TITLE 13 INSURANCE
CHAPTER 19 NON-ADMITTED
OR SURPLUS LINES INSURANCE
PART 4 MULTIPLE
EMPLOYER WELFARE ARRANGEMENTS
13.19.4.1 ISSUING AGENCY: Office
of Superintendent of Insurance (“OSI”).
[13.19.4.1 NMAC – N,
2/25/2020]
13.19.4.2. SCOPE:
A. Applicability. These rules apply to any group establishing
or maintaining a multiple employer welfare arrangement (“MEWA”) providing
health benefits in accordance with Section 59A-15-16 NMSA 1978 for its
participants or their beneficiaries. An
unregistered MEWA shall not:
(1) advertise in the state as a benefit of membership for
any group health insurance policy available to its members or beneficiaries;
(2) issue a
certificate for delivery in New Mexico to any resident of the state; or
(3) solicit membership
in the state on the basis of the existence or availability of such health
insurance coverage.
B. Exclusions. Notwithstanding Subsection A of this section,
these rules do not apply to any multiple employer welfare arrangement that:
(1) establishes
or maintains a multiple employer welfare arrangement plan pursuant to
one or more agreements that the United States secretary of labor finds to be a
collective bargaining agreement;
(2) is
a rural electric cooperative or a rural telephone cooperative association as
those terms are defined in ERISA; or
(3) has satisfactorily
demonstrated to the superintendent that it is subject to the jurisdiction of
another agency of this state or the federal government in accordance with
Section 59A-15-17 NMSA 1978.
[13.19.4.2 NMAC – N,
2/25/2020]
13.9.4.3 STATUTORY
AUTHORITY: Sections 59A-1-8, 59A-1-18, 59A-2-9, 59A-4-14,
59A-10-3, 59A-15-17, 59A-15-20, 59A-16-1, 59A-16-27, 59A-18-13.2, 59A-18-13.3,
59A-18-13.5, 59A-23-3, 59A-23C-3 NMSA 1978.
[13.19.4.3 NMAC – N,
2/25/2020]
13.19.4.4 DURATION:
Permanent.
[13.19.4.4 NMAC – N,
2/25/2020]
13.19.4.5 EFFECTIVE DATE: February 25, 2020, unless a later date
is cited at the end of a section.
[13.19.4.5 NMAC – N,
2/25/2020]
13.19.4.6 OBJECTIVE: The purpose of this rule is to establish
eligibility requirements, registration, reporting, oversight
and transparency requirements for multiple employer welfare arrangements. This rule also applies state and federal
statutes protecting consumers’ access to care to MEWAs.
[13.19.4.6 NMAC – N,
2/25/2020]
13.19.4.7 DEFINITIONS:
For definitions of terms contained
in this rule, refer to 13.10.29 NMAC, unless otherwise noted below.
A. “Association
health plan or association or AHP” means any foreign or domestic
association that provides a health benefits plan that covers the employees of
multiple employers or union members. All association health plans are multiple
employer welfare arrangements.
B. “By laws” means the statements
adopted by a MEWA that prescribe its purpose, government and administration.
C. “Discretionary
group” means a group that does not meet the standard, eligible group
requirements under state or federal law, but have otherwise obtained insurance
by the discretion of the superintendent to operate.
D. “Employer”
means:
(1) a person who is an employer as that
term is defined in Section 3(5) of the federal Employee Retirement Income
Security Act of 1974, and who employs two or more employees; and
(2) a partnership
in relation to a partner pursuant to Section 59A-23E-17 NMSA 1978.
E. “ERISA”
refers to the Employee Retirement Income Security Act of 1974 (29 United States
Code Section 1002(4)), and ERISA’s implementing regulations, as currently
enacted or subsequently amended;
(1) these rules
incorporate the definitions in 29 U.S.C.A., § 1002, and in its implementing
regulations, as currently enacted or subsequently amended.
(2) unless
inconsistent with the definitions in 29 U.S.C.A., § 1002, or in its implementing
regulations, these rules incorporate the definitions in the New Mexico
Insurance Code.
F. “Fully-insured
multiple employer welfare arrangement” means that an authorized
insurer is obligated to provide all of the benefits and services owed to a
participant in, or beneficiary of, a MEWA and is directly liable to each
participant or beneficiary for those services or benefits.
G. “Insurance code” refers to the New Mexico Insurance Code and its
implementing rules, as currently enacted or subsequently amended.
H. “M-1
filing” means a Form M-1 report that the federal department of labor
requires a MEWA to file annually.
I. “Multiple employer welfare
arrangement” or “MEWA” refers to any foreign or domestic entity that administers a
multiple employer welfare arrangement pursuant to 29 U.S.C.A., § 1002(40)(A) and these rules.
J. “NAIC” means the national association of insurance commissioners.
K. “Plan administrator
or third-party administrator” means a person or entity engaged by a
self-funded MEWA, to carry out the policies established by the trustees and to
otherwise administer and provide day-to-day management of the health benefits
plan;
L. “Self-funded multiple employer
welfare arrangement” refers to a MEWA that is not fully-insured. A fully-insured MEWA shall be deemed a
self-funded MEWA, subject to all of the laws and regulations pertaining
thereto, if, at any time, any of the obligations owed by the MEWA to a
participant or beneficiary will not be provided by an authorized insurer.
M. “Self-insure” means to assume
primary liability or responsibility for certain risks or benefits, rather than
transferring liability or responsibility to some other entity.
N. “SERFF” means the system for
electronic rates and forms filings.
