# Insurance (GIN)

## Title 15. Health Insurance

### Subtitle 12. Maryland Health Insurance Reform Act

#### Section 15-1201

(a) In this subtitle the following words have the meanings indicated.

(b) "Board" means the Board of Directors of the Pool established under Sec. 15-1216 of this subtitle.

(c) "Carrier" means a person that:

  (1) offers health benefit plans in the State covering eligible employees of small employers; and

  (2) is:

    (i) an authorized insurer that provides health insurance in the State;

    (ii) a nonprofit health service plan that is licensed to operate in the State;

    (iii) a health maintenance organization that is licensed to operate in the State; or

    (iv) any other person or organization that provides health benefit plans subject to State insurance regulation.

(d) "Commission" means the Maryland Health Care Commission established under Title 19, Subtitle 1 of the Health - General Article.

(e) "Coverage level" has the meaning stated in Sec. 31-101 of this article.

(f)

  (1) "Eligible employee" means an employee who is offered coverage under a health benefit plan by a small employer.

  (2) "Eligible employee", at the option of the small employer, may include:

    (i) only full-time employees; or

    (ii) full-time employees and part-time employees.

(g) "Employee" means an individual who is employed by a small employer.

(h)

  (1) "Full-time employee" means, with respect to a calendar month, an employee of a small employer who works, on average, at least 30 hours per week.

  (2) "Full-time employee" does not include a seasonal employee as defined in federal law.

(i)

  (1) "Health benefit plan" means:

    (i) a policy or certificate for hospital or medical benefits issued by an insurer;

    (ii) a nonprofit health service plan contract; or

    (iii) a health maintenance organization subscriber or group master contract.

  (2) "Health benefit plan" includes a policy or certificate for hospital or medical benefits that covers residents of this State who are eligible employees and that is issued through:

    (i) a multiple employer trust or association located in this State or another state; or

    (ii) a professional employer organization, coemployer, or other organization located in this State or another state that engages in employee leasing.

  (3) "Health benefit plan" does not include:

    (i) accident-only insurance;

    (ii) credit health insurance;

    (iii) disability income insurance;

    (iv) coverage issued as a supplement to liability insurance;

    (v) workers' compensation or similar insurance;

    (vi) automobile medical payment insurance;

    (vii) the following benefits, if the benefits are provided under a separate policy, certificate, or contract, or are not otherwise an integral part of a small employer health benefit plan:

      (1) dental benefits;

      (2) vision benefits; or

      (3) long-term care insurance as defined in Sec. 18-101 of this article;

    (viii) disease-specific insurance if:

      (1) the benefits are provided under a separate policy, certificate, or contract;

      (2) there is no coordination between the provision of the benefits and an exclusion of benefits under any group health plan maintained by the same employer; and

      (3) the benefits are paid with respect to an event, without regard to whether benefits are provided with respect to the event under any group health plan maintained by the same employer;

    (ix) hospital indemnity or other fixed indemnity insurance if:

      (1) the benefits are provided under a separate policy, certificate, or contract;

      (2) there is no coordination between the provision of the benefits and an exclusion of benefits under any group health plan maintained by the same employer;

      (3) the benefits are paid with respect to an event, without regard to whether benefits are provided with respect to the event under any group health plan maintained by the same employer; and

      (4) the benefits are payable in a fixed dollar amount per period of time, regardless of the amount of expenses incurred; or

    (x) the following supplemental benefits, if the benefits are provided under a separate policy, certificate, or contract:

      (1) a Medicare supplement policy as defined in Sec. 15-901 of this title;

      (2) coverage supplemental to the coverage provided under Chapter 55, Title 10 of the United States Code; and

      (3) similar supplemental coverage provided to coverage under a group health plan if the coverage qualifies for the exception described in 45 C.F.R. Sec. 146.145(b)(5)(i)(C).

(j) "Health care practitioner" has the meaning stated in Sec. 1-301 of the Health Occupations Article.

(k) "Health status-related factor" means a factor related to:

  (1) health status;

  (2) medical condition;

  (3) claims experience;

  (4) receipt of health care;

  (5) medical history;

  (6) genetic information;

  (7) evidence of insurability including conditions arising out of acts of domestic violence; or

  (8) disability.

(l) "Late enrollee" means an eligible employee or dependent who requests enrollment in a health benefit plan after the initial enrollment period provided under the health benefit plan.

(m) "Minimum essential coverage" has the meaning stated in 45 C.F.R. Sec. 155.20.

(n) "Part-time employee" means an employee of a small employer who:

  (1) has a normal workweek of at least 17.5 hours; and

  (2) is not a full-time employee.

(o) "Plan year" means a calendar year or other consecutive 12-month period during which a health benefit plan provides coverage for health care services.

(p) "Pool" means the Maryland Small Employer Health Reinsurance Pool established under this subtitle.

(q) "Preexisting condition" means:

  (1) a condition existing during a specified period immediately preceding the effective date of coverage, that would have caused an ordinarily prudent person to seek medical advice, diagnosis, care, or treatment; or

  (2) a condition for which medical advice, diagnosis, care, or treatment was recommended or received during a specified period immediately preceding the effective date of coverage.

(r) "Preexisting condition provision" means a provision in a health benefit plan that denies, excludes, or limits benefits for an enrollee for expenses or services related to a preexisting condition.

(s) "Qualified employer" has the meaning stated in Sec. 31-101 of this article.

(t) "Qualified health plan" has the meaning stated in Sec. 31-101 of this article.

(u) "Reinsuring carrier" means a carrier that participates in the Pool.

(v) "Risk-assuming carrier" means a carrier that does not participate in the Pool.

(w) "SHOP Exchange" has the meaning stated in Sec. 31-101 of this article.

(x) "Small employer" has the meaning stated in Sec. 31-101 of this article.

(y) "Special enrollment period" means a period during which a group health plan shall permit certain individuals who are eligible for coverage, but not enrolled, to enroll for coverage under the terms of the group health benefit plan.

(z) "Standard Plan" means the Comprehensive Standard Health Benefit Plan adopted by the Commission in accordance with Sec. 15-1207 of this subtitle and Title 19, Subtitle 1 of the Health - General Article.

(aa) "Wellness benefit" means a benefit that:

  (1) includes a bona fide wellness program as defined in Sec. 15-509 of this title; and

  (2) complies with regulations adopted by the Commission.

(bb)

  (1) "Wellness program" means a program or activity that:

    (i) is designed to improve health status and reduce health care costs; and

    (ii) complies with guidelines developed by the Commission.

  (2) "Wellness program" includes programs and activities for:

    (i) smoking cessation;

    (ii) reduction of alcohol misuse;

    (iii) weight reduction;

    (iv) nutrition education; and

    (v) automobile and motorcycle safety.

#### Section 15-1202

(a) This subtitle applies only to a health benefit plan that:

  (1) covers eligible employees of small employers in the State; and

  (2) is issued or renewed on or after July 1, 1994, if:

    (i) any part of the premium or benefits is paid by or on behalf of the small employer;

    (ii) any eligible employee or dependent is reimbursed, through wage adjustments or otherwise, by or on behalf of the small employer for any part of the premium;

    (iii) the health benefit plan is treated by the employer or any eligible employee or dependent as part of a plan or program under the United States Internal Revenue Code, 26 U.S.C. Sec. 106, Sec. 125, or Sec. 162; or

    (iv) the small employer allows eligible employees to pay for the health benefit plan through payroll deductions.

