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Introduced by   Representative Obuchowski of Rockingham

Referred to Committee on


Subject:  Health insurance; small group carriers; 75 percent rule; repeal

Statement of purpose:  This bill proposes to repeal the law mandating small group insurance carriers to require that 75 percent of the employees or members of the small group participate in the carrier’s plan.


It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  8 V.S.A. § 4080a is amended to read:


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(l)  A registered small group carrier which is not a nonprofit health maintenance organization shall require that at least 75 percent of the employees or members of a small group participate in the carrier's plan, provided that if a nonprofit health maintenance organization provides a small group plan to more than 25 percent of the employees or members of the small group, a registered small group carrier may offer or continue to provide its small group plan to the remaining employees or members.  For purposes of this requirement, the registered small group carrier shall not include in its calculation an employee or member who is already covered by another group health benefit plan as a spouse or dependent.  If the small group is an association, trust or other substantially similar group, this participation requirement shall be calculated on an employer-by-employer basis.

(m)  This section shall apply to the provisions of small group plans.  This section shall not be construed to prevent any person from issuing or obtaining a bona fide individual health insurance policy; provided that no person may offer a health benefit plan or insurance policy to individual employees or members of a small group as a means of circumventing the requirements of this section.  The commissioner shall adopt, by rule, standards and a process to carry out the provisions of this subsection.

(n)(m)  The guaranteed acceptance provision of subsection (d) of this section shall not be construed to limit an employer's discretion in contracting with his or her employees for insurance coverage.

(o)(n)  Registered small group carriers, except nonprofit medical and hospital service organizations and nonprofit health maintenance organizations, shall form a reinsurance pool for the purpose of reinsuring small group risks. This pool shall not become operative until the commissioner has approved a plan of operation.  The commissioner shall not approve any plan which he or she determines may be inconsistent with any other provision of this section.  Failure or delay in the formation of a reinsurance pool under this subsection shall not delay implementation of this section.  The participants in the plan of operation of the pool shall guarantee, without limitation, the solvency of the pool, and such guarantee shall constitute a permanent financial obligation of each participant, on a pro rata basis.

Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont