NMSA 1978, § 59A-23C-1 Short title
59A-23C-1. Short title
Chapter 59A, Article 23C NMSA 1978 may be cited as the "Small Group Rate and Renewability Act".
Laws 1991, ch. 153, § 1; 1994, ch. 75, § 29.
Small Group Rate and Renewability
NMSA 1978 ch. 59A, art. 23C
in effectNMSA 1978, § 59A-23C-2 Purpose of act
59A-23C-2. Purpose of act
The purpose of the Small Group Rate and Renewability Act is to promote the continuing availability of health insurance coverage to small employers, to prevent abusive rating practices, to require disclosure of rating practices to purchasers, to establish rules for continuity of coverage for employers and covered individuals and to improve the efficiency and fairness of the small group health insurance marketplace.
Laws 1991, ch. 153, § 2.
NMSA 1978, § 59A-23C-3 Definitions
59A-23C-3. Definitions
As used in the Small Group Rate and Renewability Act:
A. "actuarial certification" means a written statement by a member of the American academy of actuaries or another individual acceptable to the superintendent that a small employer carrier is in compliance with the provisions of Section 59A-23C-5 NMSA 1978, based upon the person's examination, including a review of the appropriate records and of the actuarial assumptions and methods used by the carrier in establishing premium rates for applicable health benefit plans;
B. "base premium rate" means, for each class of business as to a rating period, the lowest premium rate 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;
C. "carrier" means any person who provides health insurance in this state. For the purposes of the Small Group Rate and Renewability Act, "carrier" or "insurer" includes a licensed insurance company, a licensed fraternal benefit society, a prepaid hospital or medical service plan, a health maintenance organization, a nonprofit health care organization, a multiple employer welfare arrangement or any other person providing a plan of health insurance subject to state insurance regulation;
D. "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, but "case characteristics" does not include claim experience, health status and duration of coverage since issue;
E. "class of business" means all small employers as shown on the records of the small employer carrier. A separate class of business may be established by the small employer carrier on the basis that the applicable health benefit plans have been acquired from another small employer carrier as a distinct grouping of plans;
F. "creditable coverage" means, with respect to an individual, coverage of the individual pursuant to:
(1) a group health plan;
(2) health insurance coverage;
(3) Part A or Part B of Title 18 of the Social Security Act;
(4) Title 19 of the Social Security Act except coverage consisting solely of benefits pursuant to Section 1928 of that title;
(5) 10 USCA Chapter 55;
(6) a medical care program of the Indian health service or of an Indian nation, tribe or pueblo;
(7) the Comprehensive Health Insurance Pool Act [Medical Insurance Pool Act] [Chapter 59A, Article 54 NMSA 1978];
(8) a health plan offered pursuant to 5 USCA Chapter 89;
(9) a public health plan as defined in federal regulations; or
(10) a health benefit plan offered pursuant to Section 5(e) of the federal Peace Corps Act;
G. "department" means the department of insurance;
H. "group health plan" means an employee welfare benefit plan as defined Section 3(1) of the Employee Retirement Income Security Act of 1974 to the extent that the plan provides medical care and including items and services paid for as medical care to employees or their dependents as defined under the terms of the plan directly or through insurance, reimbursement or otherwise;
I. "health benefit plan" or "plan" means any hospital or medical expense incurred policy or certificate, hospital or medical service plan contract or health maintenance organization subscriber contract. "Health benefit plan" does not include accident-only, credit, dental or disability income insurance, medicare supplement coverage, coverage issued as a supplement to liability insurance, workers' compensation or similar insurance or automobile medical-payment insurance;
J. "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;
K. "late enrollee" means, with respect to coverage under a group health plan, a participant or beneficiary who enrolls under the plan other than during:
(1) the first period in which the individual is eligible to enroll under the plan; or
(2) a special enrollment period pursuant to Sections 8 and 9 [59A-23A-8 and 59A-23A-9 NMSA 1978] of the Health Insurance Portability Act;
L. "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;
M. "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;
N. "small employer" means any person, firm, corporation, partnership or association actively engaged in business who, on at least fifty percent of its working days during either of the two preceding years, employed no less than two and no more than fifty eligible employees; provided that:
(1) in determining the number of eligible employees, the spouse or dependent of an employee may, at the employer's discretion, be counted as a separate employee;
(2) companies that are affiliated companies or that are eligible to file a combined tax return for purposes of state income taxation shall be considered one employer; and
(3) in the case of an employer that was not in existence throughout a preceding calendar year, the determination of whether the employer is a small or large employer shall be based on the average number of employees that it is reasonably expected to employ on working days in the current calendar year;
O. "small employer carrier" means any insurer that offers health benefit plans covering the employees of a small employer; and
P. "superintendent" means the superintendent of insurance.
Laws 1991, ch. 153, § 3; 1994, ch. 75, § 30; 1997, ch. 243, § 22.
