(1) The
Commissioner may not issue a certificate of authority to a self-funded
qualified multiple employer welfare arrangement unless the arrangement
establishes to the satisfaction of the Commissioner that:
(a) Employers participating in the
arrangement are members of either the same trade or professional association or
a non-profit coalition for health;
(b) Employers or employees participating in
the arrangement exercise direct control over the arrangement;
1. Direct control exists if the employer or
employees participating in the arrangement have the right to elect at least
seventy-five percent (75%) of the individuals designated in the arrangement's
organizational documents as having control over the operations of the
arrangement and the individuals designated in the arrangement's organizational
documents in fact exercise control over the operation of the
arrangement;
2. Use of a
third-party administrator to process claims and to assist in the administration
of the arrangement is not evidence of the lack of exercise of control over the
operations of the arrangement;
(c) The arrangement provides only allowable
benefits;
(d) The arrangement has
adequate facilities and competent personnel, as determined by the Commissioner,
to service the health benefit plan or has contracted with an administrator
licensed or exempt for licensure under Title 56, Chapter 6, Part 4 to service
the health benefit plan;
(e) The
arrangement does not solicit participation in the arrangement from the general
public, except the arrangement may employ or independently contract with a
licensed insurance producer who may be paid a commission or other remuneration
to enroll employers in the arrangement;
(f) The arrangement is not organized or
maintained solely as a conduit for the collection of premiums and the
forwarding of premiums to an insurance company;
(g) The arrangement has deposited with the
Commissioner a bond in an amount to be determined by the Commissioner, to be
used for the payment of claims in the event the arrangement becomes insolvent
and has submitted to the Commissioner a written plan of operation that, in the
discretion of the Commissioner, ensures the financial integrity of the
arrangement;
(h) The arrangement is
not in a hazardous financial condition;
1. In
determining whether an arrangement is in a hazardous financial condition, the
Commissioner may consider the following:
(i)
The financial statements of the arrangement or any employer participating in
the arrangement;
(ii) Types and
levels of stop-loss insurance coverage, including attachment points of the
coverage;
(iii) Whether a deposit
is required for each employee covered under the arrangement equal to at least
one month's cost of providing benefits under the arrangement;
(iv) The experience of the individuals who
will be involved in the management of the arrangement, including employees,
independent contractors, and consultants; and
(v) Other factors the Commissioner considers
relevant to determining whether the arrangement is in a hazardous financial
condition, including, but not limited to, those standards enumerated in Rule
0780-1-66-.03.
(2) The Commissioner may require that the
articles, bylaws, agreements, trusts, or other documents or instruments
describing the rights and obligations of the employers, employees, and
beneficiaries of the arrangement require that employers participating in the
arrangement are liable for a pro rata share of all liabilities of the
arrangement that are unpaid.
(3)
The arrangement shall maintain both specific and aggregate stop-loss insurance
coverage covering one hundred percent (100%) of claims in excess of the
attachment points recommended by a qualified actuary.