[13.19.4.7 NMAC – N,
2/25/2020]
13.19.4.8 ELIGIBILITY TO OPERATE:
A. Eligibility
to operate as or offer coverage through a MEWA.
(1) Self-funded MEWA. A self-funded MEWA shall be eligible to offer
health benefits plans only after meeting the requirements outlined in this
section
(2) Fully-insured MEWA. A fully-insured MEWA shall confirm that its
offered coverage conforms with the requirements of this section prior to the
sale or delivery of any health benefits plan to MEWA members.
B. Eligibility
for status as MEWA. A MEWA shall prove that it:
(1) is a bona
fide association, which means that the association:
(a) has
membership consisting solely of employers or union members;
(b) has been
actively in existence for at least five continuous years;
(c) is engaged in substantial activities
for its members, other than the sponsorship of an employee welfare benefit
plan, and provides business or professional assistance and benefits to its
members who share a common business interest and are primarily engaged in the
same trade or business;
(d) does not
condition membership in the association on any health status-related factor
relating to an individual (including an employee of an employer or a dependent
of an employee) and clearly so states in all membership and application
materials;
(e) has
within its membership the employers who participate in and fund the
arrangement;
(f) makes health benefits plan coverage
offered through the MEWA available to all members regardless of any health
status-related factor relating to such members (or individuals eligible for
coverage through a member) and clearly so states in all marketing and
application materials;
(g) does not
make health benefits plan coverage offered through the MEWA available other
than in connection with a member of the MEWA and clearly so states in all
marketing and application materials;
(h) provides and annually updates
information necessary for the superintendent to determine whether or not the
MEWA meets the definition of a MEWA before qualifying as a bona fide
association for the purposes of this rule; and
(i) meets at least one of the following conditions:
(i) is a New Mexico entity;
(ii) includes
a member that is a New Mexico entity or who conducts business in New Mexico; or
(iii) has
a participant who resides in New Mexico;
(2) shares a
commonality of interests, which means that the employers or union members are
in the same trade, industry, line of business, or profession; and
(3) does not
charge employers or union members membership fees solely to participate in the
MEWA and no membership fees are included in the premiums charged for health
benefits plans.
C. Limitations of membership. A MEWA may only provide benefits to active or retired owners,
officers, directors, or employees (and the domestic partners and family members
of any of them) of participating employers or union members, except as may
otherwise be limited by provisions of ERISA.
D. MEWAs formed for the purposes of
selling insurance, prohibited. No MEWA, shall be formed solely for the purpose of selling
insurance.
E. Limitations
on large group plans. A health
benefits plan offered by a MEWA shall not be considered a large group plan
exempt from state and federal laws governing individual or small group coverage
solely because the aggregate number of lives covered by the MEWA meets the
definition of a large group plan.
F. Size of MEWA. A self-funded MEWA proposing to provide a
health benefits plan to fewer than 100 covered lives does not meet the criteria
for eligibility under this rule, shall not be registered as an authorized MEWA
and shall not offer a health benefits plan to any employees or union members.
[13.19.4.8 NMAC – N,
2/25/2020]
13.19.4.9 MULTIPLE EMPLOYER WELFARE
ARRANGEMENT OR ASSOCIATION HEALTH PLAN NAME:
A. Name. No MEWA formed pursuant to this rule
shall take any name that is the same as or closely resembles the name of any
other MEWA possessing registration and doing business in this state. A MEWA
must complete its application for registration to transact business under its
own name and shall not adopt any assumed name, except that a MEWA by amending
its articles may change its name or take a new name with the approval of the
superintendent. A MEWA shall clearly
state this name on all advertising materials.
B. Legal proceedings. Whenever it shall be necessary in any
legal proceeding to prove the existence of a MEWA, a certified copy of the MEWA
registration in this state shall be prima facie evidence of the existence of
the MEWA.
[13.19.4.9 NMAC – N,
2/25/2020]
13.19.4.10 Duties
and Compensation of Trustees, Officers or Directors:
A. Responsibilities
of trustees, officers or directors. The trustees, officers
or directors of a MEWA shall give the attention and exercise the vigilance,
diligence, care and skill that prudent persons use in like or similar
circumstances.
B. Authority
of trustees, officers or directors. The board of trustees,
officers or directors shall select such directors as designated in the articles
or bylaws or trust agreement and may appoint agents as deemed necessary for the
transaction of the business of the MEWA.
All directors and agents shall respectively have such authority and
perform such duties in the management of the property and affairs of the MEWA
as may be delegated by the board of trustees, officers or directors. Any director or agent may be removed by the
board of trustees, officers or directors whenever in their judgment the
business interests of the MEWA will be served by the removal. The board of trustees, officers or directors
shall secure by bond or otherwise the fidelity of any or all such directors or
agents who handle the funds of the MEWA.
C. Duties of the trustees, officers or
directors. The trustees, officers or
directors of a MEWA are responsible for the operations of the MEWA. The
directors shall have, at minimum, the following duties:
(1) fiduciary
responsibility for the MEWA operation and financial condition;
(2) selection,
supervision, and evaluation of the service company, financial administrator,
accountant, insurer, and any other contractors;
(3) on the basis
of the plan's overall financial condition, authorizing changes in premium,
reserve, or investment practices; and declaring assessments or dividends as appropriate;
(4) approving
all reports concerning the plan's operations and status to the superintendent
and the members;
(5) monitoring
delinquent premiums, loss experience, and the financial condition of individual
members; and authorizing disciplinary action or expulsion as appropriate;
(6) authorizing
acceptance or rejection of applications for membership;
(7) as permitted
by the bylaws, making or recommending changes to the bylaws for the improvement
of the plan's operation and financial integrity; and
(8) monitoring
the plan's compliance with all statutes and rules governing its operation.
