To:            All Health Insurers

From:       Linda Bohrer
                 Director of the Insurance Market Regulation Division
                 Missouri Department of Insurance, Financial Institutions and Professional Registration

Re:           Association Health Plans with Large and Small Employers

Date:        August 8, 2007

The Insurance Market Regulation Division of the Missouri Department of Commerce & Insurance issues this bulletin to provide guidance as to House Bill 1827, which became law in 2006.

HB 1827 allows insurers who provide coverage to an association of large and small employers to be exempt from section 379.936.1(1), RSMo.  Such exemption is granted if the Director determines that the health benefit plan:

  • Is underwritten and rated as a single employer;
  • Has a uniform health benefit plan design option or options for all participating association members or employers;
  • Guarantees issuance to all association members and all eligible employees, as defined in subsection 2 of section 379.930, RSMo., of any participating association member company; and
  • Complies with all other federal and state insurance requirements, including but not limited to the small employer health insurance availability act under sections 379.930 to 379.952, RSMo.”

There has been some question as to how carriers should comply with the requirement for health benefit plans to be "underwritten and rated as a single employer." The Insurance Market Regulation Division considers "underwritten and rated as a single employer" to mean that experience rating be applied to any insured association as a whole. The Division recognizes that carriers cannot underwrite an association that does not have claims history based on its experience. Thus, carriers can require health statements before coverage is issued to the association and upon adding new entrants to the association.

Experience rating for the association as a whole means the additional rating factors in section 379.936.1(3)(b) RSMo. concerning experience, health status or duration of coverage may only be considered when coverage for the entire association is issued or renewed.  The carrier should not apply factors which consider these differences to employers or groups within the association.

Additionally, a carrier can apply the case characteristics found in section 379.936.1(10) to different employers or groups within the association, with the exception of group size.  Allowing group size to be considered would work against the intent of HB 1827 by negating the benefit small employers receive from being rated with large employers.  The group size case characteristic may be considered for the entire association at the time of issuance and/or at renewal, but shall not apply to different employers or groups within the association.