1997 Minnesota Statutes

CHAPTER 62H. Joint self-insurance employee health plan

     62H.01 Joint self-insurance employee health plan. 

    Any two or more employers, excluding the state and its 
 political subdivisions as described in section 471.617, 
 subdivision 1, who are authorized to transact business in 
 Minnesota may jointly self-insure employee health, dental, 
 short-term disability benefits, or other benefits permitted 
 under the Employee Retirement Income Security Act of 1974, 
 United States Code, title 29, sections 1001 et seq.  Joint plans 
 must have a minimum of 100 covered employees and meet all 
 conditions and terms of sections 62H.01 to 62H.08.  Joint plans 
 covering employers not resident in Minnesota must meet the 
 requirements of sections 62H.01 to 62H.08 as if the portion of 
 the plan covering Minnesota resident employees was treated as a 
 separate plan.  A plan may cover employees resident in other 
 states only if the plan complies with the applicable laws of 
 that state. 

    A multiple employer welfare arrangement as defined in 
 United States Code, title 29, section 1002(40)(a), is subject to 
 this chapter to the extent authorized by the Employee Retirement 
 Income Security Act of 1974, United States Code, title 29, 
 sections 1001 et seq.  The commissioner of commerce may, on 
 behalf of the state, enter into an agreement with the United 
 States Secretary of Labor for delegation to the state of some or 
 all of the secretary's enforcement authority with respect to 
 multiple employer welfare arrangements, as described in United 
 States Code, title 29, section 1136(c). 

    HIST: 1983 c 241 s 1; 1987 c 337 s 74; 1992 c 549 art 3 s 18; 
 1992 c 564 art 1 s 43; 1994 c 485 s 36; 1997 c 175 art 4 s 1 

     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.  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 has contracted to 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 
 commerce 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 62H.01 to 62H.08 and 
 respond within a 30-day period.  Any excess or stop-loss 
 insurance plan must contain a provision that the excess or 
 stop-loss insurer will give the plan and the commissioner of 
 commerce a minimum of 180 days notice of termination or 
 nonrenewal.  If the plan fails to secure replacement coverage 
 within 60 days after receipt of the notice of cancellation or 
 nonrenewal, the commissioner shall issue an order providing for 
 the orderly termination of the plan. 

    HIST: 1983 c 241 s 2; 1983 c 289 s 114 subd 1; 1984 c 655 art 
 1 s 92; 1987 c 337 s 75 

     62H.03 Marketing, risk management, or administrative 
  services. 

    No joint self-insurance plan may offer marketing, risk 
 management, or administrative services 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.  

    HIST: 1983 c 241 s 3 

     62H.04 Compliance with other laws. 

    A joint self-insurance plan is subject to the requirements 
 of chapters 62A, 62E, and 62L, 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.  

    HIST: 1983 c 241 s 4; 1987 c 337 s 76; 1995 c 234 art 7 s 10 

     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 118A.04.  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 commerce 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.  

    HIST: 1983 c 241 s 5; 1983 c 289 s 114 subd 1; 1984 c 655 art 
 1 s 92; 1996 c 399 art 2 s 12 

     62H.06 Regulation of plans by commissioner. 

    The commissioner of commerce shall promulgate 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.031.  

    HIST: 1983 c 241 s 6; 1983 c 289 s 114 subd 1; 1984 c 640 s 
 32; 1984 c 655 art 1 s 92; 1985 c 248 s 26; 1995 c 233 art 2 s 
 56 

     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.  

    HIST: 1983 c 241 s 7 

     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 sections 62H.01 to 62H.08 and 471.617, 
 subdivisions 1 to 3, and the insurance laws of this state, 
 except that the association must comply with the provisions of 
 chapter 62L with respect to any members that are small employers.

    HIST: 1983 c 241 s 8; 1995 c 234 art 7 s 11 

     62H.10 Definitions. 

    Subdivision 1.    Scope.  For purposes of sections 
 62H.10 to 62H.17, the terms in this section have the meanings 
 given them. 

