(a) (1) This subchapter does not apply to a health benefit plan during the health benefit plan's following health benefit plan year if the application of this subchapter to the health benefit plan in a health benefit plan year resulted in an increase in the actual costs of coverage with respect to medical and surgical benefits and mental illness benefits under the health benefit plan as determined and certified under subsection (b) of this section by an amount that exceeds:

(A) Two percent (2%) for the first health benefit plan year in which this section is applied; or

(B) One percent (1%) for each subsequent health benefit plan year.

(2) The exemption provided by subdivision (a)(1) of this section applies to a health benefit plan for one (1) year.

(3) A healthcare insurer may elect to continue to apply mental health parity under this subchapter to its health benefit plans regardless of any increase in its total costs of coverage.

(b)

(1) A determination under this section of increases to the actual costs of coverage of a health benefit plan shall be made and certified by a qualified and licensed actuary who is a member in good standing of the American Academy of Actuaries.

(2) The determination shall be in a written report prepared by the actuary.

(3) The report and all underlying documentation relied upon by the actuary shall be maintained by the healthcare insurer for a period of six (6) years following the notification required by subsection (d) of this section.

(c) To obtain an exemption under this section, a healthcare insurer shall make the increased cost determination required by this section after the health benefit plan has complied with this section for the first six (6) months of the health benefit plan year.

(d)

(1) A healthcare insurer that elects to claim an exemption for a qualifying health benefit plan under this section based upon a certification under subsection (b) of this section shall promptly notify the Insurance Commissioner, the policyholder or contract holder, and the certificate holders, subscribers, and enrollees covered by the health benefit plan of its election.

(2) The notification to the commissioner under subdivision (d)(1) of this section shall include:

(A) A description of the number of covered lives under the health benefit plan at the time of the notification and, if applicable, at the time of any prior election of the increased cost exemption under this section; and

(B) For the current and previous health benefit plan year:

(i) A description of the actual total costs of coverage for medical and surgical benefits and mental illness benefits under the health benefit plan; and

(ii) The actual total costs of coverage with respect to mental illness benefits under the health benefit plan.

(3)

(A) A notification under this subsection is confidential.

(B) The commissioner shall make available upon request, but not more than annually, an anonymous itemization of notifications under this section that includes a summary of the data received under subdivision (d)(2) of this section.

(e) To determine compliance with this section, the commissioner may audit the books and records of a healthcare insurer relating to an exemption, including without limitation any actuarial reports prepared pursuant to subsection (b) of this section during the six-year period following the notification required by subsection (d) of this section.

(f) The commissioner may promulgate rules to implement this section.