D. Compensation. The compensation of any commissioned sales
agent shall not exceed five percent of the premium attributable to that agent.
E. Membership. Members of the MEWA’s board of trustees,
officers or directors shall include individuals receiving benefits from the
MEWA’s health plan.
[13.19.4.10 NMAC – N,
2/25/2020]
13.19.4.11 APPLICATION PROCESS FOR MEWAS:
A. Application requirements for registration
generally. All MEWAs shall submit an
application for registration and receive approval from the superintendent
before sale of any plans or products.
All application materials shall be provided in the format specified by
the superintendent on the office of superintendent of insurance website.
B. Contents of application, generally.
An application for registration shall include the MEWA’s most current M-1
filing with the United States department of labor. Unless the information in the documents
requested below is provided in the M-1 filing, the MEWA must also file:
(1) a certified copy of the formative documents that
establish the MEWA entity name and type
under which the MEWA will operate, the MEWA’s federal employer identification
number (FEIN) and filings which demonstrate that the MEWA is authorized to do
business in New Mexico;
(2) copies of all bylaws,
operating agreements or similar documents that govern the control of the MEWA;
(3) the name, address, and telephone number for the
contact for each association, group, trust, employer or member participating in the MEWA;
(4) the
name, address, and telephone number of each officer, director, partner or
trustee of the MEWA;
(5) a description of all sources
of financing and revenue of the MEWA;
(6) the MEWA’s current
financial statements including audit reports, a balance sheet, income
statement, cash flow statement and detailed listing of assets and debts, each
developed according to generally accepted accounting principles;
(7) an affidavit from an officer, director, fiduciary or
trustee of the MEWA attesting that, based on the affiant’s informed belief, the
MEWA is in compliance with all applicable provisions of ERISA;
(8) an affidavit from an officer,
director, fiduciary or trustee of the MEWA attesting that, based on the
affiant’s informed belief, the MEWA is in compliance with all applicable
provisions of the Insurance Code and applicable portions of the Affordable Care
Act. Such affidavit does not absolve the
MEWA from any rate or form filing requirements under 13.19.4.23 NMAC;
(9) an affidavit from an officer,
director or trustee of the MEWA certifying that all association members and
their employees shall be eligible for participation in the MEWA;
(10) a copy of any
document executed by an employer or trust to become a member of the MEWA,
including application for membership;
(11) a description
of all membership requirements;
(12) the names and
license numbers of any third-party benefit administrators administering health
benefits offered by the MEWA;
(13) a copy of a
binder or policy of stop loss coverage required by 13.19.4.19; and
(14) any additional information
requested by the superintendent, including but not limited to any documents
required by 13.19.4.23 to establish compliance with 13.19.4.11 NMAC
C. Additional
specifications for fully-insured MEWAs. An
application for a registration to operate as a fully-insured MEWA shall also
include:
(1) the NAIC number of each insurer who will provide benefits on behalf
of the MEWA; and
(2) all
contracts between the MEWA and each insurer identified in Paragraph (1) of this
subsection.
D. Additional specifications for
self-insured MEWAs. An application for
registration to operate as a self-insured MEWA shall also include:
(1) an actuarial opinion prepared, signed
and dated by a person who is a member of the American Academy of Actuaries
stating that appropriate loss and loss adjustment reserves have been
established and that adequate premiums are being charged;
(2) a copy of an
indemnity agreement that jointly and severally binds the MEWA and each member
thereof to meet the obligations of the MEWA;
(3) a copy of a
document that binds and obligates the board members of the MEWA to replace any
funding shortfall relating to the MEWA operations in this state. Such document shall provide for the payment
of one hundred percent of any claims covered by the plan in the event the MEWA
operates in states other than New Mexico;
(4) a copy of
all stop-loss or reinsurance commitments, binders or policies insuring the MEWA
or its members for benefits owed under the plan;
(5) any
applicable documents required to be filed pursuant to 13.2.7 NMAC; and
(6) all documents
necessary to demonstrate its solvency to the superintendent’s satisfaction, as
set forth in 13.19.4.15 NMAC.
E. Application
filing fee. The application filing
fee for registration to operate as a MEWA in New Mexico shall be the same as
those described under Section 59A-6-1, NMSA 1978.
[13.19.4.11 NMAC – N,
2/25/2020]
13.19.4.12 APPLICATION REVIEW AND APPROVAL PROCESS FOR MEWAS:
A. Application
completion requirements. An
application is not complete until the MEWA has met all the requirements of this
section to the satisfaction of the superintendent. The superintendent shall examine the
application and supporting documents submitted by the applicant and shall
conduct any investigation that the superintendent deems necessary. Incomplete applications shall be denied.
B. Application
review. The superintendent shall
register the MEWA upon finding that:
(1) the persons
responsible for the conduct of the MEWA are competent, financially responsible
and of good moral character;
(2) the
applicant MEWA satisfies the requirements of 13.19.4.14 - 13.19.4.19 NMAC; and
(3) the
applicant MEWA satisfies the requirements of 13.19.4.23 NMAC.
C. Material changes. A MEWA
that has made an application under this rule shall amend such application
within 30 days of the date the MEWA becomes aware, or through the exercise of
due diligence should have become aware, of any material change to the
information required to be filed. The
amended application filing shall accurately reflect material changes to the
information originally filed. Any
changes made subsequent to the immediately preceding M-1 filing shall be
specifically identified.
