These amendments change the current practice of small group carriers using two different underwriting application approaches, based on group size. This rule requires one type of application for all small employer groups, indifferent of group size.

DEPARTMENT OF FINANCIAL SERVICES
OIR – Insurance Regulation

RULE NO: RULE TITLE
69O-149.041: Marketing Communication Material and Marketing Guidelines
PURPOSE AND EFFECT: These amendments change the current practice of small group carriers using two different underwriting application approaches, based on group size. This rule requires one type of application for all small employer groups, indifferent of group size.
SUMMARY: This rule creates an unfair trade practice pursuant to Section 626.9611, F.S., by prohibiting an insurer from treating certain sized small groups differently than it treats other sized small groups. Under the rule, all small groups must be treated the same, unless Section 627.6699, F.S., specifically otherwise provides.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: No Statement of Estimated Regulatory Cost was prepared.
Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.
SPECIFIC AUTHORITY: 626.9611, 627.6699(13)(i), (17) FS.
LAW IMPLEMENTED: 626.9541(1)(b), (g)2., (x)3., 627.6699(3)(g), (v), (5)(a), (7), (12), (12)(c), (13), (13)(b) FS.
IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE,TIME AND PLACE SHOWN BELOW(IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):
DATE AND TIME: July 23, 2008, 9:30 a.m.
PLACE: 116 Larson Building, 200 East Gaines Street, Tallahassee, Florida
Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 5 days before the workshop/meeting by contacting: Gerry Smith, Life and Health Product Review, Office of Insurance Regulation, E-mail [e-mail]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Gerry Smith, Life and Health Product Review, Office of Insurance Regulation, E-mail [e-mail]

THE FULL TEXT OF THE PROPOSED RULE IS:

69O-149.041 Marketing Communication Material and Marketing Guidelines.

(1) Any marketing communication shall comply with the requirements of Rule Chapter 69O-150, Part III, F.A.C.

(2) Any insurer marketing small group health plans shall comply with the following guidelines:

(a) The small group health history or size shall not be used to direct the small group to a particular small group plan except as permitted by the provisions of Section 627.6699, F.S.

(b)1. In determining eligibility for small group coverage an employer/employee income may not be used.

2. A carrier may request information and documentation to determine whether an individual qualifies as an active business that is eligible for coverage.

3. The following information, records, or documents may be requested or considered in determining whether an employer meets the definition of small employer pursuant to Section 627.6699(3)(v), F.S. If the employer was required by applicable law to maintain the information, record or documents or to file the document with a local, state or federal governmental agency or authority; maintains the information in the normal course of business; or was issued the information, records, or documents by a local, state, or deferral agency or authority:

a. IRS form 1040, Schedule C or F.

b. IRS 941 (quarterly wage and tax form).

c. IRS 1065 (for partnership income).

d. IRS 1120 (corporate income).

e. IRS 1099 (which may include payments to independent contractors).

f. IRS 2106 (employee business expenses).

g. IRS 990 (for non-profits with annual receipts over $25,000).

h. Occupational Licenses.

i. State Licenses.

j. Florida UT 6 (unemployment compensation tax form).

k. Articles of incorporation.

l. Partnership agreements.

m. Affidavits from the customers or suppliers of the small employer.

n. Auditable personal records of receipts, expenditures, invoices.

o. Leases and other contracts.

4.a. Refusal to insure an eligible small employer because of the employer’s refusal or unwillingness to provide information, records or documents which are not necessary to reasonably establish that the employer meets the definition of Section 627.6699(3)(v), F.S., violates Section 627.6699(5)(a), F.S.

b. Any statement that requires information not necessary for determining eligibility be provided for coverage to be issued shall constitute an unfair method of competition in violation of Section 626.9541(1)(b), F.S.

(c) In the instance where a company splits to become two or more corporations, with each corporation employing less than 50 employees, they are considered an eligible small employer if:

1. The group is not splitting solely with the intent of providing health insurance coverage to a separate class of employees;

2. The new company can produce signed documentation (i.e., articles of incorporation) that substantiates that there is a legitimate business with business activity;

3. All eligible employees are working 25 hours or more per week.

(d) New and renewal policies for the Basic and Standard policies issued on or after May 1, 1995, must include the 1995 Basic and Standard Health Benefit Plans (OIR-B2-95) pursuant to Section 627.6699(12), F.S., which is incorporated herein by reference and can be obtained from the Bureau of Life and Health Forms and Rates.

(e)1. Pursuant to Section 626.9611, F.S., the Office identifies the following as being prohibited by Section 626.9541(1)(b) or 626.9541(1)(g), F.S., for a small employer carrier in reflecting any of the permitted rate adjustments in subsection 69O-149.037(6), F.A.C.:

a. To quote a rate which does not reflect the actual characteristics of the individual group; or

b. Where necessary underwriting information has not been analyzed, to quote a rate other than the approved community rate. Any such quote of the community rate shall include a disclosure that the rate will be affected by the results of underwriting by up to 15 percent up or down for new groups, or up to a 10 percent increase for renewal groups; or,

c. To use a different application form, underwriting method, medical questionnaire form, or any other method of collecting information that varies by case size to quote a group rate, such as an individual application or underwriting methodology for groups with less than a certain number of employees and a group application for larger groups, or any other way of separating the entire small group market from being one actuarially supportable class into subgroups within the small group market unless specifically prescribed by Section 627.6699, F.S.

2. This does not restrict carriers from quoting rates to groups based on estimated enrollment or demographics provided by the employer.

(f) Any practice that results in the declination of an application from an eligible small employer, other than for statutorily permitted reasons, constitutes a failure to comply with the guaranteed-issue requirements of Section 627.6699(5), F.S.; for example, imposing standards for eligibility that are not required by law, such as:

1. Requiring the small employer to be a domestic entity; or

2. Requiring the group to have prior group coverage; or

3. Requiring payment of premiums with business checks instead of personal checks.

Specific Authority 626.9611, 627.6699(13)(i), (17) FS. Law Implemented 626.9541(1)(b), (g)2., (x)3., 627.6699(3)(g), (v), (5)(a), (7), (12), (12)(c), (13), (13)(b) FS. History–New 3-1-93, Amended 11-7-93, 4-23-95, 8-4-02, 6-19-03, Formerly 4-149.041, Amended________.

NAME OF PERSON ORIGINATING PROPOSED RULE: Gerry Smith, Life and Health Product Review, Office of Insurance Regulation, E-mail [e-mail]
NAME OF SUPERVISOR OR PERSON WHO APPROVED THE PROPOSED RULE: Mary Beth Senkewicz
DATE PROPOSED RULE APPROVED BY AGENCY HEAD: January 14, 2008
DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAW: March 7, 2008