(b) This subtitle applies to any health benefit plan offered by an association, a professional employer organization, or any other entity, including a plan issued under the laws of another state, if the health benefit plan covers eligible employees of one or more small employers and meets the requirements of subsection (a) of this section.

#### Section 15-1204

(a) This section applies to a carrier with respect to any health benefit plan that is a grandfathered health plan, as defined in Sec. 1251 of the Affordable Care Act.

(b) In addition to any other requirement under this article, a carrier shall:

  (1) have demonstrated the capacity to administer the health benefit plan, including adequate numbers and types of administrative personnel;

  (2) have a satisfactory grievance procedure and ability to respond to enrollees' calls, questions, and complaints;

  (3) provide, in the case of individuals covered under more than one health benefit plan, for coordination of coverage under all of those health benefit plans in an equitable manner; and

  (4) design policies to help ensure adequate access to providers of health care.

(c) A person may not offer a health benefit plan in the State unless the person offers at least the Standard Plan.

(d) A carrier may not offer a health benefit plan that has fewer benefits than those in the Standard Plan.

(e) A carrier may offer benefits in addition to those in the Standard Plan if:

  (1) the additional benefits:

    (i) are offered and priced separately from benefits specified in accordance with Sec. 15-1207 of this subtitle; and

    (ii) do not have the effect of duplicating any of those benefits; and

  (2) the carrier:

    (i) clearly distinguishes the Standard Plan from other offerings of the carrier;

    (ii) indicates the Standard Plan is the only plan required by State law; and

    (iii) specifies that all enhancements to the Standard Plan are not required by State law.

(f) Notwithstanding subsection (c) of this section, a health maintenance organization may provide a point of service delivery system as an additional benefit through another carrier regardless of whether the other carrier also offers the Standard Plan.

(g) A carrier may offer coverage for dental care and services as an additional benefit.

(h)

  (1) In this subsection, "prominent carrier" means a carrier that insures at least 10% of the total lives insured in the small group market.

  (2)

    (i) A prominent carrier shall offer a wellness benefit for a health benefit plan offered under this subtitle.

    (ii) A carrier that is not a prominent carrier may offer a wellness benefit for a health benefit plan offered under this subtitle.

  (3) A carrier may not condition the sale of a wellness benefit to a small employer on participation of the eligible employees of the small employer in wellness programs or activities.

#### Section 15-1204.1

(a) This section applies to a carrier with respect to any health benefit plan that:

  (1) is not a grandfathered health plan, as defined in Sec. 1251 of the Affordable Care Act; and

  (2) is issued, delivered, or renewed in the State on or after January 1, 2014.

(b)

  (1) Except as provided in this subsection and Sec. 31-110(f) of this article, a carrier may not offer health benefit plans to small employers in the State unless the carrier also offers qualified health plans, as defined in Sec. 31-101 of this article, in the Small Business Health Options Program of the Maryland Health Benefit Exchange in compliance with the requirements of Title 31 of this article.

  (2) A carrier is exempt from the requirement in paragraph (1) of this subsection if:

    (i) the reported total aggregate annual earned premium from all health benefit plans offered to small employers in the State for the carrier and any other carriers in the same insurance holding company system, as defined in Sec. 7-101 of this article, is less than $20,000,000;

    (ii) the Commissioner determines that the carrier complies with the procedures established under paragraph (3) of this subsection; and

    (iii) when the carrier ceases to meet the requirements for the exemption, the carrier provides to the Commissioner immediate notice and its plan for complying with the requirement in paragraph (1) of this subsection.

  (3) The Commissioner shall establish procedures for a carrier to submit evidence each year that the carrier meets the requirements necessary to qualify for an exemption under paragraph (2) of this subsection.

  (4) Notwithstanding the exemption provided in paragraph (2) of this subsection, the Commissioner, in consultation with the Maryland Health Benefit Exchange:

    (i) may assess the impact of the exemption provided in paragraph (2) of this subsection and, based on that assessment, alter the limit on the amount of annual premiums that may not be exceeded to qualify for the exemption; and

    (ii) shall make any change in the exemption requirement by regulation.

#### Section 15-1205

(a)

  (1) This subsection applies to a carrier with respect to any health benefit plan that is a grandfathered health plan, as defined in Sec. 1251 of the Affordable Care Act.

  (2) In establishing a community rate for a health benefit plan, a carrier shall use a rating methodology that is based on the experience of all risks covered by that health benefit plan without regard to any factor not specifically authorized under this subsection or subsection (g) of this section.

  (3) A carrier may adjust the community rate only for:

    (i) age;

    (ii) geography based on the following contiguous areas of the State:

      (1) the Baltimore metropolitan area;

      (2) the District of Columbia metropolitan area;

      (3) Western Maryland; and

      (4) Eastern and Southern Maryland; and

    (iii) health status, as provided in subsection (g) of this section.

  (4) Rates for a health benefit plan may vary based on family composition as approved by the Commissioner.

  (5)

    (i) Subject to subparagraph (ii) of this paragraph, after applying the risk adjustment factors under paragraph (3) of this subsection, a carrier may offer a discount not to exceed 20% to a small employer for participation in a wellness program.

    (ii) A discount offered under subparagraph (i) of this paragraph shall be:

      (1) applied to reduce the rate otherwise payable by the small employer;

      (2) actuarially justified;

      (3) offered uniformly to all small employers; and

      (4) approved by the Commissioner.

(b)

  (1) This subsection applies to a carrier with respect to any health benefit plan that:

    (i) is not a grandfathered health plan, as defined in Sec. 1251 of the Affordable Care Act; and

    (ii) is issued, delivered, or renewed in the State on or after January 1, 2014.

  (2) In establishing a premium rate for a health benefit plan, a carrier shall use a rating methodology that is based on the experience of all risks covered by that health benefit plan without regard to any factor not specifically authorized under this subsection.

  (3) In accordance with Sec. 2701(a) of the Affordable Care Act, a premium rate may vary only by:

    (i) whether the health benefit plan covers an individual or a family;

    (ii) rating area;

    (iii) age, except that a rate may not vary by more than 3 to 1 for adults; and

    (iv) tobacco use, except that a rate may not vary by more than 1.5 to 1.

  (4) A rate may not vary by any factor that is not specified in paragraph (3) of this subsection.

(c)

  (1) A carrier shall apply all risk adjustment factors under subsections (a) and (g) of this section consistently with respect to all health benefit plans that are:

    (i) issued, delivered, or renewed in the State; and

    (ii) grandfathered health plans, as defined in Sec. 1251 of the Affordable Care Act.

  (2) A carrier shall apply all risk adjustment factors under subsection (b) of this section consistently with respect to all health benefit plans that are:

    (i) issued, delivered, or renewed in the State; and

    (ii) not grandfathered health plans, as defined in Sec. 1251 of the Affordable Care Act.

(d)

  (1) This subsection applies to a carrier with respect to any health benefit plan that is a grandfathered health plan.

  (2) Based on the adjustments allowed under subsection (a)(3)(i) and (ii) of this section, a carrier may charge a rate that is 50% above or 50% below the community rate.

  (3) On or before October 1, 2007, the Commission shall adopt regulations that require carriers to collect and report to the Commission data on participation, by rate band, in health benefit plans issued, delivered, or renewed under this subtitle.

(e)

  (1) A carrier shall base its rating methods and practices on commonly accepted actuarial assumptions and sound actuarial principles.

  (2) A carrier that is a health maintenance organization and that includes a subrogation provision in its contract as authorized under Sec. 19-713.1(d) of the Health - General Article shall:

    (i) use in its rating methodology an adjustment that reflects the subrogation; and

    (ii) identify in its rate filing with the Administration, and annually in a form approved by the Commissioner, all amounts recovered through subrogation.

(f)

  (1) This subsection applies to a carrier with respect to any health benefit plan that is a grandfathered health plan, as defined in Sec. 1251 of the Affordable Care Act.

  (2) A carrier may offer an administrative discount to a small employer if the small employer elects to purchase, for its employees, an annuity, dental insurance, disability insurance, life insurance, long-term care insurance, vision insurance, or, with the approval of the Commissioner, any other insurance sold by the carrier.

  (3) The administrative discount shall be offered under the same terms and conditions for all qualifying small employers.

(g)

  (1) A carrier may adjust the community rate for a health benefit plan that is a grandfathered health plan, as defined in Sec. 1251 of the Affordable Care Act, for health status only if a small employer has not offered a health benefit plan issued under this subtitle to its employees in the 12 months prior to the initial enrollment of the small employer in the health benefit plan.

  (2)

    (i) Based on the adjustment allowed under paragraph (1) of this subsection, in addition to the adjustments allowed under subsection (d)(1) of this section, a carrier may charge:

      (1) in the first year of enrollment, a rate that is 10% above or below the community rate;

      (2) in the second year of enrollment, a rate that is 5% above or below the community rate; and

      (3) in the third year of enrollment, a rate that is 2% above or below the community rate.

    (ii) A carrier may not make any adjustment for health status in the community rate of a health benefit plan issued under this subtitle after the third year of enrollment of a small employer in the health benefit plan.

  (3) For a health benefit plan that is a grandfathered health plan, as defined in Sec. 1251 of the Affordable Care Act, a carrier may use health statements, in a form approved by the Commissioner, and health screenings to establish an adjustment to the community rate for health status as provided in this subsection.

  (4) A carrier may not limit coverage offered by the carrier, or refuse to issue a health benefit plan to any small employer that meets the requirements of this subtitle, based on a health status-related factor.

  (5) It is an unfair trade practice for a carrier knowingly to provide coverage to a small employer that discriminates against an employee or applicant for employment, based on the health status of the employee or applicant or a dependent of the employee or applicant, with respect to participation in a health benefit plan sponsored by the small employer.

(h) A carrier shall set premium rates for the entire plan year for each small employer.

#### Section 15-1206

(a)

  (1) A carrier may not arbitrarily transfer a small employer involuntarily into or out of a health benefit plan.

  (2) A carrier may not offer to transfer a small employer into or out of a health benefit plan unless the offer to transfer is made to all small employers with similar risk adjustment factors.

(b) A carrier shall make a reasonable disclosure in its solicitation and sales materials of:

  (1) the provisions that relate to the carrier's right to change premium rates, including any factors that may affect the changes in premium rates;

  (2) the provisions that relate to renewability of policies and contracts;

  (3) the provisions that relate to preexisting conditions; and

  (4) the provisions of Sec. 15-1209 of this subtitle that require an employer to make dependent coverage available to eligible employees but do not require the employer to make a contribution to the premium payments for that dependent coverage.

(c)

  (1) Subject to the approval of the Commissioner and as provided under this subsection and Sec. 15-1209(d) of this subtitle, a carrier may impose reasonable minimum participation requirements.

  (2) A carrier may not impose a requirement for minimum participation by the eligible employees of a small employer that is greater than 75%.

  (3) In applying a minimum participation requirement to determine whether the applicable percentage of participation is met, a carrier may not consider as eligible employees:

    (i) those who have group spousal coverage under a public or private plan of health insurance or another employer's health benefit arrangement, including Medicare, Medicaid, and CHAMPUS, that provides benefits similar to or exceeding the benefits provided under a bronze level health plan as described in 45 C.F.R. Sec. 156.140; or

    (ii) employees who are under the age of 26 years who are covered under their parent's health benefit plan.

  (4) A carrier may not impose a minimum participation requirement for a small employer group if any member of the group participates in a medical savings account.

  (5) A carrier may not impose a minimum participation requirement for a qualified employer if the qualified employer designates a coverage level within which its employees may choose any qualified health plan in the SHOP Exchange, as provided for in Sec. 31-111(c)(1) of this article.

  (6) A carrier may not impose a minimum participation requirement for a small employer group if the small employer group applies for coverage during the period that begins on November 15 and extends through December 15 of any year.

(d)

  (1) On or before March 15 of each year, each carrier shall file an actuarial certification with the Commissioner.

  (2) The actuarial certification shall be written in a form that the Commissioner approves, by a member of the American Academy of Actuaries or another person acceptable to the Commissioner and shall state that the carrier is in compliance with this subtitle and has followed the rating practices imposed under Sec. 15-1205 of this subtitle.

  (3) The actuarial certification shall be based on an examination that includes a review of appropriate records and actuarial assumptions and methods used by the carrier.

(e)

  (1) To indicate compliance with subsections (b) and (c)(1) of this section and Sec. 15-1205(e) of this subtitle, a carrier shall maintain information and documentation that is satisfactory to the Commissioner.

  (2) A carrier shall:

    (i) retain all information and documentation required under this subtitle at its principal place of business for a period of 5 years; and

    (ii) make the information and documentation available to the Commissioner on request.

(f) A carrier may not implement a producer commission schedule that varies the amount of a commission based on the size of a small employer group unless the variation:

  (1) is inversely related to the size of the small employer group;

  (2) applies to the cumulative premium paid over a specific period of time, is uniformly applied, and is inversely related to the cumulative premium paid during the period of time; or

  (3) is established by a contract between the carrier and each outside producer, and the carrier:

    (i) specifies in the contract the group size to which the variation applies;

    (ii) directs the outside producer to refer small employers of the specified size to an employee of the carrier who is a licensed producer or to a company affiliated with the carrier through common ownership within an insurance holding company; and

    (iii) pays a commission to the employee producer described in item (ii) of this item.

(g)

  (1) A licensed insurance producer, in connection with the sale, solicitation, or negotiation of a health benefit plan to a small employer, shall:

    (i) provide information to the small employer about wellness benefits; and

    (ii) advise the small employer to consult a tax advisor about the tax advantages of a payroll deduction plan under Sec. 125 of the Internal Revenue Code.

  (2) The information shall be provided:

    (i) whenever the employer purchases or renews a health benefit plan; and

    (ii) on request.

(h)

  (1) In accordance with regulations adopted by the Commissioner, a licensed insurance producer may provide to a small employer information about the Maryland Medical Assistance Program and the Maryland Children's Health Program for the small employer to distribute to its employees during the enrollment period.

  (2) The information provided under paragraph (1) of this subsection shall be restricted to general information about the Maryland Medical Assistance Program and the Maryland Children's Health Program, including:

    (i) income eligibility thresholds; and

    (ii) application instructions.

#### Section 15-1207

(a) In accordance with Title 19, Subtitle 1 of the Health - General Article, the Commission shall adopt regulations that specify:

  (1) the Comprehensive Standard Health Benefit Plan to apply under this subtitle; and

  (2) the requirements for a wellness benefit offered by a carrier to apply under this subtitle.

(b)

  (1) Subject to paragraph (2) of this subsection, the Commission shall exclude or limit benefits or adjust cost-sharing arrangements in the Standard Plan if the average rate for the Standard Plan exceeds 10% of the average annual wage in the State.

