Current through August, 2024
Section 1 Purpose
This rule is promulgated pursuant to
8 V.S.A. §
4079a and in response to the United States
Department of Labor's June 21, 2018 amendment to 29 C.F.R § 2510. See
Definition of "Employer" Under Section
3(5) of
ERISA--Association Health Plans, 83 Fed. Reg. 28,961 (June 21, 2018) (to be
codified at 29 C.F.R. § 2510.3-5). The purpose of this rule is to set
forth rules, forms, and procedures regarding self-insured association or MEWA
health plans. This rule protects Vermont consumers and promotes the stability
of Vermont's health insurance markets, to the extent permitted under federal
law, by implementing licensure, solvency, reserve, and rating requirements.
This rule shall not apply to association health plans that are fully funded.
Nothing in this rule shall be construed to provide a self-insured association
or MEWA, created pursuant to the Department of Labor's June 21, 2018 amendment
to 29 C.F.R § 2510, authority to operate in the State before January 1,
2019. Preexisting self-insured associations or MEWAs must come into compliance
with this rule no later than December 31, 2019.
Section 2 Definitions
The following terms are defined for purposes of this rule as
follows:
A. "Association" means any
foreign or domestic association that provides a health benefit plan that covers
the employees of at least one employer that is either domiciled in Vermont or
has its principal headquarters or principal administrative office in Vermont.
For purposes of this rule, "association" refers to self-insured associations,
unless otherwise stated.
B.
"Commissioner" means the Commissioner of the Vermont Department of Financial
Regulation.
C. "Department" means
the Vermont Department of Financial Regulation.
D. "Employee Welfare Benefit Plan," as used
in this rule, has the same meaning as that contained in
29
U.S.C. §
1002(1).
E. "Health Benefit Plan" means a policy,
contract, certificate, or agreement offered or issued by a self-insured
association or MEWA to provide, deliver, arrange for, pay for, or reimburse any
of the costs of health services, as defined in
33 V.S.A §
1802(3).
F. "Multiple employer welfare arrangement
(MEWA)," as used in this rule, has the same meaning as that contained in
29
U.S.C. §
1002(40). For
purposes of this rule, "multiple employer welfare arrangement (MEWA)" refers to
self-insured associations, unless otherwise stated.
G. "Self-Insured" means any association or
MEWA offering a health benefit plan that reimburses costs of health services
incurred by covered persons pursuant to the benefits and coverages provided by
their plan exclusively from association or MEWA assets.
H. "Third-party Administrator" means any
person who, on behalf of an association or MEWA, receives or collects charges,
contributions, or premiums for, or adjusts or settles claims on or for
residents of this State or Vermont health care providers and facilities.
Section 3 Authority
The Department has authority to promulgate rules for domestic
and foreign self-insured association health benefit plans pursuant to
8
V.S.A. §§
3368 and
4079a(b)
and 29 U.S.C. §
1144(b)(6)(A)(ii). The
Department has authority to regulate any association or MEWA offering a
self-insured health benefit plan in this State.
Section 4 Captive
Self-insured associations and MEWAs insured via a captive
insurance company are exempt from this rule pursuant to
8 V.S.A. §
6016. Such associations and MEWAs will be
regulated by the Department's Captive Insurance Division per 8 V.S.A. Chapter
141.
Section 5 Licensing
Requirement
No association or MEWA may offer a self-insured health
benefit plan in this State unless duly licensed with the Department. An
association or MEWA shall be licensed and regulated as an insurer in accordance
with Title 8 V.S.A. Chapter 101, and all applicable regulations. The
application for license shall be on a form prescribed by the Department. To be
eligible for licensure in the State, all self-insured associations and MEWAs
shall meet all of the following requirements in addition to those contained in
Title 8 V.S.A. Chapter 101:
A. Be
licensed as a nonprofit corporation.
B. Be established and maintained by a trade
association, industry association, professional association, or by any other
business group or association of any kind that has a constitution or bylaws
specifically stating its purpose and have been organized and maintained in good
faith for a continuous period of five years, for purposes other than obtaining
or providing health care coverage benefits to its members.
