NHLA Bill Review: Bill Text

Bill Text - SB228 (2019)

Relative to multiple-employer welfare arrangements.

Revision: Jan. 23, 2019, 4:49 p.m.

SB 228-FN - AS INTRODUCED

2019 SESSION

19-1100

01/04

SENATE BILL 228-FN

AN ACT relative to multiple-employer welfare arrangements.

SPONSORS: Sen. Feltes, Dist 15

COMMITTEE: Commerce

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ANALYSIS

This bill makes changes to the law governing multiple-employer arrangements.

This bill is a request of the insurance department.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

19-1100

01/04

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Nineteen

AN ACT relative to multiple-employer welfare arrangements.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Statement of Purpose. It is the purpose of this act to help individuals and small businesses obtain affordable health care coverage while ensuring the health care of persons with preexisting conditions while not having an adverse impact on New Hampshire's federally-facilitated health insurance marketplace.

2 Title. This act shall be known as the Small Business Health Care Reform Act of 2019.

3 Multiple-Employer Welfare Arrangements; Definitions RSA 415-E:1 is repealed and reenacted to read as follows:

415-E:1 Definitions. In this chapter:

I. “Association” means any foreign or domestic group or association that provides a health benefit plan that covers the employees of at least one employer that maintains a work location in New Hampshire, which is the primary workplace of at least one New Hampshire resident who works at least the hourly requirement provided in RSA 126-AA:2, III(a) and who is qualified to enroll in the plan.

II. “Bona fide pathway II association” means a group or association that meets the requirements of 29 C.F.R. section 2510.3-5(b).

III. "Commissioner" means the insurance commissioner of the state of New Hampshire.

IV. "Department" means the insurance department.

V. Employee welfare benefit plan” has the same meaning as that contained in 29 U.S.C. section 1002(1).

VI. “Fully insured health benefit plan” means a policy, contract, certificate, or agreement to provide, deliver, arrange for, pay for, or reimburse any of the costs of health services, that is offered or issued to bona fide pathway II association by a health insurer licensed to do business in New Hampshire and approved by the department.

VII. "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.

VIII. "Insolvency termination" means the termination of an arrangement where the fund balance as of the termination date is inadequate.

IX. “Insurer” means any insurer, nonprofit hospital or medical service corporation, health maintenance organization, or managed care organization, including but not limited to an insurer offering health coverage as defined in RSA 420-G:2, IX.

X. "Multiple-employer welfare arrangement" or "MEWA" 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 all of the employees of 2 or more employers, whether part-time or full-time, or to their beneficiaries and shall include a MEWA as defined in the Employee Retirement Income Security Act of 1974, 29 U.S.C. section 1001 et seq. (ERISA). No employer shall create independent contractor status for any employee in order to qualify as a MEWA. 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 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.

4 New Sections; Multiple- Employer Welfare Arrangements. Amend RSA 415-E by inserting after section 1 the following new sections:

415-E:1-a Bona Fide Pathway II Association Coverage; Purpose.

I. Bona fide pathway II association coverage as set forth in the United States Department of Labor’s June 21, 2018 amendment to 29 C.F.R. section 2510, 83 Fed. Reg. 28,961 (codified at 29 C.F.R. section 2510.3-5) shall be permissible in New Hampshire provided it conforms with the 2019 amendments to Title XXXVII concerning this coverage and this chapter.

II. The purpose of the 2019 amendment is to protect New Hampshire consumers and promote the stability of New Hampshire’s health insurance markets, to the extent permitted under federal law, including requirements regarding licensure, solvency, reserving, and rating.

415-E:1-b Fully-Insured MEWA and Association Coverage.

I. No insurer shall issue a fully-insured health benefit plan to an association or MEWA with covered lives in New Hampshire, including a bona fide pathway II association, unless both the plan and the association or MEWA meet the requirements of this chapter and are approved by the department.

II. An insurer may issue, after department approval, a fully insured health benefit plan that conforms with the requirements of this chapter to a qualified purchasing alliance licensed under RSA 420-M, which shall be deemed to be a bona fide pathway II association, subject to compliance with all applicable requirements of this chapter with respect to such associations and the coverage that may be issued to them.

III. The department shall not approve any fully-insured health benefit plan unless it remains on or as part of New Hampshire’s federally-facilitated health insurance marketplace, or the department determines, after a duly noticed public hearing with opportunity for public input, that it will have no adverse impact on either the rates or the coverage offered on the New Hampshire’s federally-facilitated health insurance marketplace, including, but not limited to, the rates and coverage relating to mental health and substance use disorder services.

415-E:1-c Benefit Requirements for Bona Fide Pathway II Association Coverage.

I. Each health benefit plan offered to or by a bona fide pathway II association shall, at a minimum, provide the following benefits:

(a) Coverage for each of the 10 essential health benefits, as defined in 42 U.S.C. section 18022(b)(1), subject to approval of the commissioner based the New Hampshire benchmark;

(b) Cost sharing requirements of 42 U.S.C. section 18022(c)(1), (c)(3);

(d) A level of coverage equal to or greater than that designed to provide benefits that are actuarially equivalent to 60 percent of the full actuarial value of the benefits provided under the plan; and

(e) All other benefits required to comply with applicable federal laws and regulations.

II. Every health benefit plan offered by any bona fide pathway II association, or by any insurer to a bona fide pathway II association shall comply with and be subject to the following:

(a) Except as otherwise specifically provided in this chapter, all requirements of RSA 420-G, including claims data and other reporting requirements.

(b) Requirements contained in RSA 420-J, and any rules adopted thereunder by the department, including but not limited to network adequacy, balance billing protections, and appeal and grievance processes.

(d) Requirements pertaining to examinations under RSA 400-A:37.

