900 KAR 10:020. KHBE Small Business Health Options Program.

 

      RELATES TO: KRS 194A.050(1), 42 U.S.C. 18031, 45 C.F.R. Parts 155, 156

      STATUTORY AUTHORITY: KRS 194A.050(1)

      NECESSITY, FUNCTION, AND CONFORMITY: The Cabinet for Health and Family Services, Kentucky Office of Health Benefit and Information Exchange, has responsibility to administer the state-based American Health Benefit Exchange. KRS 194A.050(1) requires the secretary of the cabinet to promulgate administrative regulations necessary to protect, develop, and maintain the health, personal dignity, integrity, and sufficiency of the individual citizens of the Commonwealth; to operate the programs and fulfill the responsibilities vested in the cabinet; and to implement programs mandated by federal law or to qualify for the receipt of federal funds. This administrative regulation establishes the policies and procedures relating to the operation of a Small Business Health Options Program in accordance with 42 U.S.C. 18031 and 45 C.F.R. parts 155 and 156.

 

      Section 1. Definitions. (1) "Agent" is defined by KRS 304.9-020(1).

      (2) "Annual open enrollment period" is defined by 45 C.F.R. 155.410(e).

      (3) "Annual renewal date" means the date following twelve (12) months from the first day of the first coverage month and every twelve (12) months thereafter.

      (4) "Children’s Health Insurance Program" or "CHIP" is defined by 42 C.F.R. 457.10.

      (5) "COBRA" means continuation of coverage under 29 U.S.C. Part 6.

      (6) "Department of Health and Human Services" or "HHS" means the U.S. Department of Health and Human Services.

      (7) "Employer identification number" means a unique numerical identifier which is used to identify a business, partnership, or other entity.

      (8) "Full-time employee" is defined by 45 C.F.R. 155.20.

      (9) "Full-time equivalent employee" means the number of employees determined by using the method set forth in section 4980H(c)(2) of the Internal Revenue Code, 26 U.S.C. 4980H(c)(2).

      (10) "Group participation rate" means the minimum percentage of all eligible individuals or employees of an employer that is required to be enrolled.

      (11) "Health plan" is defined by 42 U.S.C. 18021(b)(1).

      (12) "Indian" is defined by 25 U.S.C. 450b(d).

      (13) "Initial open enrollment period" means the enrollment period in which a qualified employer first enrolls in coverage through the Small Business Health Options Program (SHOP).

      (14) "Kentucky Health Benefit Exchange" or "KHBE" means the Kentucky state-based exchange approved by HHS pursuant to 45 C.F.R. 155.105 to offer a QHP or stand-alone dental plan (SADP), that includes an:

      (a) Individual exchange; and

      (b) Small Business Health Options Program.

      (15) "Kentucky Health Insurance Premium Payment Program" or "KHIPP" means a Kentucky Medicaid program that pays the costs of some or all of the employee portion of employer-sponsored health insurance premiums.

      (16) "Kentucky Office of Health Benefit and Information Exchange", "KOHBIE", or "office" means the office created to administer the Kentucky Health Benefit Exchange.

      (17) "Medicaid" means coverage in accordance with Title XIX of the Social Security Act, 42 U.S.C. sections 1396 et seq. as amended.

      (18) "Metal level of coverage" means health care coverage provided within plus or minus two (2) percentage points of the full actuarial value as follows:

      (a) Bronze level with an actuarial value of sixty (60) percent;

      (b) Silver level with an actuarial value of seventy (70) percent;

      (c) Gold level with an actuarial value of eighty (80) percent; and

      (d) Platinum level with an actuarial value of ninety (90) percent.

      (19) "Minimum essential coverage" is defined by 26 C.F.R. 1.5000A-2.

      (20) "Newly qualified employee" means an employee who becomes eligible to participate in the employer’s group health plan outside of a qualified employer’s initial or annual enrollment period.

      (21) "Plan year" means a consecutive twelve (12) month period during which a health plan provides coverage for health benefits.

      (22) "Premium" is defined by KRS 304.14-030.

      (23) "Qualified employee" means an individual employed by a qualified employer who has been offered health insurance coverage by the qualified employer through the SHOP.

      (24) "Qualified employer" means an employer that elects to make, at a minimum, all full-time employees of the employer eligible for one (1) or more QHPs in the small group market offered through the SHOP.

      (25) "Qualified Health Plan" or "QHP" means a health plan that meets the standards described in 45 C.F.R. 156 Subpart C and that has in effect a certification issued by the office.

      (26) "Qualifying event" means an event that triggers a special enrollment period for an individual to enroll in health insurance coverage.

      (27) "Reference plan" means a single health plan on which an employer will base its employee premium contribution and an employee is then able to select the reference plan, or if the employee selects another health plan, the employee shall pay the premium differential between the selected health plan and the reference plan.

      (28) "SHOP" means a Small Business Health Options Program operated by the KHBE through which a qualified employer can provide a qualified employee and the employee's dependents with access to one (1) or more QHPs or SADPs.

      (29) "Small employer" means for a plan year beginning:

      (a) Before January 1, 2016, an employer who employed an average of fifty (50) or fewer full-time employees on business days during the preceding calendar year; or

      (b) On or after January 1, 2016, an employer who employed an average of at least one (1) but no more than 100 full-time equivalent employees on business days during the preceding calendar year and who employs at least one (1) employee on the first day of the plan year.

      (30) "Special enrollment period" means a period during which a qualified employee who experiences certain qualifying events may enroll in, or change enrollment in, a QHP through the KHBE outside the initial and annual open enrollment periods.

      (31) "Stand-alone dental plan" or "SADP" means a dental plan as described by 45 C.F.R. 155.1065 that has been certified by the office to provide a limited scope of dental benefits as defined in 26 U.S.C. 9832(c)(2)(A), including a pediatric dental essential health benefit.

      (32) "TRICARE" means the Department of Defense administered health care program serving active uniformed service members, retirees, and their families.

      (33) "Waiting period" means the period before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective.

 

      Section 2. Employer Eligibility. (1) An employer shall be a qualified employer and eligible to purchase coverage through SHOP if the employer:

      (a) Meets the eligibility requirements established in 45 C.F.R. 155.710(b);

      (b) Has a valid federal employer identification number;

      (c) Has at least one (1) common law employee that shall not include an individual described in 29 C.F.R. 2510.3-3(c); and

      (d) Except as provided in 45 C.F.R. 147.104(b)(1)(i) and subsection (2) of this section:

      1. Meets a group participation rate of at least seventy-five (75) percent that shall be calculated in accordance with subsection (6) of this section; and

      2. Contributes a minimum of fifty (50) percent toward the QHP premium of any qualified employee in accordance with Section 6 of this administrative regulation.

      (2) A small employer may elect to offer SADP coverage to only its full-time employees.

      (3) A small employer participating in more than one (1) SHOP and meeting the criteria in subsection (1) of this section shall offer coverage to its full-time employees whose primary work site is in Kentucky.

      (4) An employer shall apply to enroll in a QHP or SADP:

      (a) Via the internet at www.kynect.ky.gov;

      (b) By telephone by contacting the office contact center at 1-800-459-6328; or

      (c) In person.

      (5) If the information submitted by a small employer is inconsistent with the eligibility standards in this section, the employer shall have thirty (30) days after a notification of the inconsistency to present documentation to support the employer’s application or resolve the inconsistency.

      (6) An employee participation rate shall be calculated:

      (a) As the number of qualified employees accepting medical coverage under the employer’s group health plan plus the number of qualified employees enrolled in other medical coverage as described in subsection (7) of this section divided by the number of qualified employees offered medical coverage; and

      (b) At the time the employer submits the SHOP group enrollment.

