CABINET FOR HEALTH AND FAMILY SERVICES

Kentucky Office of Health Benefit and Health Information

Exchange

(Amendment)

 

      900 KAR 10:020. KHBE[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 Office of Health Benefit and Health 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[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 enrollment period in which a qualified employer first enrolls in coverage through the Small Business Health Options Program (SHOP)[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 or stand-alone dental plan (SADP)[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) "Kentucky Office of Health Benefit and Health Information Exchange", "KOHBHIE", 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.[(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) "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)[(21)] "Premium" is defined by KRS 304.14-030.

      (23)[(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.

      (24)[(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.

      (25)[(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.

      (26)[(25)] "Qualifying event" means an event that triggers a special enrollment period for an individual to enroll in health insurance coverage[described in Section 9(1) of this administrative regulation].

      (27)[(26)] "Reference plan" means[the selection of] a single health plan on which an employer will base its employee premium contribution and an employee is[employees are] then able to select the reference plan or another health plan[elect other plans] and pay the premium differential.

      (28)[(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 or SADPs.

      (29)[(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.

      (30)[(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.

      (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[and Participation Requirements]. (1) An employer shall be a qualified employer and eligible to purchase coverage through SHOP if the employer[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 eligibility requirements established in 45 C.F.R. 155.710(b);

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

      (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):

      1. Meets[Has] a group participation rate of at least seventy-five (75) percent that shall be calculated in accordance with subsection (5)[(6)] of this section; and

      2. Contributes a minimum of fifty (50) percent toward the premium of any qualified employee in accordance with Section 6 of this administrative regulation[, 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 full-time employees whose primary work site is in Kentucky.

      (3) An[A small] employer shall apply to enroll in a QHP or SADP[submit Form KHBE-E10, Small Business Health Options (SHOP) Insurance Application for Employers, to participate in SHOP]:

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

      (b) By telephone by contacting the office contact center at 1-800-459-6328[KHBE customer service center];

      (c)[By mail; or (d)] In person; or

      (d) By mailing a completed Form KHBE-E10, Small Business Health Options (SHOP) Insurance Application for Employers, to kynect SHOP, PO Box 2012, Frankfort, Kentucky 40602.

      (4) 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[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].

      (5) An employee participation rate shall be calculated as the number of qualified employees accepting coverage under the employer’s group health plan divided by the number of qualified employees offered coverage, excluding from the calculation any employee who is enrolled in coverage through:[(6) A calculation of a group participation rate shall not include in the count of eligible employees an employee:]

      (a) Another employer’s plan[Enrolled in:

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

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

      (b)[3.] Medicare[, including a Medicare advantage plan];

      (c)[4.] Medicaid[or CHIP];

      (d)[5.] TRICARE[or other veteran’s health coverage;

      6. A parent’s health plan];

      (e) Other[7.] coverage identified in 45 C.F.R. 156.602; or

      (f)[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].

      (6)[(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.

      (7) 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[(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. 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 the qualified spouse or dependent of the qualified employee who is three (3) years of age up to twenty-one (21) years of age may enroll in an SADP.

      (4) 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;

      (c) In person; or

      (d) By mailing a completed Form KYBE-E11, Small Business Health Options (SHOP) Insurance Application for Employees, to kynect SHOP, PO Box 2102, Frankfort, Kentucky 40602.

      (5) 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.

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

      (7) 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[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; 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[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 6.[4.] Minimum Contribution. (1) [If] A small employer who selects only one (1) QHP to offer to a qualified employee in accordance with Section 5[3] of this administrative regulation[, the small employer] shall:

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

      (2)[If] A small employer who selects more than one (1) QHP to offer to a qualified employee in accordance with Section 5[3] of this administrative regulation[, the small employer] 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[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 the[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) An[If a small] employer who elects to provide dependent or spousal coverage[, the small employer] 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.[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 6[4] of this administrative regulation;

      (b)[and (c)] QHP or QHPs offered to a qualified employee[employees] in accordance with Section 5[3] of this administrative regulation; and

      (c) SADP or SADPs offered to a qualified employee in accordance with Section 5 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 10.[8.] Annual Open Enrollment Period. (1) A qualified employee shall select a QHP or change a QHP[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.

 

      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 if the employee selected a plan on the first day of becoming eligible.

      (4) An effective date of coverage for a newly qualified employee shall be:

      (a) On the first day of the month; and

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

      2. 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[(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 12.[9.] Special Enrollment Period. (1) A qualified employee,[or] 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 a SADP[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 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 their own or their 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.[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 15.[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.

 

CARRIE BANAHAN, Executive Director

AUDREY TAYSE HAYNES, Secretary

      APPROVED BY AGENCY: May 13, 2015

      FILED WITH LRC: May 14, 2015 at 4 p.m.

      PUBLIC HEARING AND PUBLIC COMMENT PERIOD: A public hearing on this administrative regulation shall, if requested, be held on June 22, 2015, at 9:00 a.m. in the Public Health Auditorium located on the First Floor, 275 East Main Street, Frankfort, Kentucky 40621. Individuals interested in attending this hearing shall notify this agency in writing by June 15, 2015, five (5) workdays prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing is received by that date, the hearing may be canceled. The hearing is open to the public. Any person who attends will be given an opportunity to comment on the proposed administrative regulation. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to attend the public hearing, you may submit written comments on the proposed administrative regulation. You may submit written comments regarding this proposed administrative regulation until June 30, 2015. Send written notification of intent to attend the public hearing or written comments on the proposed administrative regulation to:

      CONTACT PERSON: Tricia Orme, Office of Legal Services, 275 East Main Street 5 W-B, Frankfort, Kentucky 40621, phone (502) 564-7905, fax (502) 564-7573, email address tricia.orme@ky.gov.

