§ 36-6527. Marketing of health benefit plan coverage.

A.  Each small employer carrier shall actively market health benefit plan coverage to all eligible small employers in this state.

B.  1.  Except as provided in paragraph 2 of this subsection, no small employer carrier or agent 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, group size, occupation or geographic location of the small employer, or

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

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

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

2.  Paragraph 1 of this subsection shall not apply with respect to a compensation arrangement that provides compensation to an agent 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.

3.  A small employer carrier shall not implement, directly or indirectly, agent commission schedules that vary the level of agent commissions based on the size of the group or otherwise reduce access to small employer health benefit plans.

4.  Notwithstanding paragraph 3 of this subsection, a small employer carrier may:

a.              vary agent commission amounts or percentages based on group size if the variation in the commission amounts or percentages are inversely related to the size of the group, or

b.              vary agent commission amounts or percentages based on the cumulative premium paid by a single small employer over a specific period if the variation in the commission amounts or percentages are inversely related to the cumulative premium paid during the period.

D.  A small employer carrier shall provide reasonable compensation, as provided under the plan of operation of the program, to an agent, if any, for the sale of any health benefit plan.

E.  No small employer carrier may terminate, fail to renew or limit its contract or agreement of representation with an agent for any reason related to the health status, claims experience, occupation, group size, or geographic location of the small employers placed by the agent with the small employer carrier.

F.  No small employer carrier or agent may induce or otherwise encourage a small employer to separate or otherwise exclude an employee from health coverage or benefits provided in connection with the employee's employment.

G.  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.  The reasons for denial shall be limited to minimum participation requirements and minimum contribution requirements.

H.  The Insurance Commissioner 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.

I.  1.  A violation of this section by a small employer carrier or an agent shall be an unfair trade practice under Article 12 of this title.

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.

Added by Laws 1994, c. 211, § 13, eff. July 1, 1994.  Amended by Laws 1998, c. 304, § 6, eff. July 1, 1998; Laws 2001, c. 363, § 27, eff. July 1, 2001.