KRS 304.17A-430: Criteria for program plan -- Alternative underwriting.

(1) A health benefit plan shall be considered a program plan and is eligible for

inclusion in calculating assessments and refunds under the program risk adjustment

process if it meets all of the following criteria:

(a) The health benefit plan was purchased by an individual to provide benefits for

only one (1) or more of the following: the individual, the individual's spouse,

or the individual's children. Health insurance coverage provided to an

individual in the group market or otherwise in connection with a gr oup health

plan does not satisfy this criteria even if the individual, or the individual's

spouse or parent, pays some or all of the cost of the coverage unless the

coverage is offered in connection with a group health plan that has fewer than

two (2) participants as current employees on the first day of the plan year;

(b) An individual entitled to benefits under the health benefit plan has been

diagnosed with a high -cost condition on or before the effective date of the

individual's coverage for coverage issued on a guarantee-issue basis after July

15, 1995;

(c) The health benefit plan imposes the maximum pre -existing condition

exclusion permitted under KRS 304.17A-200;

(d) The individual purchasing the health benefit plan is not eligible for or covered

by other coverage; and

(e) The individual is not a state employee eligible for or covered by the state

employee health insurance plan under KRS Chapter 18A.

(2) Notwithstanding the provisions of subsection (1) of this section, if the total claims

paid for the high-cost condition under a program plan for any three (3) consecutive

years are less than the premiums paid under the program plan for those three (3)

consecutive years, then the following shall occur:

(a) The policy shall not be considered to be a progra m plan thereafter until the

first renewal of the policy after there are three (3) consecutive years in which

the total claims paid under the policy have exceeded the total premiums paid

for the policy and at the time of the renewal the policy also qualifie s under

subsection (1) as a program plan; and

(b) Within the last six (6) months of the third year, the insurer shall provide each

person entitled to benefits under the policy who has a high-cost condition with

a written notice of insurability. The notice shall state that the recipient may be

able to purchase a health benefit plan other than a program plan and shall also

state that neither the notice nor the individual's actions to purchase a health

benefit plan other than a program plan shall affect the in dividual's eligibility

for plan coverage. The notice shall be valid for six (6) months.

(3) (a) There is established within the guaranteed acceptance program the alternative

underwriting mechanism that a participating insurer may elect to use. An

insurer that elects this mechanism shall use the underwriting criteria that the

insurer has used for the past twelve (12) months for purposes of the program

plan requirement in paragraph (b) of subsection (1) of this section for high -

risk individuals rather than using the criteria established in KRS 304.17A -005

and 304.17A-280 for high-cost conditions.

(b) An insurer that elects to use the alternative underwriting mechanism shall

make written application to the commissioner. Before the insurer may

implement the mech anism, the insurer shall obtain approval of the

commissioner. Annually thereafter, the insurer shall obtain the commissioner's

approval of the underwriting criteria of the insurer before the insurer may

continue to use the alternative underwriting mechanism.