WILLIAM DONALD SCHAEFER, Governor                                Ch. 9

(3) (III) 33% ABOVE OR BELOW THE COMMUNITY RATE FOR ALL
HEALTH BENEFIT PLANS ISSUED, DELIVERED, OR RENEWED AFTER JULY 1, 1996
BETWEEN JULY 1, 1996 AND JUNE 30, 1997; AND

(IV) 16% ABOVE OR BELOW THE COMMUNITY RATE FOR ALL HEALTH
BENEFIT PLANS ISSUED, DELIVERED, OR RENEWED AFTER JULY 1, 1997.

(2) ON OR BEFORE OCTOBER 1, 1998, THE COMMISSIONER SHALL SUBMIT A
REPORT TO THE GOVERNOR AND, IN ACCORDANCE WITH § 2-1312 OF THE STATE
GOVERNMENT ARTICLE, THE GENERAL ASSEMBLY, ON THE FEASIBILITY AND
DESIRABILITY OF ESTABLISHING A PURE COMMUNITY RATE OR MAINTAINING AN
ADJUSTED COMMUNITY RATE.

703.

(A)     A CARRIER SHALL APPLY ALL RISK ADJUSTMENT FACTORS UNDER § 702
OF THIS SUBTITLE CONSISTENTLY WITH RESPECT TO ALL HEALTH BENEFIT PLANS
ISSUED, DELIVERED, OR RENEWED IN THE STATE.

(B)     (1) A CARRIER MAY NOT ARBITRARILY TRANSFER A SMALL EMPLOYER
INVOLUNTARILY INTO OR OUT OF A HEALTH BENEFIT PLAN.

(2) A CARRIER MAY NOT OFFER TO TRANSFER A SMALL EMPLOYER
INTO OR OUT OF A HEALTH BENEFIT PLAN UNLESS THE OFFER TO TRANSFER IS
MADE TO ALL SMALL EMPLOYERS WITH SIMILAR RISK ADJUSTMENT FACTORS.

(C)     A CARRIER SHALL MAKE A REASONABLE DISCLOSURE IN ITS
SOLICITATION AND SALES MATERIALS OF:

(1) THE EXTENT TO WHICH PREMIUM RATES FOR A SPECIFIED SMALL
EMPLOYER ARE ESTABLISHED OR ADJUSTED BASED UPON THE ACTUAL OR
EXPECTED VARIATION IN HEALTH CONDITIONS OF THE ELIGIBLE EMPLOYEES AND
DEPENDENTS OF THE SMALL EMPLOYER;

(2) (1) THE PROVISIONS CONCERNING THE CARRIER'S RIGHT TO
CHANGE PREMIUM RATES, INCLUDING ANY FACTORS THAT MAY AFFECT THE
CHANGES IN PREMIUM RATES;

(3) (2) THE PROVISIONS RELATING TO RENEWABILITY OF POLICIES
AND CONTRACTS; AND

(4) (3) THE PROVISIONS RELATING TO ANY PREEXISTING CONDITION
PROVISION.

(D)     (1) A CARRIER SHALL BASE ITS RATING METHODS AND PRACTICES ON:

(I)       COMMONLY ACCEPTED ACTUARIAL ASSUMPTIONS; AND

(II)     SOUND ACTUARIAL PRINCIPLES.

(2) SUBJECT TO THE APPROVAL OF THE COMMISSIONER AND AS
PROVIDED UNDER § 704(A)(3) OF THIS SUBTITLE, A CARRIER MAY IMPOSE
REASONABLE MINIMUM PARTICIPATION REQUIREMENTS.

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