TITLE XXXVII
INSURANCE
Chapter 420-K
SMALL EMPLOYER HEALTH REINSURANCE POOL
Section 420-K:1
420-K:1 Definitions. –
In this chapter:
I. "Assessment" means the liability of the member insurer to the reinsurance pool.
II. "Board" means the board of directors of the small employer health reinsurance pool.
III. "Commissioner" means the insurance commissioner.
IV. "Covered lives" shall include all persons who are:
(a) Covered under an individual health insurance policy issued or delivered in New Hampshire.
(b) Covered under a group health insurance policy that is issued or delivered in New Hampshire.
(c) Covered under a group health insurance policy evidenced by a certificate of insurance that is issued or delivered in New Hampshire.
(d) Protected, in part, by a group excess loss insurance policy where the policy or certificate of coverage has been issued or delivered in New Hampshire, and where coverage has been purchased by a group health insurance plan subject to the Employee Retirement Income Security Act of 1974, Public Law No. 93-406 (ERISA).
V. "Health carrier" means any entity licensed pursuant to RSA 402, RSA 420-A, or RSA 420-B that delivers, issues for delivery or maintains in force policies of health insurance in New Hampshire.
VI. "Health insurance" means "health insurance" as defined in RSA 404-G:2, VII.
VII. "Plan of operation" means the plan of operation of the small employer health reinsurance pool, including articles, bylaws and operating rules, procedures and policies approved by the commissioner and adopted by the pool.
VIII. "Pool" means the small employer health reinsurance pool.
IX. "Small employer" means "small employer" as defined in RSA 420-G: 2, XVI.
X. "Standard health benefit plan" means a health benefit plan developed pursuant to RSA 420-K:4, I.
Source. 2005, 225:12. 2008, 375:7, eff. July 1, 2008.
Section 420-K:2
420-K:2 Establishment of the Pool. –
I. There is established a nonprofit entity to be known as the "New Hampshire small employer health reinsurance pool." All health carriers, writers of health insurance, and other insurers issuing or maintaining health insurance in this state shall be members of the pool.
II. On or before July 1, 2005, the commissioner shall give notice to all members of the pool of the time and place for the initial organizational meeting, which shall take place by July 15, 2005. The members shall select the initial board at the organizational meeting and such initial board shall be subject to approval by the commissioner. The members shall elect each subsequent board at the annual meeting of members and each such subsequent board shall be subject to approval by the commissioner. The initial board and each subsequent board shall consist of at least 5 and not more than 9 representatives of members. There shall be no more than one board member on the initial board and each subsequent board representing any one member company. In determining voting rights at the organizational meeting and all subsequent meetings of members, each member shall be entitled to vote in person or by proxy. All such votes shall be proportional to the member's covered lives. To the extent possible, at least 2/3 of members of each board shall be small employer health carriers. At least one member of each board shall be a small employer health carrier with less than $100,000,000 in net small employer health insurance premium in this state. The commissioner, or designee, shall be an ex-officio voting member of the board. In approving selection of each board, the commissioner shall assure that all members are fairly represented.
III. If the initial board is not elected at the organizational meeting, the commissioner shall appoint the initial board within 15 days of the organizational meeting.
IV. Within 60 days after the appointment of such initial board, the board shall submit to the commissioner a plan of operation and thereafter any amendments to the plan necessary or suitable to assure the fair, reasonable, and equitable administration of the pool. The commissioner shall, after notice and hearing, approve the plan of operation provided he or she determines it to be suitable to assure the fair, reasonable, and equitable administration of the pool, and provides for the sharing of pool gains or losses on an equitable proportionate basis in accordance with the provisions of paragraph VI of this section. The plan of operation shall become effective upon approval in writing by the commissioner consistent with the date on which the coverage under this section shall be made available. If the board fails to submit a suitable plan of operation within 60 days after its appointment, or at any time thereafter fails to submit suitable amendments to the plan of operation, the commissioner shall, after notice and hearing, adopt and promulgate a plan of operation or amendments no later than October 1, 2005. The commissioner shall amend any plan adopted by him or her, as necessary at the time a plan of operation is submitted by the board and approved by the commissioner.
