidence of individual insurability is not satisfactory to the insurer] only to the extent authorized by the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191), sections 379.930 to 379.952, RSMo, or any state or federal regulations promulgated pursuant to any of these statutes;

     (7) A policy issued to cover persons in a group where that group is specifically described by a law of this state as one which may be covered for group life insurance. The provisions of such law relating to eligibility and evidence of insurability shall apply.

     2. Group health insurance offered to a resident of this state under a group health insurance policy issued to a group other than one described in subsection 1 of this section shall be subject to the following requirements:

     (1) No such group health insurance policy shall be delivered in this state unless the director finds that:

     (a) The issuance of such group policy is not contrary to the best interest of the public;

     (b) The issuance of the group policy would result in economies of acquisition or administration; and

     (c) The benefits are reasonable in relation to the premiums charged;

     (2) No such group health insurance coverage may be offered in this state by an insurer under a policy issued in another state unless this state or another state having requirements substantially similar to those contained in subdivision (1) of this subsection has made a determination that such requirements have been met;

     (3) The premium for the policy shall be paid either from the policyholder's funds, or from funds contributed by the covered persons, or from both;

     (4) An insurer may exclude or limit the coverage on any person [as to whom evidence of individual insurability is not satisfactory to the insurer] only to the extent authorized by the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191), sections 379.930 to 379.952, RSMo, or any state or federal regulations promulgated pursuant to any of these statutes.

     376.424. Except for a policy issued under subdivision (2) of subsection 1 of section 376.421, a group health insurance policy may be extended to insure the employees and members with respect to their family members or dependents, or any class or classes thereof, subject to the following:

     (1) The premium for the insurance shall be paid either from funds contributed by the employer, union, association or other person to whom the policy has been issued or from funds contributed by the covered persons, or from both. Except as provided in subdivision (2) of this section, a policy on which no part of the premium for the family members' or dependents' coverage is to be derived from funds contributed by the covered persons must insure all eligible employees or members with respect to their family members or dependents, or any class or classes thereof;

     (2) An insurer may exclude or limit the coverage on any family member or dependent [as to whom evidence of individual insurability is not satisfactory to the insurer], subject to sections 376.406 and 376.776, [in a policy insuring fewer than ten employees or members and in a policy insuring ten or more employees or members if:

     a. Application is not made within thirty-one days after the date of eligibility for insurance; or

     b. The employee or member voluntarily terminated the insurance of the family member or dependent while such family member or dependent continues to be eligible for insurance under the policy; or

     c. After the expiration of an open enrollment period during which the family member or dependent could have been enrolled for the insurance or could have been enrolled for another level of benefits under the policy] only to the extent authorized by the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191), sections 379.930 to 379.952, RSMo, or any state or federal regulations promulgated pursuant to any of these statutes.

     376.426. No policy of group health insurance shall be delivered in this state unless it contains in substance the following provisions, or provisions which in the opinion of the director of insurance are more favorable to the persons insured or at least as favorable to the persons insured and more favorable to the policyholder; except that: Provisions in subdivisions (5), (7), (12), (15), and (16) of this section shall not apply to policies insuring debtors; standard provisions required for individual health insurance policies shall not apply to group health insurance policies; and if any provision of this section is in whole or in part inapplicable to or inconsistent with the coverage provided by a particular form of policy, the insurer, with the approval of the director, shall omit from such policy any inapplicable provision or part of a provision, and shall modify any inconsistent provision or part of the provision in such manner as to make the provision as contained in the policy consistent with the coverage provided by the policy:

     (1) A provision that the policyholder is entitled to a grace period of thirty-one days for the payment of any premium due except the first, during which grace period the policy shall continue in force, unless the policyholder shall have given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy. The policy may provide that the policyholder shall be liable to the insurer for the payment of a pro rata premium for the time the policy was in force during such grace period;

     (2) A provision that the validity of the policy shall not be contested, except for nonpayment of premiums, after it has been in force for two years from its date of issue, and that no statement made by any person covered under the policy relating to insurability shall be used in contesting the validity of the insurance with respect to which such statement was made after such insurance has been in force prior to the contest for a period of two years during such person's lifetime nor unless it is contained in a written instrument signed by the person making such statement; except that, no such provision shall preclude the assertion at any time of defenses based upon the person's ineligibility for coverage under the policy or upon other provisions in the policy;

     (3) A provision that a copy of the application, if any, of the policyholder shall be attached to the policy when issued, that all statements made by the policyholder or by the persons insured shall be deemed representations and not warranties and that no statement made by any person insured shall be used in any contest unless a copy of the instrument containing the statement is or has been furnished to such person or, in the event of the death or incapacity of the insured person, to the individual's beneficiary or personal representative;

     (4) A provision setting forth the conditions, if any, under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of the individual's coverage, subject to compliance with the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191), sections 379.930 to 379.952, RSMo, and any state or federal regulations promulgated pursuant to any of these statutes;

     (5) A provision specifying the additional exclusions or limitations, if any, applicable under the policy with respect to a disease or physical condition of a person, not otherwise excluded from the person's coverage by name or specific description effective on the date of the person's loss, which existed prior to the effective date of the person's coverage under the policy. Any such exclusion or limitation may only apply to a disease or physical condition for which medical advice or treatment was received by the person during the twelve months prior to the effective date of the person's coverage. In no event shall such exclusion or limitation apply to loss incurred or disability commencing after the earlier of:

     (a) The end of a continuous period of twelve months commencing on or after the effective date of the person's coverage during all of which the person has received no medical advice or treatment in connection with such disease or physical condition; or

     (b) The end of the two-year period commencing on the effective date of the person's coverage;

Notwithstanding the above, a health benefit plan, as defined in section 379.930, may exclude or limit coverage on any person only to the extent authorized by the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191), sections 379.930 to 379.952, RSMo, or any state or federal regulations promulgated pursuant to any of these statutes.

     (6) If the premiums or benefits vary by age, there shall be a provision specifying an equitable adjustment of premiums or of benefits, or both, to be made in the event the age of the covered person has been misstated, such provision to contain a clear statement of the method of adjustment to be used;

     (7) A provision that the insurer shall issue to the policyholder, for delivery to each person insured, a certificate setting forth a statement as to the insurance protection to which that person is entitled, to whom the insurance benefits are payable, and a statement as to any family member's or dependent's coverage;

     (8) A provision that written notice of claim must be given to the insurer within twenty days after the occurrence or commencement of any loss covered by the policy. Failure to give notice within such time shall not invalidate nor reduce any claim if it shall be shown not to have been reasonably possible to give such notice and that notice was given as soon as was reasonably possible;

     (9) A provision that the insurer shall furnish to the person making claim, or to the policyholder for delivery to such person, such forms as are usually furnished by it for filing proof of loss. If such forms are not furnished before the expiration of fifteen days after the insurer receives notice of any claim under the policy, the person making such claim shall be deemed to have complied with the requirements of the policy as to proof of loss upon submitting, within the time fixed in the policy for filing proof of loss, written proof covering the occurrence, character, and extent of the loss for which claim is made;

