Bill Text: NJ A3421 | 2014-2015 | Regular Session | Introduced
Bill Title: Revises the "Self-Funded Multiple Employer Welfare Arrangement Regulation Act."
Spectrum: Bipartisan Bill
Status: (Passed) 2015-12-09 - Approved P.L.2015, c.172. [A3421 Detail]
Download: New_Jersey-2014-A3421-Introduced.html
Sponsored by:
Assemblyman RONALD S. DANCER
District 12 (Burlington, Middlesex, Monmouth and Ocean)
SYNOPSIS
Revises the "Self-Funded Multiple Employer Welfare Arrangement Regulation Act."
CURRENT VERSION OF TEXT
As introduced.
An Act concerning certain multiple employer welfare arrangements and amending P.L.2001, c.352.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 5 of P.L.2001, c.352 (C.17B:27C-5) is amended to read as follows:
5. a. A self-funded multiple employer welfare arrangement shall deposit, or obtain on its behalf a deposit from an appropriate capital funding source, and continuously maintain with a financial institution licensed in this State, cash or securities as defined in N.J.S. 17B:18-37, having an admitted asset value of not less than [$200,000] $300,000. The deposit shall be held for the benefit and protection of all covered members of the self-funded multiple employer welfare arrangement, provided, however, that any permitted underwriting gains may be shared with any entity acting as a source of deposit funds to the extent otherwise consistent with P.L.2001, c.352 (C.17B:27C-1 et seq.). The self-funded multiple employer welfare arrangement shall further maintain a cash reserve for loss in an amount established by a qualified actuary as being adequate to provide for all incurred losses including unpaid claims.
b. A self-funded multiple employer welfare arrangement shall maintain aggregate stop-loss coverage, with a retention level of 125 percent of expected claims per year, including provisions to cover incurred, unpaid claims liability in the event of the termination or liquidation of the self-funded multiple employer welfare arrangement, and specific stop-loss coverage, with a retention level determined annually by a qualified actuary based on sound actuarial principles. Any stop-loss contract maintained pursuant to this subsection shall contain a provision that the stop-loss insurer shall give the self-funded multiple employer welfare arrangement and the commissioner a minimum of 180 days' notice of cancellation or nonrenewal. If the self-funded multiple employer welfare arrangement fails to secure replacement coverage within 90 days after receipt of the notice of cancellation or nonrenewal, the trustees of the self-funded multiple employer welfare arrangement shall provide for the orderly liquidation of the self-funded multiple employer welfare arrangement.
(cf: P.L.2001, c.352, s.5)
2. Section 6 of P.L.2001, c.352 (C.17B:27C-6) is amended to read as follows:
6. Each self-funded multiple employer welfare arrangement shall file all of the following with the commissioner:
a. No later than May 15th of each calendar year or four months and 15 days after the end of each fiscal year of the self-funded multiple employer welfare arrangement, financial statements audited by a certified public accountant and on forms prescribed by the commissioner, an actuarial opinion rendered by a qualified actuary, a report of its Risk-Based Capital (RBC) as of the end of the immediately preceding calendar year, in a form and containing such information as is required by the instructions adopted by the National Association of Insurance Commissioners for health insurers, as amended from time to time and proof of the deposit required in accordance with section 5 of this act. The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board and on any additional standards that the commissioner may prescribe by regulation. For purposes of this section and section 5 of this act, "qualified actuary" means a member in good standing of the American Academy of Actuaries who meets the requirements set forth in regulations of the commissioner.
b. Within 60 days after the end of each fiscal quarter, unaudited financial statements on forms prescribed by the commissioner, affirmed by an appropriate officer or agent of the self-funded multiple employer welfare arrangement.
c. Within 60 days after the end of each fiscal quarter, a report on forms prescribed by the commissioner certifying that the self-funded multiple employer welfare arrangement maintains cash or liquid assets in a claim reserve account sufficient to meet the requirements of section 5 of this act.
d. The information required to be filed pursuant to subsections a., b., and c. of this section shall be separately certified by a board of trustees of the self-funded multiple employer welfare arrangement. The board of trustees shall consist of one designee selected by each member employer, in addition to at least one independent trustee chosen by majority vote of the members. The board of trustees shall meet at least quarterly.
e. The self-funded multiple employer welfare arrangement shall establish and maintain a website upon which all of the filings required pursuant to this section and information concerning its governance and financial performance shall be publicly available for a period of at least five years.
