23-86-202. Definitions.

23-86-202. Definitions. (1) “Actuarial certification” means a written statement by a member of the American Academy of Actuaries or other individuals acceptable to the Insurance Commissioner that a small employer carrier is in compliance with the provisions of § 23-86-204 based upon the person's examination, including a review of the appropriate records and of the actuarial assumptions and methods utilized by the carrier in establishing premium rates for applicable health benefit plans; (2) “Base premium rate” means, for each class of business as to a rating period, the lowest premium rate charged or which could have been charged under a rating system for that class of business by the small employer carrier to small employers with similar case characteristics for health benefit plans with the same or similar coverage; (3) “Carrier” means health insurance issuer, i.e., an insurance company, insurance service, or insurance organization, including a health maintenance organization that is licensed to engage in the business of insurance in a state and that is subject to Arkansas law that regulates insurance, but the term does not include a group health plan; (4)(A) “Case characteristics” means demographic or other relevant characteristics of a small employer, as determined by a small employer carrier, that are considered by the carrier in the determination of premium rates for the small employer. (B) Claim experience, health status, and duration of coverage since issue are not case characteristics for the purposes of this subchapter; (5)(A) “Class of business” means all or a distinct grouping of small employers as shown on the records of the small employer carrier. (B) A distinct grouping may only be established by the small employer carrier on the basis that the applicable health benefit plans: (i) Are marketed and sold through individuals and organizations that are not participating in the marketing or sale of other distinct groupings of small employers for the small employer carrier; (ii) Have been acquired from another small employer carrier as a distinct grouping of plans; (iii) Are provided through an association with membership of not less than two (2) or more small employers that has been formed for purposes other than obtaining insurance; or (iv) Are in a class of business that meets the requirements for exception to the restrictions related to premium rates provided in § 23-86-204(a)(1)(A). (C) A small employer carrier may establish no more than two (2) additional groupings under each of subdivisions (5)(B)(i), (ii), (iii), and (iv) of this section on the basis of underwriting criteria that are expected to produce substantial variation in the healthcare costs. (D) The commissioner may approve the establishment of additional distinct groupings upon application to the commissioner and a finding by the commissioner that such an action would enhance the efficiency and fairness of the small employer insurance marketplace; (6) “Commissioner” means the Insurance Commissioner; (7) “Department” means the State Insurance Department; (8)(A) “Health benefit plan” or “plan” means health insurance coverage, i.e., benefits consisting of medical care, provided directly through insurance or reimbursement or otherwise, and including items and services paid for as medical care, under any hospital or medical service policy or certificate, hospital or medical service plan contract, or health maintenance organization contract offered by a health insurance issuer. (B) “Health benefit plan” does not include: (i) Accident-only, credit, dental, or disability income insurance; (ii) Coverage issued as a supplement to liability insurance; (iii) Workers' compensation or similar insurance; or (iv) Automobile medical-payment insurance; (9) “Index rate” means, for each class of business for small employers with similar case characteristics, the arithmetic average of the applicable base premium rate and the corresponding highest premium rate; (10) “New business premium rate” means, for each class of business as to a rating period, the premium rate charged or offered by the small employer carrier to small employers with similar case characteristics for newly issued health benefit plans with the same or similar coverage; (11) “Rating period” means the calendar period for which premium rates established by a small employer carrier are assumed to be in effect, as determined by the small employer carrier; (12)(A) “Small employer” means any person, firm, corporation, partnership, or association actively engaged in business that, on at least fifty percent (50%) of its working days during the preceding year, employed no fewer than two (2) nor more than twenty-five (25) eligible employees, the majority of whom were employed within this state. (B) In determining the number of eligible employees under subdivision (12)(A) of this section, companies that are affiliated companies or that are eligible to file a combined tax return for purposes of state taxation are considered to be one (1) employer; and (13) “Small employer carrier” means a health insurance issuer as defined in subdivision (3) of this section.