A BILL TO BE ENTITLED
AN ACT to make TECHNICAL CHANGES TO THE SMALL EMPLOYER GROUP HEALTH COVERAGE REFORM ACT TO MITIGATE THE EFFECTS OF THE FEDERAL AFFORDABLE CARE ACT ON NORTH CAROLINA'S SMALL BUSINESSES AND TO CODIFY A COURT FINDING.
The General Assembly of North Carolina enacts:
SECTION 1.  Corrections to small group act. – No small employer carrier shall be required to issue the basic or standard health benefit plan as described in G.S. 58‑50‑125(a). Any basic or standard health benefit plans described in G.S. 58‑50‑125(a) that are not "grandfathered health plans," as that term is used under Section 1251 of the Affordable Care Act, P.L. 11‑148, as amended, shall be terminated on the next anniversary date on or after January 1, 2014, and the small employer carrier shall offer the employer replacement coverage from available small group health benefit plans pursuant to and in accordance with all applicable State and federal laws and regulations. The termination shall be preceded by a 90‑day notice to the Commissioner, the employer policyholder, the participants, and the beneficiaries. If the plan is issued to a self‑employed individual, as defined in G.S. 58‑50‑110(21a), then the small employer carrier shall offer (i) replacement coverage from available individual health benefit plans or (ii) if the small employer carrier does not offer individual health benefit plans in this State, then individual conversion coverage pursuant to G.S. 58‑53‑45.
SECTION 2.(a)  The following are repealed: G.S. 58‑50‑126, 58‑50‑127, 58‑50‑135, 58‑50‑155, and 58‑50‑156.
SECTION 2.(b)  G.S. 58‑50‑110 reads as rewritten:
"§ 58-50-110.  Definitions.
As used in this Act:
…
(10a)	"Grandfathered health plan" means a health benefit plan providing coverage considered grandfathered health coverage described in 45 C.F.R. §147.140(a).
…
(22)	"Small employer" means any individual actively engaged in business that, on at least fifty percent (50%) of its working days during the preceding calendar quarter, employed no more than 50 eligible employees, the majority of whom are employed within this State, and is not formed primarily for purposes of buying health insurance and in which a bona fide employer‑employee relationship exists. 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 taxation by this State, shall be considered one employer. Subsequent to the issuance of a health benefit plan to a small employer and for the purpose of determining eligibility, the size of a small employer shall be determined annually. Except as otherwise specifically provided, the provisions of this Act that apply to a small employer shall continue to apply until the plan anniversary following the date the small employer no longer meets the requirements of this definition. For purposes of this subsection, the term small employer includes self‑employed individuals. Effective January 1, 2014, this definition shall apply only to grandfathered group health plans subject to this Act.
(22a)	"Small employer" means, in connection with a non‑grandfathered group health plan with respect to a calendar year and a plan year, an employer that employed an average of at least one but not more than 50 employees on business days during the preceding calendar year and that employs at least one employee on the first day of the plan year. The number of employees shall be determined using the method set forth in section 4980H(c)(2) of the Internal Revenue Code.
…."SECTION 2.(c)  G.S. 58‑50‑115 reads as rewritten:
"§ 58‑50‑115.  Health benefit plans subject to Act.
(a)	A health benefit plan is subject to this Act if it provides health benefits for small employers and if any of the following conditions are met:
(1)	Any part of the premiums or benefits is paid by a small employer or any covered individual is reimbursed, whether through wage or adjustments or otherwise, by a small employer for any portion of the premium;
(2)	The health benefit plan is treated by the employer as part of a plan or program for the purpose of sections 106, 125, or 162 of the United States Internal Revenue Code; or
(3)	The small employer has permitted payroll deductions for the eligible enrollees for the health benefit plans.
(b)	Repealed by Session Laws 1993, c. 529, s. 3.5."