(cf: P.L.2001, c.352, s.6)
3. Section 7 of P.L.2001, c.352 (C.17B:27C-7) is amended to read as follows:
7. a. The liability of each member for the obligations of the self-funded multiple employer welfare arrangement shall be individual, several and proportionate, but not joint, except as provided in this section.
b. Each member shall have a contingent assessment liability pursuant to subsection c. of this section. Each benefit plan issued by a self-funded multiple employer welfare arrangement shall contain a statement of the contingent liability. Both the application for benefits and the benefit plan shall contain in contrasting color, not less than 10-point type, the following statement: "This is a fully assessable benefit plan. In the event that the self-funded multiple employer welfare arrangement is unable to pay its obligations, members shall be required to contribute on a pro rata earned premium basis the funds necessary to meet any unfilled obligations."
c. All self-funded multiple employer welfare arrangements shall provide that members are assessed in accordance with the provisions of this section. Each self-funded multiple employer welfare arrangement may assess all members [if its prior fiscal year statement of operations reflected a loss] to the extent deemed necessary by sound actuarial standards and as certified by an appropriate actuarial opinion. Each self-funded multiple employer welfare arrangement shall assess all members if the arrangement's fund balance or reserve at the end of any accounting period is less than the amount required by law. The minimum assessment shall be the amount necessary to comply with the requirements of sections 5 and 9 of this act. Each member's assessment shall be computed by applying the earned premium for each employer's benefit plan during the prior fiscal year as a percent of the amount of the total of all employers' earned premium for the same year. Each member's assessment shall be that [members's] member's percent times the total assessment levied. Assessments shall be paid by each member within 45 days of being levied. In the event a member fails to pay an assessment, the self-funded multiple employer welfare arrangement shall have the option to terminate the member's participation in the plan within 30 days after the expiration of the period covered by any earned premiums actually paid to date, subject to adequate reserves being set aside for the due payment of any terminal liabilities or incurred but not yet revealed claims for that member's plan participants, as certified by an appropriate actuarial opinion. Alternatively, the other members shall [be liable] , if in accordance with the plan design, assume liability on a proportionate basis for an additional assessment [. The] , in which case, the self-funded multiple employer welfare arrangement, acting on behalf of all members who paid the additional assessment, shall take appropriate legal action to recover the assessment from any member who fails to pay an assessment.
d. [In] The members shall deposit reserves, as certified by a qualified actuarial opinion, sufficient to provide for the payment, in the event of a rehabilitation, liquidation, conservation or dissolution of a self-funded multiple employer welfare arrangement, [the court, pursuant to section 11 of this act, may assess the members in] of the amounts needed to pay all incurred but unpaid claims and all [projected claims,] terminal liabilities as of the date of that event. If any such member has not complied with the foregoing, the court, pursuant to section 11 of P.L.2001, c.352 (C.17B:27C-11), may assess that member for those amounts, together with the costs and expenses of collecting the assessments, a reasonable loading factor for uncollected assessments and the costs and expenses of the rehabilitation, liquidation, conservation or dissolution.
e. The following notice shall be provided to employers and employees who obtain coverage from a self-funded multiple employer welfare arrangement:
NOTICE
THE SELF-FUNDED MULTIPLE EMPLOYER WELFARE ARRANGEMENT IS NOT AN INSURANCE COMPANY AND DOES NOT PARTICIPATE IN ANY OF THE GUARANTEE FUNDS CREATED BY NEW JERSEY LAW. THESE FUNDS WILL NOT PAY YOUR CLAIMS OR PROTECT YOUR ASSETS IF A SELF-FUNDED MULTIPLE EMPLOYER WELFARE ARRANGEMENT BECOMES INSOLVENT AND IS UNABLE TO MAKE PAYMENTS AS PROMISED.
THE HEALTH CARE BENEFITS THAT YOU HAVE PURCHASED OR ARE APPLYING TO PURCHASE ARE BEING ISSUED BY A SELF-FUNDED MULTIPLE EMPLOYER WELFARE ARRANGEMENT.
FOR ADDITIONAL INFORMATION ABOUT THE MULTIPLE EMPLOYER WELFARE ARRANGEMENT YOU SHOULD ASK QUESTIONS OF YOUR TRUST ADMINISTRATOR AT _______________(this blank should include the "800" consumer service telephone number).
(cf: P.L.2001, c.352, s.7)
4. Section 8 of P.L.2001, c.352 (C.17B:27C-8) is amended to read as follows:
8. a. Except as provided by this act, the insurance laws of this State do not apply to the operation of self-funded multiple employer welfare arrangements. A self-funded multiple employer welfare arrangement is not an insurance company or insurer under the laws of this State.
b. Any self-funded multiple employer welfare arrangement shall offer all products that it is actively marketing to any employer, and accept any employer and any employee of that employer who applies for any of those products; provided, however that a self-funded multiple employer welfare arrangement may limit participation to members of the association.
