Ohio’s Health Insurance Laws Amended

Faith M. Williams
Miranda C. Motter
Bricker & Eckler LLP
January 2007

Full Text of S.B. 5

Ohio’s health insurance laws have been revised by legislation enacted in December 2006. Senate Bill 5 makes a number of changes to Ohio’s Small Employer Health Care Alliance statutes, establishes standards governing discount medical plans and requires disclosure of broker compensation in certain instances. Except as noted below, the bill takes effect on March 23, 2007.

This provides a summary of major provisions of Senate Bill 5.

Health Care Alliances

• Makes it easier to establish a Health Care Alliance by changing the minimum number of participants to 1,000 and allows employers with up to 500 employees to participate. (Current law requires a minimum of 2,500 participants, and allows employers with up to 150 employees to participate.)

• Allows insurers to require that an employee participating in a Health Care Alliance work a minimum of 25 hours (up from the current 17.5 hours).

• Allows insurers to designate Health Care Alliances as one or more separate classes of business with separate rates, if specific rating and actuarial certification requirements are met.

Other Provisions

• Eliminates the current $1000 maximum deductible that may be imposed by a health insuring corporation.

• In the small group market (2-50 lives) changes the rating bands to + 40% (from the current + 35%).

• Allows insurers in the small group market to apply a low claims discount not to exceed 5% of the midpoint rate. The application of a low claims discount may cause the premium rate for a rating period to fall outside the 40% variance.

• Limits the amount that enrollees and insureds covered by a health benefit plan may be required to pay health providers and pharmacies “out-of-pocket” or from savings accounts funds.

• Requires health insurers, HICs, and MEWAs to provide to covered individuals information regarding potential out-of-pocket costs for services provided by in-network providers. (Effective September 23, 2007)

• Regulates discount medical plans, including agreements with health care providers, disclosures, marketing and membership. These provisions are consistent with the NAIC Model Act, and specifically exclude plans controlled by licensed insurers and HICs.

Agent Compensation Disclosure

• S.B. 5 also imposes disclosure requirements on agents involved in insurance sales to public entities, where the agent accepts compensation from both the public entity client and an insurer or other third party. In this type of “dual compensation” situation, the agent obtain the public entity’s documented acknowledgment that the agent will be receiving compensation from the insurer or other third party.