D. Rate
and form filing requirements. A MEWA
shall comply with the rate and form and filing requirements described in
Chapter 59A, Article 18, NMSA 1978 and its implementing rules, as currently
enacted or subsequently amended. All
forms, rates and advertisements shall be filed through SERFF prior to use.
[13.19.4.12 NMAC – N,
2/25/2020]
13.19.4.13 REVOCATION: The
superintendent may revoke a MEWA’s registration upon determining that the MEWA
is no longer in compliance with any applicable provision of federal law, the
Insurance Code or these rules, even if the non-compliance pre-dated
registration.
[13.19.4.13 NMAC – N,
2/25/2020]
13.19.4.14 SELF-FUNDED MEWA DEPOSIT
REQUIREMENTS:
A. Deposit requirement. Every self-funded MEWA shall make and
maintain deposits in trust of for the benefit and protection of all of its
participants and their beneficiaries as specified by the superintendent in the
certificate of registration. The deposit
shall consist of assets eligible under Section 59A-10-3 NMSA 1978, and shall be
deposited with or through the superintendent or in a commercial depository
located in the state of New Mexico approved by the superintendent subject to
Section 59A-10-1 et seq., NMSA 1978.
B. Deposit
release conditions. Any such deposit
shall be released only in the following instances:
(1) upon extinguishment of
all fixed and contingent liabilities of the MEWA secured by the deposit;
(2) upon
the assumption by an authorized insurer of the MEWA’s fixed and contingent
liabilities secured by the deposit; or
(3) upon order of a court of
competent jurisdiction, the reserve deposit may be released to the receiver,
conservator, rehabilitator or liquidator of the MEWA for whose account the
deposit is held.
[13.19.4.14 NMAC – N,
2/25/2020]
13.19.4.15 SELF-FUNDED MEWA MINIMUM SOLVENCY
REQUIREMENTS:
A. Net
worth requirements. Every
self-funded MEWA shall maintain an unallocated reserve level of not less than the greater
of twenty percent of the total premiums in the preceding plan year or twenty
percent of the total estimated premiums for the current plan year. The superintendent may require a self-funded
MEWA to maintain a minimum net worth in an amount lesser or greater than
otherwise required in this rule.
B. Reserve
accounting principles. Every
self-funded MEWA shall establish and maintain loss and loss adjustment reserves
determined by sound actuarial principles in a format consistent with that
required by the national association of insurance commissioners for commercial
health insurers. These principles shall give proper actuarial
regard for known claims, paid and outstanding, a history of incurred but not
reported claims, claims handling expenses, unearned premium, an estimate for
bad debts, a trend factor and a margin for error.
C. Reserve
requirements. Reserves shall be maintained in liquid admitted
assets.
[13.19.4.15 NMAC – N,
2/25/2020]
13.19.4.16 ACCOUNTING STANDARDS AND REPORTING
REQUIREMENTS:
A. Annual
statement required. Each self-funded MEWA
transacting business in this state shall file annually with the superintendent
statements and reports in compliance with 13.2.5 NMAC. Additionally, each annual statement shall be
filed:
(1) by June 1st
of each year, financial statements audited by a certified public accountant;
and
(2) by March 1st of each year, an
actuarial opinion prepared and certified by an actuary who is not an employee
of the self-funded MEWA and who is a fellow of the society of actuaries, a
member of the American academy of actuaries, or an enrolled actuary under the
Employee Retirement Income Security Act of 1974 (29 United States Code §§ 1241
and 1242). The actuarial opinion shall
include:
(a) a
description of the actuarial soundness of the self-funded MEWA, including any
recommended actions that the self-funded MEWA should take to improve its
actuarial soundness;
(b) the recommended amount of cash
reserves the self-funded MEWA should maintain, which shall not be less than the
greater of twenty percent of the total contributions in the preceding plan year
or twenty percent of the total estimated contributions for the current plan
year;
(c) a calculation of cash reserves with
proper actuarial regard for known claims, paid and outstanding, a history of
incurred but not reported claims, claims handling expenses, unearned premiums,
an estimate for bad debts, a trend factor, and a margin for error; and
(d) the
recommended level of specific and aggregate stop-loss insurance the MEWA
arrangement should maintain.
B. Renewal contingent upon
compliance. The superintendent shall
review the statements and reports required by Subsection A of this
section. Renewal of a self-funded MEWA
registration is contingent upon the superintendent finding that the self-funded
MEWA meets the requirements of Subsection B of 13.19.4.12 NMAC.
C. Order for actuarial review. On a finding of good cause, the superintendent may
order an actuarial review of a self-funded MEWA in addition to the actuarial
opinion required by this section. The
cost of any such additional actuarial review shall be paid by the self-funded
MEWA.
D. Quarterly reports. A
self-funded MEWA shall file quarterly financial reports. Quarterly reports shall contain statements
for each health benefits plan offered by the self-funded MEWA pursuant to NAIC
standards set forth in Model Law 430 Section 25 and Section 26.
E. Examination
timeline. The superintendent shall
examine the affairs and conduct of a self-funded MEWA at least once every three
years in the same manner that applies to domestic and foreign insurers with a
certificate of authority to transact insurance in New Mexico. Expenses of examination shall be paid by each
MEWA, or its insurers, pursuant to Section 59A-4-14 NMSA 1978.
[13.19.4.16 NMAC – N,
2/25/2020]
13.19.4.17 INVESTMENT REQUIREMENTS OF
SELF-FUNDED MEWAS: Every self-funded MEWA shall comply fully
with the investment requirements of Section 59A-9-2 NMSA 1978. In addition, a MEWA must not invest in securities or debt of a member
employer, or a member employer’s parent, subsidiary, or affiliate; or any
person or entity under contract with the MEWA.
