On Friday, June 28th, the Washington Insurance Commissioner (OIC) adopted emergency rules governing association health plans. The rules became effective upon filing Friday (here are the rules). The rules require carriers to maintain proof that a small group/association has grandfathered status; require carriers to replace plans that do not meet reform standards within particular time frames; require carriers to make a “good faith” effort to ensure the validity of “bona fide” association status; and establishes rate pooling standards for association plans.
I have not had time to parse the provisions of the rule to determine all of its implications; but, the OIC rules continue to refer to March 23, 2010 without regard to the addition of groups changing from another plan or carrier while maintaining grandfather status. These date provisions will need clarification by the OIC.
The Federal grandfather rules as amended in November 2012 recognize the right of an employer to move from one issuer to another:
This amendment modifies paragraph (a)(1) of the interim final regulations,
which previously caused a group health plan to cease to be a grandfathered
health plan if the plan entered into a new policy, certificate, or contract of
insurance. The modification provides that a group health plan does not cease
to be grandfathered health plan coverage merely because the plan (or its sponsor)
enters into a new policy, certificate, or contract of insurance after March 23,
2010 7 (for example, a plan enters into a contract with a new issuer or a new
policy is issued with an existing issuer). [Federal Register / Vol. 75, No. 221 / November 17, 2010, at 70116].
Under the federal grandfathering rules, an employer group may have joined an association after March 23, 2010 and could still be part of the grandfathered association rating pool. Grandfather status is measured from the employer’s point of view that requires a comparison of the employer’s coverage before and after association plan membership rather than a determination of membership date.
Furthermore, the OIC rules presume that no new employer group would join an association and obtain grandfathered coverage and that all grandfathered employer groups would be known to the issuer prior to the rate and form filing date.
Contrast the federal recognition that employers may switch plans with the OIC emergency rules governing association rate filing:
WAC 284-170-958 Transition of Plans Purchased by Association Members.
… (3) For plans offered to association or member-governed groups that do not meet the requirements of subsection (1) of this section, the following specific requirements apply:
(a) An issuer must treat grandfathered plans issued under those purchasing arrangements as a closed pool, and file a single case closed pool rate filing. For purposes of this section, a single case closed pool rate filing means a rate filing which includes the rates and the rate filing information only for the issuer’s closed pool enrollees.
(b) For each single case closed pool rate filing, an issuer must file a certification from an officer of the issuer attesting that:
(i) The employer groups covered by the filing joined the association prior to or on March 23, 2010;
(ii) The issuer can establish with documentation in its files that none of the conditions triggering termination of grandfathered status set forth in WAC 284-170-950 or in 45 CFR 2590.715-1251(g) have occurred for any plan members.
(4)For each grandfathered plan issued to an association or member governed group under section (3), the issuer must include the following items in its rate filing:
(a) Plan Number;
(b) Identification number assigned to each employer group, including employer groups of less than two;
(c) Initial contract or certificate date;
(d) Number of employees for each employer group, pursuant to RCW 48.43.005 (11);
(e) Number of enrolled employees for each employer group for the prior calendar year;
(f) Current and proposed rate schedule for each employer group; and
(g) Description of the rating methodology and rate change for each employer group.
Another minor clarification that has significance to associations is the OIC’s description of the federal requirement that carriers sell all non-grandfathered, small group plans to all eligible small groups.
Carriers may not sell non-grandfathered small group plan designs unique to particular associations. However, this federal standard does not mandate that coverage sold through associations be sold to those not affiliated with the association as suggested in the OIC rule. The OIC rule should simply state that carriers must sell all small group plans to all small groups rather than stating that coverage sold through associations does not depend upon association membership.