  (2) The Commission annually shall determine the average rate for the Standard Plan by using the average rate submitted by each carrier that offers the Standard Plan.

(c) In establishing benefits, the Commission shall judge preventive services, medical treatments, procedures, and related health services based on:

  (1) their effectiveness in improving the health status of individuals;

  (2) their impact on maintaining and improving health and on reducing the unnecessary consumption of health care services; and

  (3) their impact on the affordability of health care coverage.

(d) The Commission may exclude:

  (1) a health care service, benefit, coverage, or reimbursement for covered health care services that is required under this article or the Health - General Article to be provided or offered in a health benefit plan that is issued or delivered in the State by a carrier; or

  (2) reimbursement required by statute, by a health benefit plan for a service when that service is performed by a health care provider who is licensed under the Health Occupations Article and whose scope of practice includes that service.

(e) The Commission shall include mental health and substance abuse benefits required under Sec. 15-802 of this title and Sec. 19-703.1 of the Health - General Article for employers that meet the large employer definition under Sec. 15-802 of this title and Sec. 19-703.1 of the Health - General Article.

(f) The Commission shall specify the deductibles and cost-sharing associated with the benefits in the Standard Plan.

(g) In establishing cost-sharing as part of the Standard Plan, the Commission shall:

  (1) include cost-sharing and other incentives to help prevent consumers from seeking unnecessary services;

  (2) balance the effect of cost-sharing in reducing premiums and in affecting utilization of appropriate services; and

  (3) limit the total cost-sharing that may be incurred by an individual in a year.

(h) Beginning January 1, 2014, this section applies only to grandfathered health plans as defined in Sec. 1251 of the Affordable Care Act.

#### Section 15-1208

The provisions of Sec. 15-508 of this title apply to a policy or certificate issued to a small employer.

#### Section 15-1208.1

(a) A carrier shall provide the special enrollment periods described in this section in each small employer health benefit plan.

(b) A carrier shall allow an eligible employee or dependent who is eligible, but not enrolled, for coverage under the terms of the employer's health benefit plan to enroll for coverage under the terms of the plan if:

  (1) the eligible employee or dependent was covered under an employer-sponsored plan or group health benefit plan at the time coverage was previously offered to the employee or dependent;

  (2) the eligible employee states in writing, at the time coverage was previously offered, that coverage under an employer-sponsored plan or group health benefit plan was the reason for declining enrollment, but only if the plan sponsor or carrier requires the statement and provides the employee with notice of the requirement;

  (3) the eligible employee's or dependent's coverage described in item (1) of this subsection:

    (i) was under a COBRA continuation provision, and the coverage under that provision was exhausted; or

    (ii) was not under a COBRA continuation provision, and either the coverage was terminated as a result of loss of eligibility for the coverage, including loss of eligibility as a result of legal separation, divorce, death, termination of employment, or reduction in the number of hours of employment, or employer contributions towards the coverage were terminated; and

  (4) under the terms of the plan, the eligible employee requests enrollment not later than 30 days after:

    (i) the date of exhaustion of coverage described in item (3)(i) of this subsection; or

    (ii) termination of coverage or termination of employer contributions described in item (3)(ii) of this subsection.

(c) All small employer health benefit plans shall provide a special enrollment period during which the following individuals may be enrolled under the health benefit plan:

  (1) an individual who becomes a dependent of the eligible employee through marriage, birth, adoption, placement for adoption, or placement for foster care;

  (2) an eligible employee who acquires a new dependent through marriage, birth, adoption, placement for adoption, placement for foster care, or through a child support order or other court order;

  (3) the spouse of an eligible employee at the birth or adoption of a child, placement of a child for foster care, or through a child support order or other court order, provided the spouse is otherwise eligible for coverage;

  (4) at the option of the SHOP Exchange, an enrollee who is the eligible employee or the spouse of the eligible employee, if:

    (i) the enrollee loses a dependent or is no longer considered to be a dependent due to divorce or legal separation; or

    (ii) the employee or the employee's dependent dies; and

  (5)

    (i) an eligible employee who becomes pregnant, as confirmed by a health care practitioner; and

    (ii) an eligible employee's spouse or dependent who becomes pregnant, as confirmed by a health care practitioner, provided the spouse or dependent is otherwise eligible for coverage.

(d) An eligible employee may not enroll a dependent during a special enrollment period unless the eligible employee:

  (1) is enrolled under the health benefit plan; or

  (2) applies for coverage for the eligible employee during the same special enrollment period.

(e)

  (1) The special enrollment period under subsection (c)(1) through (4) of this section shall be a period of not less than 31 days and shall begin on the later of:

    (i) the date dependent coverage is made available; or

    (ii) the date of the marriage, birth, adoption, placement for adoption, placement for foster care, child support order or other court order, divorce, legal separation, or death, whichever is applicable.

  (2) The special enrollment period under subsection (c)(5) of this section shall:

    (i) be open for a period of 90 days; and

    (ii) begin on the date a health care practitioner confirms the pregnancy.

(f)

  (1) If an eligible employee enrolls any of the individuals described in subsection (c)(1) through (4) of this section during the first 31 days of the special enrollment period, the coverage shall become effective as follows:

    (i) in the case of marriage, not later than the first day of the first month beginning after the date the completed request for enrollment is received;

    (ii) in the case of a dependent's birth, as of the date of the dependent's birth;

    (iii) in the case of a dependent's adoption or placement for adoption, the date of adoption or placement for adoption, whichever occurs first;

    (iv) in the case of a dependent's placement for foster care, the date of placement; and

    (v) in the case of a dependent added due to a child support order or any other court order:

      (1) the date the child support order or other court order is effective; or

      (2) for SHOP Exchange plans, if allowed by the SHOP Exchange and selected by the eligible employee, the first day of the month following receipt of the plan selection.

  (2) If an eligible employee enrolls an individual described in subsection (c)(5) of this section in a health benefit plan, the coverage shall become effective on the first day of the month in which the individual receives confirmation of pregnancy.

(g) If the SHOP Exchange allows the special enrollment periods described in subsection (c)(4) of this section, the coverage shall become effective as follows:

  (1) for special enrollment periods in the SHOP Exchange due to death of the employee or dependent, the first day of the month following plan selection; and

  (2) for special enrollment periods in the SHOP Exchange due to divorce or legal separation, the first day of the month following receipt of the plan selection.

#### Section 15-1208.2

(a)

  (1) In this section the following words have the meanings indicated.

  (2) "Dependent" means an individual who is or who may become eligible for coverage under the terms of a health benefit plan because of a relationship with an eligible employee.

  (3) "Qualifying coverage in an eligible employer-sponsored plan" has the meaning stated in 45 C.F.R. Sec. 155.300.

(b)

  (1) A carrier shall establish a standardized annual open enrollment period of at least 30 days for each small employer.

  (2) The annual open enrollment period shall occur before the end of the small employer's plan year.

  (3) During the annual open enrollment period, each eligible employee of the small employer shall be permitted to:

    (i) enroll in a health benefit plan offered by the small employer;

    (ii) discontinue enrollment in a health benefit plan offered by the small employer; or

    (iii) change enrollment from one health benefit plan offered by the small employer to a different health benefit plan offered by the small employer.

(c) A carrier shall provide an open enrollment period of at least 30 days for each employee who becomes an eligible employee outside the initial or annual open enrollment period.

(d)

  (1) A carrier shall provide an open enrollment period for each individual who experiences a triggering event described in paragraph (4) of this subsection.