[13.19.4.17 NMAC – N,
2/25/2020]
13.19.4.18 FINANCIAL INTEGRITY OF SELF
FUNDED-MEWAS:
A. Fidelity
bond. All persons who handle MEWA funds
or who will have authority to gain access to MEWA funds, including trustees, officers
or directors must be covered by a fidelity bond. The bond must cover losses from dishonesty,
robbery, forgery or alteration, misplacement, and mysterious and unexplainable
disappearance. The amount of coverage
for each occurrence must be at least $300,000.
The MEWA must submit a fidelity bond covering the required persons, or submit proof of
coverage for all required individuals not covered under the MEWAs bond.
B. Integrity of assets. A MEWA’s
assets:
(1) must not be
commingled with the assets of any employer member;
(2) must not be
loaned to anyone for any purpose, or used as security for a loan, except as
permitted under subsection C of this section
for investments.
(3) must be
employed solely for the purposes stated in the bylaws, and in compliance with
this chapter and related statutes; and
(4) must not be
considered the property or right of any member, covered employee, or other
covered person, except:
(a) for benefits
under the coverage documents;
(b) for
dividends declared in accordance with Section 59A-37-22 NMSA 1978.
(c) for a
portion of the assets remaining after the plan’s dissolution.
C. Sources and uses of funds. A
MEWA may expend funds for payment of losses and expenses, and for other costs
customarily borne by insurers under conventional insurance policies in New
Mexico. A MEWA must not borrow money or issue debt instruments, except to
maintain cash flow through a stop-loss policy requiring an insurer to advance
funds to the MEWA under conditions approved by the superintendent. A MEWA may
bring legal suits to collect legal debts. A MEWA may receive funds only from:
(1) its members
as premiums, assessments or penalties;
(2) its insurers
or indemnitors pursuant to insurance or indemnification agreements;
(3) dividends,
interest, or the proceeds of sale of investments;
(4) refunds of
excess payments;
(5) coordination
of benefits with automobile coverage, workers’ compensation coverage, and other
employee health benefit coverage;
(6) collection
of money owed to the MEWA; or
(7) subrogation.
D. Separate accounts. A MEWA may establish separate accounts for
the payment of claims or certain types of expenses. These accounts must be used only by the
MEWA’s third-party administrators, its authorized subcontractors or financial
administrators as appropriate to the account’s purpose. The amount in these special accounts must not
exceed the amount reasonably sufficient to pay the claims or expenses for which
it is established. All monetary and
investment assets not in these accounts must be under the control of the
financial administrator.
E. Monitoring financial condition. The trustees, officers or directors must
review the MEWA’s revenues, expenses, and loss development, and evaluate its
current and expected financial condition quarterly. The trustees, officers or directors must
attempt in good faith to maintain or restore the MEWA’s sound financial
condition, using any means at its disposal.
These means include but are not limited to adjusting premium rates,
underwriting standards, dividend rates, expulsion standards, and other powers
granted in this rule and the bylaws. If
the superintendent judges that the trustees’, officers’ or director's actions
are inadequate to maintain or restore the plan's sound financial condition, the
superintendent shall, as appropriate: order an increase in the premium rates;
revoke the MEWA’s registration; or order that an assessment be levied against
the members.
[13.19.4.18 NMAC – N,
2/25/2020]
13.19.4.19 SELF-FUNDED MEWA STOP-LOSS COVERAGE
REQUIREMENTS:
A. Purchase
and alteration. A MEWA must inform the superintendent at least
180 days prior to expiration of any required stop-loss insurance policy whether
it intends to renew the policy, and whether the insurer is willing to renew the
policy. Alteration of a required
stop-loss insurance policy midterm with the effect of reducing coverage, and
cancellation by the plan midterm, is prohibited. If more than one stop-loss insurance policy
is obtained in fulfillment of this part's requirements, their expiration dates
must be the same.
B. Individual excess. A MEWA shall have and maintain individual
excess stop-loss insurance, that provides for the insurer to assume all
liability in excess of the per person limit per year under all coverages the
plan offers. The reporting period under
this coverage shall be no less than one year after the fund year's conclusion.
C. Aggregate excess. A MEWA must have and maintain aggregate
excess stop-loss insurance that provides for the insurer to assume all
liability in excess of a specified amount of claim losses for each fund
year. The aggregate excess coverage may
be in the form of incurred basis stop-loss insurance or paid basis stop-loss
insurance. MEWAs using paid basis stop-loss insurance shall have and maintain
extended or runoff aggregate excess stop-loss insurance on an incurred
basis. The extended or runoff coverage
shall provide for the insurer to assume all liability in excess of a specified
amount of claim losses incurred while the paid basis stop-loss insurance was in
force, but paid after its termination or nonrenewal. The reporting period under paid basis
insurance shall be no less than three months after the fund year's
conclusion. The reporting period under
incurred basis insurance, including extended or runoff insurance shall be no
less than one year after the fund year's conclusion.
D. Contractual Requirements. A MEWA shall have and maintain the following
language in its required aggregate excess stop-loss insurance policy, unless
the superintendent determines that a policy with that language is not available
in the market for stop-loss coverage, in which case, the superintendent may
determine the requirements needed to obtain stop-loss coverage and meet
solvency requirements: “The insurer
shall, at the superintendent's request, assume direct responsibility for the
MEWA’s coverage and all other responsibilities under this chapter and related
statutes, if the MEWA becomes insolvent, ceases operations without
authorization, or otherwise fails to fulfill its responsibilities under this
chapter and related statutes. The
insurer may attempt to collect reimbursement from the MEWA or an employer
member on whose behalf the insurer is called upon to pay premium, pay claims,
or incur other extraordinary expenses.
