TITLE XXXVII
INSURANCE
Chapter 415-E
MULTIPLE-EMPLOYER WELFARE ARRANGEMENTS
Section 415-E:1
415-E:1 Definitions. –
In this chapter:
I. "Multiple-employer welfare arrangement" means an employee welfare benefit plan or any other arrangement which is established or maintained for the purpose of offering or providing health benefits to the employees of 2 or more employers, or to their beneficiaries. This shall include plans established by any political subdivision of the state or religious organization, but shall not include any plan or arrangement established or maintained under or pursuant to one or more agreements deemed collective bargaining agreements under section 3(40)(A)(i) of the Employee Retirement Income Security Act of 1974, Public Law No. 93-406 (ERISA). For the purposes of this chapter, 2 or more trades or businesses, whether or not incorporated, shall be deemed a single employer if such trades or businesses are under common ownership or within the same control group as defined under section 3(40)(B) of ERISA.
II. "Commissioner" means the insurance commissioner of the state of New Hampshire.
III. "Fund balance" means the total assets in excess of total liabilities, except that assets pledged to secure debts not reflected on the books of the multiple-employer welfare arrangement shall not be included in the fund balance. Fund balance shall include other contributed capital, retained earnings, and surplus notes.
IV. "Insolvency termination" means the termination of an arrangement where the fund balance as of the termination date is inadequate.
Source. 1991, 246:1, eff. Jan. 1, 1992.
Section 415-E:2
415-E:2 Applicability. –
I. No person shall, after April 1, 1992, operate a multiple-employer welfare arrangement unless such arrangement is approved by the commissioner. No person shall, after April 1, 1992, operate a multiple-employer welfare arrangement in existence prior to April 1, 1992, unless such arrangement has submitted for approval in compliance with RSA 415-E:4, or otherwise meets the special requirements of paragraph III of this section.
II. This chapter shall not apply to a multiple-employer welfare arrangement which offers or provides benefits which are fully insured by an authorized insurer or under the provisions of RSA 5-B.
III. RSA 415-E:4, RSA 415-E:8, RSA 415-E:9, III and RSA 415-E:11 shall not apply to a multiple-employer welfare arrangement which:
(a) Meets the general eligibility requirements of RSA 415-E:3, I;
(b) Is administered primarily from a principal place of business located within the state of New Hampshire;
(c) Has provided employee health benefits for a continuous period of 10 or more years;
(d) Maintains a termination liability fund wherein the fund balance plus the total liabilities of the multiple-employer welfare arrangement shall at no time, for a consecutive 90-day period, be less than 40 percent of the aggregate amount of premiums billed during the 6 prior months. For purposes of this subparagraph, that surety amount, if any, deposited with the commissioner pursuant to RSA 415-E:7, I, may be credited as a fund balance asset toward the termination liability fund amount required under this chapter; and
(e) Files with the commissioner, not later than 4 months following the end of each fiscal year, a report on the financial status of the termination liability fund, which report is filed under oath by a member of its board of trustees, or by an administrative executive duly appointed by the board, and further certified to by an independent certified public accountant with a place of business located within the state of New Hampshire.
IV. In the event a multiple-employer welfare arrangement does not satisfy the requirements of paragraph III, the arrangement shall within 60 days file with the commissioner an application for approval under RSA 415-E:4, and shall be subject to all provisions of this chapter until such time as the requirements of paragraph III are satisfied.
Source. 1991, 246:1, eff. Jan. 1, 1992.
Section 415-E:3
415-E:3 General Eligibility. –
I. To meet the requirements for approval and to maintain a multiple-employer welfare arrangement, an arrangement shall be:
(a) Nonprofit.
(b) Established by a trade association, industry association, political subdivision of the state, religious organization, or professional association of employers or professionals which has a constitution or bylaws and which has been organized and maintained in good faith for a continuous period of one year for purposes other than that of obtaining or providing insurance.