V. The board shall select reinsurance pool administrators through a competitive bidding process to administer the pool. The board shall evaluate bids submitted based on criteria established by the board. Each month, total payments to administrators shall not exceed the larger of $2,500 or an amount equal to $10 per life for which the reinsurance pool has any potential claims liability.
VI. The plan of operation shall establish procedures for:
(a) Handling and accounting of assets and moneys of the pool, and for annual fiscal reporting to the commissioner.
(b) Filling vacancies on the board, subject to the approval of the commissioner.
(c) Selecting an administrator and setting forth the powers and duties of the administrator.
(d) Reinsuring risks in accordance with the provisions of this chapter.
(e) Collecting assessments from all members to provide for claims reinsured by the pool and for administrative expenses incurred or estimated to be incurred during the period for which the assessment is made.
(f) Any additional matters at the discretion of the board.
Source. 2005, 225:12. 2007, 289:32, eff. Sept. 1, 2007.
Section 420-K:3
420-K:3 Powers of the Pool. –
I. The pool shall have the general powers and authority granted under the laws of New Hampshire to insurance companies licensed to transact health insurance.
II. In addition, the pool shall have the specific authority to:
(a) Enter into contracts as are necessary or proper to carry out the provisions and purposes of this chapter, including the authority, with the approval of the commissioner, to enter into contracts with programs of other states for the joint performance of common functions, or with persons or other organizations for the performance of administrative functions.
(b) Sue or be sued, including taking any legal actions necessary or proper for recovery of any assessments for, on behalf of, or against members.
(c) Take such legal action as necessary to avoid the payment of improper claims against the pool.
(d) Define the array of health coverage products for which reinsurance will be provided, and to issue reinsurance policies, in accordance with the requirements of this chapter.
(e) Establish rules, conditions, and procedures pertaining to the reinsurance of members' risks by the pool.
(f) Establish appropriate rates, rate schedules, rate adjustments, rate classifications, and any other actuarial functions appropriate to the operation of the pool.
(g) Assess members in accordance with the provisions of this chapter, and to make advance interim assessments as may be reasonable and necessary for organizational and interim operating expenses and to pay claims reinsured by the pool. Any such interim assessments shall be credited as offsets against any regular assessments due following the close of the fiscal year.
(h) Appoint from among the members appropriate legal, actuarial, and other committees as necessary to provide technical assistance in the operation of the pool, policy, and other contract design, and any other function within the authority of the pool.
(i) Borrow money to effectuate the purposes of the pool. Any notes or other evidence of indebtedness of the pool not in default shall be legal investments for insurers and may be carried as admitted assets.
(j) Develop a standard health benefit plan.
Source. 2005, 225:12. 2007, 289:30, eff. Sept. 1, 2007.
Section 420-K:4
420-K:4 Standard Health Benefit Plan. –
I. The board shall:
(a) Develop a standard health benefit plan which shall contain benefit and cost sharing levels that reflect the health coverages most commonly sold by small employer carriers in the state.
(b) Develop base reinsurance premium rates for the standard health benefit plan. The base reinsurance premium rates shall be set at levels which reasonably approximate gross premiums charged to small employers by small employer carriers for health benefit plans with benefits similar to the standard health benefit plan. The base premium rates shall be subject to approval of the commissioner.
(c) Establish a methodology for determining premium rates to be charged by the pool to reinsure small employer groups and individuals. The methodology shall include a system for classification of small employers that reflects the types of case characteristics commonly used by small employer carriers in establishing premium rates.
II. The standard health benefit plan, base reinsurance premium rates, and the rating methodology shall be submitted to the commissioner for approval within 45 days after the appointment of the board and shall subsequently be revised as necessary and appropriate.
Source. 2005, 225:12, eff. July 1, 2005.
Section 420-K:5
420-K:5 Eligibility, Coverage, and Rates. –
Beginning January 1, 2006 and ending June 30, 2008, members may reinsure with the pool health coverage provided to small employers as follows:
I. The pool shall reinsure the level of coverage provided up to, but not exceeding, the level of coverage provided in the standard health benefit plan or the actuarial equivalent thereof as defined and authorized by the board.
