Minnesota Session Laws - 1983, Regular Session

  

                         Laws of Minnesota 1983 

                        CHAPTER 241--S.F.No. 892
           An act relating to insurance; authorizing the 
          establishment of joint self-insurance employee health 
          plans; providing administrative, trust, bonding, 
          investment, and reporting requirements; establishing a 
          revenue fee; authorizing certain governmental 
          subdivisions to self-insure for long-term disability 
          coverage; amending Minnesota Statutes 1982, section 
          471.617, subdivisions 1, 2, and 3; proposing new law 
          coded as Minnesota Statutes, chapter 62H. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [62H.01] [JOINT SELF-INSURANCE EMPLOYEE HEALTH 
PLAN.] 
    Any three or more employers, excluding the state and its 
political subdivisions as described in 471.617, subdivision 1, 
who are authorized to transact business in Minnesota may jointly 
self-insure employee health, dental, or short-term disability 
benefits.  Joint plans must have a minimum of 250 covered 
employees and meet all conditions and terms of sections 1 to 8.  
    Sec. 2.  [62H.02] [REQUIRED PROVISIONS.] 
    A joint self-insurance plan must include aggregate excess 
stop-loss coverage and individual excess stop-loss coverage 
provided by an insurance company licensed by the state of 
Minnesota.  Aggregate excess stop-loss coverage must include 
provisions to cover incurred, unpaid claim liability in the 
event of plan termination.  The excess or stop-loss insurer must 
bear the risk of coverage for any member of the pool that 
becomes insolvent with outstanding contribution due.  In 
addition, the plan of self-insurance must have participating 
employers fund an amount at least equal to the point at which 
the excess or stop-loss insurer must assume 100 percent of 
additional liability.  A joint self-insurance plan must submit 
its proposed excess or stop-loss insurance contract to the 
commissioner of insurance at least 30 days prior to the proposed 
plan's effective date and at least 30 days subsequent to any 
renewal date.  The commissioner shall review the contract to 
determine if they meet the standards established by sections 1 
to 8 and respond within a 30-day period.  Any excess or 
stop-loss insurance plan must be noncancelable for a minimum 
term of two years.  
    Sec. 3.  [62H.03] [MARKETING, RISK MANAGEMENT, OR 
ADMINISTRATIVE SERVICES.] 
    No joint self-insurance plan may offer marketing, risk 
management, or administrative service unless these services are 
provided by vendors duly licensed by the commissioner to provide 
these services.  No vendor of these services may be a trustee of 
any joint self-insurance plan for which they provide marketing, 
risk management, or administrative services.  
    Sec. 4.  [62H.04] [COMPLIANCE WITH OTHER LAWS.] 
    A joint self-insurance plan is subject to the requirements 
of chapter 62A and sections 72A.17 to 72A.32 unless otherwise 
specifically exempt.  A joint self-insurance plan must not offer 
less than a number two qualified plan or its actuarial 
equivalent.  
    Sec. 5.  [62H.05] [MANAGEMENT OF FUNDS.] 
    Funds collected from the participating employers under 
joint self-insurance plans must be held in trust subject to the 
following requirements:  
    (a) A board of trustees elected by participating employers 
shall serve as fund managers on behalf of participants. 
Trustees must be plan participants.  No participating employer 
may be represented by more than one trustee.  A minimum of three 
and a maximum of seven trustees may be elected.  Trustees shall 
receive no remuneration, but they may be reimbursed for actual 
and reasonable expenses incurred in connection with duties as 
trustees.  
    (b) Trustees shall be bonded in an amount not less than 
$100,000 or no more than $500,000 from a licensed bonding 
company.  
     (c) Investment of plan funds is subject to the same 
restrictions as are applicable to political subdivisions 
pursuant to section 475.66.  All investments must be managed by 
a bank or other investment organization licensed to operate in 
Minnesota.  
    (d) Trustees, on behalf of the fund, shall file annual 
