2010 North Carolina Code
Chapter 58 Insurance.
Article 50 - General Accident and Health Insurance Regulations.
58-50-126. Alternative coverage permitted.

58‑50‑126. Alternative coverage permitted.

(a) In General. In the case of health insurance coverage offered in this State, a small employer carrier may elect to limit the coverage offered under G.S. 58‑50‑125(d) if the carrier offers at least two different policy forms of health insurance coverage and both policy forms meet all of the following:

(1) The policy forms are designed for, made available or actively marketed to, and actually enroll self‑employed individuals and other small employer groups.

(2) The policy forms meet the requirements of either subsections (b) or (c) of this section, as elected by the small employer carrier.

(b) Choice of Most Popular Policy Forms. The requirements of this section are met for health insurance coverage policy forms offered by a small employer carrier if the carrier offers the policy forms for small group health insurance coverage with the two highest premium volume numbers of all the policy forms offered by the carrier in this State or in applicable marketing or service areas in the period involved.

(c) Choice of Two Policy Forms with Representative Coverage. The requirements of this section are met for health insurance coverage policy forms offered by a small employer carrier in the small group market if the small employer carrier offers both policy forms described in this subsection and each policy form includes benefits substantially similar to other small group health insurance coverage offered by the small employer carrier in this State.

(1) Lower‑level coverage policy form. A policy form is deemed a lower‑level coverage policy form if the actuarial value of the benefits under the coverage is at least eighty‑five percent (85%), but not greater than one hundred percent (100%) of a weighted average, as described in subdivision (3) of this subsection.

(2) Higher‑level coverage policy form. A policy form is deemed a higher‑level coverage policy form if all of the following apply:

a. The actuarial value of the benefits under the coverage is at least fifteen percent (15%) greater than the actuarial value of the coverage described in subdivision (1) of this subsection offered by the small employer carrier.

b. The actuarial value of the benefits under the coverage is at least one hundred percent (100%), but not greater than one hundred twenty percent (120%) of a weighted average, as described in subdivision (3) of this subsection.

(3) Weighted average. For the purposes of this subsection, a weighted average is the average actuarial value of the benefits provided by all the health insurance coverage issued, as elected by the small employer carrier, either by that small employer carrier or all small employer carriers in this State in the small group market during the previous year, not including coverage issued under this section, weighted by enrollment for the different coverage.

(d) Election. The small employer carrier elections of the policies to be offered under this section shall apply uniformly to all small employers in this State for that small employer carrier. The election shall be effective for a period of not less than two years. An election under this section shall be made in accordance with G.S. 58‑50‑127.

(e) Assumptions. For the purposes of subsection (c) of this section, the actuarial value of benefits provided under small group insurance coverage shall be calculated based on a standardized population and a set of standardized utilization and cost factors.

(f) Discontinuation of Basic or Standard Plans. If a small employer carrier chooses to offer the plans under this section and discontinues coverage under the basic or standard health benefit plans provided for in G.S. 58‑50‑125, the carrier shall make available to the insured employer whose coverage is to be discontinued both of the plans offered under this section. New coverage made available under this section shall constitute replacement coverage and shall be rated in accordance with G.S. 58‑50‑130(b)(3).

(g) Different Policy Forms. For purposes of this section only, policy forms that have different cost‑sharing arrangements or different riders shall be considered to be different policy forms. (2006‑154, s. 3; 2007‑298, s. 5.1.)