II. The pool shall not reimburse a ceding carrier with respect to claims of a reinsured employee or dependent until the carrier has incurred an initial level of claims for such employee or dependent of at least $5,000 in a calendar year for benefits covered by the standard health benefit plan. The amount of the deductible shall be periodically reviewed by the board and may be adjusted upward as determined by the board.
III. A member may reinsure an entire small employer group within a period of 60 days following the small employer's health insurance policy issue date.
IV. A member may reinsure an eligible employee or dependent of a small employer group:
(a) Within a period of 60 days following the small employer's health insurance policy issue date; or
(b) On the first plan anniversary after the coverage has been in effect for a period of 3 years, and every third plan anniversary thereafter; provided, that reinsurance pursuant to this subparagraph shall only be permitted with respect to eligible employees and their dependents of a small employer which has no more than 5 eligible employees as of the applicable anniversary.
V. A member may reinsure a newly eligible employee or dependent of a small employer group within a period of 60 days following the commencement of his or her coverage.
VI. Reinsurance coverage may be terminated for each reinsured employee or dependent on any plan anniversary.
VII. Reinsurance of newborn dependents shall be allowed only if the mother of any such dependent is reinsured as of the date of birth of such child, and all newborn dependents of reinsured persons shall be automatically reinsured as of their date of birth.
VIII. Notwithstanding the provisions of paragraphs III and IV:
(a) Coverage for eligible employees and their dependents provided under a group policy covering 2 or more small employers shall not be eligible for reinsurance when such coverage is discontinued and replaced by a group policy of another carrier covering 2 or more small employers, unless coverage for such eligible employees or dependents was reinsured by the prior carrier; and
(b) At the time coverage is assumed for such group by a succeeding carrier, such carrier shall notify the pool of its intention to provide coverage for such group and shall identify the employees and dependents whose coverage will continue to be reinsured. The time limitations for providing such notice shall be established by the pool.
IX. The board, as part of the plan of operation, shall establish a methodology for determining premium rates to be charged for reinsuring small employers and individuals. The methodology shall include a system for classification of small employers that reflects the way case characteristics are commonly used by small employer carriers in the state. Pool reinsurance premiums shall be established at the following percentages of the base reinsurance premium rate established by the pool for that classification of small employers with similar case characteristics:
(a) An entire small employer group consisting of 2 or more employees may be reinsured for a rate that is 150 percent of the applicable base reinsurance premium rate for the group established pursuant to RSA 420-K:4, II; and
(b) An eligible employee or dependent may be reinsured for a rate that is 500 percent of the applicable base reinsurance premium rate for the individual established pursuant to RSA 420-K:4, II.
X. On or before December 1, 2005, the board shall establish, subject to the approval of the commissioner, a standard reinsurance underwriting form for use by small employer carriers in ceding risks to the pool. The form may be amended from time to time as the board deems necessary, subject to the approval of the commissioner.
XI. Reinsurance coverage under this chapter shall terminate on December 31, 2008. Reinsurance shall be provided only for covered claims submitted within 2 years from the date the expenses on which the claim is based were incurred.
XII. A member who reinsured an eligible employee or dependent with an initial coverage date or anniversary date on or after January 1, 2008 may elect to terminate coverage for the eligible employee or dependent retroactive to the applicable initial coverage date or anniversary date occurring on or after January 1, 2008. These elections shall be made no later than July 1, 2008. The pool shall reimburse the member for the premium paid on behalf of the eligible employee or eligible dependent and the member shall reimburse the pool for any claims paid by the pool on behalf of the eligible employee or eligible dependent.
Source. 2005, 225:12, 14. 2008, 375:8, 9, eff. July 1, 2008.
Section 420-K:6
420-K:6 Assessments. –
I. Following the close of each fiscal year, the administrator shall determine the net premiums, the pool expenses of administration and the incurred losses for the year, taking into account investment income and other appropriate gains and losses.