NMSA 1978, § 59A-23C-4 Health insurance plans subject to the Small Group Rate and Renewability Act
59A-23C-4. Health insurance plans subject to the Small Group Rate and Renewability Act
A. Except as provided in Subsections B and C of this section, the provisions of the Small Group Rate and Renewability Act apply to any health benefit plan that provides coverage to one or more employees of a small employer.
B. The provisions of the Small Group Rate and Renewability Act shall not apply to individual health insurance policies that are subject to policy form and premium rate approval as provided in Section 59A-18-12, 59A-18-13, 59A-44-16, 59A-46-8, 59A-47-25 or 59A-47-26 NMSA 1978.
C. Any policies or certificates of a master policy that because of solicitation by agents or through the mail or mass media advertising are treated as individual policies and subject to the approvals stated in Subsection B of this section.
Laws 1991, ch. 153, § 4.
NMSA 1978, § 59A-23C-5.1 Adjusted community rating
59A-23C-5.1. Adjusted community rating
A. A health benefit plan that is offered by a carrier to a small employer shall be offered without regard to the health status of any individual in the group, except as provided in the Small Group Rate and Renewability Act. The only rating factors that may be used to determine the initial year's premium charged a group, subject to the maximum rate variation provided in this section for all rating factors, are the group members':
(1) ages;
(2) geographic areas of the place of employment; or
(3) smoking practices.
B. Separately for an insurer's individual and group policies, no person's rate shall exceed the rate of any other person with similar family composition by more than two hundred fifty percent of the lower rate, except that the rates for children under nineteen years of age or children nineteen to twenty-five years of age who are full-time students may have rates that are lower than the bottom rates in the two hundred fifty percent band. The rating factor restrictions shall not prohibit an insurer, multiple employer welfare arrangement, fraternal benefit society, health maintenance organization or nonprofit health care plan from offering rates that differ depending upon family composition. For the purposes of this subsection, "family composition" refers only to whether coverage covers an individual or a family.
C. The superintendent shall adopt and promulgate rules to implement the provisions of this section.
Laws 1994, ch. 75, § 33; 1997, ch. 22, § 3; 1997, ch. 243, § 24; 1998, ch. 41, § 4; 2010, ch. 95, § 4; 2019, ch. 259, § 5.
NMSA 1978, § 59A-23C-6 Provisions on renewability of coverage
59A-23C-6. Provisions on renewability of coverage
A. Except as provided in Subsection B of this section, a health benefit plan subject to the Small Group Rate and Renewability Act shall be renewable to all eligible employees and dependents at the option of the small employer, except for the following reasons:
(1) nonpayment of required premiums;
(2) fraud or misrepresentation of the small employer, or with respect to coverage of an insured individual, fraud or misrepresentation by the insured individual or that individual's representative;
(3) noncompliance with plan provisions;
(4) the number of individuals covered under the plan is less than the number or percentage of eligible individuals required by percentage requirements under the plan; or
(5) the small employer is no longer actively engaged in the business in which it was engaged on the effective date of the plan.
Eligibility classifications may not be changed if any individual is eliminated, due to the change, who was insured immediately prior to the change without first receiving the approval of the superintendent.
B. A small employer carrier may cease to renew all plans under a class of business. The carrier shall provide notice to all affected health benefit plans and to the superintendent in each state in which an affected insured individual is known to reside at least ninety days prior to termination of coverage. A carrier which exercises its right to cease to renew all plans in a class of business shall not:
(1) establish a new class of business for a period of five years after the nonrenewal of the plans without prior approval of the superintendent; or
(2) transfer or otherwise provide coverage to any of the employers from the nonrenewed class of business unless the insurer offers to transfer or provide coverage to all affected employers and eligible employees and dependents without regard to case characteristics, claim experience, health status or duration of coverage.
C. A small employer carrier may not change eligibility classifications upon renewal or replacement within twelve months of its termination of its own coverage if the change in classification eliminates from coverage any individual who was insured previous to the change and would have continued to be insured if the change in eligibility had not occurred.
Laws 1991, ch. 153, § 6.
NMSA 1978, § 59A-23C-7 Disclosure of rating practices and renewability provisions
59A-23C-7. Disclosure of rating practices and renewability provisions
Each small employer carrier shall make reasonable disclosure in solicitation and sales materials provided to small employers of the following:
A. the provisions concerning the carriers' right to change premium rates and the factors that affect changes in premium rates; and
B. the provisions relating to renewability of coverage.
Laws 1991, ch. 153, § 7; 2019, ch. 259, § 6.
NMSA 1978, § 59A-23C-8 Maintenance of records
59A-23C-8. Maintenance of records
A. Each small employer carrier shall maintain at its principal place of business a complete and detailed description of its rating practices and renewal underwriting practices, including information and documentation that demonstrate that its rating methods and practices are based upon commonly accepted actuarial assumptions and are in accordance with sound actuarial principles.