(e) Requirements pertaining to unfair insurance trade practices under RSA 417.

(f) Vaccine association assessment under RSA 126-Q.

(g) Individual health insurance market assessment under RSA 404-G.

III. No health benefit plan or related policy, contract, certificate, or agreement offered or issued in this state shall reserve discretion to the insurer 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 section.

IV. A bona fide pathway II association shall not offer, and an insurer shall not deliver or issue for delivery to a bona fide pathway II association, a health benefit plan covering lives located in this state that contains any increased rate, copayment, or deductible, or any exclusion or limitation for pre-existing conditions or any waiting period on the coverage of pre-existing conditions.

415-E:1-d Rating Requirements for Bona Fide Pathway II Association Coverage.

I. Any bona fide pathway II association or any insurer contracting with bona fide pathway II association to provide a health benefit plan, shall comply with all requirements of RSA 420-G, except that, for a bona fide pathway II association with 500 or more covered lives, large group rather than small group rating standards under RSA 420-G shall apply, regardless of the size of the member employer groups, and the association as a whole shall be rated as a single large group.

II. Nothing in this chapter shall be construed to allow a member employer group within any association to be rated as a large group.

415-E:1-e Nondiscrimination Requirements for Bona Fide Pathway II Association Coverage. Bona fide pathway II association coverage shall comply with the provisions of 29 C.F.R. section 2590.702.

5 Multiple-Employer Welfare Arrangements; Applicability; General Eligibility. Amend RSA 415-E:2 and 415-E:3 to read as follows:

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[;].

[(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.]

415-E:3 General Eligibility.

I. Except as provided in paragraph I-a, 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.

I-a. For a bona fide pathway II association, an arrangement shall not be required to meet the requirements under subparagraph I(b) if it conforms with the following:

(a) The group or association has a formal organizational structure with a governing body, bylaws, and other similar indications of formality, and complies with subparagraph I(c) and with all other organizational requirements under this chapter.

(b) The functions and activities of the group or association are controlled by its employer members, and the group’s or association’s employer members that participate in the group health plan control the plan, both in form and in substance.

(c) The employer members have a commonality of interest, such that one or both of the following standards are met, in a manner that is not a subterfuge for discrimination as prohibited under RSA 415-E:1-e:

(1) The employers are in the same trade, industry, line of business, or profession; or

(2) Each employer has a principal place of business in the same region of the state.

(d) The group or association operating the arrangement has at least one substantial business purpose unrelated to offering and providing health coverage or other employee benefits to its employer members and their employees.

(e) Each employer member of the group or association participating in the group health plan is a person acting directly as an employer of at least one employee who is a participant covered under the plan.

(f) The group or association does not make health coverage through the group’s or association’s group health plan available other than to:

(1) An employee of a current employer member of the group or association;

(2) A former employee of a current employer member of the group or association who became eligible for coverage under the group health plan when the former employee was an employee of the employer; and

(3) A beneficiary of an individual eligible under (f)(1) or (f)(2).

(g) The group or association is not a health insurance issuer, or owned or controlled by a health insurance issuer, or by a subsidiary or affiliate of a health insurance issuer, other than to the extent such entities participate in the group or association in their capacity as employer members of the group or association.

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;

(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.

6 Multiple-Employer Welfare Arrangements; Financial Condition, Loss Reserves, Reinsurance, or Working Capital; Determination of Inadequacy. Amend RSA 415-E:6, I to read as follows:

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 the costs of which shall be borne by the 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.

7 Multiple-Employer Welfare Arrangements; Insolvency Protection. Amend RSA 415-E:7, I to read as follows:

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 $750,000 or [25]33 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.

8 Multiple-Employer Welfare Arrangements; Maintenance of Records. Amend RSA 415-E:12 to read as follows:

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.

9 Multiple-Employer Welfare Arrangements; Rehabilitation; Dissolution. Amend RSA 415-E:15 to read as follows:

415-E:15 Rehabilitation, Dissolution. Any rehabilitation, liquidation, conservation, supervision, 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, supervision, or dissolution of insurers.

10 Multiple-Employer Welfare Arrangements; Rulemaking. Amend RSA 415-E:16 to read as follows:

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] this chapter.

11 Effective Date. This act shall take effect January 1, 2020.

LBAO

19-1100

1/18/19

SB 228-FN- FISCAL NOTE

AS INTRODUCED

AN ACT relative to multiple-employer welfare arrangements.

FISCAL IMPACT: [ X ] State [ X ] County [ X ] Local [ ] None


	Estimated Increase / (Decrease)
STATE:	FY 2020	FY 2021	FY 2022	FY 2023
Appropriation	$0	$0	$0	$0
Revenue	$0	$0	$0	$0
Expenditures	Indeterminable	Indeterminable	Indeterminable	Indeterminable
Funding Source:	[ X ] General [ ] Education [ X ] Highway [ X ] Other - Various Government Funds

COUNTY:
Revenue	$0	$0	$0	$0
Expenditures	Indeterminable	Indeterminable	Indeterminable	Indeterminable

LOCAL:
Revenue	$0	$0	$0	$0
Expenditures	Indeterminable	Indeterminable	Indeterminable	Indeterminable

METHODOLOGY:

This bill makes changes to multi-employer welfare arrangements.

The Insurance Department states this bill establishes parameters for association health plans pursuant to recent federal regulations. The Department assumes the intent is to provide more insurance purchasing alternatives for employers and self-employed individuals. To the extent rules for the associations differ from the rest of the marketplace, there could be anti selection, where lower risk customers leave current insurance plans for lower cost insurance. This may impact how other markets price their product. The Department assumes the new plans would be subject to the insurance premium tax. The Department indicates the bill would not impact its operating budget.

AGENCIES CONTACTED:

Insurance Department