  (2) The open enrollment period shall be for at least 30 days, beginning on the date of the triggering event.

  (3) During the open enrollment period for an individual who experiences a triggering event, a carrier shall permit the individual to enroll in or change from one health benefit plan offered by the small employer to another health benefit plan offered by the small employer.

  (4) A triggering event occurs when:

    (i) subject to paragraph (5) of this subsection, an eligible employee or dependent loses minimum essential coverage;

    (ii) an eligible employee or a dependent loses:

      (1) pregnancy-related coverage described under Sec. 1902(a)(10)(A)(i)(IV) and (a)(10)(A)(ii)(IX) of the Social Security Act, which is considered to occur on the last day the eligible employee or dependent would have pregnancy-related coverage; or

      (2) access to health care services through a program providing prenatal care or services, which is considered to occur on the last day the eligible employee or dependent would have access to health care services;

    (iii) an eligible employee or a dependent loses medically needy coverage as described under Sec. 1902(a)(10)(C) of the Social Security Act, which is considered to occur on the last day the eligible employee or dependent would have medically needy coverage;

    (iv) an eligible employee or a dependent who is enrolled in a qualified health plan in the SHOP Exchange adequately demonstrates to the SHOP Exchange that the qualified health plan in which the eligible employee or a dependent is enrolled substantially violated a material provision of the qualified health plan's contract in relation to the eligible employee or a dependent;

    (v) an eligible employee or a dependent:

      (1) loses eligibility for coverage under a Medicaid plan under Title XIX of the Social Security Act or a state child health plan under Title XXI of the Social Security Act; or

      (2) becomes eligible for assistance, with respect to coverage under the SHOP Exchange, under a Medicaid plan or state child health plan, including any waiver or demonstration project conducted under or in relation to a Medicaid plan or a state child health plan;

    (vi) for SHOP Exchange health benefit plans:

      (1) an eligible employee's or a dependent's enrollment or nonenrollment in a qualified health plan is, as evaluated and determined by the Exchange:

      (A) unintentional, inadvertent, or erroneous; and

      (B) the result of the error, misrepresentation, misconduct, or inaction of an officer, employee, or agent of the Exchange or the federal Department of Health and Human Services, or its instrumentalities, or a non-Exchange entity providing enrollment assistance or conducting enrollment activities;

      (2) an eligible employee is an Indian as defined in Sec. 4 of the federal Indian Health Care Improvement Act;

      (3) subject to paragraph (11) of this subsection, a material error related to plan benefits, service area, cost-sharing, or premium influenced the eligible employee's or dependent's decision to purchase a qualified health plan through the Exchange; or

      (4) an eligible employee or dependent demonstrates to the SHOP Exchange, in accordance with guidelines issued by the federal Department of Health and Human Services, that the eligible employee or a dependent meets other exceptional circumstances as the SHOP Exchange may provide;

    (vii) an eligible employee or dependent:

      (1) is a victim of domestic abuse or spousal abandonment, as defined by 26 C.F.R. Sec. 1.36B-2T;

      (2) is enrolled in minimum essential coverage; and

      (3) seeks to enroll in coverage separate from the perpetrator of the abuse or abandonment;

    (viii) an eligible employee or dependent:

      (1) applies for coverage through the Individual Exchange during the annual open enrollment period or a special enrollment period;

      (2) is assessed by the Individual Exchange as potentially eligible for the Maryland Medical Assistance Program or the Maryland Children's Health Program; and

      (3) is determined ineligible for the Maryland Medical Assistance Program or the Maryland Children's Health Program by the Maryland Department of Health either:

      (A) after open enrollment has ended; or

      (B) more than 60 days after the qualifying event;

    (ix) an eligible employee or dependent:

      (1) applies for coverage through the Maryland Medical Assistance Program or the Maryland Children's Health Program during the annual open enrollment period; and

      (2) is determined ineligible for the Maryland Medical Assistance Program or the Maryland Children's Health Program after open enrollment has ended; or

    (x) an eligible employee or dependent gains access to new qualified health plans as a result of a permanent move and either:

      (1) had minimum essential coverage as described in 26 C.F.R. Sec. 1.5000a-1(b) for 1 or more days during the 60 days before the date of the permanent move;

      (2) lived in a foreign country or in a United States territory for 1 or more days during the 60 days before the date of the permanent move;

      (3) lived in a service area where no qualified health plan was available through the Exchange:

      (A) for 1 or more days during the 60 days before the date of the permanent move; or

      (B) during the eligible employee's or dependent's most recent preceding open enrollment period or special enrollment period;

      (4) had coverage for prenatal care or services as described in 45 C.F.R. Sec. 155.420(d)(1)(iii) for 1 or more days during the 60 days before the date of the permanent move; or

      (5) had medically needy coverage as described in 45 C.F.R. Sec. 155.420(d)(1)(iv) for 1 or more days during the 60 days before the date of the permanent move.

  (5) Loss of minimum essential coverage under paragraph (4)(i) of this subsection does not include loss of coverage due to:

    (i) voluntary termination of coverage;

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

    (iii) a rescission authorized under 45 C.F.R. Sec. 147.128.

  (6) The triggering event described in paragraph (4)(iii) of this subsection is permitted only once per year per individual.

  (7) If an eligible employee or a dependent meets the requirements for the triggering event described in paragraph (4)(vi)1 of this subsection, the Exchange may take any action necessary to correct or eliminate the effects of the error, misrepresentation, or inaction.

  (8) If an eligible employee meets the requirements for the triggering event described in paragraph (4)(vi)2 of this subsection, the eligible employee and a dependent may enroll in a qualified health plan or change from one qualified health plan to another one time per month.

  (9) An eligible employee or a dependent who meets the requirements for the triggering event described in paragraph (4)(v) of this subsection shall have 60 days from the triggering event to select a health benefit plan.

  (10) If a victim of domestic abuse or spousal abandonment meets the requirements for the triggering event described in paragraph (4)(vii) of this subsection, the victim's dependents may enroll in a qualified health plan at the same time as the victim.

  (11) A material error under paragraph (4)(vi)3 of this subsection is an error that is likely to have influenced the enrollment of an eligible employee or the dependent of the eligible employee in a qualified health plan.

(e) If an individual enrolls for coverage during one of the open enrollment periods described in this section, coverage shall be effective in accordance with the requirements in 45 C.F.R. Sec. 155.420.

#### Section 15-1209

(a) This section does not apply to any insurance enumerated in Sec. 15-1201(i)(3)(i) through (xiii) of this subtitle.

(b) A carrier shall issue its health benefit plans to each small employer that meets the requirements of this section.

(c)

  (1) Nothing in this subsection requires a small employer to contribute to the premium payments for coverage of a dependent of an eligible employee.

  (2) To be covered under a health benefit plan offered by a carrier, a small employer shall:

    (i) elect to be covered;

    (ii) agree to pay the premiums;

    (iii) agree to offer coverage to any dependent of an eligible employee when coverage is sought by the eligible employee, in accordance with provisions governing late enrollees and any other provisions of this subtitle that apply to coverage;

    (iv) agree to collect payments for premiums through payroll deductions for coverage of eligible employees and dependents and transmit those payments to the carrier or the SHOP Exchange, as applicable; and

    (v) satisfy other reasonable provisions of the health benefit plan as approved by the Commissioner.

(d)

  (1) In determining whether a small employer satisfies the requirements of this section, a carrier shall apply its requirements uniformly among all small employers with the same number of eligible employees who apply for or receive coverage from the carrier, including a requirement that a minimum percentage of eligible employees of the small employer participate in the health benefit plan.