     (10) A provision that in the case of claim for loss of time for disability, written proof of such loss must be furnished to the insurer within ninety days after the commencement of the period for which the insurer is liable, and that subsequent written proofs of the continuance of such disability must be furnished to the insurer at such intervals as the insurer may reasonably require, and that in the case of claim for any other loss, written proof of such loss must be furnished to the insurer within ninety days after the date of such loss. Failure to furnish such proof within such time shall not invalidate nor reduce any claim if it was not reasonably possible to furnish such proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity of the claimant, later than one year from the time proof is otherwise required;

     (11) A provision that all benefits payable under the policy other than benefits for loss of time shall be payable not more than thirty days after receipt of proof and that, subject to due proof of loss, all accrued benefits payable under the policy for loss of time shall be paid not less frequently than monthly during the continuance of the period for which the insurer is liable, and that any balance remaining unpaid at the termination of such period shall be paid as soon as possible after receipt of such proof;

     (12) A provision that benefits for accidental loss of life of a person insured shall be payable to the beneficiary designated by the person insured or, if the policy contains conditions pertaining to family status, the beneficiary may be the family member specified by the policy terms. In either case, payment of these benefits is subject to the provisions of the policy in the event no such designated or specified beneficiary is living at the death of the person insured. All other benefits of the policy shall be payable to the person insured. The policy may also provide that if any benefit is payable to the estate of a person, or to a person who is a minor or otherwise not competent to give a valid release, the insurer may pay such benefit, up to an amount not exceeding two thousand dollars, to any relative by blood or connection by marriage of such person who is deemed by the insurer to be equitably entitled thereto;

     (13) A provision that the insurer shall have the right and opportunity, at the insurer's own expense, to examine the person of the individual for whom claim is made when and so often as it may reasonably require during the pendency of the claim under the policy and also the right and opportunity, at the insurer's own expense, to make an autopsy in case of death where it is not prohibited by law;

     (14) A provision that no action at law or in equity shall be brought to recover on the policy prior to the expiration of sixty days after proof of loss has been filed in accordance with the requirements of the policy and that no such action shall be brought at all unless brought within three years from the expiration of the time within which proof of loss is required by the policy;

     (15) A provision specifying the conditions under which the policy may be terminated. Such provision shall state that except for nonpayment of the required premium or the failure to meet continued underwriting standards, the insurer may not terminate the policy prior to the first anniversary date of the effective date of the policy as specified therein, and a notice of any intention to terminate the policy by the insurer must be given to the policyholder at least thirty-one days prior to the effective date of the termination. Any termination by the insurer shall be without prejudice to any expenses originating prior to the effective date of termination. An expense will be considered incurred on the date the medical care or supply is received. Notwithstanding the above, a health benefit plan, as defined in section 379.930, may exclude or limit coverage on any person only to the extent authorized by the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191), sections 379.930 to 379.952, RSMo, or any state or federal regulations promulgated pursuant to any of these statutes;

     (16) A provision stating that if a policy provides that coverage of a dependent child terminates upon attainment of the limiting age for dependent children specified in the policy, such policy, so long as it remains in force, shall be deemed to provide that attainment of such limiting age does not operate to terminate the hospital and medical coverage of such child while the child is and continues to be both incapable of self-sustaining employment by reason of mental or physical handicap and chiefly dependent upon the policyholder for support and maintenance. Proof of such incapacity and dependency must be furnished to the insurer by the policyholder at least thirty-one days before the child's attainment of the limiting age. The insurer may require at reasonable intervals during the two years following the child's attainment of the limiting age subsequent proof of the child's incapacity and dependency. After such two-year period, the insurer may require subsequent proof not more than once each year. This subdivision shall apply only to policies delivered or issued for delivery in this state on or after one hundred twenty days after September 28, 1985;

     (17) In the case of a policy insuring debtors, a provision that the insurer shall furnish to the policyholder for delivery to each debtor insured under the policy a certificate of insurance describing the coverage and specifying that the benefits payable shall first be applied to reduce or extinguish the indebtedness.

     376.771. Any policy of accident and sickness insurance having provisions which constitute an individual health benefit plan as defined in section 379.930, RSMo, shall comply with the requirements of the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191), sections 379.930 to 379.952, RSMo, and any regulations authorized and issued pursuant to such laws.

     379.930. 1. Sections 379.930 to 379.952 shall be known and may be cited as the "Small Employer Health Insurance Availability Act".

     2. For the purposes of sections 379.930 to [379.952] 379.969, the following terms shall have the meanings given:

     (1) "Actuarial certification" means a written statement by a member of the American Academy of Actuaries or other individual acceptable to the director that a small employer carrier is in compliance with the provisions of section 379.936, based upon the person's examination, including a review of the appropriate records and of the actuarial assumptions and methods used by the small employer carrier in establishing premium rates for applicable health benefit plans;

     (2) "Affiliate" or "affiliated" means any entity or person who directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, a specified entity or person;

     (3) "Agent" means "insurance agent" as that term is defined in section 375.012, RSMo;

     (4) "Base premium rate" means, for each class of business as to a rating period, the lowest premium rate charged or that could have been charged under the rating system for that class of business, by the small employer carrier to small employers with similar case characteristics for health benefit plans with the same or similar coverage;

     (5) "Basic health benefit plan" means a lower cost health benefit plan developed pursuant to section 379.944;

     (6) "Board" means the board of directors of the program established pursuant to sections 379.942 and 379.943;

     (7) "Bona fide association" means an association which meets all of the following criteria:

     (a) Has been actively in existence for five (5) years;

     (b) Has a constitution and by-laws or other analogous governing documents thereto;

     (c) Has been formed and maintained in good faith for purposes other than obtaining insurance;

     (d) Is not owned or controlled by a carrier or affiliated with a carrier;

     (e) Does not condition membership in the association on health status or claims experience;

     (f) Has at least one thousand members if it is a national association; five hundred members if it is a state association; or two hundred members if it is a local association;

     (g) All members and dependents of members are eligible for coverage regardless of health status or claims experience;

     (h) Does not offer a health benefit plan to an individual through the association other than in connection with a member of the association;

     (i) Is governed by a board of directors and sponsors annual meetings of its members; and

     (j) Meets any other requirements of state or federal law;

     (8) "Bona fide association plan" means a health benefit plan offered through a bona fide association that covers members of a bona fide association and their dependents in this state regardless of the situs of delivery of the policy or contract and which meets all the following criteria:

     (a) Provides renewability of coverage for the members and dependents of members of the bona fide association which meets the criteria set forth in section 379.938;

     (b) Provides availability of coverage for the members and dependents of members of the bona fide association in conformance with the provisions of section 379.940;

     (c) Is offered by a carrier that offers health benefit plan coverage to any bona fide association seeking health benefit plan coverage from the carrier; and

     (d) Conforms with the preexisting condition provisions of section 379.940;

     (9) "Broker" means "broker" as that term is defined in section 375.012, RSMo;

     [(8) "Carrier" means any entity that provides health insurance or health benefits in this state. For the purposes of sections 379.930 to 379.952, carrier includes an insurance company, health services corporation, fraternal benefit society, health maintenance organization, multiple employer welfare arrangement specifically authorized to operate in the state of Missouri, or any other entity providing a plan of health insurance or health benefits subject to state insurance regulation;]

