Date:March 14, 1997
To:All Insurers Authorized to Transact the Business of Accident and Health Insurance
From:Josephine W. Musser, Commissioner of Insurance
Subject:Wisconsin Act 289 (W-2)

Wisconsin Act 289 (W-2) resulted in changes to laws governing group health insurance. The laws relating to contract termination and renewability, preexisting condition limitations, portability of group health insurance coverage, minimum participation requirements, and prohibited coverage practices that currently apply only to policies issued to small employers with 2 - 25 eligible employes will apply to all group health benefit plans. The law becomes effective May 1, 1997.

A new federal law, The Health Insurance Portability and Accountability Act of 1996 (HIPAA), also establishes new requirements for self-funded, fully insured group plans and individual health policies. Many of the federal law requirements become effective July 1, 1997.

There are some major differences in the insurance requirements of W-2 and HIPAA, which cannot be resolved without enactment of new state legislation. Until new enabling legislation is enacted, it is unknown which provisions of W-2 will be amended or repealed to conform to the requirements of HIPAA.

OCI does not expect insurers to submit new policy form filings or to amend their currently approved policy forms in an attempt to bring the forms into compliance with the requirements of either W-2 or HIPAA, until enabling legislation is enacted. However, all insurers are expected and required to administratively comply with the requirements enacted by W-2 as of May 1, 1997.

If insurers do submit to OCI for approval new group policies and certificates containing policy provisions and language intended to comply with W-2 or HIPAA, OCI will not disapprove such policy provisions or language, provided the OCI review process is completed prior to enactment of enabling state legislation and the policy or certificate complies with all other applicable statutory and regulatory requirements. If insurers submit policy amendments, endorsements, or riders which contain only language meant to bring currently approved policies into compliance with W-2 or HIPAA, such forms will be "deemed" approved if they are submitted to OCI prior to enactment of enabling state legislation.

Insurers are warned that it may be necessary for them to submit further revisions to comply with W-2 or HIPAA after the effective date of enabling state legislation. A more detailed bulletin pertaining to the new requirements under W-2, as amended to conform to the requirements of HIPAA, will be sent to insurers when enabling state legislation is enacted. Any questions concerning this bulletin may be directed to Pam Ellefson, (608) 266-7769, or Barb Belling, (608) 267-4555.