(c) Operated pursuant to a trust agreement by a board of trustees which shall have complete fiscal control over the arrangement and which shall be responsible for all operations of the arrangement. The trustees selected shall be owners, partners, officers, directors, or employees of one or more employers in the arrangement. A trustee may not be an owner, officer, or employee of the administrator or service company of the arrangement. The trustees shall have the authority to approve applications of association members for participation in the arrangement and to contract with an authorized administrator or service company to administer the day-to-day affairs of the arrangement.
(d) Neither offered nor advertised to the public generally.
(e) Operated in accordance with sound actuarial principles.
II. The arrangement shall issue to each covered employee a policy contract, certificate, summary plan description, or other evidence of the benefits and coverages provided. This evidence of the benefits and coverages provided shall contain in boldfaced print in a conspicuous location, the following statement: "The benefits and coverages described herein are provided through a trust fund established and funded by a group of employers." Arrangements in existence prior to January 1, 1992, that have previously issued benefit descriptions to employees may meet the disclosure requirements under this chapter by issuing to each employee such additional written material necessary to meet the requirements of this paragraph.
II-a. Each arrangement shall provide to each covered employee, on request, a written statement of the dollar amount of allowable benefit for any procedure which is requested by the appropriate procedure code.
II-b. No arrangement shall extend preexisting condition exclusions beyond a period of 9 consecutive months after the date of enrollment of the person's health coverage.
III. Each arrangement shall maintain specific excess insurance with a retention level determined in accordance with sound actuarial principles and approved by the commissioner.
IV. Each arrangement shall establish and maintain appropriate loss reserves determined in accordance with sound actuarial principles and approved by the commissioner.
V. The commissioner shall not grant or continue approval until such time as the arrangement replaces any trustee found by the commissioner, upon the presentation of sufficient evidence:
(a) To be incompetent;
(b) To be guilty of, or to have pled guilty or no contest to a felony, or a crime involving moral turpitude;
(c) To have had any type of insurance license revoked in this or any other state;
(d) To have improperly manipulated assets, accounts, or specific excess insurance or to have otherwise acted in bad faith.
VI. To qualify for and retain approval to transact business, an arrangement shall make all contracts with administrators or service companies available for inspection by the department initially, and thereafter upon reasonable notice.
VII. Failure to maintain compliance with applicable eligibility or filing requirements established by this section shall be grounds for suspension or revocation of approval of an arrangement, provided, however, that such arrangement shall have 60 days after notification by the commissioner to take such action necessary to correct the deficiency.
Source. 1991, 246:1. 1993, 102:2. 2007, 289:11, eff. Jan. 1, 2008.
Section 415-E:3-a to 415-E:3-g
415-E:3-a to 415-E:3-g [Omitted.] –
Section 415-E:4
415-E:4 Filing of Application. –
The sponsoring association shall file with the commissioner an application for approval of the arrangement upon a form to be furnished by the commissioner, which shall include or have attached the following:
I. A copy of the constitution or bylaws of the association.
II. The names and addresses of the trustees of the arrangement.
III. A copy of the bylaws or trust agreement which governs the operation of the arrangement.
IV. A copy of the policy, contract, certificate, summary plan description, or other evidence of the benefits and coverages provided to covered employees.
V. A copy of the fidelity bond in an amount equal to not less than 10 percent of the funds handled annually and issued in the name of the arrangement covering its trustees, employees, administrator, or other individuals managing or handling the funds or assets of the arrangement. In no case may such bond be less than $1,000 or more than $500,000, except that the commissioner, after due notice to all interested parties and opportunity for hearing, and after consideration of the record, may prescribe an amount in excess of $500,000 subject to the 10 percent limitation.
VI. A copy of the arrangement's excess insurance agreement.
VII. Evidence satisfactory to the commissioner showing that the arrangement will be operated in accordance with sound actuarial principles. The commissioner shall not approve the arrangement unless the commissioner determines that the plan is designed to provide sufficient revenues to pay current and future liabilities, as determined in accordance with sound actuarial principles.
