SECTION 1. The legislature finds that the federal Patient Protection and Affordable Care Act of 2010 (Affordable Care Act) requires states to establish health insurance exchanges to connect buyers and sellers of health and dental insurance and facilitate the purchase and sale of federally qualified health insurance plans and qualified dental plans. Hawaii's health insurance exchange, known as the Hawaii health connector (connector), stated in its January 2015 annual report that it is on the path to financial self-sustainability and could reach a surplus by 2022. However, increased engagement and participation by insurers in the connector will be a critical factor to increase enrollment and achieve self-sustainability as quickly as possible.

The legislature further finds that the Affordable Care Act allows states to elect to permit the sale of fully-insured large group health plans through state health exchanges. If a state chooses this option, the same insurance market reforms that currently apply to fully-insured group health plans purchased by small employers will apply to the fully-insured large group health insurance market. Enabling the Hawaii health connector to offer large group coverage to insurers is one option for increased insurer participation in the connector.

The legislature additionally finds that the small business health options program (SHOP) participation provision is a qualified health plan certification requirement that links certification of a qualified health plan insurer in the individual market to SHOP participation. Adopting the federal interpretation of the participation provision will increase health insurer participation in the Hawaii health connector, by requiring all health insurers with more than twenty per cent of the market share to participate in the connector's SHOP market.

The legislature also finds that section 1304(b)(2) of the Affordable Care Act defines a small employer as an employer who employs an average of at least one but not more than one hundred employees. Amending the definition of "small employer" in section 431:2-201.5, Hawaii Revised Statutes, to conform to the definition in section 1304(b)(2) of the Affordable Care Act may help expand the potential market for small businesses in the Hawaii health connector's small business health options program.

The legislature further finds that states currently have the option to permit health insurers to continue certain insurance policies that would otherwise be canceled due to the requirements of the Affordable Care Act. These transitional renewal policies, also known as grandmothered health plans, contain only some of the features of the Affordable Care Act but are not considered out of compliance with certain reforms of the Act, if specific conditions are met. States may not extend these plans to policy years beginning after October 1, 2016, but may elect to end the transitional period at an earlier date. Ending transitional renewal policies by January 1, 2016, will increase the number of individuals and small businesses that could compare plans offered through the connector and will ensure that all plans offered in Hawaii are fully compliant with the Affordable Care Act.

The legislature also finds that under the federal Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), employers sponsoring group health plans to covered employees must provide an initial notice about the ability to continue insurance coverage under COBRA. The federal Department of Labor also requires employers covered by the Fair Labor Standards Act to provide written notice to employees about potential insurance coverage available through state health insurance marketplaces. Requiring health insurers to provide notice about the connector will therefore ensure that more people are aware of their health insurance options under COBRA and the connector.

The purpose of this Act is to:

(1) Enable the Hawaii health connector to offer large group coverage to insurers;

(2) Require insurer participation in the connector pursuant to Small Business Health Options Program policies set under 45 CFR 156.200(g);

(3) Expand the potential small businesses market in the connector by amending the current definition of "small employer" under section 431:2-201.5, Hawaii Revised Statutes;

(4) End transitional renewal policies, beginning January 1, 2016; and

(5) Require health insurers to provide notice to group health plans offering continuation coverage about options to secure affordable coverage under the Hawaii health connector.

SECTION 2. Chapter 435H, Hawaii Revised Statutes, is amended by adding three new sections to be appropriately designated and to read as follows:

"§435H- Large group coverage. Beginning on January 1, 2017, the State shall allow the connector to offer large group coverage to insurers, as permitted in section 1312(f)(2)(B) of the Federal Act.

§435H- Transitional renewal policies. Beginning January 1, 2016, the State shall cease permitting transitional renewal policies issued by insurers. All policies issued or renewed after this date shall be in compliance with the Federal Act, including the requirements of sections 2701, 2702, 2703, 2704, 2705, 2706, 2707, and 2709 of the Federal Act.

§435H- Consolidated Omnibus Budget Reconciliation Act; notification. In addition to the requirements under the federal Consolidated Omnibus Budget Reconciliation Act of 1985, all insurers shall provide notice to group health plans that offer continuation coverage to employees, former employees, spouses, former spouses, and dependent children regarding options to secure affordable coverage through the connector, including the official website, telephone number, similar health insurance plans, and the availability of advance premium tax credits and cost-sharing reductions."

SECTION 3. Section 431:2-201.5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The following definitions shall be used when applying title 42 United States Code section 300gg, et seq.:

"Employee" means an employee who works on a full-time basis with a normal workweek of twenty hours or more.

"Group health issuer" means all persons offering health insurance coverage to any group or association, but shall not include those persons offering benefits exempted from title I of the Health Insurance Portability and Accountability Act of 1996, P.L. 104-191, under sections 732(c) and 733(c) of title I of the Employee Retirement Income Security Act of 1974 and sections 2747 and 2791(c) of the Public Health Service Act.

"Small employer" means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least one but no more than [~~fifty~~] one hundred employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year."

SECTION 4. Section 435H-6, Hawaii Revised Statutes, is amended to read as follows:

"[[]§435H-6[]] Eligibility of insurers and plans. (a) The commissioner shall determine eligibility for the inclusion of insurers and plans; provided that all qualified plans and qualified dental plans that apply for inclusion shall be included in the connector[.]; provided further that, as a condition of its license or certificate of authority, any insurer who controls, in any fiscal year and as determined by the commissioner, greater than twenty per cent share of the State's small group market for all policies of accident and health or sickness insurance subject to article 10A of chapter 431 or chapter 432 or 432D, shall offer through the connector, in the following fiscal year:

(1) At least one silver level qualified health plan; and

(2) At least one gold level qualified health plan,

as a condition of participation in the individual market of the connector.

(b) The commissioner shall require that each qualified plan, as a condition of certification, shall:

(1) Offer to any willing federally-qualified health center providing services in geographic areas served by the qualified plan, the opportunity to contract with the qualified plan to provide to the qualified plan's enrollees all ambulatory services that are covered by the qualified plan that the federally-qualified health center offers to provide; and

(2) Reimburse each federally-qualified health center for services as provided in 42 United States Code section 1396a(bb).

"Federally-qualified health center" has the same meaning as provided in 42 United States Code section 1396d(l)(2)(B).

"Silver level" and "gold level" have the same meaning as provided in 42 United States Code section 18022(d)."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2050.

HOUSE OF REPRESENTATIVES	H.B. NO.	1467
TWENTY-EIGHTH LEGISLATURE, 2015		H.D. 1
STATE OF HAWAII