SEC. 2741 GUARANTEED AVAILABILITY OF INDIVIDUAL HEALTH INSURANCE COVERAGE TO
CERTAIN INDIVIDUALS WITH PRIOR GROUP COVERAGE.
Title[ Title I\Subtitle B\Sec. 111 Contents
<<NOTE: 42 USC 300gg-41.>> .
``(a) Guaranteed Availability.--
``(1) In general.--Subject to the succeeding subsections of
this section and section 2744, each health insurance issuer that
offers health insurance coverage (as defined in section
2791(b)(1)) in the individual market in a State may not, with
respect to an eligible individual (as defined in subsection (b))
desiring to enroll in individual health insurance coverage--
``(A) decline to offer such coverage to, or deny
enrollment of, such individual; or
``(B) impose any preexisting condition exclusion (as
defined in section 2701(b)(1)(A)) with respect to such
coverage.
``(2) Substitution by state of acceptable alternative
mechanism.--The requirement of paragraph (1) shall not apply to
health insurance coverage offered in the individual market in a
State in which the State is implementing an acceptable
alternative mechanism under section 2744.
``(b) Eligible Individual Defined.--In this part, the term `eligible
individual' means an individual--
``(1)(A) for whom, as of the date on which the individual
seeks coverage under this section, the aggregate of the periods
of creditable coverage (as defined in section 2701(c)) is 18 or
more months and (B) whose most recent prior creditable coverage
was under a group health plan, governmental plan, or church plan
(or health insurance coverage offered in connection with any
such plan);
``(2) who is not eligible for coverage under (A) a group
health plan, (B) part A or part B of title XVIII of the Social
Security Act, or (C) a State plan under title XIX of such Act
(or any successor program), and does not have other health
insurance coverage;
``(3) with respect to whom the most recent coverage within
the coverage period described in paragraph (1)(A) was not
terminated based on a factor described in paragraph (1) or (2)
of section 2712(b) (relating to nonpayment of premiums or
fraud);
``(4) if the individual had been offered the option of
continuation coverage under a COBRA continuation provision or
under a similar State program, who elected such coverage; and
``(5) who, if the individual elected such continuation
coverage, has exhausted such continuation coverage under such
provision or program.
``(c) Alternative Coverage Permitted Where No State Mechanism.--
``(1) In general.--In the case of health insurance coverage
offered in the individual market in a State in which the State
is not implementing an acceptable alternative mechanism under
section 2744, the health insurance issuer may elect to limit the
coverage offered under subsection (a) so long as it offers at
least two different policy forms of health insurance coverage
both of which--
``(A) are designed for, made generally available to,
and actively marketed to, and enroll both eligible and
other individuals by the issuer; and
``(B) meet the requirement of paragraph (2) or (3),
as elected by the issuer.
For purposes of this subsection, policy forms which have
different cost-sharing arrangements or different riders shall be
considered to be different policy forms.
``(2) Choice of most popular policy forms.--The requirement
of this paragraph is met, for health insurance coverage policy
forms offered by an issuer in the individual market, if the
issuer offers the policy forms for individual health insurance
coverage with the largest, and next to
largest, premium volume of all such policy forms offered by the issuer
in the State or applicable marketing or service area (as may be
prescribed in regulation) by the issuer in the individual market in the
period involved.
``(3) Choice of 2 policy forms with representative
coverage.--
``(A) In general.--The requirement of this paragraph
is met, for health insurance coverage policy forms
offered by an issuer in the individual market, if the
issuer offers a lower-level coverage policy form (as
defined in subparagraph (B)) and a higher-level coverage
policy form (as defined in subparagraph (C)) each of
which includes benefits substantially similar to other
individual health insurance coverage offered by the
issuer in that State and each of which is covered under
a method described in section 2744(c)(3)(A) (relating to
risk adjustment, risk spreading, or financial
subsidization).
``(B) Lower-level of coverage described.--A policy
form is described in this subparagraph if the actuarial
value of the benefits under the coverage is at least 85
percent but not greater than 100 percent of a weighted
average (described in subparagraph (D)).