     [(9)] (10) "Case characteristics" means demographic or other objective characteristics of a small employer that are considered by the small employer carrier in the determination of premium rates for the small employer, provided that claim experience, health status related factors and duration of coverage since issue shall not be case characteristics for the purposes of sections 379.930 to 379.952;

     (11) "Church plan" has the meaning given such term under section 3(33) of the Employee Retirement Income Security Act of 1974;

     [(10)] (12) "Class of business" means all or a separate grouping of small employers established pursuant to section 379.934;

     [(11)] (13) "Committee" means the health benefit plan committee created pursuant to section 379.944;

     [(12)] (14) "Control" shall be defined in manner consistent with chapter 382, RSMo;

     [(13)] (15) "Creditable coverage" means, with respect to an individual:

     (a) Health benefits or coverage provided under any of the following:

     a. A group health plan;

     b. A health benefit plan;

     c. Part A or Part B of Title XVIII of the Social Security Act (Medicare);

     d. Title XIX of the Social Security Act (Medicaid), other than coverage consisting solely of benefits under Section 1928;

     e. Chapter 55 of Title 10, United States Code (Civilian Health and Medical Program of the Uniformed Services (CHAMPUS));

     f. A medical care program of the Indian Health Service or of a tribal organization;

     g. A state health benefits risk pool;

     h. A health plan offered under Chapter 89 of Title 5, United States Code (Federal Employees Health Benefits Program (FEHBP));

     i. A public health plan as defined in federal regulations authorized by Public Health Service Act Section 2701(c)(1)(I), as amended by P.L. 104-191; or

     j. A health benefit plan under Section 5(e) of the Peace Corps Act (22 U.S.C. 2504(e));

     (b) A period of creditable coverage shall not be counted, with respect to enrollment of an individual under a group health plan, if, after such period and before the enrollment date, there was a sixty-three day period during all of which the individual was not covered under any creditable coverage.

     (16) "Dependent" means a spouse or an unmarried child under the age of nineteen years; an unmarried child who is a full-time student under the age of twenty-three years and who is financially dependent upon the parent; or an unmarried child of any age who is medically certified as disabled and dependent upon the parent;

     [(14)] (17) "Director" means the director of the department of insurance of this state;

     [(15)] (18) "Eligible employee" means an employee who works on a full-time basis and has a normal work week of thirty or more hours. The term includes a sole proprietor, a partner of a partnership, and an independent contractor, if the sole proprietor, partner or independent contractor is included as an employee under a health benefit plan of a small employer, but does not include an employee who works on a part-time, temporary or substitute basis. For purposes of sections 379.930 to 379.952, a person, his spouse and his minor children shall constitute only one eligible employee when they are employed by the same small employer;

     (19) "Enrollment date", the date of enrollment of an individual in the health benefit plan or coverage or, if earlier, the first day of the waiting period for such enrollment;

     [(16)] (20) "Established geographic service area" means a geographical area, as approved by the director and based on the carrier's certificate of authority to transact insurance in this state, within which the carrier is authorized to provide coverage;

     (21) "Family composition" means:

     (a) Enrollee;

     (b) Enrollee, spouse and children;

     (c) Enrollee and spouse;

     (d) Enrollee and children; or

     (e) Child only;

     (22) "Governmental plan" has the meaning given such term under section 3(32) of the Employee Retirement Income Security Act of 1974 and any Federal governmental plan;

     (23) "Group health plan" means an employee welfare benefit plan as defined in section 3(1) of the Employee Retirement Income Security Act of 1974 to the extent that the plan provides medical care as defined in section 379.930 and including items and services paid for as medical care to employees or their dependents as defined under the terms of the plan directly or through insurance, reimbursement, or otherwise. For purposes of sections 379.930 to 379.952:

     (a) Any plan, fund, or program which would not be, but for the federal Public Health Service Act, section 2721(e) as added by P.L. 104-191, an employee welfare benefit plan and which is established or maintained by a partnership, to the extent that such plan, fund, or program provides medical care, including items and services paid for as medical care, to present or former partners in the partnership, or to their dependents, as defined under the terms of the plan, fund, or program, directly or through insurance, reimbursement, or otherwise, shall be treated, subject to paragraph (b), as an employee welfare benefit plan which is a group health plan;

     (b) In the case of a group health plan, the term "employer" also includes the partnership in relation to any partner; and

     (c) In the case of a group health plan, the term "participant" also includes:

     a. In connection with a group health plan maintained by a partnership, an individual who is a partner in relation to the partnership; or

     b. In connection with a group health plan maintained by a self-employed individual, under which one or more employees are participants, the self-employed individual, if such individual is, or may become, eligible to receive a benefit under the plan or such individual's beneficiaries may be eligible to receive any such benefit.

     [(17)] (24) "Health benefit plan" means [any hospital or medical] a policy, contract, [or] certificate[, health services corporation contract, or health maintenance organization subscriber contract] or agreement offered by a health carrier to provide, deliver, arrange for, pay for or reimburse any of the costs of health care services. [Health benefit plan does not include a policy of individual accident and sickness insurance or hospital supplemental policies having a fixed daily benefit, or accident-only, specified disease-only, credit, dental, vision, medicare supplement, long-term care, or disability income insurance, or coverage issued as a supplement to liability insurance, worker's compensation or similar insurance, or automobile medical payment insurance;] Health benefit plan does include short-term and catastrophic health insurance policies and a policy that pays on a cost-incurred basis, except as otherwise specifically exempted in this definition. Health benefit plan shall not include:

     (a) One or more, or any combination of, the following:

     a. Coverage only for accident, or disability income insurance, or any combination thereof;

     b. Coverage issued as a supplement to liability insurance;

     c. Liability insurance, including general liability insurance and automobile liability insurance;

     d. Workers' compensation or similar insurance;

     e. Automobile medical payment insurance;

     f. Credit-only insurance;

     g. Coverage for on-site medical clinics; and

     h. Other similar insurance coverage, specified in federal regulations issued pursuant to P.L. 104-191, under which benefits for medical care are secondary or incidental to other insurance benefits;

     (b) The following benefits if they are provided under a separate policy, certificate or contract of insurance or are otherwise not an integral part of the plan:

     a. Limited scope dental or vision benefits;

     b. Benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof;

     c. Such other similar, limited benefits as are specified in federal regulations issued pursuant to the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191);

     (c) The following benefits if the benefits are provided under a separate policy, certificate or contract of insurance, there is no coordination between the provision of the benefits and any exclusion of benefits under any group health plan maintained by the same plan sponsor, and such benefits are paid with respect to an event without regard to whether benefits are provided with respect to such an event under any group health plan maintained by the same plan sponsor:

     a. Coverage only for a specified disease or illness;

     b. Hospital indemnity or other fixed indemnity insurance;