C. Have at least 500 covered lives at the
time of application.
D. Have been
operating in compliance with ERISA on a self-insured basis for a continuous
period of five years pursuant to a trust agreement by a board of trustees that
shall have complete fiscal control over the association or MEWA, and that shall
be responsible for all operations of the association or MEWA. The trustees
shall be selected by vote of the participating employers and shall be owners,
partners, officers, directors, or employees of one or more employers
participating in the association or MEWA. A trustee may not be an owner,
officer, or employee of the association, MEWA, or third-party administrator.
The trustees shall have authority to approve applications of association
members for participation in the association or MEWA and to contract with an
authorized administrator or service company to administer the day-to-day
affairs of the association or MEWA.
E. Offer benefits only to association or MEWA
members.
F. Offer benefits only
through licensed producers, as defined in Title 8 V.S.A. Chapter 131.
G. Have within its own organization adequate
facilities and competent personnel to serve the association or MEWA or have
contracted with a registered third-party administrator to provide those
services.
H. Have established a
procedure for handling claims for benefits in the event of the dissolution of
the association or MEWA.
I. All
filings made under this rule shall be submitted to:
Department of Financial Regulation
Insurance Division
Attn: Company Licensing
89 Main Street
Montpelier VT 05620-3101
Section 6 Stop Loss Insurance
The association or MEWA shall at all times maintain a
stop-loss insurance policy or contract in compliance with Regulation H-2009-02
(Revised) and shall establish and maintain appropriate loss and loss adjustment
reserves determined by sound actuarial principles.
Section 7 Rating Requirements
A. An association or MEWA shall obtain rate
approval annually from the Green Mountain Care Board through the rate review
process provided in
8 V.S.A.
§§
4062 and
4062a. No
self-insured association or MEWA may offer any plan that does not have approved
rates.
B. Any association or MEWA
providing a health benefit plan shall use a community rating methodology
acceptable to the Commissioner as outlined in this subsection. The association
or MEWA may be rated based on the collective group experience of its members,
provided that each certificate holder and dependent is charged the same
community rate. The following risk classification factors are prohibited from
use in rating individual employees or employer members, and dependents of such
employees or members:
1. demographic rating,
including age and gender rating;
2.
geographic area rating;
3. health
status rating;
4. industry
rating;
5. medical underwriting and
screening;
6. experience
rating;
7. tier rating (except for
tiers related to family structure); and 8. durational rating.
C. The Commissioner may permit an
association or MEWA to establish rewards, premium discounts, split benefit
designs, rebates, or otherwise waive or modify applicable copayments,
deductibles, or other cost-sharing amounts in return for adherence by a member
or subscriber to programs of health promotion and disease prevention that are
satisfactory to the Commissioner. If such a wellness plan is integrated in the
health benefit plan, approval shall occur through the SERFF product approval
process, and the provisions of Section
5 shall apply
to filing, licensure, and renewal. If the wellness plan is offered as a
standalone program, then it must be submitted pursuant to Section
5 for
approval in conjunction with licensure and renewal.
D. An association or MEWA shall guarantee
acceptance of all persons within the association or MEWA and their
dependents.
E. An association or
MEWA shall guarantee the rates on all plans for a minimum of 12 months. The
calendar year constitutes the plan year for all health benefit plans offered by
an association or MEWA.
F. Medical
Loss Ratio. A foreign or domestic association or MEWA with covered lives in
Vermont shall comply, with respect to those covered lives, with the medical
loss ratio and rebating requirements of 45 C.F.R. §§ 158.210-240.
Consistent with
45 C.F.R. §
158.210(a), a minimum
medical loss ratio of 85 percent is required and shall be calculated consistent
with the federal methodology.
G.