      (7) Other medical coverage shall include:

      (a) Another employer’s plan;

      (b) Medicare;

      (c) Medicaid;

      (d) TRICARE;

      (e) Other coverage identified in 45 C.F.R. 156.602; or

      (f) Coverage recognized by HHS as meeting the requirement for minimum essential coverage under 45 C.F.R. 156.604.

      (8) If a small employer’s group participation rate falls below the requirement in subsection (1)(d) of this section during a plan year, the qualified small employer shall be eligible to participate in the SHOP through the remainder of the plan year.

      (9) A qualified employer who ceases to be a small employer by reason of an increase in the number of employees shall be eligible to participate in SHOP until the employer:

      (a) Fails to otherwise meet the eligibility criteria of this section; or

      (b) Chooses to no longer purchase health coverage through the SHOP.

 

      Section 3. Employee Eligibility. (1) An employee shall be a qualified employee eligible to enroll in a QHP or SADP through the SHOP if the employee receives an offer of coverage from a qualified employer.

      (2) A qualified employee shall be eligible to enroll a dependent or spouse in a QHP through SHOP if the offer of coverage from a qualified employer includes an offer of dependent or spousal coverage and the qualified employee is enrolled in the QHP.

      (3) A qualified employee shall be able to enroll a dependent or spouse in an SADP if the offer of coverage from a qualified employer includes an offer of dependent or spousal coverage in an SADP; and

      (a) The qualified employee is enrolled in an SADP; or

      (b) If the qualified employee is not enrolled in an SADP, only a spouse or dependent of the qualified employee up to twenty-one (21) years of age may enroll in an SADP.

      (4) A qualified employee who is enrolled in an SADP shall enroll a dependent or spouse in an SADP if:

      (a) The offer of coverage from a qualified employer includes an offer of dependent or spousal coverage in an SADP; and

      (b) The dependent or spouse is three (3) years of age up to twenty-one (21) years of age.

      (5) If the offer of coverage from a qualified employer includes an offer of stand-alone dental coverage, a qualified employee up to twenty-one (21) years of age who is not otherwise enrolled in dental coverage shall enroll in an SADP.

      (6) An employee shall apply to enroll in a QHP or SADP:

      (a) Via the internet at www.kynect.ky.gov;

      (b) By contacting the office contact center at 1-800-459-6328; or

      (c) In person.

      (7) If the information submitted by an employee is inconsistent with the eligibility standards in this section, the employee shall have thirty (30) days after a notification of the inconsistency to present documentation to support the employee’s application or resolve the inconsistency.

      (8) A qualified employee who does not want to enroll in a QHP offered by a qualified employer shall waive coverage.

      (9) A qualified employee waiving coverage shall:

      (a) Wait until the next annual open enrollment period, pursuant to Section 10 of this administrative regulation, to enroll in coverage; or

      (b) If the employee experiences a qualifying event, enroll during a special enrollment period pursuant to Section 12 of this administrative regulation.

 

      Section 4. Employer Participation Requirements. (1) A qualified employer shall submit the following information to the SHOP:

      (a) An employee census that includes the name, address, birth date, and social security number of a qualified employee;

      (b) If offering dependent or spousal coverage, the name, address, and birth date of the dependent or spouse;

      (c) General employer information that shall include the:

      1. Business legal name;

      2. Primary business address; and

      3. Federal employer identification number;

      (d) The number of qualified employees and the total number of employees employed by the qualified employer;

      (e) Whether the employer shall offer dependent or spousal health coverage;

      (f) The name and primary phone number for the primary contact for the qualified employer; and

      (g) Whether the employer has an agent or kynector, and if so, the name of the agent or kynector.

      (2) A qualified employer shall provide the SHOP:

      (a) A copy of its most recently filed Employer's Quarterly Unemployment Wage and Tax Report, if applicable; or

      (b) If in business for less than three (3) months, a copy of a business filing with the Kentucky Secretary of State.

