(1)
(a) Except as provided in Subsection (1)(b), if prior notice is given, a covered carrier may impose upon a small group that changes coverage to that carrier from another carrier a one-time surcharge of up to 25% of the annualized premium that the carrier could otherwise charge under Section 31A-30-106.1.
(b) A covered carrier may not impose the surcharge described in Subsection (1)(a) if:
(i) the change in carriers occurs on the anniversary of the plan year, as defined in Section 31A-1-301;
(ii) the previous coverage was terminated under Subsection 31A-22-618.6(5);
(iii) employees from an existing group form a new business; and
(iv) the surcharge is not applied uniformly to all similarly situated small groups.
(2) A covered carrier may not impose the surcharge described in Subsection (1) if the offer to cover the group occurs at a time other than the anniversary of the plan year because:
(a)
(i) the application for coverage is made prior to the anniversary date in accordance with the covered carrier's published policies; and
(ii) the offer to cover the group is not issued until after the anniversary date; or
(b)
(i) the application for coverage is made prior to the anniversary date in accordance with the covered carrier's published policies; and
(ii) additional underwriting or rating information requested by the covered carrier is not received until after the anniversary date.
(3) If a covered carrier chooses to apply a surcharge under Subsection (1), the application of the surcharge and the criteria for incurring or avoiding the surcharge shall be clearly stated in the:
(a) written application materials provided to the applicant at the time of application; and
(b) written producer guidelines.
(4) The commissioner shall adopt rules in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, to ensure compliance with this section.