All expenses incurred by the association or MEWA and payable to a licensed
agent, broker, or producer who is not an employee of the association or MEWA
shall be incorporated into the medical loss ratio under subsection (F) of this
Section and shall be incorporated in the administrative expense portion of the
association or MEWA's rate filing. All expenses incurred by the association or
MEWA and payable to a licensed agent, broker, or producer--whether an employee
of the association or MEWA--shall be reported to the Department with an
explanation of how those fees are funded. If the association or MEWA utilizes
an agent, broker, or producer for the sale of products including, but not
limited to, a health benefit plan, the association or MEWA shall report the
portion of the fee as it relates to the advertising, marketing, and sale of the
health benefit plan only.
Section
8 Benefit Requirements
A. Each
health benefit plan offered by an association or MEWA shall, at a minimum,
provide the following benefits:
1. Essential
Health Benefits as defined in
42 U.S.C. §
18022(b)(1).
2. Cost sharing requirements of
42 U.S.C. §
18022(c)(1),
(c)(3).
3. Lifetime and annual limits as prescribed
in
29 C.F.R. §
2590.715-2711.
4. A level of coverage equal to or greater
than that designed to provide benefits that are actuarially equivalent to 60
percent of the full actuarial value of the benefits provided under the
plan.
5. The requirements of
Department Regulation H-2009-03.
6.
All other insurance requirements and benefit mandates as provided in 8 V.S.A.
and 18 V.S.A. Chapter 221, as may be amended from time to time, and as
specified by rule by the Commissioner.
7. All other benefits required to comply with
applicable federal laws and regulations.
8. The requirement of pediatric dental and
vision coverage as required in (A)(1) of this Section can be satisfied by
either a stand-alone dental or vision plan or as a benefit embedded in the
health benefit plan.
B.
Every health benefit plan offered by an association or MEWA shall include a
process for subscribers to appeal adverse benefit determinations that complies
with the requirements of
8
V.S.A. §
4089f and Department Regulation
H-2011-02.
C. No health benefit
plan or related policy, contract, certificate, or agreement offered or issued
in this State may reserve discretion to an association or MEWA to interpret the
terms of the contract or to provide standards of interpretation or review that
are inconsistent with the laws of this State. Any such policy, contract,
certificate, or agreement shall be null and void to the extent it conflicts
with this subsection, pursuant to
8 V.S.A. §
4062f.
D. An association or MEWA shall not deliver
or issue for delivery a health benefit plan covering lives located in this
State that contains an exclusion or limitation for pre-existing conditions or a
waiting period on the coverage of pre-existing conditions.
Section 9 Membership Requirements
A. An association or MEWA offering a health
benefit plan in the State shall meet the requirements of 83 Fed. Reg. 28,961
(June 21, 2018) (to be codified at 29 C.F.R. § 2510.35(c)), provided
these standards are not implemented in a manner that is subterfuge for
discrimination as is prohibited under
8 V.S.A.
§§
4062 and
4083
and 83 Fed. Reg. 28,961 (June 21, 2018) (to be codified at 29 C.F.R. §
2510.3-5(d)).
B. An association or
MEWA doing business in this State may not restrict membership to employers
located within a particular geographic region of the State and shall accept
employers with a principal place of business located in any part of the State.
Section 10 Filing
Requirements
No policy or certificate of health insurance shall be
delivered or issued for delivery in this State until a copy of the form and of
the rules for the classification of risks has been filed with and approved by
the Department in accordance with
8 V.S.A. §§
3541,
4062,
4515a,
4587,
or
5104.
A. The following notice shall be provided to
employers and employees who obtain coverage from an MEWA or association and
shall be printed in no less than 14-point boldface type of uniform font in the
policy, certificate, and/or a stand-alone notice:
"NOTICE
The association or MEWA is not an insurance company and
therefore may subject employers and employees to increased financial risk. If
you have questions about an association or MEWA policy or whether such a policy
is right for you, you should consult your broker, a Vermont Health Connect
Assister, or the Vermont Department of Financial Regulation at________.
The Vermont Life & Health Insurance Guaranty Association
does not cover policies issued by associations or MEWAs. In the event of an
insolvency or dissolution of the association or MEWA you may be liable for
unpaid claims and expenses."
B. Each notice under subsection A of this
Section shall include the Department's current consumer service telephone
number and website in the blank provided in this notice.
C. The association or MEWA shall include in
its policy document the following disclosures:
(1) the Vermont employer has the option of
purchasing insurance on Vermont Health Connect (Exchange) and does not have to
join an association or MEWA to purchase insurance;
(2) purchasing an association or MEWA health
benefit plan may prevent your employees from accessing premium subsidies and
cost sharing reductions;
(3)
purchasing an association or MEWA health benefit plan may be more expensive
than purchasing a plan on Vermont Health Connect (Exchange) and may not be the
most cost-effective option for the employer or its employees; and
(4) the Vermont employer should understand
all of its purchasing and financing options before electing insurance coverage
through an association or MEWA and can contact the Vermont Office of the
Healthcare Advocate for additional information.
D. The association or MEWA shall file its
advertising and marketing materials with the Department for prior approval. The
association or MEWA shall be responsible for any advertising or marketing
materials disseminated about its health benefit plan regardless of the
source.
E. The association or MEWA
shall file policies; certificates; statement of benefits; brochures; Summary of
Benefits and Coverage; any endorsement, rider, or application used in
conjunction with the health benefit plan; and any other document issued in
conjunction with the health benefit plan with the Department for prior
approval.
Section 11
Enrollment Periods
An association or MEWA enrolling members in a health benefit
plan shall comply with all open enrollment and special enrollment periods. The
open enrollment period is defined as November 1 through December 15. The
qualified health plan (QHP) market rules allowing for certain enrollment
extensions for small groups do not apply to the association health plan (AHP)
market since, under federal law, AHPs are functionally treated as large groups.
An employer that elects to obtain AHP insurance for its employees will have to
do so during open enrollment for the following plan year. Only an employer that
comes into the market (i.e. a bona fide new business) can join an association
and elect coverage through an AHP outside open enrollment, and it must do so
within 60 days of coming into existence. The Department will not consider a
business that previously existed but reorganized for the purposes of gaining
access to an AHP "new"
Section
12 Financial Auditing
A. Each
association or MEWA shall file annually with the Commissioner, and with the
members of the association or MEWA, within 180 days after the end of the fiscal
year, an audited financial statement for the most recently completed fiscal
year as supported by an independent certified public accountant's report. If
the MEWA or association fails to file such audited financial statement, the
Commissioner may perform the audit and the association or MEWA shall reimburse
the Commissioner for the cost thereof, including, but not limited to, the cost
to hire an independent auditor. An association or MEWA may request, in writing,
permission from the Commissioner to submit a compilation statement or financial
statement review conducted by a certified public accountant in lieu of an
audited financial statement.
B. At
a minimum, the audited financial statement shall contain the following exhibits
for the current and prior fiscal years:
1.
Balance sheet;
2. Statement of
income;
3. Statement of changes in
equity;
4. Proof of minimum capital
and surplus, as required pursuant to
8 V.S.A. §
3304;
5. Notes to financial statements;
and
6. Management and internal
control letters.
C. The
financial statement shall be prepared in accordance with statutory accounting
practices, unless the Commissioner finds an exception to statutory accounting
practices is necessary to preserve the fiscal integrity of the association or
MEWA.
D. Each association or MEWA
shall file a copy of the fidelity bond, or evidence acceptable to the
Commissioner, covering the administrator, the MEWA or association employees,
and service agents with the audited financial statement.
E. The Commissioner may require any
association or MEWA to file additional financial-information including, but not
limited to, interim financial reports, additional financial reports or
exhibits, or statements considered necessary to secure complete information
concerning the condition, solvency, experience, transactions, or affairs of the
association or MEWA. The Commissioner shall establish reasonable deadlines for
filing these additional reports, exhibits, or statements. The Commissioner may
require verification of any additional required information.
F. An association or MEWA with covered lives
in Vermont shall comply with all financial reporting requirements applicable to
traditional insurance companies doing business in Vermont, including the
requirement to file the Health Insurer Annual Statement (Act 152) Spreadsheet,
provided for in 33 V.S.A. § 9414a. Instructions for annual filings by
traditional insurance companies doing business in Vermont are set forth on the
Insurance Division's webpages on the Department's website.
Section 13 Advertising and Marketing
A. Associations, MEWAs, and insurance agents
or brokers acting on behalf of an association or MEWA may advertise and market
to potential customers using only marketing materials that have been submitted
to and approved by the Department pursuant to Section 10 of this rule.
Associations, MEWAs, and insurance agents or brokers acting on their behalf are
subject to
8 V.S.A. §
4084 and all other applicable provisions of
law regarding advertising and marketing practices.
B. Using metal levels--bronze, silver, gold,
and/or platinum--in the name of an association or MEWA health benefit plan, or
in advertising or marketing such a plan, shall be a per se violation of
8 V.S.A. §
4084.
Section 14 Record Retention
An association or MEWA doing business in Vermont shall
maintain its books and records in accordance with Department Regulation
99-01.
Section 15
Enforcement Authority
A. To ensure compliance
with the provisions of this rule and protect Vermont health care consumers, the
Commissioner may, in his or her discretion, examine the business and financial
affairs of an association or MEWA doing business in this State utilizing the
powers granted by
8 V.S.A. §§
13,
18,
3368-3390, 3563-3574,
4726,
and other provisions of Titles 8 or 18 as may be applicable.
B. The Commissioner may decline to issue or
renew a license issued pursuant to this rule if the Commissioner finds that an
association or MEWA does not satisfy any standard or requirement of this rule
or any provision of other applicable State or federal law or
regulation.
C. The Commissioner may
impose corrective action or suspend or revoke a license issued pursuant to this
rule for a violation of this rule or any provision of applicable State and
federal law.
D. Any person or
entity that violates any provision of this rule is subject to the penalties
provided in Chapters 3, 101, 107, and 129 of Title 8 and such other provisions
of Titles 8 or 18 as may be applicable.
E. When the Commissioner believes that an
association, MEWA, or any other person is operating in this State without being
duly licensed or has violated the law, an administrative rule of the
Department, or an Order of the Commissioner, the Commissioner may issue an
order to cease and desist such violation or take any other action set forth in
8 V.S.A. §
3661.
Section 16 Notification to the Department by
Third-Party Administrators of Contracts with Associations or MEWAs
A. A third-party administrator shall notify
the Department by December 31 of each year of all contracts it had in force at
any time during the 12-month period of that calendar year that covered an
association or MEWA with members having employees or subscribers in
Vermont.
B. The third-party
administrator shall notify the Department within five days of any cancellation
or termination of a contract that covered an association or MEWA with members
having employees or subscribers in Vermont.
C. Reporting Requirement for Fraudulent
Association or MEWA Activity.
1. A third-party
administrator having knowledge or a reasonable suspicion that an association,
MEWA, or entity holding itself out to be an association or MEWA in this State
is not in compliance with the requirements of this rule shall immediately
report to the Commissioner in writing regarding the identity of the entity, any
known contact information and other materials, and the nature of the entity's
practices triggering this reporting. This reporting obligation also requires a
third-party administrator to report to the Commissioner any person, including a
licensed or unlicensed agent, broker, or other individual, soliciting,
offering, or selling a health benefit plan on behalf of an association, MEWA,
or entity holding itself out to be an association or MEWA in this State without
complying with the requirements of this rule.
2. Confidentiality.
a. The documents and evidence provided
pursuant to subsection (C) of this Section or obtained by the Commissioner in
an investigation of suspected or actual conduct in violation of this rule shall
be privileged and confidential, shall not be made public, and shall not be
subject to discovery or introduction into evidence in any private civil action
pursuant to
1 V.S.A.
§
317(c)(26) and 8
V.S.A. § 3574.
b. Subdivision
(a) of this subsection does not prohibit release by the Commissioner of
documents and evidence obtained in an investigation of suspected or actual
conduct in violation of this rule:
i. in
administrative or judicial proceedings to enforce laws administered by the
Commissioner;
ii. to federal,
state, or local law enforcement or regulatory agencies, to an organization
established for the purpose of detecting and preventing such conduct;
or
iii. at the Commissioner's
discretion in the furtherance of legal or regulatory proceedings brought as
part of the Commissioner's official duties or to civil or criminal law
enforcement authorities for use in the exercise of such authority's duties, in
such manner as the Commissioner may deem proper.
c. Release of documents and evidence under
subdivision (b) of this subsection does not abrogate or modify the privilege
granted in subdivision (a) of this subsection.