     (d) The following if it is offered as a separate policy, certificate or contract of insurance:

     a. Medicare supplemental health insurance as defined under section 1882(g)(1) of the Social Security Act;

     b. Coverage supplemental to the coverage provided under Chapter 55 of Title 10, United States Code (Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)); and

     c. Similar supplemental coverage provided to coverage under a group health plan;

     (25) "Health carrier" or "carrier" means any entity subject to the insurance laws and regulations of this state, or subject to the jurisdiction of the director, that contracts or offers to contract to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services, including a sickness and accident insurance company, a health maintenance organization, a health services corporation, fraternal benefit society, a multiple employer welfare arrangement specifically authorized to operate in the state of Missouri, or any other entity providing a plan of health insurance, health benefits or health services;

     (26) "Health status-related factor" means any of the following factors:

     (a) Health status;

     (b) Medical condition, including both physical and mental illnesses;

     (c) Claims experience;

     (d) Receipt of health care;

     (e) Medical history;

     (f) Genetic information;

     (g) Evidence of insurability, including conditions arising out of acts of domestic violence; and

     (h) Disability;

     [(18)] (27) "Index rate" means, for each class of business as to a rating period for small employers with similar case characteristics, the arithmetic mean of the applicable base premium rate and the corresponding highest premium rate;

     (28) "Individual", any natural person who is a resident of Missouri and who:

     (a) Is an eligible individual as defined in section 2741 of the federal Public Health Service Act; or

     (b) Had creditable coverage for a period of twelve or more months, which coverage was continuous to a date not more than sixty-three days prior to the current application for coverage, which coverage is no longer available, and which coverage was not terminated because of a failure of the individual to pay premiums or contributions or because the individual committed fraud or made misrepresentations of material fact under the terms of such previous coverage;

     (29) "Individual carrier", a carrier that issues or offers for issuance individual health benefit plans covering one or more residents of this state;

     (30) "Individual health benefit plan" means:

     (a) A health benefit plan other than a converted policy or a bona fide association plan for individuals and their dependents; and

     (b) A certificate issued to an individual that evidences coverage under a policy or contract issued to a trust or association or other similar grouping of individual persons, regardless of the situs of delivery of the policy or contract, if the individual pays the premium and is not being covered under the policy or contract pursuant to continuation of benefits provisions applicable under federal or state law, except that "individual health benefit plan" shall not include a certificate issued to an individual that evidences coverage under a bona fide association plan or purchasing alliance plan;

     [(19)] (31) "Late enrollee" means an eligible employee or dependent who requests enrollment in a health benefit plan of a small employer following the initial enrollment period for which such individual is entitled to enroll under the terms of the health benefit plan, provided that such initial enrollment period is a period of at least thirty days. However, an eligible employee or dependent shall not be considered a late enrollee if:

     (a) The individual meets each of the following:

     a. The individual was covered under [qualifying previous] creditable coverage at the time of the initial enrollment;

     b. The individual lost coverage under [qualifying previous] creditable coverage as a result of cessation of employer contribution, termination of employment or eligibility, reduction in the number of hours of employment, the involuntary termination of the [qualifying previous] creditable coverage, or death of a spouse or divorce or legal separation;

     c. The individual requests enrollment within thirty days after termination of the [qualifying previous] creditable coverage or the change in conditions that gave rise to the termination of coverage;

     (b) The individual is employed by an employer that offers multiple health benefit plans and the individual elects a different plan during an open enrollment period; or

     (c) A court has ordered coverage be provided for a spouse or minor or dependent child under a covered employee's health benefit plan and request for enrollment is made within thirty days after issuance of the court order;

     (32) "Limited benefit health insurance" means that form of coverage that pays stated predetermined amounts for specific services or treatments or pays a stated predetermined amount per day or confinement for one or more named conditions, named diseases or accidental injury;

     (33) "Medical care" means amounts paid for:

     (a) The diagnosis, care, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body;

     (b) Transportation primarily for and essential to medical care referred to in paragraph (a); and

     (c) Insurance covering medical care referred to in paragraphs (a) and (b);

     (34) "Network plan" means a health benefit plan offered by a health carrier under which the financing and delivery of medical care including items and services paid for as medical care are provided, in whole or in part, through a defined set of providers under contract with the carrier;

     [(20)] (35) "New business premium rate" means, for each class of business as to a rating period, the lowest premium rate charged or offered, or which could have been charged or offered, by the small employer carrier to small employers with similar case characteristics for newly issued health benefit plans with the same or similar coverage;

     [(21)] (36) "Plan of operation" means the plan of operation of the program established pursuant to sections 379.942 and 379.943;

     (37) "Plan sponsor" has the meaning given such term under Section 3(16)(B) of the Employee Retirement Income Security Act of 1974;

     (38) "Preexisting condition" means a condition, whether physical or mental, regardless of the cause of the condition, for which medical advice, diagnosis, care or treatment was recommended or received during the six month period ending on the enrollment date. Genetic information shall not be treated as a preexisting condition in the absence of a diagnosis of the condition related to such information;

     (39) "Preexisting condition exclusion", a limitation or exclusion of health insurance benefits relating to a medical condition based on the fact that the condition was present before the date of the enrollment for such coverage, whether or not any medical advice, diagnosis, care or treatment was recommended or received before such date;

     [(22)] (40) "Premium" means all moneys paid by a small employer and eligible employees as a condition of receiving coverage from a small employer carrier, including any fees or other contributions associated with the health benefit plan;

     [(23)] (41) "Producer" includes an insurance agent or broker;

     [(24)] (42) "Program" means the Missouri small employer health reinsurance program created pursuant to sections 379.942 and 379.943;

     (43) "Purchasing alliance" means a non-risk bearing, nonprofit corporation established to provide health benefit plans through multiple, unaffiliated, participating health carriers to member employers and their employees that:

     (a) Has a constitution and by-laws or other analogous governing documents thereto;

     (b) Has been formed and maintained in good faith;

     (c) Is not owned or controlled by a carrier or affiliated with a carrier;

     (d) Does not condition membership in the purchasing alliance on health status or claims experience;

     (e) Has at least one hundred employer members if it is a national purchasing alliance; fifty employer members if it is a state purchasing alliance; twenty employer members if it is a local purchasing alliance; or any number of employer members if it is a governmental purchasing alliance;

     (f) All eligible employees and dependents of eligible employees are eligible for coverage regardless of health status or claims experience;

     (g) Does not offer a health benefit plan to an individual through the purchasing alliance other than in connection with an employer member of the purchasing alliance;

     (h) Is governed by a board of directors and sponsors annual meetings of its employer members; and

     (i) Meets any other requirements of state or federal law;

     (44) "Purchasing alliance plan" means a health benefit plan offered through a purchasing alliance that covers eligible employees and dependents of employer members in this state regardless of the situs of delivery of the policy or contract and which meets all the following criteria:

     (a) Provides renewability of coverage for the eligible employees and dependents of employer members of the purchasing alliance which meets the criteria set forth in subsection 4 of section 379.938 as they apply to individual health benefit plans;

     (b) Provides availability of coverage for the eligible employees and dependents of employer members of the purchasing alliance in conformance with the provisions of section 379.940;

     (c) Is offered by a carrier that offers health benefit plan coverage to any purchasing alliance seeking health benefit plan coverage from the carrier; and