reports with the commissioner of insurance within 30 days 
immediately following the end of each calendar year.  The 
reports must summarize the financial condition of the fund, 
itemize collection from participating employers, and detail all 
fund expenditures.  
    Sec. 6.  [62H.06] [REGULATION OF PLANS BY COMMISSIONER.] 
    The commissioner of insurance shall promulgate rules, 
including temporary rules, to insure the solvency and operation 
of all self-insured plans subject to this chapter.  The 
commissioner may examine the joint self-insurance plans pursuant 
to sections 60A.03 and 60A.31.  
    Sec. 7.  [62H.07] [REVENUE FEE.] 
    A joint self-insurance plan shall pay a two percent revenue 
fee.  This revenue must be computed based on two percent of the 
paid claims level for the most recently completed calendar 
year.  This revenue must be deposited in the general fund.  
    Sec. 8.  [62H.08] [EXEMPTION.] 
    A homogenous joint employer plan providing group health 
benefits, which was in existence prior to March 1, 1983, and 
which is associated with, or organized or sponsored by, an 
association exempt from taxation under United States Code, title 
26, section 501(c)(6), and controlled by a board of trustees a 
majority of whom are members of the association, is exempt from 
the requirements of this act and the insurance laws of this 
state.  
    Sec. 9.  Minnesota Statutes 1982, section 471.617, 
subdivision 1, is amended to read:  
    Subdivision 1.  A statutory or home rule charter city or, 
county or, school district, or instrumentality thereof which has 
more than 100 employees, may by ordinance or resolution 
self-insure for any employee health benefits except including 
long-term disability and, but not for employee life benefits.  
Any self-insurance plan shall provide all benefits which are 
required by law to be provided by group health insurance 
policies.  Self-insurance plans shall be certified as provided 
by section 62E.05.  Employee wage deductions for the purpose of 
funding a self-insured health benefit plan shall be are subject 
to the licensing provisions of section 60A.23, subdivision 7. 
    Sec. 10.  Minnesota Statutes 1982, section 471.617, 
subdivision 2, is amended to read:  
    Subd. 2.  Any two or more statutory or home rule charter 
cities or, counties or, school districts, or instrumentalities 
thereof which together have more than 100 employees may jointly 
self-insure for any employee health benefits except including 
long-term disability and, but not for employee life benefits, 
subject to the same requirements as an individual self-insurer 
under subdivision 1.  The commissioner of insurance is 
authorized to promulgate administrative may adopt rules, 
including emergency rules, pursuant to sections 14.01 to 14.70, 
providing standards or guidelines for the operation and 
administration of self-insurance pools. 
    Sec. 11.  Minnesota Statutes 1982, section 471.617, 
subdivision 3, is amended to read:  
    Subd. 3.  Any self-insurance plan covering fewer than 1,000 
employees shall include excess or stop-loss coverage, provided 
by a licensed insurance company or, an insurance company 
approved pursuant to section 60A.20, or service plan corporation 
, but excess or stop-loss coverage need not be obtained for 
long-term disability.  
    This excess or stop-loss coverage shall cover all eligible 
claims incurred during the term of the policy or contract.  In 
addition to excess or stop-loss coverage, the self-insurance 
plan shall provide for reserving of an appropriate amount of 
funds to cover the estimated cost of claims incurred, but 
unpaid, during the term of the policy or contract which shall be 
added to the expected claim level.  These funds shall be in 
addition to funds reserved to cover the claims paid during the 
term of the policy or contract.  The excess or stop-loss 
coverage shall be provided at levels in excess of self-insured 
retention which is appropriate, taking into account the number 
of covered persons in the group.  
    Sec. 12.  [EFFECTIVE DATE.] 
    Sections 6 and 9 to 11 are effective the day after final 
enactment.  Sections 1 to 5, 7, and 8 are effective January 1, 
1984. 
    Approved June 1, 1983