  (2) A carrier may vary application of minimum participation of eligible employees only by the size of the group of the small employer.

(e) A carrier may not require a small employer to contribute to payment of premiums for a health benefit plan.

#### Section 15-1210

(a) A carrier that offers coverage to a small employer shall:

  (1) offer coverage to all of its eligible employees and all of their eligible dependents; and

  (2) at the election of the small employer, offer coverage to all of its part-time employees who have a normal workweek of at least 17 1/2 but less than 30 hours per week.

(b)

  (1) A health maintenance organization need not offer coverage:

    (i) to a small employer that is outside of the health maintenance organization's approved service areas;

    (ii) to an eligible employee who resides outside of the health maintenance organization's approved service areas; or

    (iii) within an area where the health maintenance organization reasonably anticipates, and demonstrates to the satisfaction of the Commissioner, that it will not have the capacity in its network of providers to deliver service adequately because of obligations to existing group contract holders and enrollees.

  (2) A health maintenance organization that does not offer coverage under paragraph (1)(iii) of this subsection may not offer coverage in the applicable area to any employer groups until the later of:

    (i) 180 days after a refusal to do so; or

    (ii) the date on which the health maintenance organization notifies the Commissioner that it has regained capacity to deliver services to small employer groups in that area.

(c) A carrier may not be required to offer coverage under Sec.Sec. 15-1209 and 15-1213 of this subtitle for as long as the Commissioner finds that the coverage would place the carrier in a financially impaired condition.

#### Section 15-1211

(a) To sell health benefit plans to small employers in the State, a carrier shall file its proposed health benefit plans with the Commissioner on or before the date designated by the Commissioner.

(b) Unless the Commissioner previously has disapproved a health benefit plan, it is deemed approved 60 days after filing with the Commissioner.

#### Section 15-1212

(a)

  (1) In this section the following words have the meanings indicated.

  (2) "Plan" means, with respect to a product, the pairing of the health benefits under the product with a particular cost-sharing structure, provider network, and service area.

  (3)

    (i) "Product" means a discrete package of health benefits that are offered using a particular product network type within a geographic service area.

    (ii) "Product" comprises all plans offered within the product.

  (4) "Uniform modification of coverage" means a change to a small employer's health benefit plan that meets the criteria stated in 45 C.F.R. Sec. 147.106(e).

(b) Changes in benefits made in accordance with federal or State requirements are not subject to the plus or minus 2 percentage points referenced in 45 C.F.R. Sec. 147.106(e)(3)(v).

(c) The combination of all plans offered with a product constitutes the total service area of the product.

(d)

  (1) With respect to a plan that has been modified at the time of coverage renewal consistent with this section, the plan shall be considered to be the same plan if:

    (i)

      (1) the plan has the same cost-sharing structure as before the modification; or

      (2) any variation in cost sharing:

      (A) is solely related to changes in cost or utilization of medical care; or

      (B) is to maintain the same metal level described in Sec. 1302(d) and (e) of the Affordable Care Act;

    (ii) the plan continues to cover a majority of the same service area; and

    (iii) the plan continues to cover a majority of the same provider network.

  (2) Notwithstanding paragraph (1) of this subsection, the plan shall be considered to be the same plan to the extent that the modifications are:

    (i) made uniformly and solely as a result of a federal or State requirement;

    (ii) made within a reasonable time period after the imposition or modification of the federal or State requirement; and

    (iii) directly related to the imposition or modification of the federal or State requirement.

(e)

  (1) Except as provided in subsections (f), (g), and (h) of this section, a carrier shall renew a health benefit plan at the option of the small employer.

  (2) On renewal, a carrier may not exclude eligible employees or dependents from a health benefit plan.

  (3)

    (i) A carrier shall mail a notice of renewal to the small employer at least 60 days before the expiration of a health benefit plan.

    (ii) The notice of renewal shall include the dates of the renewal period, the health benefit plan rates, and the terms of coverage under the health benefit plan.

  (4) Policies or certificates for hospital or medical benefits issued through a professional employer organization, coemployer, or other organization under this subtitle may, with the consent of the carrier, have a common renewal date.

(f) A carrier may cancel or refuse to renew a health benefit plan only:

  (1) for nonpayment of premiums;

  (2) for fraud or intentional misrepresentation of material fact by the small employer;

  (3) for noncompliance with a material plan provision relating to employer contributions or group participation rules;

  (4) when the carrier elects not to renew:

    (i) all of its health benefit plans that are issued to small employers in the State; or

    (ii) the particular product for all small employers in the State; or

  (5) in the case of a health maintenance organization, where there is no longer any enrollee who lives, resides, or works in the health maintenance organization's approved service area, provided notice of the termination is provided to each small employer and to each employee covered under the health benefit plan at least 90 calendar days before the date coverage will be terminated.

(g) When a carrier elects not to renew all health benefit plans in the State, the carrier:

  (1) shall give notice of its decision to the affected small employers and the insurance regulatory authority of each state in which an eligible employee or dependent resides at least 180 days before the effective date of nonrenewal;

  (2) shall give notice to the Commissioner at least 30 working days before giving the notice specified in item (1) of this subsection; and

  (3) may not write new business for small employers in the State for a period of 5 years beginning on the date of notice to the Commissioner.

(h) When a carrier elects not to renew a particular product for all small employers in the State, the carrier shall:

  (1) provide notice of the nonrenewal at least 90 days before the date of the nonrenewal to:

    (i) each affected:

      (1) small employer; and

      (2) enrolled employee; and

    (ii) the Commissioner;

  (2) offer to each affected small employer the option to purchase all other health benefit plans currently offered by the carrier in the small group market; and

  (3) act uniformly without regard to the claims experience of any affected small employer, or any health status-related factor of any affected individual.

(i)

  (1) Within 7 days after cancellation or nonrenewal of a health benefit plan, the carrier shall send to each enrolled employee:

    (i) written notice of its action; and

    (ii) notice delivered by electronic means that complies with Sec. 27-601.2 of this article.

  (2) The notice required under paragraph (1) of this subsection shall include information on additional health benefit coverage options, including continuation of coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA), if available, and plans available through the Maryland Health Benefit Exchange.

(j) A carrier may make a uniform modification of coverage for a product only at the time of renewal of the health benefit plan.

(k) A carrier will not be considered to have elected not to renew all health benefit plans that are issued to small employers in the State if the carrier complies with 45 C.F.R. Sec. 147.106(d)(3).

#### Section 15-1213

(a) This section does not apply to any insurance enumerated in Sec. 15-1201(i)(3)(i) through (xiii) of this subtitle.

(b) Each benefit offered in addition to the Standard Plan that increases access to care choices or lowers the cost-sharing arrangement in the Standard Plan is subject to all of the provisions of this subtitle applicable to the Standard Plan, including:

  (1) guaranteed issuance;

  (2) guaranteed renewal; and

  (3) adjusted community rating.

(c)

  (1) Each benefit offered in addition to the Standard Plan that increases the type of services available or the frequency of services is not subject to guaranteed issuance but is subject to all other provisions of this subtitle applicable to the Standard Plan, including:

    (i) guaranteed renewal; and

    (ii) adjusted community rating.

  (2) For each additional benefit offered under this subsection, a carrier shall accept or reject the application of the entire group.