 

      Section 5. Employer Selection of Qualified Health Plans. (1) A qualified employer shall make available to a qualified employee:

      (a) A single QHP;

      (b) All available QHPs at a single metal level of coverage;

      (c) If metal levels are contiguous, one (1) or more QHPs at more than one (1) metal level of coverage; or

      (d) All available QHPs from one (1) or more issuer.

      (2) Unless each QHP offered to a qualified employee has an embedded pediatric dental benefit, a qualified employer shall make available to a qualified employee at least one (1) pediatric stand-alone dental plan.

 

      Section 6. Minimum Contribution. (1) A small employer who selects only one (1) QHP to offer to a qualified employee in accordance with Section 5 of this administrative regulation shall:

      (a) Define a percentage contribution of at least fifty (50) percent toward the premium for employee-only coverage under the QHP, except as provided for in 45 C.F.R. 147.104(b)(1)(i); and

      (b) Apply the employer contribution determined in paragraph (a) of this subsection toward the QHP selected by the employee.

      (2) A small employer who selects more than one (1) QHP to offer to a qualified employee in accordance with Section 5 of this administrative regulation shall:

      (a) Apply the employer contribution determined in accordance with subsection (1)(a) of this section to the QHP selected by an employee; or

      (b) If a reference plan is selected by the employer, make a percentage contribution of at least fifty (50) percent toward the premium for employee-only coverage under the reference plan.

      (3) An employer who elects to provide dependent or spousal coverage may make a contribution toward a premium for dependent or spousal coverage.

      (4) An employer who elected to provide coverage for an SADP may make a contribution toward a premium for:

      (a) Employee coverage; or

      (b) Employee coverage and dependent or spousal coverage.

 

      Section 7. Employer Selection of Coverage Period. (1) Subject to subsection (2) of this section, a qualified employer shall elect to offer health insurance coverage through the SHOP for a qualified employee at any time during the calendar year after:

      (a) Submitting the information required in Section 4 of this administrative regulation;

      (b) Selecting a QHP or QHPs to offer to qualified employees as provided in Section 5 of this administrative regulation; and

      (c) Meeting the minimum contribution requirement in Section 6 of this administrative regulation.

      (2) If a qualified employer fails to meet the minimum participation rate specified in Section 2(1)(d) of this administrative regulation or the minimum contribution requirement specified in Section 6 of this administrative regulation, the qualified employer may elect to offer coverage to a qualified employee during an enrollment period from November 15 through December 15 of each year.

      (3) A qualified employer may apply for coverage through the SHOP for its qualified employees at any time during the year.

      (4) A qualified employer’s plan year shall be a twelve (12) month period beginning on the coverage effective date for its qualified employees.

      (5) A qualified employer shall not change its offer of coverage to its qualified employees after a qualified employee has made a QHP selection during an initial or annual open enrollment period.

 

      Section 8. Enrollment Periods for a Qualified Employee. (1) A qualified employee shall enroll in a QHP or SADP or change a QHP or SADP only during:

      (a) An initial open enrollment period described in this section;

      (b) For a newly qualified employee, an enrollment period described in Section 11 of this administrative regulation;

      (c) An annual open enrollment period described in Section 10 of this administrative regulation; or

      (d) A special enrollment period described in Section 12 of this administrative regulation.

      (2) An initial open enrollment period shall:

      (a) Begin on a day chosen by the employer if the employer has provided the information required in Section 4 of this administrative regulation;

      (b) Be a minimum of ten (10) days; and

      (c) End on the tenth day of a calendar month.

      (3) An effective date of coverage for a qualified employee enrollment during an initial open enrollment period shall be the first day of the month following the end of the open enrollment period.

      (4) Unless an employee changes coverage due to a qualifying event, a premium shall not change until the employer’s annual renewal date.

 

      Section 9. Annual Employer Election Period. (1) On an annual basis, a small employer shall have a thirty (30) day period prior to the completion of the employer’s plan year and before the annual open enrollment to change the employer’s participation in the SHOP for the next plan year.

