An Act To Clarify the Definition of "Eligible Group" in Small Group Health Insurance Plans
Maine Legislature, Session 122, LD 0335
Committee: Insurance and Financial Services
Sponsors: LINDELL, SNOWE-MELLO
Amends: 24-A MRSA §2808-B, 24-A MRSA §4346

Legislative Document 
No. 335 
H.P.258 
House of Representatives, January 20, 2005 
An Act To Clarify the Definition of "Eligible Group" in Small 
Group Health Insurance Plans 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Representati ve GLYNN of South Portland. 
7J'/~ 1?7.77!~ 
MILLICENT M. MacFARLAND 
Clerk 
Cosponsored by Representatives: LINDELL of Frankfort, McKANE of Newcastle, 
V AUGHAN of Durham, Senator: SNOWE-MELLO of Androscoggin. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 
24-A MRSA §2808-B, sub-§I, ,D, 
as 
repealed 
and 
replaced by PL 2003, c. 428, Pt. H, §5, is amended to read: 
D. 
"Eligible group" means any person, 
firm, 
corporation, 
partnership, association or subgroup engaged actively in a 
business that employed an average of 50 or fewer eligible 
employees dur ing the preceding calendar year, the maj or i ty 
of whom were employed within this State. 
(1) 
If an employer was not in existence throughout the 
preceding 
calendar 
year, 
the 
determination 
must 
be 
based on 
the 
average 
number 
of 
employees 
that the 
employer is reasonably expected to employ on business 
days in the current calendar year. 
( 2 ) 
In determining the numper 
companies that are affiliated 
eligible to file a combined tax 
of eligible employees, 
companies or that are 
return for purposes of 
state taxation are considered one employer. 
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eRe-e~ee£-~~~~€-~~~~~~~~~-&~i~ia~&-effi~±eyee6 
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eeveFa~e-~-~Ra~-~~~-eF-~-e±i~ia±e-~~--~aaFaR~eea 
issaaRee-e~-eeveFa~e-iR-~Ra~-s~a~eT 
(4) 
An employer qualifies as an eligible group for 
2-person coverage if the employer provides a carrier 
with the following information demonstrating that the 
employer's 
business 
and 
employees 
meet 
the 
minimum 
qualifications for group coverage in paragraph C: 
(a) 
A copy of the most recent quarterly combined 
filing for income tax withholding and unemployment 
contributions, Form 941/Cl-ME; 
(b) 
For an employee claimed to be an employee 
eligible for 
group coverage whose 
name 
is not 
listed on Form 941/CI-ME, a copy of the employer's 
payroll 
records 
for 
the 
most 
recent 
months 
showing tax withholding or a wage report from a 
payroll 
company 
showing 
wages 
paid 
to 
that 
employee 
for 
the most 
recent quarter with tax 
withholding; 
(c) 
If an employer 
941/CI-ME 
for 
group 
that 
exemption 
and 
is exempt from filing Form 
coverage, 
documentation 
of 
a 
copy 
of 
the 
employer's 
payroll 
records 
for 
the 
most 
recent 
months 
showing tax withholding or a wage report from a 
payroll 
company 
showing 
wages 
paid 
to 
that 
employee 
for 
the 
most 
recent quarter with tax 
withholding; or 
(d) 
If the name of the business owner or employee 
does not appear on Form 941/C1-ME, a copy of one 
of the following: 
(i) 
federal income tax Form Schedule 
C or 
Schedule F; 
(ii) 
K-l; 
Federal income tax Form 1120S, Schedule 
(iii) 
Federal income tax Form 1065, Schedule 
K-l; 
(iv) 
A workers' 
or evidence of 
Title 39-A; 
compensation insurance audit 
a 
waiver of benefits under 
(v) 
A 
description 
of 
operations 
in 
a 
commercial general liability insurance policy 
or 
equivalent 
insurance 
policy 
providing 
coverage for the business; or 
(vi) 
A 
signature 
card 
from 
a 
financial 
institution or credit union authorizing the 
employee 
to 
sign 
checks 
on 
a 
business 
checking or share draft account that is at 
least 
months 
old; 
a 
notarized affidavit 
from the employer describing the duties of 
the employee and the average number of hours 
worked by the employee and attesting that the 
employer is not defrauding the carrier and is 
aware of the consequences of committing fraud 
or making a material misrepresentation to the 
carrier, 
including 
a 
loss 
of coverage 
and 
benefits; 
and, 
if 
the 
group 
coverage 
is 
purchased 
through 
a 
producer, 
a 
notarized 
affidavit 
from 
the 
producer 
affirming 
the 
producer's belief that the employer qualifies 
as an eligible group for coverage. 
In determining if a 
new business or a business that 
adds an owner or a new employee to payroll during the 
course of a year qualifies as an eligible group for 
2-person coverage under this subparagraph, the employer 
must 
submit an affidavit stating that all employees 
meet the criteria in this subparagraph and that the 
documentation 
and 
forms 
required 
under 
this 
subparagraph will 
be 
provided 
to 
the 
carrier 
when 
payroll 
records 
become 
available, 
when 
ownership 
distribution 
forms 
become 
available 
or 
the 
first 
renewal 
date 
of 
the 
coverage, 
whichever 
date 
is 
earlier. 
A. false affidavit or misrepresentation on an 
affidavit submitted by an employer may result in the 
loss of group coverage and repayment of claims paid. 
This subparagraph may not be construed to prohibit a 
carrier from 
recognizing an employer as 
an eligible 
group 
if 
the 
employer 
has 
not 
produced 
the 
documentation required in this subparagraph. 
This subparagraph applies only to an employer applying 
for group health insurance coverage as a 2-person group 
on or after October 1, 2001. 
Sec. 2. 24-A MRSA §4346, sub-§l, ,G, as enacted by PL 200L c. 
708, §3, is amended to read: 
G. 
"Small employer" means 
aa--e-,l-i-9"i-b-l-€-~FEHi-~-a-6--de-f-ined--ia 
seet:iea - -2~- -&1:i-&&e-e-t-i-G-n- -·:h - --p-cH'~-aph- -Q a pe r son, firm, 
corporation, 
partnership, 
association or 
subgroup engaged 
actively in a business that employed an average of 50 or 
fewer eligible employees during the preceding calendar year. 
SUMMARY 
This bill clarifies the definition of "eligible group" as it 
applies to small group health plans by specifying that a majority 
of the employees in the group must be employed in the State. 
This bill also changes a cross-reference in the Maine Consumer 
Choice 
Health 
Plan 
to 
maintain 
the 
current 
definition 
of 
"eligible group."