VIII. Such additional information as the commissioner may reasonably require.
Source. 1991, 246:1, eff. Jan. 1, 1992.
Section 415-E:5
415-E:5 Fund Balance. –
Each multiple-employer welfare arrangement shall maintain a fund balance in excess of or equal to zero.
Source. 1991, 246:1, eff. Jan. 1, 1992.
Section 415-E:6
415-E:6 Financial Condition, Loss Reserves, Reinsurance, or Working Capital; Determination of Inadequacy. –
I. The commissioner may, upon reasonable notice, conduct an examination of the loss reserves, financial condition, specific excess insurance, and working capital of a multiple-employer welfare arrangement. If the commissioner preliminarily finds that the reserves, specific excess insurance, or financial condition may be inadequate, or that the arrangement does not have a combined working capital in an amount establishing the financial strength and liquidity of the arrangement to pay claims promptly and showing evidence of the financial ability of the arrangement to meet its obligations to covered employees, the commissioner shall notify the arrangement of such inadequacy. Upon being so notified, the arrangement shall within 30 days file with the commissioner all information which, in the belief of the arrangement, proves the reasonableness and adequacy of the condition noted as being inadequate.
II. If the commissioner determines, after reviewing the information filed, that an inadequate condition exists, the arrangement shall implement, within 30 days, a plan to correct the inadequacy and shall file proof of reasonable improvement or adequate condition with the commissioner within 6 months of the implementation of the plan. If the commissioner is satisfied that the plan submitted to improve the inadequate condition of the arrangement is sufficient, he shall so notify the arrangement. The arrangement shall report quarterly to the commissioner until the causes of the inadequate condition have been corrected.
III. The commissioner may suspend or revoke the approval of an arrangement if he finds that the arrangement has failed to correct or reasonably improve an inadequate condition within the time authorized by paragraph II.
Source. 1991, 246:1, eff. Jan. 1, 1992.
Section 415-E:7
415-E:7 Insolvency Protection. –
I. To assure the faithful performance of its obligations to its member employers and covered employees and their dependents, every arrangement shall, within 30 days after the close of the arrangement's fiscal year, deposit with the commissioner cash, securities, or any combination of these or other measures acceptable to the commissioner, in an amount equal to 25 percent of the preceding 12 months' health care claims expenditures or 5 percent of gross annual premiums for the succeeding year, whichever is greater; however, in no case shall the amount of the deposit exceed $100,000. All income from deposits shall belong to the depositing arrangement and shall be paid to it as it becomes available. An arrangement that has made a securities deposit may withdraw that deposit, or any part of such deposit, after making a substitute deposit of cash, securities, or any combination of these or other measures of equal amount and value, upon approval by the commissioner. No judgment creditor or other claimant of a multiple-employer welfare association shall have the right to levy upon any of the assets or securities held in this state as a deposit under this section.
II. In lieu of the deposit required under paragraph I, an arrangement may file with the commissioner a surety bond in like amount. The bond shall be one issued by an authorized surety insurer, shall be for the same purpose as the deposit in lieu of which it is filed, and shall be subject to the commissioner's approval. No bond shall be canceled or subject to cancellation unless at least 60 days' advance notice of cancellation in writing is filed with the commissioner. No bond shall be approved unless it covers liabilities arising from all policies and contracts issued and entered into during the time the bond is in effect and unless the commissioner is satisfied that the bond provides the same degree of security as would be provided by a deposit of securities.
III. In the event of an insolvency termination, the deposit held by the commissioner pursuant to RSA 415-E:7, I, or the bond held by the commissioner pursuant to RSA 415-E:7, II, shall be applied to the extent of the insolvency. Any deposit funds remaining in excess of the amount needed to make the arrangement solvent shall be distributed in accordance with RSA 415-E:10.
Source. 1991, 246:1, eff. Jan. 1, 1992.