 

REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT

 

Contact Person: Carrie Banahan

      (1) Provide a brief summary of:

      (a) What this administrative regulation does: 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. Section 18031 and 45 C.F.R. parts 155 and 156.

      (b) The necessity of this administrative regulation: This administrative regulation is necessary to establish the policies and procedures relating to the operation of a Small Business Health Options Program.

      (c) How this administrative regulation conforms to the content of the authorizing statutes: This administrative regulation is necessary so that small businesses are aware of the small business health options program which will allow them to enroll employees in qualified health plans offered on the Kentucky Health Benefit Exchange as required by 45 C.F.R. Parts 155 and 156 and qualify for small employer health insurance tax credits pursuant to 26 U.S.C. 45R.

      (d) How this administrative regulation currently assists or will assist in the effective administration of the statutes: This administrative regulation provides detailed requirements for the small business health options program and how small businesses may enroll employees in qualified plans to be offered on the Kentucky Health Benefit Exchange to comply with the statute and qualify for small employer health insurance tax credits pursuant to 26 U.S.C. 45R.

      (2) If this is an amendment to an existing administrative regulation, provide a brief summary of:

      (a) How the amendment will change this existing administrative regulation: The amendments to this administrative regulation seek to clarify policy regarding waiting periods for newly hired employees by establishing waiting periods and effective dates, changes the open enrollment periods by establishing a minimum of ten (10) days and ending on the tenth day of any month, changes the methodology for calculating the group participation rate, and provides clarification for employees and dependents enrollment in stand-alone dental plans.

      (b) The necessity of the amendment to this administrative regulation: The amendment to this administrative regulation is necessary to conform with federal rules issued February 27, 2015 and to conform to system changes that will be effective May, 2015.

      (c) How the amendment conforms to the content of the authorizing statutes: This amendment conforms to the content of the authorizing statues by providing information regarding eligibility and enrollment to employers and their employees who want to purchase health coverage through the Small Business Health Options Program.

      (d) How the amendment will assist in the effective administration of the statutes: This administrative regulation provides detailed information to employers and employees on the requirements to enroll in health coverage through the Small Business Health Options Program.

      (3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation: This administrative regulation will affect approximately 2,500 small businesses that may purchase health insurance for their employees on the Kentucky Health Benefit Exchange and potentially qualify for small employer health insurance tax credits.

      (4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:

      (a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment: Each entity will be able to submit an application online to purchase health insurance coverage for their employees through the Exchange, provide supporting documentation, and contribute at least fifty (50) percent of the premium towards an employee coverage.

      (b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3): There will be no cost to the individual agent or business entity for participation on the KHBE.

      (c) As a result of compliance, what benefits will accrue to the entities identified in question (3): This administrative regulation will benefit each small business as it may ease the administrative burden of administering their health insurance program and may benefit certain employers through health insurance tax credits.

      (5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:

      (a) Initially: No additional costs will be incurred to implement this administrative regulation.

      (b) On a continuing basis: No additional costs will be incurred.

      (6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation: The source of funding to be used for the implementation and enforcement of this administrative regulation will be from Kentucky Office of Health Benefit and Health Information Exchange existing budget. No new funding will be needed to implement the provisions of this regulation.

      (7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment: No increase in fees or funding is necessary.

      (8) State whether or not this administrative regulation established any fees or directly or indirectly increased any fees: This administrative regulation does not establish any fees and does not increase any fees either directly or indirectly.

      (9) TIERING: Is tiering applied? Tiering was not appropriate in this administrative regulation because the administrative regulation applies equally to all those individuals or entities regulated by it.

 

FISCAL NOTE ON STATE OR LOCAL GOVERNMENT

 

      (1) What units, parts, or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation? This administrative regulation affects the Kentucky Office of Health Benefit and Health Information Exchange within the Cabinet for Health and Family Services.

      (2) Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation. KRS 194A.050(1), 42 U.S.C. § 18031, and 45 C.F.R. Part 155 and 156.

      (3) Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.

      (a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year? This administrative regulation will not generate any revenue.

      (b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years? This administrative regulation will not generate any revenue.

      (c) How much will it cost to administer this program for the first year? No additional costs will be incurred to implement this administrative regulation.

      (d) How much will it cost to administer this program for subsequent years? No additional costs will be incurred to implement this administrative regulation on a continuing basis.

      Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.

      Revenues (+/-):

      Expenditures (+/-):

      Other Explanation:

 

FEDERAL MANDATE ANALYSIS COMPARISON

 

      1. Federal statute or regulation constituting the federal mandate. 42 U.S.C. Section 18031 and 45 C.F.R. Part 155 and 156.

      2. State compliance standards. 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. Section 18031 and 45 C.F.R. parts 155 and 156.

      3. Minimum or uniform standards contained in the federal mandate. The Affordable Care Act establishes the creation of the American Health Benefit Exchange as identified in Section 1311(a) of the Affordable Care Act. The "Kentucky Health Benefit Exchange" (KHBE) is the Kentucky state-based exchange conditionally approved by HHS established by 45 C.F.R. 155.105. An Exchange must establish a Small Business Health Options Program (SHOP). A SHOP is designed to assist qualified small employers in the state in enrolling their employees in qualified health plans in the state’s small group market.

      4. Will this administrative regulation impose stricter requirements, or additional or different responsibilities or requirements, than those required by the federal mandate? No.

      5. Justification for the imposition of the stricter standard, or additional or different responsibilities or requirements. This administrative regulation does not impose stricter requirements than those required by the federal mandate.