c. Assessments payable by small employer members, except for dental plans, shall be established in accordance with the rating requirements of section 9 of P.L.1992, c.162 (C.17B:27A-25) and regulations promulgated thereunder; provided, however, [that for the first year after the effective date of this act, a self-funded multiple employer welfare arrangement providing benefits in this State prior to the effective date of this act shall: (1) not charge a small employer member an assessment greater than 300 percent of the assessment charged to the lowest rated small employer member of the self-funded multiple employer welfare arrangement; (2) for the second year after the effective date of this act, not charge a small employer member an assessment greater than 250 percent of the assessment charged to the lowest rated small employer member of the self-funded multiple employer welfare arrangement ; and (3) for each year thereafter, comply with the rating requirements of section 9 of P.L.1992, c.162 (C.17B:27A-25) and regulations promulgated thereunder] a self-funded multiple employer welfare arrangement may employ an assessment methodology that results in assessments for the highest rated small employer member which are greater than 200 percent of the assessments produced for the lowest rated small employer member for each plan and option.
d. [The] If the member is a small employer, the health benefits to be provided by the self-funded multiple employer welfare arrangement shall at all times be equal to or greater than benefits required to be provided in the lowest benefit level standard plan promulgated by the New Jersey Small Employer Health Benefits Program pursuant to P.L.1992, c.162 (C.17B:27A-17 et seq.).
e. If the member is not a small employer, the rate manual used to calculate program rates may include appropriate classification factors such as claims experience and utilization, age, gender and geography, and such specific underwriting adjustments as may be certified in accordance with subsection d. of section 6 of P.L.2001, c.352 (C.17B:27C-6).
f. The self-funded multiple employer welfare arrangement may provide to its members a health and wellness program consistent with the United States Department of Labor's requirements, which shall be filed with the commissioner on an annual basis.
g. The self-funded multiple employer welfare arrangement may provide to its members an internet-based system for the administration, billing and claims processing of its benefits.
(cf: P.L.2001, c.352, s.8)
5. This act shall take effect on the first day of the sixth month next following enactment.
STATEMENT
This bill revises the "Self-Funded Multiple Employer Welfare Arrangement Regulation Act," which was enacted in 2002 to regulate self-funded multiple employer welfare arrangements (MEWAs). A MEWA is a self-funded or partially self-funded multiple employer welfare arrangement that provides for health benefits plans that has two or more employers who each have two or more employees and that has one or more of the employer members either domiciled in New Jersey or its principal headquarters or principal administrative office located in the State. The act includes regulation and reporting requirements and penalties for noncompliance for self-funded and partially self-funded MEWAs.
The purpose of a MEWA is to provide a self-insured pooled risk mechanism so that associations of small and mid-sized employers may provide employee health benefits at costs that are comparable to the discounted rates available to large corporations. MEWAs, if properly structured, provide an economical means for small and mid-sized employers to provide employee health benefits and are an alternative to purchasing commercial insurance. Presently, because of the economic barriers presented by existing law, there are only three registered MEWAs in the State. This bill would modernize and enhance the existing law to encourage and promote competition in this marketplace, and provide additional options for small and mid-sized businesses to offer affordable employee health benefits.
Specifically, the bill increases the amount of funds that must be deposited on reserve from $200,000 to $300,000, but allows for the provision of those funds from a third-party source, such as a financial institution or investor, and allows for the sharing of any underwriting gains. The bill also modernizes the governance of MEWAs by requiring the public posting of all regulatory filings, governance documents and financial data on a website for a period of at least five years. Each of the disclosure documents must be separately certified by a board of trustees consisting of one designee selected by each member employer, in addition to one independent trustee. The board of trustees shall meet at least quarterly.
The bill also provides that annual assessments shall be levied to the extent deemed necessary by sound actuarial standards, as certified by an appropriate actuarial opinion. Members shall pay all assessments within 45 days of being levied. If the member fails to pay the assessment, the MEWA may terminate the member's participation within 30 days after the expiration of the period covered by any earned premiums actually paid to date, subject to adequate reserves being set aside for the due payment of any terminal liabilities or incurred but not yet revealed claims for that member's plan participants, as certified by an appropriate actuarial opinion.
Notwithstanding the provision in the act that requires assessments payable by small employer members, except for dental plans, to be established in accordance with the rating requirements of the New Jersey Small Employer Health Benefits Program, the bill allows annual assessment methodology to result in assessments for the highest rated small employer which are greater than 200 percent of the assessments produced for the lowest rated small employer for each plan and option. The bill also provides that health benefits provided by a MEWA to a small employer must be consistent with the benefits standards existing under the New Jersey Small Employer Health Benefits Program, but not to members that are not small employers. In addition, as to members that are not small employers, the rate manual used to calculate program rates may include appropriate classification factors such as claims experience and utilization, age, gender and geography, or such other underwriting adjustments as may be certified by a qualified actuary.
Finally, the bill provides that a MEWA may provide its members with a health and wellness program, and an internet-based system for the administration, billing and claims processing of its benefits.
