
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 42USC300gg-41]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                    CHAPTER 6A--PUBLIC HEALTH SERVICE
 
   SUBCHAPTER XXV--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE
 
                     Part B--Individual Market Rules
 
      subpart 1--portability, access, and renewability requirements
 
Sec. 300gg-41. Guaranteed availability of individual health 
        insurance coverage to certain individuals with prior group 
        coverage
        

(a) Guaranteed availability

                           (1) In general

        Subject to the succeeding subsections of this section and 
    section 300gg-44 of this title, each health insurance issuer that 
    offers health insurance coverage (as defined in section 300gg-
    91(b)(1) of this title) in the individual market in a State may not, 
    with respect to an eligible individual (as defined in subsection (b) 
    of this section) 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 300gg(b)(1)(A) of this title) 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 300gg-44 of this title.

(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 300gg(c) of this title) 
    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 
    [42 U.S.C. 1395c et seq., 1395j et seq.], or (C) a State plan under 
    title XIX of such Act [42 U.S.C. 1396 et seq.] (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 
    300gg-12(b) of this title (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 300gg-44 of this 
    title, the health insurance issuer may elect to limit the coverage 
    offered under subsection (a) of this section 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 300gg-44(c)(3)(A) of this title (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) \1\ Application of financial capacity limits
---------------------------------------------------------------------------

    \1\ So in original. Two subsecs. (e) have been enacted.
---------------------------------------------------------------------------

                           (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) \1\ Market requirements

                           (1) In general

        The provisions of subsection (a) of this section 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 subchapter 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.

(July 1, 1944, ch. 373, title XXVII, Sec. 2741, as added Pub. L. 104-
191, title I, Sec. 111(a), Aug. 21, 1996, 110 Stat. 1978.)

                       References in Text

    The Social Security Act, referred to in subsec. (b)(2), is act Aug. 
14, 1935, ch. 531, 49 Stat. 620, as amended. Parts A and B of title 
XVIII of the Act are classified generally to parts A (Sec. 1395c et 
seq.) and B (Sec. 1395j et seq.) of subchapter XVIII of chapter 7 of 
this title. Title XIX of the Act is classified generally to subchapter 
XIX (Sec. 1396 et seq.) of chapter 7 of this title. For complete 
classification of this Act to the Code, see section 1305 of this title 
and Tables.


                             Effective Date

    Section 111(b) of Pub. L. 104-191 provided that:
    ``(1) In general.--Except as provided in this subsection, part B of 
title XXVII of the Public Health Service Act [this part] (as inserted by 
subsection (a)) shall apply with respect to health insurance coverage 
offered, sold, issued, renewed, in effect, or operated in the individual 
market after June 30, 1997, regardless of when a period of creditable 
coverage occurs.
    ``(2) Application of certification rules.--The provisions of section 
102(d)(2) [102(c)(2)] of this Act [set out as a note under section 300gg 
of this title] shall apply to section 2743 of the Public Health Service 
Act [section 300gg-43 of this title] in the same manner as it applies to 
section 2701(e) of such Act [section 300gg(e) of this title].''

                  Section Referred to in Other Sections

    This section is referred to in section 300gg-44 of this title.