Section 415-E:8
415-E:8 Policy Forms. –
I. No policy or contract form, application form, certificate, rider, endorsement, summary plan description, or other evidence of coverage shall be issued by an arrangement unless the form and all changes to it have been filed with the commissioner by or on behalf of the arrangement which proposed to use such form and have been approved by the commissioner.
II. The commissioner shall disapprove any form filed under this section, or withdraw any previous approval, only if the form:
(a) Is in any respect in violation of, or does not comply with, this chapter.
(b) Contains or incorporates by reference, where such incorporation is otherwise permissible, any inconsistent, ambiguous, or misleading clauses, or exceptions and conditions which deceptively affect the risk purported to be assumed in the general coverage of the contract.
(c) Has any title, heading, or other indication of its provisions which is misleading.
(d) Is printed or otherwise reproduced in such manner as to render any material provision of the form substantially illegible.
(e) Contains provisions which are unfair or inequitable, or contrary to the public policy of this state or which encourage misrepresentation.
Source. 1991, 246:1, eff. Jan. 1, 1992.
Section 415-E:9
415-E:9 Employer Participants' Liability. –
I. The liability of each employer participant for the obligations of the multiple-employer welfare arrangement shall be individual, several, and proportionate, but not joint.
II. Each employer participant shall have a contingent assessment liability pursuant to 415-E:10 for payment of actual losses and expenses incurred while the policy was in force.
III. Each policy issued by the arrangement shall contain a statement of the contingent liability. Both the application for insurance and policy shall contain, in contrasting color and not less than 10-point type, the following statement: "This is a fully assessable policy. In the event the arrangement is unable to pay its obligations, policyholders (employers) shall be required to contribute on a pro rata earned premium basis the money necessary to meet any unfulfilled obligations."
Source. 1991, 246:1, eff. Jan. 1, 1992.
Section 415-E:10
415-E:10 Termination of Arrangement. –
If an arrangement is terminated for any reason, it shall pay all outstanding claims, debts, and obligations. The arrangement may retain sufficient funds to provide coverage for such additional period as the trustees of the arrangement consider prudent. In addition, the trustees may purchase such additional insurance as they consider necessary for protection against potential future claims. Any funds remaining in the arrangement after satisfaction of all obligations upon termination shall be paid to participating employers and/or covered employees as of the termination date in some equitable manner meeting with the approval of the commissioner, including, without ruling out other alternatives, equally on a per capita basis to each participating employer and/or employee who is covered under the arrangement as of the effective date of termination.
Source. 1991, 246:1, eff. Jan. 1, 1992.
Section 415-E:11
415-E:11 Annual Reports and Triennial Actuarial Reports. –
I. Every arrangement shall, annually within 4 months of the end of the fiscal year or within such extension of time as the commissioner for good cause may grant, file a report with the commissioner, verified by the oath of a member of the board of trustees or by an administrative executive appointed by the board, showing its condition on the last day of the preceding fiscal year. The report shall contain a financial statement of the arrangement, including its balance sheet and a statement of operations for the preceding year certified by an independent certified public accountant. The report shall also include an analysis of the adequacy of reserves and contributions or premiums charged, based on a review of past and projected claims and expenses.
II. In addition to information called for and furnished in connection with the annual report, if reasonable grounds exist, the commissioner may request information which summarizes paid and incurred expenses, and contributions or premiums received, and may request evidence satisfactory to the commissioner that the arrangement is actuarially sound. Such information and evidence shall be furnished to the commissioner by the arrangement as soon as reasonably possible after requested by the commissioner, but no later than 30 days after such request, unless the commissioner, for good cause, grants an extension.
III. At least once every 3 years, each arrangement shall have a report prepared by an actuary who is a member of the Society of Actuaries of the American Academy of Actuaries as to the actuarial soundness of the arrangement. The report shall be made available to the commissioner upon request. The report shall consist of, but shall not be limited to, the following:
(a) Adequacy of contribution rate in meeting the level of benefits provided and changes, if any, needed in the contribution rates to achieve or preserve a level of funding deemed adequate to enable payment of the benefit amounts provided under the arrangement, which shall include a valuation of present assets, based on statement value, and prospective assets and liabilities of the plan and the extent of any unfunded accrued liabilities.