However, the insurer shall fulfill its responsibilities under this
section while any collection attempts are pending. The insurer's responsibilities extend to all
matters arising during or attributable to the policy period, and do not
terminate with the end of the policy period.”
[13.19.4.19 NMAC – N,
2/25/2020]
13.19.4.20 ENDING SELF-FUNDED, RUNOFF PERIOD,
AND PLAN DISSOLUTION:
A. Ending self-funded registration. A MEWA may decide to end its self-funded
registration and cease to provide coverage, effective at the end of a fund
year. The MEWA shall notify the
superintendent within 14 days of such a decision. A MEWA may not elect to end its self-funded
registration less than 45 days prior to the end of the fund year in
question. Voluntary ending of
self-funded registration does not constitute MEWA dissolution under Subsection
D of this section.
B. Revocation of self-funded
registration. The superintendent shall,
by order, revoke the registration of a MEWA to self-insure upon ten days’
written notice if any of the following events occur or conditions develop, and
if the superintendent judges them to be material:
(1) failure of
the MEWA to comply with this rule and all applicable statutes under the
Insurance Code;
(2) failure of
the MEWA to comply with any lawful order of the superintendent;
(3) commission by the MEWA of an unfair or
deceptive practice or fraud as defined in Chapter 59A, Articles 16, 16b, or 16c
of the Insurance Code or in related rules; or
(4) a
deterioration of the MEWA’s financial integrity to the extent that its present
or future ability to meet obligations promptly and in full is or will be
significantly impaired.
C. Runoff period. A health benefits
plan offered by a MEWA shall continue to exist as a runoff plan after its
self-funded registration has ended, for the purpose of paying claims, preparing
reports, and administering transactions associated with the period when the
plan provided coverage. A runoff plan
shall continue to comply with all appropriate provisions of this rule, and with
all other applicable New Mexico statutes and rules. Authority to exist as a runoff plan is
open-ended, and does not require renewal of registration.
D. Dissolution. A MEWA, including a runoff health benefits
plan offered by a MEWA, which desires to cease existence
shall apply to the superintendent for authorization to dissolve. Applications shall be approved or disapproved
within 60 days of receipt. Dissolution
without authorization is prohibited and void, and does not absolve a MEWA or
runoff plan from fulfilling its continuing obligations, and does not absolve
its members from assessment under premium tax law. The MEWA’s assets at the time of dissolution
shall be distributed to the members and covered employees as provided in the
bylaws. The superintendent shall grant
authorization to dissolve if either of the following conditions are met:
(1) the MEWA
demonstrates that it has no outstanding liabilities, including incurred but not
reported liabilities; or
(2) the
MEWA has obtained an irrevocable
commitment from a licensed insurer that provides for payment of all outstanding
liabilities, and for providing all related services, including payment of
claims, preparation of reports, and administration of transactions associated
with the period when the plan provided coverage.
[13.19.4.20 NMAC – N,
2/25/2020]
13.19.4.21 EFFECT OF REGISTRATION:
A. Deemed
to be an insurer. Upon approval of
the application for registration, a self-funded MEWA is deemed to be an
“insurer” under Subsection A of Section 59A-1-8 NMSA
1978.
B. Deemed
to be an authorized issuer. Upon
approval of the application for registration, a self-funded MEWA is deemed to
be an authorized insurer for purposes of compliance with state and federal law.
C. Plan
deemed to be a contract. The health
benefits plan of a registered self-funded MEWA is deemed to be a health
benefits plan under state and federal law.
[13.19.4.21 NMAC – N,
2/25/2020]
13.19.4.22 RENEWAL
OF REGISTRATION:
A. Renewal
requirements. A MEWA’s registration
shall continue in force as long as the MEWA complies with these rules and all
other applicable state and federal laws, unless suspended or revoked by the
superintendent or terminated at the MEWA’s request, subject to continuance of
the registration by the MEWA each year by:
(1) payment on
or before March 1 of a $200.00 continuation fee;
(2) filing on or
before March 1, by the MEWA or its authorized insurer(s), of an audited
financial statement for the preceding year;
(3) timely
payment by the MEWA, or its authorized insurer(s), of premium taxes for the
preceding calendar year;
(4) reporting on
demographic information, on a form approved by the superintendent, providing
MEWA, and any third party administrator,
intermediary, regulatory compliance, and insurer contacts that comply with the
following requirements:
(a) the MEWA contact shall be the person responsible for filing
all applicable forms and changes in information with the superintendent; and
(b) the regulatory contact shall be the person responsible for
receiving notice of laws, rules, bulletins and the like that may affect the
plan;
(5) notice of
any changes in information previously filed with the superintendent, which
shall include, but is not limited to, the following items:
(a) biographical affidavits of any new trustees, officers,
directors, or other members of the association’s or MEWA’s governing body;
(b) the names, addresses, and qualifications of any new
individuals responsible for the conduct of the plan’s affairs, including
third-party administrators;
(c) any new policy or amendment;
(d) any new trust agreement, plan document, plan summary, or
bylaws;
(e) any new advertising and marketing material;
(f) any new members of the MEWA; and
(g) any other new agreements.
B. Expiration
of registration and cure. A MEWA’s
registration shall expire under the same conditions and be cured by the same
processes as described in Section 59A-5-23, NMSA 1978.