     (d) Conforms with the preexisting condition provisions of section 379.940;

     [(25) "Qualifying previous coverage" and "qualifying existing coverage" mean benefits or coverage provided under:

     (a) Medicare or medicaid;

     (b) An employer-based health insurance or health benefit arrangement that provides benefits similar to or exceeding benefits provided under the basic health benefit plan; or

     (c) An individual health insurance policy (including coverage issued by a health maintenance organization, health services corporation or a fraternal benefit society) that provides benefits similar to or exceeding the benefits provided under the basic health benefit plan, provided that such policy has been in effect for a period of at least one year;

     (26)] (45) "Rating period" means the calendar period for which premium rates established by a small employer carrier are assumed to be in effect;

     [(27)] (46) "Restricted network provision" means any provision of a health benefit plan that conditions the payment of benefits, in whole or in part, on the use of health care providers that have entered into a contractual arrangement with the carrier pursuant to section 354.400, RSMo, et seq. to provide health care services to covered individuals;

     (47) "Self-employed individual" means an individual or sole proprietor who derives a substantial portion of his or her income from a trade or business through which the individual or sole proprietor has attempted to earn taxable income and for which he or she has filed the appropriate Internal Revenue Service Form 1040, Schedule C or F, for the previous taxable year;

     [(28)] (48) "Small employer" means, in connection with a group health plan with respect to a calendar year and a plan year, any person, firm, corporation, partnership, [or] association or political subdivision that is actively engaged in business that[, on at least fifty percent of its working days during the preceding calendar quarter,] employed [not less than three nor] an average of at least two but not more than [twenty-five eligible] fifty employees[, the majority of whom were employed within this state] on business days during the preceding calendar year and that employs at least two employees on the first day of the plan year. [In determining the number of eligible employees, companies that are affiliated companies, or that are eligible to file a combined tax return for purposes of state taxation, shall be considered one employer] All persons treated as a single employer under subsection (b), (c), (m), or (o) of Section 414 of the Internal Revenue Code of 1986 shall be treated as one employer. Subsequent to the issuance of a health benefit plan to a small employer and for the purpose of determining continued eligibility, the size of a small employer shall be determined annually. Except as otherwise specifically provided, the provisions of sections 379.930 to 379.952 that apply to a small employer shall continue to apply at least until the plan anniversary following the date the small employer no longer meets the requirements of this definition. In the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether the employer is a small or large employer shall be based on the average number of employees that it is reasonably expected that the employer will employ on business days in the current calendar year. Any reference in this act to an employer shall include a reference to any predecessor of such employer;

     [(29)] (49) "Small employer carrier" means a carrier that issues or offers to issue health benefit plans covering eligible employees of one or more small employers in this state;

     [(30)] (50) "Standard health benefit plan" means a health benefit plan developed pursuant to section 379.944;

     (51) "Waiting period", the period that must pass with respect to a person before the person is eligible to be covered for benefits under the terms of the health plan. For the purpose of calculating periods of creditable coverage, a waiting period shall not be considered a gap in coverage.

     379.934. 1. A small employer carrier may establish a class of business only to reflect substantial differences in expected claims experience or administrative costs related to the following reasons:

     (1) The small employer carrier uses more than one type of system for the marketing and sale of health benefit plans to small employers;

     (2) The small employer carrier has acquired a class of business from another small employer carrier; or

     (3) The small employer carrier provides coverage to one or more association groups that meet the requirements of subdivision (5) of subsection 1 of section 376.421, RSMo.

     2. A small employer carrier may establish up to nine separate classes of business under subsection 1 of this section. A small employer carrier which immediately prior to the effective date of sections 379.930 to 379.952 had established more than nine separate classes of business may, on the effective date of sections 379.930 to 379.952, establish no more than twelve separate classes of business, and shall reduce the number of such classes to eleven within one year after the effective date of sections 379.930 to 379.952; ten within two years after such date; and nine within three years after such date.

     3. The director may promulgate rules to provide for a period of transition in order for a small employer carrier to come into compliance with subsection 2 of this section in the instance of acquisition of an additional class of business from another small employer carrier.

     4. The director may approve the establishment of additional classes of business upon application to the director and a finding by the director that such action would enhance the efficiency and fairness of the small employer marketplace.

     5. No small employer carrier may use health status-related factors in establishing classes of business or in considering whether to issue or renew coverage for a small employer.

     379.938. 1. A small employer health benefit plan subject to sections 379.930 to 379.952 shall be renewable with respect to all eligible employees and dependents, at the option of the small employer, except in any of the following cases:

     (1) [Nonpayment of the required premiums] The plan sponsor has failed to pay premiums or contributions in accordance with the terms of the health benefit plan or the health carrier has not received timely premium payments;

     (2) [Fraud or misrepresentation of the small employer or, with respect to coverage of individual insureds, the insureds or their representatives] The plan sponsor has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage;

     (3) Noncompliance with the carrier's minimum participation requirements;

     (4) Noncompliance with the carrier's employer contribution requirements;

     (5) [Repeated misuse of a provider network provision; or

     (6)] A decision by the small employer carrier [elects] to discontinue offering and to nonrenew all of its health benefit plans delivered or issued for delivery to small employers in this state. In such a case the carrier shall:

     (a) Provide advance notice of its decision under this subdivision to the insurance supervisory official in each state in which it is licensed; [and]

     (b) Provide notice of the decision not to renew coverage to all affected small employers, participants and beneficiaries, and to the insurance supervisory official in each state in which an affected covered individual is known to reside at least one hundred eighty days prior to the nonrenewal of any health benefit plan by the carrier. Notice to the insurance supervisory official under this paragraph shall be provided at least three working days prior to the notice to the affected small employers and participants and beneficiaries; and

     (c) Discontinue all health insurance issued or delivered for issuance in the state's small employer market and not renew coverage under any health benefit plan issued to a small employer;

     [(7)] (6) The director finds that the continuation of the coverage would:

     (a) Not be in the best interests of the policyholders or certificate holders; or

     (b) Impair the carrier's ability to meet its contractual obligations. In such instance the director shall assist affected small employers in finding replacement coverage;

     (7) The small employer carrier decides to discontinue offering a particular type of health benefit plan in the state's small employer market. A type of health benefit plan may be discontinued by the carrier in that market only if the carrier:

     (a) Provides advance notice of the proposed discontinuation at least one hundred eighty days prior to the nonrenewal to the director;

     (b) Provides advance notice of the decision not to renew coverage to all affected small employers at least ninety days prior to the nonrenewal;

     (c) Offers to each small employer provided the type of health benefit plan, the option to purchase all other health benefit plans currently being offered by the carrier to small employers in the state; and

     (d) In exercising the option to discontinue the particular type of health benefit plan and in offering the option of coverage under paragraph (c), the carrier acts uniformly without regard to the claims experience of those small employers or any health status-related factor relating to any participants or beneficiaries covered or new participants or beneficiaries who may become eligible for such coverage.

     2. A small employer carrier that elects not to renew a health benefit plan under subdivision (6) of subsection 1 of this section shall be prohibited from writing new business in the small employer market in this state for a period of five years from the date of notice to the director.