  (3) The Commissioner may prohibit a carrier from offering an additional benefit under this subsection if the Commissioner finds that the additional benefit will be sold in conjunction with the Standard Plan in a manner designed to promote risk selection or underwriting practices otherwise prohibited by this subtitle.

(d) Beginning January 1, 2014, this section applies only to grandfathered health plans as defined in Sec. 1251 of the Affordable Care Act.

#### Section 15-1214

Notwithstanding any other provision of this subtitle, health benefit plans shall reimburse hospitals in accordance with rates approved by the State Health Services Cost Review Commission.

#### Section 15-1215

(a)

  (1) Each carrier shall elect to become either a risk-assuming carrier or reinsuring carrier.

  (2) The notification of election to become a risk-assuming carrier shall include an appropriate opinion by an independent qualified actuary that the risk-assuming carrier is able to assume and manage the risk of enrolling groups under this subtitle without the protection of the Pool.

(b)

  (1) The initial election under this section is binding for 3 years.

  (2) After the initial 3 years, and every 5 years thereafter, each carrier shall again elect to be either a risk-assuming or reinsuring carrier.

  (3) Each subsequent election is binding for 5 years.

  (4) The Commissioner may allow a new carrier to make an election under conditions established by the Commissioner.

(c)

  (1) The Commissioner may allow a carrier to change its election at any time for good cause shown.

  (2) In determining whether to approve an application by a carrier to change its election, the Commissioner shall consider:

    (i) the applicant's financial condition and the financial condition of any parent or guaranteeing corporation;

    (ii) the applicant's history of assuming and managing risk;

    (iii) the applicant's commitment to market fairly to all small employers in the State or in the applicant's service area;

    (iv) the applicant's ability to assume and manage the risk of enrolling groups under this subtitle without the protection of the Pool; and

    (v) the effect of approval of the application on the financial viability of the Pool.

  (3) While the Commissioner is considering an application under this subsection, the carrier may request a hearing as provided under Title 11, Subtitle 5 of this article.

#### Section 15-1216

(a) The Commissioner shall establish the Maryland Small Employer Health Reinsurance Pool.

(b) The Pool shall be operational and may reinsure claims in accordance with this subtitle on or after July 1, 1994.

(c)

  (1) The reinsuring carriers shall elect a Board of Directors to be composed of seven members.

  (2) The Board shall include representation from carriers whose principal business in health insurance comprises small employers and, to the extent possible, at least one nonprofit health service plan, at least one commercial carrier, and at least one health maintenance organization.

  (3) A carrier, including its affiliates, may not be represented by more than one member on the Board.

  (4) The term of a member is 3 years except that the terms of initial members shall be staggered for periods of 1 to 3 years.

  (5) At the end of a term, a member continues to serve until a successor is elected.

  (6) Vacancies shall be filled by an election of the remaining Board members.

  (7) A member who is elected after a term has begun serves only for the rest of the term and until a successor is elected.

  (8) A member who serves two consecutive full 3-year terms may not be reelected for 3 years after the completion of those terms.

(d) The Board shall choose a Chairman.

(e)

  (1) The Board shall appoint an Executive Director, who shall be the chief administrative officer of the Pool.

  (2) The Executive Director serves at the pleasure of the Board.

  (3) Under the direction of the Board, the Executive Director shall perform any duty or function that the Board requires.

(f) The Pool may employ a staff in accordance with the budget of the Pool.

(g)

  (1) The Board shall submit to the Commissioner a plan of operation to ensure the fair, reasonable, and financially sound administration of the Pool.

  (2) The Commissioner may amend or rescind a plan of operation if the Commissioner finds that the Pool is not operating in a fair, reasonable, and financially sound manner.

#### Section 15-1217

(a) At a minimum, the plan of operation shall:

  (1) establish procedures for the handling and accounting of Pool assets and money and for an annual fiscal report to the Commissioner;

  (2) establish procedures for reinsuring claims submitted to the Pool in accordance with this subtitle;

  (3) establish procedures for collecting assessments from members to reinsure claims submitted to the Pool and to pay for administrative expenses incurred or estimated to be incurred during the period;

  (4) establish procedures for recouping any net losses to the Pool for the calendar year by assessing reinsuring carriers under Sec. 15-1221 of this subtitle; and

  (5) provide for any additional matters at the discretion of the Board.

(b) The Board has the general powers and authority granted under the laws of the State to health insurers and health maintenance organizations authorized to transact business, except for the power to issue health benefit plans directly to groups or individuals.

(c) The Board may:

  (1) enter into contracts as necessary or proper to carry out this subtitle and, with approval of the Commissioner, enter into contracts with similar programs of other states for the joint performance of common functions or with persons or other organizations for the performance of administrative functions;

  (2) sue or be sued;

  (3) take any legal action necessary or proper to recover assessments and penalties for, on behalf of, or against the Pool or reinsuring carriers or necessary to avoid the payment of improper claims against the Board;

  (4) define the health benefit plans and medical conditions for which claims may be reinsured with the Pool in accordance with this subtitle;

  (5) establish rules, conditions, and procedures that relate to reinsurance of claims by the Pool;

  (6) establish actuarial functions as appropriate for the operation of the Pool;

  (7) assess reinsuring carriers in accordance with the provisions of Sec. 15-1221 of this subtitle;

  (8) make advance interim assessments as may be reasonable and necessary for organizational and interim operating expenses, to be credited against any assessments due after the close of the fiscal year;

  (9) appoint appropriate committees as necessary to provide technical assistance in the operation of the Pool, policy and other contract design, and any other function within the authority of the Pool; and

  (10) borrow money to carry out the purposes of the Pool.

#### Section 15-1218

(a) A reinsuring carrier may reinsure with the Pool as provided in this section.

(b) At a minimum, the Pool shall reinsure up to the level of coverage specified under the Standard Plan.

(c) A reinsuring carrier may reinsure an entire employer group within 60 days after commencement of the group's coverage under a health benefit plan.

(d)

  (1) A reinsuring carrier may reinsure an eligible employee or dependent within 60 days after commencement of coverage with the small employer.

  (2) A reinsuring carrier may reinsure a newly eligible employee or dependent within 60 days after commencement of coverage of the eligible employee or dependent.

(e)

  (1) The Pool may not reimburse a reinsuring carrier with respect to the claims of an individual until the reinsuring carrier has incurred claims for the individual of $5,000 in a calendar year for benefits covered by the Pool.

  (2) After the initial $5,000 of incurred claims, the reinsuring carrier is responsible for 10% of the next $50,000 of incurred claims during the calendar year, and the Pool shall reinsure the remainder.

  (3) The liability of a reinsuring carrier under this subsection may not exceed $10,000 in any 1 calendar year with respect to any individual.

(f)

  (1) The Board annually shall adjust the initial level of claims and the maximum limit to be retained by the reinsuring carrier to reflect increases in costs and utilization within the standard market for health benefit plans in the State.

  (2) Unless the Board proposes and the Commissioner approves a lower adjustment factor, the adjustment in paragraph (1) of this subsection may not be less than the annual change in the medical component of the "Consumer Price Index for all Urban Consumers" of the Department of Labor, Bureau of Labor Statistics.

(g) A reinsuring carrier may terminate reinsurance on a plan anniversary for one or more of the individuals in a small employer group.

#### Section 15-1219

(a)

  (1)

    (i) As part of the plan of operation, the Board shall establish a methodology to determine premium rates to be charged by the Pool to reinsure small employers and individuals under this section and Sec. 15-1218 of this subtitle.