(a) Each member's assessment for the reinsurance pool shall be based on its number of covered lives times a specified assessment rate. The board of directors shall specify the basis used to set the assessment rate. The board of directors shall establish a regular assessment rate, which shall be:
(1) Calculated on a calendar year basis based on the net losses from the audited financial statements of the prior fiscal year;
(2) Established no later than November 1 in the current fiscal year; and
(3) Anticipated to be sufficient to meet the pool's funding needs.
(b) In addition to the regular assessment rate, the board may establish a special assessment rate for organizational expenses and to pay claims reinsured by the pool. Notwithstanding RSA 420-G:4, a writer of health insurance may increase the premiums charged by the amount of the special assessment. Any assessment may appear as a separate line item on a policyholder's bill.
(1) The board shall only establish an interim assessment if the board determines that its funds are or will become insufficient to pay the reinsurance pool's expense or claims reinsured by the pool, in a timely manner.
(2) The regular assessment rate, and any special assessment rate, shall be subject to the approval of the commissioner. The commissioner shall approve the rate if he or she finds that the amount is required to fulfill the purpose of the reinsurance pool. For the purpose of making this determination, the commissioner may, at the expense of the pool, seek independent actuarial certification of the need for the proposed rate.
(c) The board shall impose and collect assessments on members of the pool.
(d) If the assessment exceeds the amount actually needed, the excess shall be held and invested and, with the earnings and interest thereon, be used to offset future net losses. Each covered life shall be included in the assessment on an aggregate basis and procedures shall be maintained to ensure that no covered life is counted more than once.
II. Provision shall be made in the plan of operation for the imposition of an interest penalty for late payment of assessments.
III. The board may defer, in whole or in part, the assessment of a member insurer if, in the opinion of the board, payment of the assessment would endanger the ability of the insurer to fulfill its contractual obligations. In the event an assessment against a member insurer is deferred in whole or in part, the amount by which such assessment is deferred may be assessed against the other members in a manner consistent with the basis for assessments set forth in this chapter. The member insurer receiving such deferral shall remain liable to the pool for the amount deferred. The board may attach appropriate conditions to any such deferral.
IV. The board shall have the authority to continue to impose and collect assessments pursuant to this section until the obligations of the pool have been satisfied in full. The board shall submit an annual report to the commissioner, in a manner and form determined by the commissioner, listing the association membership base, providing a count of covered lives by member, identifying changes in association membership and covered lives, describing the collection of assessments, listing payment delinquencies, and containing such other related information as the commissioner may require. The commissioner shall annually review the report on association membership, covered lives, and the payment of assessments to ensure that all insurers that should be members of the association are participating in the association and that all association members have accurately reported covered lives and paid the proper assessment. The board shall remedy any problem identified by the commissioner with respect to membership in the association, reporting of covered lives, or payment of the assessment.
Source. 2005, 225:12. 2007, 289:31. 2008, 375:10, eff. July 1, 2008.
Section 420-K:7
420-K:7 Immunity and Indemnification. –
I. Neither the participation in the pool as members, the establishment of rates, forms, or procedures, nor any other joint or collective action required by this chapter shall be the basis of any legal action against the pool or any of its members.
II. Any person or member made a party to any action, suit, or proceeding because the person or member served on the board or on a committee or was an officer or employee of the pool shall be held harmless and be indemnified by the pool against all liability and costs, including the amounts of judgments, settlements, fines or penalties, and expenses and reasonable attorney's fees incurred in connection with the action, suit, or proceeding. The indemnification shall not be provided on any matter in which the person or member is finally adjudged in the action, suit, or proceeding to have committed a breach of duty involving gross negligence, dishonesty, willful misfeasance, or reckless disregard of the responsibilities of office. Costs and expenses of the indemnification shall be prorated and paid for by all members. The right of indemnification shall not be exclusive of other rights or defenses to which such person or the legal representative or successors of such person, may be entitled to as a matter of law. The commissioner may retain actuarial consultants necessary to carry out his or her responsibilities pursuant to this chapter and such expenses shall be paid by the pool established in this chapter.
Source. 2005, 225:12. 2007, 289:33, eff. Sept. 1, 2007.