      (2) During the employer annual election period, a small employer may change:

      (a) Its employer contribution towards the premium of a qualified employee made in accordance with Section 6 of this administrative regulation;

      (b) The QHP or QHPs offered to a qualified employee in accordance with Section 5 of this administrative regulation;

      (c) The SADP or SADPs offered to a qualified employee in accordance with Section 5 of this administrative regulation;

      (d) Its election to offer dependent or spousal coverage; and

      (e) The waiting period for newly qualified employees.

 

      Section 10. Annual Open Enrollment Period. (1) A qualified employee shall select a QHP or change a QHP during an annual open enrollment period that shall be:

      (a) No less than thirty (30) days; and

      (b) Prior to the end of the employer’s plan year.

      (2) If a qualified employee enrolled in a QHP remains eligible for coverage, the qualified employee shall remain enrolled in the QHP selected the previous year unless:

      (a) The qualified employee enrolls in another QHP; or

      (b) The QHP is no longer available to the qualified employee.

 

      Section 11. Enrollment Period and Coverage Effective Dates for a Newly Qualified Employee. (1) A newly qualified employee shall be eligible for an enrollment period beginning on the first day of becoming a newly qualified employee, regardless of whether the employee is subject to a waiting period.

      (2) An enrollment period for a newly qualified employee shall be at least thirty (30) days.

      (3) If a newly qualified employee is subject to a waiting period in excess of forty-five (45) days, the duration of the employee’s enrollment period shall extend until fifteen (15) days before the conclusion of the waiting period.

      (4)(a) Except as provided in paragraph (b) of this subsection, an effective date of coverage for a newly qualified employee shall be:

      1. On the first day of the month; and

      2. Subject to an effective date of coverage determined in accordance with subsection (5) of this section.

      (b) If subject to a waiting period consistent with 45 C.F.R. 147.116, the effective date of coverage may be on the first day of a later month if the effective date complies with 45 C.F.R. 147.116.

      (5) The effective date of coverage shall be:

      (a) For a plan selection made between the first and the fifteenth of any month, the first day of the following month; or

      (b) For a plan selection made between the sixteenth and the last day of any month, the first day of the following second month.

 

      Section 12. Special Enrollment Period. (1) A qualified employee, dependent of a qualified employee, or spouse of a qualified employee may enroll in a QHP or an SADP or a qualified employee, dependent of a qualified employee, or spouse of qualified employee may change a QHP or an SADP during a special enrollment period if:

      (a) The qualified employee or the spouse or dependent of a qualified employee loses minimal essential coverage;

      (b) The qualified employee gains a spouse or dependent through marriage, birth, adoption, or placement for adoption;

      (c) The qualified employee or the spouse or dependent of the qualified employee enrolls or fails to enroll in a QHP due to an error, misrepresentation, or inaction of an officer, employee, or agent of the KHBE;

      (d) The qualified employee or the spouse or dependent of the qualified employee demonstrates to the KHBE that the QHP in which the qualified employee or the spouse or dependent of the qualified employee is enrolled substantially violated a material provision of its contract in relation to the enrollee;

      (e) The qualified employee or the spouse or dependent of the qualified employee gains access to new QHPs as a result of a permanent move;

      (f) The qualified employee or the spouse or dependent of the qualified employee demonstrates that the qualified employee or the spouse or dependent of an employee meets other exceptional circumstances;

      (g) The qualified employee is an Indian who may change from one (1) QHP to another QHP one (1) time per month;

      (h) The qualified employee or the spouse or dependent of the qualified employee loses eligibility for coverage under Medicaid or CHIP; or

      (i) The qualified employee or the spouse or dependent of a qualified employee becomes eligible for premium assistance through KHIPP.