SECTION 2.(d)  G.S. 58‑50‑125(d) reads as rewritten:
"(d)	
If a small employer carrier offers coverage to a small employer, the small employer carrier shall offer coverage to all 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 except in the case of late enrollees as provided in G.S. 58‑50‑130(a)(4b). A small employer carrier shall not modify any health benefit plan with respect to a small employer, any eligible employee, or dependent through riders, endorsements, or otherwise, in order to restrict or exclude coverage for certain diseases or medical conditions otherwise covered by the health benefit plan. In the case of an eligible employee or dependent of an eligible employee who, before the effective date of the plan, was excluded from coverage or denied coverage by a small employer carrier in the process of providing a health benefit plan to an eligible small employer, the small employer carrier shall provide an opportunity for the eligible employee or dependent of an eligible employee to enroll in the health benefit plan currently held by the small employer."
SECTION 2.(e)  Effective January 1, 2015, subsections (a) and (a1) of G.S. 58‑50‑125 are repealed.
SECTION 2.(f)  G.S. 58‑50‑130 reads as rewritten:
"§ 58-50-130.  Required health care plan provisions.
…
(b)	For all small employer health benefit plans that are grandfathered health benefit plans and that are subject to this section, the premium rates are subject to all of the following provisions:
…."
SECTION 2.(g)  G.S. 58‑50‑130 is amended by adding the following new subsections to read:
"(b1)	For all small employer health benefit plans that are not grandfathered health benefit plans and that are subject to this section, the premium rates are subject to all of the following provisions:
(1)	A small employer carrier shall use a method to develop premiums for small employer group health benefit plans that are not grandfathered health plans which spreads financial risk across a large population and allows adjustments for only the following factors:
a.	Age, except that the rate shall not vary by more than three to one for adults.
b.	Whether the plan or coverage covers individual or family.
c.	Geographic rating areas.
d.	Tobacco use, except that the rate shall not vary by more than one and one‑half to one due to tobacco use.
	With respect to family coverage under a health benefit plan, the rating variations for age and tobacco use shall be applied based on the portion of premium that is attributable to each family member covered under the plan.
(2)	A small employer carrier shall consider the claims experience of all enrollees in all small employer group health benefit plans that are not grandfathered health plans offered by the insurer in the small employer group market in this State to be members of a single risk pool. No small employer carrier shall consider claims experience of grandfathered health plans in developing the single risk pool.
…
(i)	A small employer carrier shall not modify the premium rate charged to a small group non‑grandfathered health benefit plan or a small employer group member, including changes in rates related to the increasing age of a group member, for 12 months from the initial issue date or renewal date."
SECTION 3.(a)  G.S. 58‑50‑110(22a) is repealed.
SECTION 3.(b)  G.S. 58‑50‑110 reads as rewritten:
"§ 58-50-110.  Definitions.
As used in this Act:
…
(22b)	"Small employer" means, in connection with a non‑grandfathered group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least one but not more than 100 employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year. The number of employees shall be determined using the method set forth in section 4980H(c)(2) of the Internal Revenue Code.
…."
SECTION 4.  The Department of Insurance shall adopt rules to implement this Act.
SECTION 4.1.(a)  The intent of this section is to codify the finding of the Superior Court, Wake County, in issuing a preliminary injunction in the case of Rockford-Cohen Group, LLC, v. North Carolina Department of Insurance, et al., 12-CVS-12379 (prelim. injunction issued Oct. 1, 2012). The Superior Court's order preliminarily enjoined the defendants from enforcing S.L. 2012-183 in part because it found that the session law violated Sections 32 and 33 of Article 1 of the North Carolina Constitution.
SECTION 4.1.(b)  S.L. 2012-183 is repealed.
SECTION 4.1.(c)  This section is retroactively effective October 1, 2012.
SECTION 5.  Section 1 of this Act is effective when it becomes law. Except as otherwise provided in that section, Section 2 of this Act becomes effective January 1, 2014, and applies to all insurance contracts and policies issued, renewed, or amended on or after that date. Section 3 of this Act becomes effective January 1, 2016. Except as otherwise provided, the remainder of this act is effective when it becomes law.