Section 17 Insurance Agents and
Brokers
A. Any person, including a licensed or
unlicensed agent, a broker, or other individual, soliciting, offering, or
selling a health benefit plan on behalf of an association or MEWA to a Vermont
employer or a Vermont resident shall notify the Commissioner in writing prior
to engaging in any conduct in connection with such sale. This written
notification shall include, at a minimum, the person's name, address, telephone
number, and email address; the name of the association or MEWA; and all
materials in the person's possession used for the purposes of soliciting,
offering, or selling the health benefit plan, including advertising and
marketing materials.
B. Prior to
completing a sale, any person, including a licensed or unlicensed agent, a
broker, or other individual, soliciting, offering, or selling a health benefit
plan on behalf of an association or MEWA to a Vermont employer or a Vermont
resident shall disclose to the employer or resident that he/she is being
compensated for the sale of the health benefit plan, that the employer or
resident has the option of purchasing insurance on the Exchange, that
purchasing such a health benefit plan may prevent the employer or individual
from accessing premium subsidies and cost sharing reductions, and that
purchasing such a health benefit plan may be more expensive than purchasing a
plan on the Vermont Health Connect (Exchange). Any person, including a licensed
or unlicensed agent, a broker, or other individual, soliciting, offering, or
selling a health benefit plan on behalf of an association or MEWA to a Vermont
employer or a Vermont resident shall also provide the employer or resident with
a crosswalk of benefits comparing the association or MEWA health benefit plan
with plans offered on the Vermont Health Connect (Exchange). As noted in
Section
5, this
crosswalk of benefits must be submitted to the Department for approval, either
through SERFF or as part of the licensure and renewal process.
C. A person, including a licensed agent,
broker, or other individual, soliciting, offering, or selling a health benefit
plan on behalf of an association or MEWA to a Vermont employer or a Vermont
resident, prior to engaging in or assisting any person to engage in offering an
association or MEWA health benefit plan, shall carry out and document
appropriate due diligence to establish, at a minimum, the following:
a. That the association or MEWA is licensed
in the State;
b. That the
disclosures listed in subsection (B) are in the policy document; and
c. That the advertising and marketing
materials he/she is using have been approved by the Department.
D. Reporting Requirement for
Fraudulent Association or MEWA Activity. Any person, including a licensed or
unlicensed agent, a broker, or other individual, soliciting, offering, or
selling a health benefit plan on behalf of an association, MEWA, or entity
holding itself out to be an association or MEWA, having knowledge or a
reasonable suspicion that an association, MEWA, or entity holding itself out to
be an association or MEWA in this State is not in compliance with the
requirements of this rule shall immediately report to the Commissioner in
writing regarding the identity of the entity, any known contact information or
other materials, and the nature of the entity's practices triggering this
reporting. This reporting obligation also requires such person to report to the
Commissioner any person, including a licensed or unlicensed agent, a broker, or
other individual, soliciting, offering, or selling a health benefit plan on
behalf of an association, MEWA, or entity holding itself out to be an
association or MEWA in this State without complying with the requirements of
this rule. The confidentiality provisions of Section 16(C)(2) shall apply to
this subsection.
Section
18 Severability
If any provision of this rule, or the application thereof to
any person or circumstance, is held invalid, such invalidity shall not affect
other provisions or applications of this rule that can be given effect without
the invalid provision or application, and to that end the provisions of this
rule are severable.
STATUTORY AUTHORITY:
8 V.S.A. §§
10,
11,
3368,
4079a