     3. In the case of a small employer carrier doing business in one established geographic service area of the state, the provisions of this section shall apply only to the carrier's operations in such service area.

     379.940. 1. (1) Every small employer carrier shall, as a condition of transacting business in this state with small employers, actively offer to small employers all health benefit plans it actively markets to small employers in this state including a minimum of at least two health benefit plans. At least one plan offered by each small employer carrier shall be a basic health benefit plan and one plan shall be a standard health benefit plan. A small employer carrier shall be considered to be actively marketing a health benefit plan if it offers that plan to a small employer not currently receiving a health benefit plan by that small employer carrier.

     (2) (a) Subject to subdivision (1), a small employer carrier shall issue [a basic] any health benefit plan [or a standard health benefit plan] to any eligible small employer that applies for [either such] the plan and agrees to make the required premium payments and to satisfy the other reasonable provisions of the health benefit plan not inconsistent with sections 379.930 to 379.952.

     (b) In the case of a small employer carrier that establishes more than one class of business pursuant to section 379.934, the small employer carrier shall maintain and issue to eligible small employers at least one basic health benefit plan and at least one standard health benefit plan in each class of business so established. A small employer carrier may apply reasonable criteria in determining whether to accept a small employer into a class of business, provided that:

     a. The criteria are not intended to discourage or prevent acceptance of small employers applying for a basic or standard health benefit plan;

     b. The criteria are not related to the health status related factors or claim experience of the small employer;

     c. The criteria are applied consistently to all small employers applying for coverage in the class of business; and

     d. The small employer carrier provides for the acceptance of all eligible small employers into one or more classes of business.

The provisions of this paragraph shall not apply to a class of business into which the small employer carrier is no longer enrolling new small employers.

     [(3) A small employer is eligible under subdivision (2) of this subsection if it employed at least three or more eligible employees within this state on at least fifty percent of its working days during the preceding calendar quarter.]

     [(4) The provisions of this subsection shall be effective one hundred eighty days after the director's approval of the basic health benefit plan and the standard health benefit plan developed pursuant to section 379.944, provided that if the small employer health reinsurance program created pursuant to sections 379.942 and 379.943 is not yet in operation on such date, the provisions of this subsection shall be effective on the date that such program begins operation.]

     2. (1) A small employer carrier shall file with the director, in a format and manner prescribed by the director, the basic health benefit plans and the standard health benefit plans to be used by the carrier. A health benefit plan filed pursuant to this paragraph may be used by a small employer carrier beginning thirty days after it is filed unless the director disapproves its use.

     (2) The director at any time may, after providing notice and an opportunity for a hearing to the small employer carrier, disapprove the continued use by a small employer carrier of a basic or standard health benefit plan on the grounds that the plan does not meet the requirements of sections 379.930 to 379.952.

     [2.] 3. Health benefit plans covering small employers shall comply with the following provisions:

     (1) A health benefit plan shall not deny, exclude or limit benefits for a covered individual for losses incurred more than twelve months following the [effective date of the individual's coverage due to a preexisting condition] enrollment date. A health benefit plan shall not define a preexisting condition more restrictively than as defined in section 379.930;[:

     (a) A condition that would have caused an ordinarily prudent person to seek medical advice, diagnosis, care or treatment during the six months immediately preceding the effective date of coverage;

     (b) A condition for which medical advice, diagnosis, care or treatment was recommended or received during the six months immediately preceding the effective date of coverage; or

     (c) A pregnancy existing on the effective date of coverage.]

     (2) [A health benefit plan shall waive any time period applicable to a preexisting condition exclusion or limitation period with respect to particular services for the period of time an individual was previously covered by qualifying previous coverage that provided benefits with respect to such services, provided that the qualifying previous coverage was continuous to a date not less than thirty days prior to the effective date of the new coverage.] The period of any preexisting condition exclusion must be reduced by the aggregate of the period of creditable coverage, provided that the creditable coverage was continuous to a date not more than sixty-three days prior to the enrollment date of new coverage. The period of continuous coverage shall not include any waiting period for the effective date of the new coverage applied by the employer or the carrier, or an affiliation period, or for the normal application and enrollment process following employment or other triggering event for eligibility. A health maintenance organization that does not use preexisting condition limitations in any of its health benefit plans may impose an affiliation period. "Affiliation period" means a period of time not to exceed sixty days for new entrants and not to exceed ninety days for late enrollees during which no premiums shall be collected and coverage issued would not become effective, as long as the affiliation period is applied uniformly, without regard to any health status-related factors. This subdivision does not preclude application of any waiting period applicable to all new enrollees under the health benefit plan, provided that any carrier-imposed waiting period shall be no longer than sixty days and shall be used in lieu of a preexisting condition exclusion;[.]

     (3) A health benefit plan may exclude coverage for late enrollees for the greater of eighteen months or provide for an eighteen-month preexisting condition exclusion, provided that if both a period of exclusion from coverage and a preexisting condition exclusion are applicable to a late enrollee, the combined period shall not exceed eighteen months from the date the individual enrolls for coverage under the health benefit plan[.];

     (4) A small employer carrier is prohibited from imposing any preexisting condition exclusion in the following cases:

     (a) A small employer carrier shall not impose any preexisting condition exclusion relating to pregnancy as a preexisting condition;

     (b) Subject to paragraph (e) of this subdivision, a small employer carrier shall not impose any preexisting condition exclusion in the case of an individual who, as of the last day of the thirty day period beginning with the date of birth, is covered under creditable coverage;

     (c) Subject to paragraph (e) of this subdivision, a small employer carrier shall not impose any preexisting condition exclusion in the case of a child who is adopted or placed for adoption before attaining eighteen years of age and who, as of the last day of the thirty day period beginning on the date of adoption or placement for adoption, is covered under creditable coverage. The previous sentence shall not apply to coverage before the date of adoption or placement for adoption;

     (d) A small employer carrier shall not impose any preexisting condition exclusion in the case of a condition for which medical advice, diagnosis, care or treatment was recommended or received for the first time while the covered person held creditable coverage, and the medical advice, diagnosis, care or treatment was a covered benefit under the plan, provided that the creditable coverage was continuous to a date not more than sixty-three days prior to the enrollment date of the new coverage;

     (e) Paragraphs (b) and (c) of this subdivision shall no longer apply to an individual after the end of the first sixty-three day period during all of which the individual was not covered under any creditable coverage;

     (5) (a) Except as provided in paragraph (d) of this subdivision, requirements used by a small employer carrier in determining whether to provide coverage to a small employer, including requirements for minimum participation of eligible employees and minimum employer contributions, shall be applied uniformly among all small employers with the same number of eligible employees applying for coverage or receiving coverage from the small employer carrier.

     (b) A small employer carrier may vary application of minimum participation requirements only by the size of the small employer group.

     (c) a. Except as provided in paragraph (b) of this subdivision, in applying minimum participation requirements with respect to a small employer, a small employer carrier shall not consider employees or dependents who have [qualifying existing] creditable coverage in determining whether the applicable percentage of participation is met.

     b. With respect to a small employer with ten or fewer eligible employees, a small employer carrier may consider employees or dependents who have coverage under another health benefit plan sponsored by such small employer in applying minimum participation requirements.