B. Each small employer carrier shall file each March 1 with the superintendent an actuarial certification that the carrier is in compliance with this section and that the rating methods of the insurer are actuarially sound. The certification shall include the index rate for all classes of business as of January 1. A copy of the certification shall be retained by the insurer at its principal place of business.
C. A small employer carrier shall make the information and documentation described in Subsection A of this section available to the superintendent upon request. The information shall be considered proprietary and trade secret information and shall not be subject to disclosure by the superintendent to persons outside of the department except as agreed to by the carrier or as ordered by a court of competent jurisdiction.
D. Each small employer carrier shall maintain at its principal place of business a complete copy of the disclosure of rating practices and renewability provided to the small employer for a period of three years during which time it shall be available to the superintendent upon request.
Laws 1991, ch. 153, § 8.
NMSA 1978, § 59A-23C-8.1 Employer utilization and loss data availability
59A-23C-8.1. Employer utilization and loss data availability
Employer claims information, including utilization and loss experience under health insurance under a group health plan, a health benefit plan or a plan provided under Chapter 59A, Article 23C NMSA 1978 shall be made available only upon the request of and to employers of employees with such coverage within sixty days of an employer's written request to the carrier for such information, provided the employer's coverage extends to no less than twenty-five individual employees, regardless of whether family coverage is included. In providing such utilization data, carriers shall not reveal information that permits identification of an individual insured or the insured's family or the specific conditions for which coverage was provided.
Laws 2003, ch. 252, § 3.
NMSA 1978, § 59A-23C-9 Discretion of the superintendent
59A-23C-9. Discretion of the superintendent
The superintendent may suspend all or any part of Section 5 [59A-23C-5 NMSA 1978] of the Small Group Rate and Renewability Act as to the premium rates applicable to one or more small employers for one or more rating periods upon a filing by the small employer carrier and a finding by the superintendent that either the suspension is reasonable in light of the financial condition of the carrier or that the suspension would enhance the efficiency and fairness of the marketplace for small employer health benefits.
Laws 1991, ch. 153, § 9.
NMSA 1978, § 59A-23C-10 Health insurers; direct services
59A-23C-10. Health insurers; direct services
A. A health insurer shall make reimbursement for direct services at a level not less than eighty-five percent of premiums across all health product lines over the preceding three calendar years, but not earlier than calendar year 2010, as determined by reports filed with the office of superintendent of insurance. Nothing in this subsection shall be construed to preclude a purchaser from negotiating an agreement with a health insurer that requires a higher amount of premiums paid to be used for reimbursement for direct services for one or more products or for one or more years.
B. An insurer that fails to comply with the eighty-five percent reimbursement requirement in Subsection A of this section shall issue a dividend or credit against future premiums to all policyholders in an amount sufficient to assure that the benefits paid in the preceding three calendar years plus the amount of the dividends or credits equal eighty-five percent of the premiums collected in the preceding three calendar years. If the insurer fails to issue the dividend or credit in accordance with the requirements of this section, the superintendent shall enforce the requirements and may pursue any other penalties as provided by law, including general penalties pursuant to Section 59A-1-18 NMSA 1978.
C. After notice and hearing, the superintendent may adopt and promulgate reasonable rules necessary and proper to carry out the provisions of this section.
D. For the purposes of this section:
(1) "direct services" means services rendered to an individual by a health insurer or a health care practitioner, facility or other provider, including case management, disease management, health education and promotion, preventive services, quality incentive payments to providers and any portion of an assessment that covers services rather than administration and for which an insurer does not receive a tax credit pursuant to the Medical Insurance Pool Act [Chapter 59A, Article 54 NMSA 1978]; provided, however, that "direct services" does not include care coordination, utilization review or management or any other activity designed to manage utilization or services;
(2) "health insurer" means a person duly authorized to transact the business of health insurance in the state pursuant to the Insurance Code but does not include a person that only issues a limited-benefit policy intended to supplement major medical coverage, including medicare supplement, vision, dental, disease-specific, accident-only or hospital indemnity-only insurance policies, or that only issues policies for long-term care or disability income; and
(3) "premium" means all income received from individuals and private and public payers or sources for the procurement of health coverage, including capitated payments, self-funded administrative fees, self-funded claim reimbursements, recoveries from third parties or other insurers and interests less any tax paid pursuant to the Insurance Premium Tax Act [7-40-1 to 7-40-10 NMSA 1978] and fees associated with participating in a health insurance exchange that serves as a clearinghouse for insurance.
Laws 2010, ch. 94, § 2; 2013, ch. 74, § 28; 2018, ch. 57, § 21.
Source: New Mexico Compilation Commission (nmonesource.com)URL: https://nmonesource.com/nmos/nmsa-unanno/en/item/18562/index.doFetched: 10/20/2026