[13.19.4.22 NMAC – N,
2/25/2020]
13.19.4.23 RATE
AND FORM FILING REQUIREMENTS:
A. Rate
and form filing requirements. A MEWA
selling health benefits plans to New Mexico residents or employers, or an
insurance company offering coverage through a MEWA, shall set premiums in
accordance with sound actuarial methods and the standards outlined below:
(1) All forms of contracts evidencing
benefits provided and all premium rates proposed, including any and all
amendments, endorsements, riders, certificates or other modifications to
contracts or premiums, shall conform to the filing and approval requirements
contained in Sections 59A-18-13.2, 59A-18-13.3 and 59A-18-13.5 NMSA 1978, and
any other applicable state or federal law.
(2) All MEWAs covering New Mexico
residents shall charge premium rates in compliance with state and federal law,
consistent with the market in which employer member is part; that is, a
self-employed individual will have an individual policy, a small business will
have a small group policy, and a large employer will have a large group policy.
(3) All MEWAs covering New Mexico residents shall
file forms and rates in compliance with state and federal law, consistent with
the market in which employer member is part, that is, a self-employed
individual will have an individual policy, a small business will have a small
group policy, a large employer will have a large group policy.
(4) All MEWAs covering New Mexico
residents shall cover consumer protections in compliance with state and federal
law, consistent with the market in which employer member is part, that is, a
self-employed individual will have an individual policy, a small business will
have a small group policy, a large employer will have a large group policy.
B. Existing group rates use. A fully-insured MEWA offering small or large
group coverage may use its existing small or large group rates, as applicable,
without making a MEWA-specific rate filing, so long as such group rates have
been filed with and approved by the superintendent and meet the requirements of
this section.
C. Rate guarantee requirement. A self-insured or fully-insured MEWA offering
benefits plans to individuals through sole proprietorship businesses shall
guarantee the rates on all such plans for a minimum of 12 months.
D. Medical
loss ratio requirements. A
self-insured or fully-insured MEWA offering a health benefit plan with covered
lives in New Mexico shall comply with respect to those covered lives, with the
medical loss ratio and rebating requirements of New Mexico law.
E. Commissions
and medical loss ratios. Any fees
associated with broker services shall not be incorporated into the medical loss
ratio under Subsection D of this section, but shall be incorporated into the
administrative expense portion of a self-insured or fully-insured MEWA’s rate
filing.
F. Commission reimbursement. A self-insured or fully-insured MEWA shall not
pay commissions or fees higher than the commissions allowed for the same
coverage offered as a qualified health plan in the individual or small group
market, as applicable.
G. Third
party administrator contracts. Prior to sale of any health benefits plan, a
self-insured or fully-insured MEWA shall file in SERFF as informational filings
all copies of all contracts or agreements between the MEWA and any other
entity that govern the management or administration of the MEWA, including any
third-party benefit administrators;
H. Approval. No health benefits plan or certificate of
coverage shall be delivered or issued for delivery in this state until a copy
of the form and of the rules for the classification of risks has been filed
with and approved by the superintendent in accordance with state law.
[13.19.4.23 NMAC - N,
2/25/2020]
13.19.4.24 MANAGED
HEALTH CARE COMPLIANCE PLAN AND BENEFITS REQUIREMENTS: A healthcare plan offered by a MEWA, or by an
insurer offering coverage through a MEWA, shall comply with all state and
federal laws that mandate benefits, that mandate consumer protections and that
mandate managed health care requirements.
[13.19.4.24 NMAC – N,
2/25/2020]
13.19.4.25 NOTICE REQUIREMENTS:
A. Notice
language. The following notice shall
be provided by a MEWA or third-party administrator within the policy documents
to employers and employees who obtain coverage from a MEWA:
“Notice
The [Insert the name of
the MULTIPLE EMPLOYER WELFARE ARRANGEMENT in all capital letters] IS NOT AN INSURANCE COMPANY. FOR ADDITIONAL INFORMATION ABOUT THE
[Insert the name of the MULTIPLE EMPLOYER WELFARE ARRANGEMENT in all capital
letters] YOU SHOULD ASK QUESTIONS OF THE ADMINISTRATOR OF THE [Insert the name
of the MULTIPLE EMPLOYER WELFARE ARRANGEMENT in all capital letters], OR YOU
MAY CONTACT THE NEW MEXICO OFFICE OF THE SUPERINTENDENT OF INSURANCE USING THE
CONTACT INFORMATION PROVIDED ON THE OSI WEBSITE.”
B. Contact
for superintendent. Each MEWA
related notice shall include the superintendent’s current consumer service
telephone number and website in this notice.
C. Notice
to individual and small group prospective enrollees. Any MEWA, third-party administrator or agent
or producer acting on behalf of a MEWA shall provide the following information
to prospective purchasers of an individual or small group health benefits plan:
(1) A statement that the individual or
small group has the option of purchasing insurance on the New Mexico Health
Insurance Exchange;
(2) Contact information for the New
Mexico health insurance marketplace, including website and phone number;
(3) A statement that purchasing a health
benefits plan through the MEWA may result in preventing the employer or
individual from accessing premium subsidies, cost sharing reductions, or other
financial assistance that may otherwise be available through the New Mexico
health insurance exchange; and
(4) A table showing current income
eligibility guidelines for Medicaid and individual and family marketplace
coverage through the New Mexico health insurance exchange.
[13.19.4.25 NMAC – N,
2/25/2020]
13.19.4.26 ENROLLMENT PERIODS: A self-funded or fully-insured MEWA
shall offer open and special
enrollment periods consistent with state and federal law and consistent with
the market in which the employer member is a part; that is, a self-employed
individual will have an individual policy, a small business will have a small
group policy, and a large employer will have a large group policy.