     (d) A small employer carrier shall not increase any requirement for minimum employee participation or any requirement for minimum employer contribution applicable to a small employer at any time after the small employer has been accepted for coverage.

     [(5)] (6) (a) If a small employer carrier offers coverage to a small employer, the small employer carrier shall offer coverage to all of the eligible employees of a small employer and their dependents. A small employer carrier shall not offer coverage to only certain individuals in a small employer group or to only part of the group, except in the case of late enrollees as provided in subdivision (3) of this subsection.

     (b) A small employer carrier shall not modify a [basic or standard] health benefit plan with respect to a small employer or any eligible employee or dependent through riders, endorsements or otherwise, to restrict or exclude coverage for certain diseases, [or] medical conditions or services otherwise covered by the health benefit plan.

     [3.] 4. [(1) A small employer carrier shall not be required to offer coverage or accept applications pursuant to subsection 1 of this section in the case of the following:

     (a) To a small employer, where the small employer is not physically located in the carrier's established geographic service area;

     (b) To an employee, when the employee does not work or reside within the carrier's established geographic service area; or

     (c) Within an area where the small employer carrier reasonably anticipates, and demonstrates to the satisfaction of the director, that it will not have the capacity within its established geographic service area to deliver service adequately to the members of such groups because of its obligations to existing group policyholders and enrollees.

     (2) A small employer carrier that cannot offer coverage pursuant to paragraph (c) of subdivision (1) of this subsection may not offer coverage in the applicable area to new cases of employer groups with more than twenty-five eligible employees or to any small employer groups until the later of one hundred eighty days following each such refusal or the date on which the carrier notifies the director that it has regained capacity to deliver services to small employer groups.]

     (1) A small employer carrier offering coverage through a network plan shall not be required to offer coverage or accept applications pursuant to subsection 1 of this section to a small employer:

     (a) If the small employer does not have eligible individuals who live, work or reside in the service area for such network plan; or

     (b) If the small employer does have eligible individuals who live, work or reside in the service area for such network plan, the carrier has demonstrated, if required, to the commissioner that it will not have the capacity to deliver services adequately to enrollees of any additional groups because of its obligations to existing group contract holders and enrollees; and that it is applying this paragraph uniformly to all employers without regard to the claims experience of those employers and their employees and their dependents or any health status related factor relating to such employees and dependents.

     (2) A small employer carrier, upon denying health insurance coverage in any service area in accordance with paragraph (b) of subdivision (1) of this section, shall not offer coverage in the small employer market within such service area for a period of one hundred eighty days after the date such coverage is denied.

     [4.] 5. A small employer carrier shall not be required to provide coverage to small employers pursuant to subsection 1 of this section for any period of time for which the director determines that requiring the acceptance of small employers in accordance with the provisions of subsection 1 of this section would place the small employer carrier in a financially impaired condition.

     [5. Sections 379.930 to 379.938 and sections 379.942 to 379.950 shall become effective July 1, 1993, this section and section 379.952 shall become effective July 1, 1994.]

     6. (1) A small employer carrier shall not be required to provide coverage to small employers pursuant to subsection 1 of this section if the small employer carrier elects not to offer new coverage to small employers in this state. However, a small employer carrier that elects not to offer new coverage to small employers under this subsection shall be allowed to maintain its existing policies in the state, subject to the requirements of section 379.938.

     (2) A small employer carrier that elects not to offer new coverage to small employers under subsection 8 of this section shall provide notice to the director and shall be prohibited from writing new business in the small employer market in this state for a period of five years from the date of notice to the director.

     7. This section shall not apply to health benefit plans offered by a small employer carrier if the carrier makes the health benefit plans available in the small employer market only through one or more bona fide associations or purchasing alliances as defined in the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191).

     379.950. [The director may promulgate rules pursuant to chapter 536, RSMo, for the implementation and administration of sections 379.930 to 379.952 and section 374.184, RSMo. No rule or portion of a rule promulgated under the authority of this chapter shall become effective unless it has been promulgated pursuant to the provisions of section 536.024, RSMo.] Small employer carriers shall, as a condition of transacting business with small employers in this state after the effective date of sections 379.930 to 379.952, reissue a health benefit plan to any small employer whose health benefit plan has been terminated or not renewed by the carrier within six months prior to the effective date of sections 379.930 to 379.952. The director may prescribe such terms for the reissuance of coverage as the director finds are reasonable and necessary to provide continuity of coverage to small employers.

     379.952. 1. Each small employer carrier shall actively market every health benefit plan [coverage, including the basic and standard health benefit plans,] sold by the carrier to eligible small employers in the state. [If a small employer carrier denies coverage to a small employer on the basis of the health status or claims experience of the small employer or its employees or dependents, the small employer carrier shall offer the small employer the opportunity to purchase a basic health benefit plan or a standard health benefit plan.]

     2. (1) Except as provided in subdivision (2) of this subsection, no small employer carrier or agent or broker shall, directly or indirectly, engage in the following activities:

     (a) Encouraging or directing small employers to refrain from filing an application for coverage with the small employer carrier because of the health status, claims experience, industry, occupation or geographic location of the small employer;

     (b) Encouraging or directing small employers to seek coverage from another carrier because of the health status, claims experience, industry, occupation or geographic location of the small employer.

     (2) The provisions of subdivision (1) of this subsection shall not apply with respect to information provided by a small employer carrier or agent or broker to a small employer regarding the established geographic service area or a restricted network provision of a small employer carrier.

     3. (1) Except as provided in subdivision (2) of this subsection, no small employer carrier shall, directly or indirectly, enter into any contract, agreement or arrangement with an agent or broker that provides for or results in the compensation paid to an agent or broker for the sale of a health benefit plan to be varied because of the initial or renewal health status, claims experience, industry, occupation or geographic location of the small employer.

     (2) Subdivision (1) of this subsection shall not apply with respect to a compensation arrangement that provides compensation to an agent or broker on the basis of percentage of premium, provided that the percentage shall not vary because of the health status, claims experience, industry, occupation or geographic area of the small employer.

     4. A small employer carrier shall provide reasonable compensation, as provided under the plan of operation of the program, to an agent or broker, if any, for the sale of a basic or standard health benefit plan.

     5. No small employer carrier shall terminate, fail to renew or limit its contract or agreement of representation with an agent or broker for any reason related to the initial or renewal health status, claims experience, occupation, or geographic location of the small employers placed by the agent or broker with the small employer carrier.

     6. No small employer carrier or producer shall induce or otherwise encourage a small employer to separate or otherwise exclude an employee or dependent from health coverage or benefits provided in connection with the employee's employment.

     7. Denial by a small employer carrier of an application for coverage from a small employer shall be in writing and shall state the reason or reasons for the denial with specificity.

     8. The director may promulgate rules setting forth additional standards to provide for the fair marketing and broad availability of health benefit plans to small employers in this state.