    (ii) The methodology shall provide for the development of base reinsurance premium rates that shall be multiplied by the factors set forth in paragraph (2) of this subsection to determine the premium rates for the Pool.

    (iii) The Board shall establish the base reinsurance premium rates at levels that reasonably approximate gross premiums charged to small employers by carriers for health benefit plans up to the level of coverage that the Board determines.

  (2) Premiums for the Pool shall be as follows:

    (i) an entire group may be reinsured for a rate that is 1.5 times the base reinsurance premium rate for the group established under this subsection; and

    (ii) an individual may be reinsured for a rate that is 5 times the base reinsurance premium rate for the individual established under this subsection.

  (3)

    (i) The Board periodically shall review the methodology established under paragraph (1) of this subsection, including the system of classification and any rating factors, to ensure that it reasonably reflects the claims experience of the Pool.

    (ii) The Board may propose changes to the methodology, subject to the approval of the Commissioner.

(b) If a health benefit plan for a small employer is entirely or partially reinsured with the Pool, the premium charged to the small employer for any rating period for the coverage issued shall meet the requirements that relate to premium rates set forth in Sec. 15-1205 of this subtitle.

#### Section 15-1220

(a) The Pool shall manage and invest all money collected by or on behalf of the Pool through premium charges, assessments, earnings from investments, or otherwise, through a financial management committee composed of the Executive Director and two members of the Board.

(b) All operating expenses of the Pool shall be paid from funds collected by or on behalf of the Pool.

(c) The account of the Pool is a special fund account and the money in the account is not part of the General Fund of the State.

(d) The State may not provide General Fund appropriations to the Pool and the obligations of the Pool are not a debt of the State or a pledge of the credit of the State.

(e) All debts, claims, obligations, and liabilities of the Pool, whenever incurred, shall be the debts, claims, obligations, and liabilities of the Pool only and not of the State or the State's agencies, instrumentalities, officers, or employees.

(f) The Pool is exempt from:

  (1) taxation by the State and local government;

  (2) the general procurement law provisions of Division II of the State Finance and Procurement Article; and

  (3) Division I of the State Personnel and Pensions Article.

#### Section 15-1221

(a) On or before the last day of February of each year, the Board shall determine and report to the Commissioner the net loss of the Pool for the previous calendar year, including administrative expenses and incurred losses for the year, taking into account investment income and other appropriate gains and losses.

(b) Any net loss for the year shall be recouped by assessments imposed on reinsuring carriers.

(c)

  (1) As part of the plan of operation, the Board shall establish a formula to make assessments against reinsuring carriers.

  (2) The assessment formula shall be based on:

    (i) each reinsuring carrier's share of the total premiums earned in the preceding calendar year from health benefit plans that are delivered or issued for delivery to small employers in the State by reinsuring carriers; and

    (ii) each reinsuring carrier's share of the premiums earned in the preceding calendar year from newly issued health benefit plans that are delivered or issued for delivery during that calendar year to small employers in the State by reinsuring carriers.

  (3) The assessment formula may not result in an assessment share for a reinsuring carrier that is less than 50% nor more than 150% of an amount that is based on the proportion of the reinsuring carrier's total premiums earned in the preceding calendar year from health benefit plans that are delivered or issued for delivery to small employers in the State to total premiums earned by all reinsuring carriers in the preceding calendar year from health benefit plans that are delivered or issued for delivery to small employers in the State.

  (4) As appropriate and with the approval of the Commissioner, the Board may change the assessment formula established in accordance with this subsection.

  (5) The Board may provide for assessment shares attributable to premiums from all health benefit plans and to premiums from newly issued health benefit plans to vary during a transition period.

  (6) Subject to approval by the Commissioner, the Board shall make an adjustment to the assessment formula for reinsuring carriers that are approved health maintenance organizations and that are federally qualified under the Health Maintenance Organization Act of 1973 to the extent that restrictions are imposed on the health maintenance organizations that are not imposed on other carriers.

  (7) Premiums and benefits paid by a reinsuring carrier that are less than an amount determined by the Board to justify the cost of collection may not be considered in determining assessments.

(d)

  (1) On or before the last day of February of each year, the Board shall determine and file with the Commissioner an estimate of the assessments needed to fund the losses incurred by the Pool in the previous calendar year.

  (2) If the Board determines that the assessments needed to fund the losses incurred by the Pool in the previous calendar year will exceed 5% of the total premiums earned that year from health benefit plans that are delivered or issued for delivery in the State, the Board shall evaluate the operation of the Pool and report its findings to the Commissioner within 90 days after the end of the calendar year in which the losses were incurred.

  (3) The evaluation required under paragraph (2) of this subsection shall include:

    (i) any recommendations for changes to the plan of operation;

    (ii) an estimate of future assessments;

    (iii) the administrative costs of the Pool;

    (iv) the appropriateness of the premiums charged;

    (v) the level of insurer retention under the Pool; and

    (vi) the costs of coverage for small employers.

  (4) If the Board fails to file the report with the Commissioner within 90 days after the end of the applicable calendar year, the Commissioner may evaluate the operations of the Pool and implement amendments to the plan of operation that the Commissioner considers necessary to reduce future losses and assessments.

(e) If assessments exceed net losses of the Pool, the excess shall be held in an interest-bearing account and used by the Board to offset future losses, including reserves for incurred but not reported claims, or to reduce Pool premiums.

(f) The Board annually shall determine the assessment share of each reinsuring carrier based on annual statements and other reports that the Board considers necessary and that reinsuring carriers file with the Board.

(g) The plan of operation shall provide for imposition of an interest penalty for late payment of assessments.

(h)

  (1)

    (i) A reinsuring carrier may seek from the Commissioner a deferment from all or part of an assessment imposed by the Board.

    (ii) The request for deferment shall be made in writing to the Commissioner within 15 days after receipt of the assessment notice.

  (2) The Commissioner may defer all or part of the assessment of a reinsuring carrier if the Commissioner determines that payment of the assessment would place the reinsuring carrier in a financially impaired condition.

  (3)

    (i) Any amount deferred shall be assessed against the other reinsuring carriers in a manner consistent with the basis for assessment set forth in this section.

    (ii) The reinsuring carrier receiving the deferment remains liable to the Pool for the amount deferred and may not reinsure any individuals or groups in the Pool until it pays that amount.

#### Section 15-1222

(a)

  (1) The Board shall report to the Commissioner on or before June 1 of each year.

  (2) At a minimum, the report shall include:

    (i) a description of the operations of the Pool for the preceding calendar year;

    (ii) an audited statement of the financial condition of the Pool as of the preceding December 31; and

    (iii) an audited detailed statement of the revenues received and expenditures of the Pool made during the preceding calendar year.

(b) The operations of the Board are subject to an annual audit by an independent auditor, and the audit report and working papers are subject to review by the Legislative Auditor.

#### Section 15-1223

Participation in the Pool as reinsuring carriers, establishment of rates, forms, or procedures, or any other joint or collective action required by Sec.Sec. 15-1218, 15-1219, and 15-1221 of this subtitle may not be the basis of any legal action, criminal or civil liability, or penalty against the Pool or any of its reinsuring carriers either jointly or separately.

#### Section 15-1224

The Commissioner may order the dissolution of the Pool if the Commissioner determines that the Pool is not financially viable, and provision is made to ensure the protection of those insured by the members of the Pool.

#### Section 15-1225

This subtitle is the Maryland Health Insurance Reform Act.

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Md. Code Ann., Ins. (as displayed at mgaleg.maryland.gov, October 16, 2026)