(b) A plan to amortize any unfunded liabilities and a description of actions taken to reduce unfunded liabilities.
(c) A description and explanation of actuarial assumptions.
(d) A schedule illustrating the amortization of any unfunded liabilities.
(e) A comparative review illustrating the level of funds available to the arrangement from rates, investment income, and other sources realized over the period covered by the report, indicating the assumptions used.
(f) A statement by the actuary that the report is complete and accurate and that in his opinion the techniques and assumptions used are reasonable and meet the requirements and intent of this chapter.
(g) Other factors or statements as may be reasonably required by the commissioner in order to determine the actuarial soundness of the plan.
Source. 1991, 246:1, eff. Jan. 1, 1992.
Section 415-E:12
415-E:12 Place of Business; Maintenance of Records. –
Each arrangement shall have and maintain its principal place of business in this state and shall make available to the commissioner complete records of its assets, transactions, and affairs in accordance with such methods and systems as are customary for, or suitable to, the kind or kinds of business transacted.
Source. 1991, 246:1, eff. Jan. 1, 1992.
Section 415-E:13
415-E:13 Suspension, Revocation of Approval. –
I. Subject to other provisions in this chapter, the commissioner shall deny, suspend, or revoke an arrangement's approval if it finds that the arrangement:
(a) Has failed to meet the financial requirements of this chapter, RSA 420-G, or has violated any lawful order or rules.
(b) Has refused to be examined or to produce its accounts, records and files for examination, or if any of its officers has refused to give information with respect to its affairs or to perform any other legal obligation as to such examination, when required by the commissioner.
(c) Has failed to pay any final judgment rendered against it in this state within 60 days after the judgment became final.
(d) No longer meets the requirements for the authority originally granted.
II. The commissioner may, in his discretion, deny, suspend, or revoke the approval of any arrangement if it finds that the arrangement:
(a) Has violated any lawful order or rule of the commissioner, provision of this chapter, RSA 420-J, or relevant provision of RSA 161-H.
(b) Has refused to be examined or to produce its accounts, records, and files for examination, or if any of its officers have refused to give information with respect to its affairs or to perform any other legal obligation as to such examination, when required by the commissioner.
Source. 1991, 246:1. 1994, 214:6. 1997, 344:4, eff. July 1, 1997; 345:2, eff. Jan. 1, 1998.
Section 415-E:14
415-E:14 Penalties. –
I. Subject to other provisions in this chapter, any arrangement that fails to obtain and maintain a valid approval from the commissioner while operating or maintaining a multiple-employer welfare arrangement shall be subject to a fine of not less than $5,000 or more than $50,000 for each violation.
II. Subject to other provisions in this chapter, the commissioner may issue a cease and desist order if he finds any person operating or maintaining a multiple-employer welfare arrangement without a currently effective certificate of approval.
Source. 1991, 246:1, eff. Jan. 1, 1992.
Section 415-E:15
415-E:15 Rehabilitation, Dissolution. –
Any rehabilitation, liquidation, conservation, or dissolution of a multiple-employer welfare arrangement shall be conducted under the supervision of the commissioner, who shall have all power with respect thereto granted to it under the laws governing the rehabilitation, liquidation, conservation, or dissolution of insurers.
Source. 1991, 246:1, eff. Jan. 1, 1992.
Section 415-E:16
415-E:16 Rulemaking. –
The commissioner may adopt such rules, pursuant to RSA 541-A, as he deems reasonable and necessary in order to carry out properly the functions and responsibilities assigned the insurance department under the laws of the state. This rulemaking authority shall expire on January 1, 1993, at which time this section, unless replaced by a later legislative enactment, shall be deemed repealed. Any rules adopted under this section shall be drafted in as narrow a manner as possible, consistent with the authority granted the department under the laws of this state.
Source. 1991, 246:1, eff. Jan. 1, 1992.