     9. (1) A violation of this section by a small employer carrier or a producer shall be an unfair trade practice under sections 375.930 to 375.949, RSMo.

     (2) If a small employer carrier enters into a contract, agreement or other arrangement with a third-party administrator to provide administrative marketing or other services related to the offering of health benefit plans to small employers in this state, the third-party administrator shall be subject to this section as if it were a small employer carrier.

     379.955. 1. Sections 379.955 to 379.969 shall be known and may be cited as the "Individual Health Insurance Availability Act".

     2. The definitions given in section 379.930 shall apply to the provisions of sections 379.955 to 379.969 unless the context requires otherwise.

     379.957. 1. Every individual carrier shall, as a condition of transacting business in this state with individuals, actively offer to individuals all health benefit plans it actively markets to individuals in this state, except as provided in subsection 3 of this section. An individual carrier shall be considered to be actively marketing a health benefit plan if it offers that plan to an individual person not currently receiving a health benefit plan by that individual carrier.

     2. The individual that applies for the plan shall agree to make the required premium payments and satisfy the other reasonable provisions of the health benefit plan not inconsistent with sections 379.955 to 379.969.

     3. An individual carrier shall not be required to issue an individual health benefit plan to an individual if:

     (1) The individual is covered, or is eligible for coverage, through a benefit plan that provides health care coverage which is provided by the individual's employer. A converted policy is not considered a benefit plan provided by an employer for the purposes of this subsection;

     (2) The individual is covered, or is eligible for coverage, through a benefit plan that provides health care coverage in which the individual's spouse, parent or guardian is enrolled or is eligible to be enrolled;

     (3) The individual already has coverage under an individual health benefit plan or converted policy; except that an individual may purchase a new individual health benefit plan or converted policy and terminate coverage under the prior health benefit plan on the renewal date of the prior health benefit plan or converted policy;

     (4) The individual is covered, or is eligible for coverage, under any other private or public health benefits arrangement, including a Medicare supplement policy or the Medicare program established under Title XVIII of the Social Security Act, 49 Stat. 620 (1935), 42 U.S.C. 301, as amended, or any other act of Congress or law of any state, except for a Medicare-eligible individual who is eligible for Medicare for reasons other than age.

     4. An individual carrier shall file with the director, in a format and manner prescribed by the director, the individual health benefit plans to be used by the carrier. A health benefit plan filed pursuant to this subsection may be used by an individual carrier beginning thirty days after it is filed unless the director disapproves of its use. The director at any time may, after providing notice and an opportunity for a hearing to the individual carrier, disapprove the continued use by an individual carrier of a health benefit plan on the grounds that the plan does not meet the requirements of sections 379.955 to 379.969.

     379.960. An individual health benefit plan subject to sections 379.955 to 379.969 shall be renewable with respect to all individuals or their dependents, at the option of the enrollee, except in the following cases:

     (1) The individual has failed to pay premiums or contributions in accordance with the terms of the health benefit plan;

     (2) The individual has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage;

     (3) The individual carrier elects to discontinue offering and to nonrenew all of its health benefit plans delivered or issued for delivery to individuals in this state. In that case the carrier shall comply with the requirements of section 379.969;

     (4) The individual carrier decides to discontinue offering a particular type of individual health benefit plan in the state's individual insurance market. In such case the carrier shall comply with the provisions of section 379.969;

     (5) In the case of health benefit plans that are made available in the individual market only through one or more bona fide associations or purchasing alliances, the membership of an individual in the association or purchasing alliance (on the basis of which the coverage is provided) ceases, but only if the coverage is terminated under this subdivision uniformly without regard to any health status-related factor relating to any covered individual;

     (6) In the case of a health carrier that offers health insurance coverage in the market through a network plan, the individual no longer resides, lives or works in the service area of the carrier, but only if such coverage is discontinued uniformly without regard to any health status-related factor of covered individuals.

     379.963. 1. No individual carrier may issue an individual health benefit plan which contains any preexisting condition exclusion.

     2. No individual carrier may issue an individual health benefit plan which contains a waiting period of over thirty days.

     379.966. 1. In connection with the offering for sale of any health benefit plan to an individual, an individual carrier shall make a reasonable disclosure, as part of its solicitation and sales materials, of all of the following:

     (1) The provisions of the health benefit plan concerning the individual carrier's right to change premium rates and the factors that may affect changes in premium rates;

     (2) The provisions relating to renewability of policies and contracts; and

     (3) A listing of and descriptive information, including benefits and premiums, about all benefit plans for which the individual is qualified.

     2. Except as provided in subsection 3 of this section, no individual carrier, agent or broker shall directly or indirectly engage in the following activities:

     (1) Encouraging or directing individuals to refrain from filing an application for coverage with the individual carrier because of the health status, claims experience, industry, occupation or geographic location of the small employer or individual; or

     (2) Encouraging or directing individuals to seek coverage from another carrier because of the health status, claims experience, industry, occupation or geographic location of the individual.

     3. The provisions of subsection 2 of this section shall not apply with respect to information provided by an individual carrier or agent or broker to an individual regarding the established geographic service area or a restricted network provision of an individual carrier.

     379.969. 1. Any individual carrier that elects to discontinue offering and to nonrenew all its health benefit plans delivered or issued for delivery to individuals in this state shall:

     (a) Provide advance notice of its decision to the insurance supervisory official in each state in which it is licensed; and

     (b) Provide notice of the decision not to renew coverage to all affected individuals and to the insurance supervisory official in each state in which an affected insured individual is known to reside at least one hundred eighty days prior to the nonrenewal of any health benefit plans by the carrier. Notice to the insurance supervisory official shall be provided at least three working days prior to the notice to the affected individuals; or

     (c) Discontinue all health insurance issued or delivered for issuance in the state's individual market and not renew coverage under any health benefit plan issued to an individual.

     2. Any individual carrier that elects to discontinue offering all health insurance plans in the state's individual market shall be prohibited from writing any new business in the individual health insurance market for a period of five years from the date of the discontinuation of the last health insurance coverage not renewed.

     3. In any case in which a carrier decides to discontinue offering a particular type of health insurance coverage offered in the individual market, the carrier shall:

     (1) Provide advance notice of the proposed discontinuation at least one hundred eighty days prior to the nonrenewal to the director;

     (2) Provide advance notice of the decision not to renew coverage to all affected individuals at least ninety days prior to the nonrenewal;

     (3) Offer to each individual provided the particular type of health benefit plan, the option to purchase any other health benefit plan currently being offered by the carrier to individuals in the state;

     (4) In exercising the option to discontinue the particular type of health benefit plan and in offering the option of coverage under subdivision (3), the carrier must act uniformly without regard to the claims experience of any affected individual or any health status-related factor relating to any covered individuals or dependents or to any individuals or dependents who may become eligible for the coverage.

     Section B. Because immediate action is necessary in order to bring Missouri law into compliance with the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191) by July 1, 1997, this act is deemed necessary for the immediate preservation of the public health, welfare, peace and safety, and is hereby declared to be an emergency act within the meaning of the constitution, and this act shall be in full force and effect on July 1, 1997, or upon its passage and approval, whichever later occurs.