[13.19.4.26 NMAC – N,
2/25/2020]
13.19.4.27 RECORD RETENTION: A MEWA doing business
in New Mexico shall maintain its books and records for a minimum period of
seven years. Records shall be made available to the superintendent for review
upon request.
[13.19.4.27 NMAC – N,
2/25/2020]
13.19.4.28 ENFORCEMENT:
A. Enforcement action for failure to comply
with rule. The superintendent may
revoke, suspend or refuse to continue the registration of a MEWA that fails to
comply with this rule and may impose such other applicable administrative
penalties authorized under the Insurance Code.
B. Cease and desist. When the superintendent believes that a MEWA
or any other person is operating in this state without a registration or has
violated the law or a rule or order of the superintendent, the superintendent
may issue an order to cease and desist such violation
or take any other action set forth in Section 59A-16-27 NMSA 1978.
C. Penalty. Any person or entity who
violates any provision of this rule is subject to the penalties provided in
Section 59A-1-18 NMSA 1978.
[13.19.4.28 NMAC – N,
2/25/2020]
13.19.4.29 FRAUD REPORTING REQUIREMENT: Any regulated entity who knowingly aids, assists or abets violations of these
rules is subject to the same penalties as the MEWA.
[13.19.4.29 NMAC – N,
2/25/2020]
13.19.4.30 INSURANCE AGENTS AND BROKERS: Any person, including
a licensed agent, broker or other individual, soliciting, offering or selling a
health benefit plan on behalf of a MEWA to a New Mexico employer or a New
Mexico resident shall comply with the following requirements:
A. Prior to completing a sale of
individual or small group coverage, disclose to the employer or resident that:
(1) the agent or
broker is being compensated for the sale of the health benefit plan;
(2) that the
small employer or individual has the option of purchasing insurance on the New
Mexico health insurance marketplace;
(3) the
eligibility guidelines for Medicaid coverage and financial assistance for
coverage through the New Mexico health insurance exchange;
(4) contact
information for the New Mexico health insurance exchange; and
(5) a comparison table showing the similarities and differences in coverages
between a MEWA with qualified health plans sold in the individual and small
group market; and
B. Prior to engaging in or assisting
any person to engage in selling health benefits plans through a MEWA, shall
document appropriate due diligence to establish, at a minimum; the following:
(1) that the
MEWA’s insurer or third-party administrator is licensed in the state;
(2) that the
MEWA has registered, permitting it to operate in the state;
(3) that the
disclosures listed in Paragraph (1) are in the policy document; and
(4) that the
advertising and marketing materials that the agent or broker is using have been
approved by the superintendent.
[13.19.4.30 NMAC – N,
2/25/2020]
13.19.4.31 SHORT TERM LIMITED DURATION AND
EXCEPTED BENEFIT PLANS: Only a fully-insured
MEWA shall offer a short-term or excepted benefits plan. A MEWA offering short-term or excepted
benefits plans shall comply with all sections of this rule pertaining to
fully-insured MEWA plan.
[13.19.4.31 NMAC – N,
2/25/2020]
13.19.4.32 VACCINE PURCHASING ACT COMPLIANCE: A MEWA offering a
major medical health benefits plan shall comply with the reporting requirements
under the Vaccine Purchasing Act at 24-5a-1 et seq. NMSA 1978.
[13.19.4.32 NMAC – N,
2/25/2020]
13.19.4.33 PHARMACY BENEFIT MANAGERS: Any self-funded or fully-insured MEWA
offering drug coverage through a pharmacy benefit manager shall comply with Section 59A-61-1
et seq. NMSA 1978.
[13.19.4.33 NMAC – N,
2/25/2020]
13.19.4.34 COMPLIANCE FOR EXISTING MEWAS OR
DISCRETIONARY GROUPS: A MEWA subject to this rule on its effective
date shall comply with the provisions of this rule no later than 45 days following
its effective date.
[13.19.4.35 NMAC – N,
2/25/2020]
13.19.4.35 DEADLINES: The
superintendent, for good cause, may shorten or extend any deadline set by this
rule or under the Insurance Code.
[13.19.4.36 NMAC – N,
2/25/2020]
13.19.4.36 RULE
NONCOMPLIANCE: Failure to comply with any provision of these
rules is a violation of the Insurance Code and punishable pursuant to Section
59A-5-30 NMSA 1978.
[13.19.4.37 NMAC – N,
2/25/2020]
13.19.4.37 HEARING RIGHTS: Any person
aggrieved by any action, threatened action, or failure to act by the
superintendent shall have the same right to a hearing before the superintendent
with respect thereto as provided for in general under Chapter 59A, Article 4
NMSA 1978 and the implementing rules.
[13.19.4.38 NMAC – N,
2/25/2020]
13.19.4.38 SEVERABILITY: If any provision of this rule, or the
application thereof to any person or circumstance, is held invalid, such
invalidity shall not affect other provisions or applications of this rule that
can be given effect without the invalid provision or application, and to that
end the provisions of this rule are severable.
[13.19.4.38 NMAC – N,
2/25/2020]
HISTORY OF 13.19.4 NMAC:
13.19.4 NMAC - Multiple Employer Welfare Arrangements filed 5/1/2002 was
repealed and replaced by 13.19.4 NMAC - Multiple Employer Welfare Arrangements,
as an emergency rule, effective 8/27/2019.
Emergency rule expired 2/24/2020, refiled as a permanent rule, effective
2/25/2020.