      (2) A qualified employee or the spouse or dependent of a qualified employee shall have thirty (30) days from the date of a triggering event described in subsection (1)(a) through (g) of this section to select a QHP or SADP through the SHOP.

      (3) A qualified employee or the spouse or dependent of a qualified employee shall have sixty (60) days from the date of a triggering event described in subsection (1)(h) or (i) of this section to select a QHP or SADP through the SHOP.

      (4) A spouse or dependent of a qualified employee shall not be eligible for a special enrollment period if a small employer does not offer coverage to a spouse or dependent.

      (5) Except as provided in subsection (6) of this section, the effective date of coverage for an enrollment during a special enrollment period shall be, if a qualified employee selects a QHP:

      (a) Between the first and the fifteenth day of any month, the first day of the following month; or

      (b) Between the sixteenth and the last day of any month, the first day of the second following month.

      (6)(a) For a birth, adoption, or placement for adoption, the effective date of coverage shall be the date of birth, adoption, or placement for adoption.

      (b) For a marriage, or if a qualified employee loses minimum essential coverage as described in subsection (7) or (8) of this section, the effective date of coverage shall be the first day of the following month.

      (7) Loss of minimum essential coverage shall include those circumstances described in 26 C.F.R. 54.9801–6(a)(3)(i) through (iii).

      (8) Loss of minimum essential coverage shall not include termination or loss due to:

      (a) Failure to pay premiums on a timely basis, including premiums prior to expiration of COBRA coverage; or

      (b) A situation allowing for a rescission as specified in 45 C.F.R. 147.128.

 

      Section 13. Effective Dates for Cancellation of Coverage. (1) Except for the death of an employee or dependent or spouse of an employee, the effective date for cancellation of coverage shall be:

      (a) The last day of the month during which an employer terminates an employee’s or dependent or spouse of an employee’s coverage; or

      (b) The last day of the month in which an employee requests to terminate the employee's own or the dependent’s or spouse’s coverage.

      (2) The effective date for cancellation of coverage for the death of an employee or dependent or spouse of an employee shall be the date of death.

 

      Section 14. Employer Voluntary and Involuntary Termination from SHOP. (1)(a) An employer may terminate its participation in SHOP at any time and for any reason by providing written notice to KHBE.

      (b) The earliest effective date of termination shall be:

      1. The last day of any calendar month if the employer has given notice to the SHOP on or before the fifteenth of any month; or

      2. The last day of the following calendar month if notice was given after the fifteenth of any month.

      (2) An employer may be terminated from participation in SHOP if the employer:

      (a) Fails to meet the minimum contribution requirements established in Section 4 of this administrative regulation;

      (b) Fails to meet the employer eligibility requirements established in Section 2 of this administrative regulation;

      (c) Fails to pay the total premium due within the grace period described in KRS 304.17A-243; or

      (d) Commits fraud or misrepresentation.

      (3) The effective date of employer termination from participation in the SHOP shall be:

      (a) The date of notification of termination for failure to meet minimum contribution requirements under subsection (2)(a) of this section;

      (b) The last day of the plan year, if the condition in subsection (2)(b) of this section is met;

      (c) The last day of the month in which premiums were paid in full, if the condition in subsection (2)(c) of this section is met; or

      (d) The last day of the calendar month following the month in which an employer shall be notified of the termination by the KHBE, if the condition in subsection (2)(d) of this section is met.

      (4) Coverage terminated under subsection (2)(c) of this section for nonpayment of premium shall be reinstated upon request of the employer one (1) time during a plan year if the employer:

      (a) Requests reinstatement by the end of the month following the month of termination; and

      (b) Pays all premiums:

      1. From the month of termination through the month reinstatement is requested; and

      2. For the month following the request for reinstatement.

      (5) If coverage is reinstated pursuant to subsection (4) of this section, there shall be no lapse in coverage. (40 Ky.R. 199; 868; eff. 12-10-2013; 41 Ky.R. 2658; 42 Ky.R. 301; eff. 9-4-2015.)