Report Title:

Health Insurance; Parity; Sole Proprietorship and Corporation

Description:

Beginning 1/1/2008, prohibits health insurers, mutual benefit societies, and HMOs from providing lower benefits or charging higher premiums to sole proprietors than they provide or charge to the sole employee of a corporation.

THE SENATE	S.B. NO.	744
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII

A BILL FOR AN ACT

relating to health insurance.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that small business remains the backbone of the State's economy.  However, that sector of small business comprising sole proprietorships suffers a distinct and unfair disadvantage in obtaining health insurance coverage.  Specifically, a sole proprietorship that seeks health coverage for the individual sole proprietor pays more in premiums than an incorporated entity consisting of only one employee for similar and often reduced coverage.  In both cases, only one individual is involved but coverage is more expensive and reduced in nature for a sole proprietor than for an individual who has incorporated but remains the corporation's sole employee.  For example, it has been reported that one insurer in the State will charge $286.25 monthly beginning on January 1, 2007, for coverage offered to sole proprietors but charges only $277.90 monthly for slightly better benefits for a sole employee of a corporation.

     The purpose of this Act is to require all health insurers in the State to provide price and benefits parity for health insurance coverage offered to individuals who are sole proprietors on a par with individuals who are sole employees in a corporation.

     SECTION 2.  Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 10A to be appropriately designated and to read as follows:

     "§431:10A‑    Benefits and premium parity; sole proprietors and sole employees of a corporation. No insurer that issues any accident and health or sickness insurance health policy, contract, plan, or agreement, issued, amended, or renewed in this State after December 31, 2007, that offers health coverage to a sole proprietor of a business entity, shall provide benefits that are lower or charge premiums that are higher than the benefits provided to and the premiums charged by the insurer to an individual who is the sole employee of a corporation."

     SECTION 3.  Chapter 432, Hawaii Revised Statutes, is amended by adding a new section to article 1 to be appropriately designated and to read as follows:

     "§432:1‑    Benefits and premium parity; sole proprietors and sole employees of a corporation. No mutual benefit society that issues any individual hospital or medical service plan, policy, contract, or agreement, issued, amended, or renewed in this State after December 31, 2007, that offers health coverage to a sole proprietor of a business entity, shall provide benefits that are lower or charge premiums that are higher than the benefits provided to and the premiums charged by the mutual benefit society to an individual who is the sole employee of a corporation."

     SECTION 4.  Chapter 432D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§432D‑    Benefits and premium parity; sole proprietors and sole employees of a corporation. No health maintenance organization that issues any policy, contract, plan, or agreement, issued, amended, or renewed in this State after December 31, 2007, that offers health coverage to a sole proprietor of a business entity, shall provide benefits that are lower or charge premiums that are higher than the benefits provided to and the premiums charged by the health maintenance organization to an individual who is the sole employee of a corporation."

     SECTION 5.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect upon its approval.

INTRODUCED BY:

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