Source: https://dfr.vermont.gov/reg-bul-ord/self-insured-multiple-employer-welfare-arrangements-and-association-health-plans
Timestamp: 2019-04-23 08:18:27+00:00

Document:
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 authority to operate in the State before January 1, 2019.
“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).
“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.
“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.
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.
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.
Be licensed as a nonprofit corporation.
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.
Be organized and maintained in good faith with at least 2,000 employees and 50 paid employer members and operated actively for a continuous period of five years.
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.
Offer benefits only to association or MEWA members.
Offer benefits only through licensed producers, as defined in Title 8 V.S.A. Chapter 131.
Have within its own organization adequate facilities and competent personnel to serve the association or MEWA or have contracted with a licensed third-party administrator to provide those services.
Have established a procedure for handling claims for benefits in the event of the dissolution of the association or MEWA.
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.
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.
The Commissioner may permit an association or MEWA to establish rewards, premium discounts, split benefit designs, rebates, or otherwise waive or modify applicable co-payments, 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.
An association or MEWA shall guarantee acceptance of all persons within the association or MEWA and their dependents.
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.
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.
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 or not—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.
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.
Pediatric dental and vision coverage as required in (A)(1) of this Section may be offered to the association or MEWA in either a stand-alone dental or vision plan or as a benefit embedded in the health benefit plan.
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.
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.
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.
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. § 2510.3-5(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)).
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 ________.
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.
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.
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.
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.
An association or MEWA enrolling members in a health benefit plan shall comply with all open enrollment and special enrollment periods applicable to the Vermont Health Connect (Exchange).
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.

References: § 4079
 § 2510
 § 2510
 § 1802
 § 1144
 § 6016
 § 158
 § 4089
 § 4062
 § 2510
 § 2510
 § 9414
 § 4084
 § 4084