900 KAR 10:020. Kentucky Health Benefit Exchange 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, Office of the Kentucky Health Benefit 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 number of eligible employees enrolled in a group health plan in relation to the number of employees eligible to enroll in the group health plan.

      (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 period beginning October 1, 2013 and extending through March 31, 2014, during which a qualified individual or qualified employee may enroll in health coverage through an exchange for the 2014 benefit year.

      (14) "Kentucky Health Benefit Exchange" or "KHBE" means the Kentucky state-based exchange conditionally approved by HHS pursuant to 45 C.F.R. 155.105 to offer a QHP beginning January 1, 2014, 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) "Medicaid" means coverage in accordance with Title XIX of the Social Security Act, 42 U.S.C. sections 1396 et seq. as amended.

      (17) "Medicare advantage plan" means a Medicare program established under 42 U.S.C. 1395w-21, which provides Medicare Part A and B benefits through a private insurer.

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

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

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

      (23) "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.

      (24) "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.

      (25) "Qualifying event" means an event described in Section 9(1) of this administrative regulation.

      (26) "Reference plan" means the selection of a single plan on which an employer will base its contribution and employees are then able to elect other plans and pay the premium differential.

      (27) "Service area" means a geographical area in which an issuer may offer a QHP.

      (28) "Shared responsibility payment" means a penalty imposed for failing to meet the requirement to maintain minimum essential coverage in accordance with 26 U.S.C. 5000A.

      (29) "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.

      (30) "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.

      (31) "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.

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

 

      Section 2. Employer Eligibility and Participation Requirements. (1) Beginning October 1, 2013, and thereafter, a small employer may submit an application to purchase health insurance coverage for its qualified employees through the SHOP if the employer is a small employer that:

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

      (b) Has a valid federal employer identification number; and

      (c) Has a group participation rate of at least seventy five (75) percent in accordance with subsection (6) of this section, except as provided in 45 C.F.R. 147.104(b)(1)(i).

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

      (3) A small employer shall submit Form KHBE-E10, Small Business Health Options (SHOP) Insurance Application for Employers, to participate in SHOP:

      (a) Via the KHBE Web site at www.kynect.ky.gov;

      (b) By telephone by contacting the KHBE customer service center;

      (c) By mail; or

      (d) In person.

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

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

      (b) Chooses to no longer purchase health insurance coverage for qualified employees through the SHOP.

      (5) As part of the verification of an application of the employer, a small employer shall submit:

      (a) An employee census that includes the name, address, and social security number of all eligible employees;

      (b) Proof of a federal employer identification number; and

      (c) Copy of its most recent Employer's Quarterly Unemployment Wage and Tax Report, if applicable.

      (6) A calculation of a group participation rate shall not include in the count of eligible employees an employee:

      (a) Enrolled in:

      1. A group health plan offered by a second employer;

      2. A group health plan offered through the spouse of the employee;

      3. Medicare, including a Medicare advantage plan;

      4. Medicaid or CHIP;

      5. TRICARE or other veteran’s health coverage;

      6. A parent’s health plan;

      7. Coverage identified in 45 C.F.R. 156.602; or

      8. Coverage recognized by HHS as meeting the requirement for minimum essential coverage under 45 C.F.R. 156.604;

      (b) Issued a certificate of exemption from the shared responsibility payment by KHBE or HHS; or

      (c) Not residing in the service area of at least one (1) QHP offered by the employer.

      (7) 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.

      (8) 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.

      (9) A qualified small employer participating in the SHOP shall:

      (a) Disseminate information to its qualified employees about the process to enroll in a QHP through the SHOP;

      (b) Make a contribution toward the premium of any qualified employee in accordance with Section 4 of this administrative regulation;

      (c) Remit to the KHBE, employer and employee contributions upon receipt of an invoice from the KHBE; and

      (d) Qualified employers participating in the SHOP shall provide the KHBE with information about dependents or employees whose eligibility status for coverage purchased through the employer in the SHOP has changed.

      (10) A small employer may designate an agent to:

      (a) Perform an employer function on behalf of the employer; or

      (b) Assist an employee with enrollment and plan selection.

      (11) A small employer participating in a SHOP may be eligible for small employer health insurance tax credits in accordance with 26 U.S.C. 45R.

 

      Section 3. Employer Selection of Qualified Health Plans. (1) A small employer shall make available to a qualified employee:

      (a) A single QHP;

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

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

      (2) A qualified employer may apply for coverage through the SHOP for its qualified employees at any time in a year.

      (3) The employer’s plan year shall consist of the twelve (12) month period beginning with the qualified employer’s effective date of coverage.

 

      Section 4. Minimum Contribution. (1) If a small employer selects one (1) QHP to offer to a qualified employee in accordance with Section 3 of this administrative regulation, the small employer shall:

      (a) Define a percentage contribution of at least fifty (50) percent toward a 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 a QHP selected by the employee.