``(C) Higher-level of coverage described.--A policy
form is described in this subparagraph if--
``(i) the actuarial value of the benefits
under the coverage is at least 15 percent greater
than the actuarial value of the coverage described
in subparagraph (B) offered by the issuer in the
area involved; and
``(ii) the actuarial value of the benefits
under the coverage is at least 100 percent but not
greater than 120 percent of a weighted average
(described in subparagraph (D)).
``(D) Weighted average.--For purposes of this
paragraph, the weighted average described in this
subparagraph is the average actuarial value of the
benefits provided by all the health insurance coverage
issued (as elected by the issuer) either by that issuer
or by all issuers in the State in the individual market
during the previous year (not including coverage issued
under this section), weighted by enrollment for the
different coverage.
``(4) Election.--The issuer elections under this subsection
shall apply uniformly to all eligible individuals in the State
for that issuer. Such an election shall be effective for
policies offered during a period of not shorter than 2 years.
``(5) Assumptions.--For purposes of paragraph (3), the
actuarial value of benefits provided under individual health
insurance coverage shall be calculated based on a standardized
population and a set of standardized utilization and cost
factors.
``(d) Special Rules for Network Plans.--
``(1) In general.--In the case of a health insurance issuer
that offers health insurance coverage in the individual market
through a network plan, the issuer may--
``(A) limit the individuals who may be enrolled
under such coverage to those who live, reside, or work
within the service area for such network plan; and
``(B) within the service area of such plan, deny
such coverage to such individuals if the issuer has
demonstrated, if required, to the applicable State
authority that--
``(i) it will not have the capacity to deliver
services adequately to additional individual
enrollees because of its obligations to existing
group contract holders and enrollees and
individual enrollees, and
``(ii) it is applying this paragraph uniformly
to individuals without regard to any health
status-related factor of such individuals and
without regard to whether the individuals are
eligible individuals.
``(2) 180-day suspension upon denial of coverage.--An
issuer, upon denying health insurance coverage in any service
area in accordance with paragraph (1)(B), may not offer coverage
in the individual market within such service area for a period
of 180 days after such coverage is denied.
``(e) Application of Financial Capacity Limits.--
``(1) In general.--A health insurance issuer may deny health
insurance coverage in the individual market to an eligible
individual if the issuer has demonstrated, if required, to the
applicable State authority that--
``(A) it does not have the financial reserves
necessary to underwrite additional coverage; and
``(B) it is applying this paragraph uniformly to all
individuals in the individual market in the State
consistent with applicable State law and without regard
to any health status-related factor of such individuals
and without regard to whether the individuals are
eligible individuals.
``(2) 180-day suspension upon denial of coverage.--An issuer
upon denying individual health insurance coverage in any service
area in accordance with paragraph (1) may not offer such
coverage in the individual market within such service area for a
period of 180 days after the date such coverage is denied or
until the issuer has demonstrated, if required under applicable
State law, to the applicable State authority that the issuer has
sufficient financial reserves to underwrite additional coverage,
whichever is later. A State may provide for the application of
this paragraph on a service-area-specific basis.
``(e) Market Requirements.--
``(1) In general.--The provisions of subsection (a) shall
not be construed to require that a health insurance issuer
offering health insurance coverage only in connection with group
health plans or through one or more bona fide associations, or
both, offer such health insurance coverage in the individual
market.
``(2) Conversion policies.--A health insurance issuer
offering health insurance coverage in connection with group
health plans under this title shall not be deemed to be a health
insurance issuer offering individual health insurance coverage
solely because such issuer offers a conversion policy.
``(f) Construction.--Nothing in this section shall be
construed--
``(1) to restrict the amount of the premium rates that an
issuer may charge an individual for health insurance coverage
provided in the individual market under applicable State law; or
``(2) to prevent a health insurance issuer offering health
insurance coverage in the individual market from establishing
premium discounts or rebates or modifying otherwise applicable
copayments or deductibles in return for adherence to programs of
health promotion and disease prevention.
``
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