Code of Vermont Rules › Agency 21 - DEPARTMENT OF FINANCIAL REGULATION › Sub-Agency 000 - GENERAL › Chapter 002 - THIRD PARTY ADMINISTRATOR RULE › Section 21 000 002 - THIRD PARTY ADMINISTRATOR RULE

Current through June, 2024
REG. I-2021-01
Section 1. Purpose
The purpose of this rule is to set forth standards and
				  requirements, pursuant to the authority contained in
				  8 V.S.A. §
											15 and 9402(8) and 9417, for entities engaged
				  in the business of insurance, as defined in
				  8 V.S.A. §
											3301a, that directly or indirectly
				  underwrite, collect charges, collateral or premiums from, or adjust or settle
				  claims on residents of this state.
Section 2. Authority.
This rule is adopted under the authority granted to the
				  Commissioner by
				  8 V.S.A.
				  §§
											15 and
				  3301a, and as
				  required under
				  18
				  V.S.A. §
											9417.
Section 3. Definitions.
For purposes of this rule:
1. "Affiliate" or "affiliated" means a person
				who directly or indirectly through one or more intermediaries, controls or is
				controlled by, or is under common control with, another specified
				person.
2. "Business entity" means
				a corporation, association, partnership, limited liability company, or other
				legal entity.
3. "Collateral" means
				funds, letters of credit or any item with economic value owned by the payor but
				held by an insurer or TPA in case it needs to be used to fulfill premium or
				loss reimbursement obligations in accordance with a contract between the
				insurer or TPA and the payor. "Collateral" shall include anticipated loss
				prepayments made prior to the payment of losses, pursuant to arrangements where
				reimbursement is not due until after losses have been paid.
4. "Commissioner" means the Commissioner of
				the Department of Financial Regulation.
5. "Control" (including the term "controlled
				by") has the same meaning as in
				8 V.S.A. §
											3681(3).
6. "Flexible spending account" or "FSA" has
				the same meaning as in
				18
				V.S.A. §
											9417(a)(1).
7. "GAAP" means United States generally
				accepted accounting principles consistently applied.
8. "Health reimbursement arrangement" or
				"HRA" has the same meaning as in
				18
				V.S.A. §
											9417(a)(2).
9. "Health savings account" or "HSA" has the
				same meaning as in
				18
				V.S.A. §
											9417(a)(3).
10. "Home state" means a United States
				jurisdiction that has adopted the National Association of Insurance
				Commissioners (NAIC) model regulation for the registration and regulation of
				TPAs or a substantially similar law governing TPAs and that has granted the TPA
				a home state TPA license.
11.
				"Insurer" means an entity licensed in a United States jurisdiction to provide
				life, annuity, health, or stop-loss coverage as an insurance company, health
				maintenance organization, fraternal benefit society, multiple employer welfare
				arrangement (MEWA), professional employer organization (PEO), or prepaid
				hospital or medical care plan.
12.
				"Insurance producer" means a person required to be licensed under the laws of
				this state to sell, solicit or negotiate insurance, and also includes a
				business entity whose primary activities are the sales, solicitation and
				negotiation of insurance.
13.
				"Nonresident TPA" means a TPA whose home state is any jurisdiction other than
				this state.
14. "Payor" means an
				insurer or an employer administering its employee benefit plan or the employee
				benefit plan of an affiliated employer under common management and
				control.
15. "Person" means an
				individual or a business entity.
16. "Third party administrator" or "TPA"
				means a person who directly or indirectly underwrites, collects charges,
				collateral or premiums from, or adjusts or settles claims on residents of this
				state, in connection with life, annuity, health or stop-loss coverage,
				including HRA, FSA, HSA, or similar tax-advantaged accounts for health-related
				expenses, except that a person shall not be considered a TPA if that person's
				only actions that would otherwise cause it to be considered a TPA are among the
				following:
a. A person working for a TPA to
				the extent that the person's activities are subject to the supervision and
				control of the TPA;
b. An employer
				administering its employee benefit plan or the employee benefit plan of an
				affiliated employer under common management and control;
c. The administration of a bona fide employee
				benefit plan established by an employer or an employee organization, or both,
				for which the insurance laws of this state are preempted pursuant to the
				Employee Retirement Income Security Act of 1974 (ERISA);
d. A union administering a benefit plan on
				behalf of its members;
e. An
				insurer administering insurance coverage for its policyholders, subscribers, or
				certificate holders, or for those of an affiliated insurer under common
				management and control;
f. An
				insurer directly or indirectly underwriting, collecting charges, collateral, or
				premiums from, or adjusting or settling claims on behalf of a client that is
				not a policyholder, subscriber or certificate holder, and that has its United
				States headquarters or principal location of business in a jurisdiction in
				which the insurer is licensed to write life, annuity, or health
				coverage;
g. An insurer directly or
				indirectly underwriting, collecting charges, collateral, or premiums, or
				adjusting or settling claims, provided that the insurer is licensed in this
				state to write life, annuity, or health coverage;
h. An insurance producer selling insurance or
				engaged in related activities within the scope of the producer's
				license;
i. A creditor acting on
				behalf of its debtors with respect to insurance covering a debt between the
				creditor and its debtors;
j. A
				trust and its trustees and agents acting pursuant to such trust established in
				conformity with
				29 U.S.C. §
												186;
k. A trust exempt from taxation under
				26 U.S.C.
				§
												501(a) of the
				Internal Revenue Code and its trustees acting pursuant to such trust, or a
				custodian and the custodian's agents acting pursuant to a custodian account
				which meets the requirements of
				26 U.S.C.
				§
												401(f);
l. A credit union or other financial
				institution that is subject to supervision or examination by federal or state
				banking authorities, or a mortgage lender, when collecting or remitting
				premiums to licensed insurance producers or to limited lines producers or
				authorized payors in connection with loan payments;
m. A credit card issuing company advancing or
				collecting insurance premiums or charges from its credit card holders who have
				authorized collection;
n. An
				individual adjusting or settling claims in the normal course of that
				individual's practice or employment as an attorney at law and who does not
				collect charges or premiums in connection with insurance coverage;
o. A person licensed as a managing general
				agent in Vermont under
				8 V.S.A. §
												4815
				when acting within the scope of that license; or
p. A business entity that is affiliated with
				a licensed insurer while acting as a TPA for the direct and assumed insurance
				business of an affiliated insurer;
17. "Underwrites" or "underwriting" means,
				but is not limited to, the acceptance of employer or individual applications
				for coverage of individuals and the overall planning and coordination of a
				benefits program.
18. "Uniform
				Application" means the current version of the NAIC Uniform Application for
				Third Party Administrators.