      (2) If a small employer selects more than one (1) QHP to offer to a qualified employee in accordance with Section 3 of this administrative regulation, the small employer shall:

      (a) Select a QHP to serve as a reference plan on which a contribution shall be based;

      (b) Make a percentage contribution of at least fifty (50) percent toward a premium for employee-only coverage under the reference plan; and

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

      (3) If a small employer elects to provide dependent coverage, the small employer may make a contribution toward a premium for dependent coverage.

 

      Section 5. 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 the:

      (a) Method by which the qualified employer makes QHPs available to qualified employees in accordance with Section 3 of this administrative regulation;

      (b) Employer contribution towards the premium of a qualified employee made in accordance with Section 4 of this administrative regulation; and

      (c) QHP or QHPs offered to qualified employees in accordance with Section 3 of this administrative regulation.

 

      Section 6. Employee Eligibility. (1) An employee shall be eligible to enroll in a QHP through the SHOP if the employee receives an offer of coverage from a qualified employer.

      (2) An employee shall submit Form KYBE-E11, Small Business Health Options (SHOP) Insurance Application for Employees, to enroll in a QHP:

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

      (b) By telephone by calling the KHBE customer service center;

      (c) By mail; or

      (d) In person.

      (3) 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.

      (4) A qualified employee may designate an individual or organization as an authorized representative.

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

      (6) A small employer shall be notified if a qualified employee enrolled in a QHP terminates coverage in the QHP.

 

      Section 7. Enrollment and Effective Dates of Coverage. (1) A qualified employee shall select a QHP or change a QHP offered by a qualified employer in accordance with Section 3 of this administrative regulation during:

      (a) The initial open enrollment period;

      (b) An annual open enrollment period as set forth in Section 8 of this administrative regulation;

      (c) A special enrollment period set forth in Section 9 of this administrative regulation; or

      (d) An enrollment period outside of the employer’s open enrollment period as set forth in Section 8(3) of this administrative regulation, for a qualified employee who is newly eligible.

      (2) The length of an initial open enrollment period and annual open enrollment period shall be:

      (a) Thirty (30) days; and

      (b) At the request of a small employer, extended up to a maximum of fifteen (15) additional days.

      (3) Coverage in a QHP shall be effective:

      (a)1. If plan selection is made prior to December 15, 2013, during the initial open enrollment period, January 1, 2014;

      2. If open enrollment ends between the first and 15th day of any month, the first day of the following month; or

      3. If open enrollment ends between the 16th and the last day of any month, the first day of the second following month; and

      (b) Upon receipt of the full first month’s premium from a small employer.

      (4) For a renewal, the effective date of coverage shall be an employer’s annual renewal date.

      (5) For a special enrollment period, the effective date of coverage shall be in accordance with Section 9(5) and (6) of this administrative regulation.

      (6)(a) Except for the death of an employee or dependent of an employee, the effective date for cancellation of coverage shall be the last day of the month during which an issuer terminates an employee’s or dependent of an employee’s coverage.

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

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

 

      Section 8. Annual Open Enrollment Period. (1) A qualified employee shall select a QHP or change QHPs 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.

      (3)(a) A newly added employee who becomes eligible after the beginning of the plan year and prior to the annual enrollment period shall have thirty (30) days prior to the date the newly added employee becomes eligible for employer-sponsored coverage to enroll in a QHP.

      (b) The effective date of coverage of a newly added employee shall be the first day of the month following the month the newly added employee becomes eligible for employer-sponsored coverage.

 

      Section 9. Special Enrollment Period. (1) A qualified employee or dependent of a qualified employee may enroll in a QHP or a qualified employee may change QHPs during a special enrollment period if:

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

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

      (c) The qualified employee 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 or HHS;

      (d) The qualified employee or dependent of the qualified employee demonstrates to the KHBE that the QHP in which the qualified employee 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 dependent of the qualified employee gains access to new QHPs as a result of a permanent move;

      (f) The qualified employee or dependent of the qualified employee demonstrates that the qualified employee 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 dependent of the qualified employee loses eligibility for coverage under Medicaid or CHIP; or

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

      (2) A qualified employee 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 through the SHOP.

      (3) A qualified employee 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 through the SHOP.

      (4) A dependent of a qualified employee shall not be eligible for a special enrollment period if a small employer does not offer coverage to a 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) and (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 COBRA 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 10. 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 the last day of the calendar month following the calendar month in which notice is given.

      (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 date premium was due, 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.

 

      Section 11. Incorporation by Reference. (1) The following material is incorporated by reference:

      (a) "Form KHBE-E10, Small Business Health Options Program (SHOP) Insurance Application for Employers”, revised 8-30-13; and

      (b) “Form KHBE-E11, Small Business Health Options Program (SHOP) Insurance Application for Employees”, revised 8-30-13.

      (2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Office of the Kentucky Health Benefit Exchange, 12 Mill Creek Park, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m., or from its Web site at www.healthbenefitexchange.ky.gov. (40 Ky.R. 199; 868; eff. 12-10-2013.)