    Subd. 2.    Agent.  "Agent" means an agent as defined 
 under section 60A.02, subdivision 7. 

    Subd. 3.    Arrangement.  "Arrangement" means a fund, 
 trust, plan, program, or other mechanism by which a person 
 provides, or attempts to provide, health care benefits to 
 individuals. 

    Subd. 4.    Broker.  "Broker" means an agent engaged in 
 brokerage business pursuant to section 60K.08. 

    Subd. 5.    Collectively bargained arrangement.  
 "Collectively bargained arrangement" means an arrangement which 
 provides or represents that it is providing health care benefits 
 or coverage under or pursuant to one or more collective 
 bargaining agreements. 

    Subd. 6.    Commissioner.  "Commissioner" means the 
 commissioner of commerce. 

    Subd. 7.    Employee leasing arrangement.  "Employee 
 leasing arrangement" means a labor leasing, staff leasing, 
 employee leasing, contract labor, extended employee staffing or 
 supply, or other arrangement, under contract or otherwise, 
 whereby one business or entity leases or obtains all or a 
 significant number of its workers from another business or 
 entity. 

    Subd. 8.    Employee welfare benefit plan.  "Employee 
 welfare benefit plan" means a plan, fund, or program established 
 or maintained by an employer or by an employee organization, or 
 by both, to the extent that the plan, fund, or program was 
 established or is maintained for the purpose of providing for 
 its participants or their beneficiaries, through the purchase of 
 insurance or otherwise, medical, surgical, or hospital care or 
 benefits, or benefits in the event of sickness, accident, 
 disability, death, or unemployment. 

    Subd. 9.    Fully insured by a licensed insurer.  "Fully 
 insured by a licensed insurer" means that, for all of the health 
 care benefits or coverage provided or offered by or through an 
 arrangement: 

    (1) a licensed insurer is directly obligated by contract to 
 provide all of the coverage to or under the arrangement; 

    (2) the licensed insurer assumes all of the risk for 
 payment of all covered services or benefits; and 

    (3) the liability of the licensed insurer for payment of 
 the covered services or benefits is directly to the individual 
 employee, member, or dependent receiving the health care 
 services. 

    Subd. 10.    Licensed insurer.  "Licensed insurer" means 
 an insurer having a certificate of authority to transact 
 insurance in this state. 

    Subd. 11.    Reportable MEWA.  "Reportable MEWA" means a 
 person that provides health care benefits or coverage to the 
 employees of two or more employers.  Reportable MEWA does not 
 include: 

    (1) a licensed insurer; 

    (2) an arrangement which is fully insured by a licensed 
 insurer; 

    (3) a collectively bargained arrangement; 

    (4) an employee welfare benefit plan established or 
 maintained by a rural electric cooperative or a rural telephone 
 cooperative; 

    (5) an employee leasing arrangement; or 

    (6) a joint self-insurance employee health plan, which 
 includes but is not limited to multiple employee welfare 
 arrangements and multiple employer welfare arrangements (MEWAs), 
 having a certificate of authority to transact insurance in this 
 state pursuant to chapter 62H. 

    Subd. 12.    Rural electric cooperative.  "Rural 
 electric cooperative" means: 

    (1) an organization that is exempt from tax under United 
 States Code, title 26, section 501(a), and which is engaged 
 primarily in providing electric service on a mutual or 
 cooperative basis; or 

    (2) an organization described in United States Code, title 
 26, section 501(c), paragraph (4) or (6), which is exempt from 
 tax under United States Code, title 26, section 501(a), and at 
 least 80 percent of the members of which are organizations 
 described in clause (1). 

    Subd. 13.    Rural telephone cooperative.  "Rural 
 telephone cooperative" means an organization described in United 
 States Code, title 26, section 501(c), paragraph (4) or (6), 
 which is exempt from tax under United States Code, title 26, 
 section 501(a), and at least 80 percent of the members of which 
 are organizations engaged primarily in providing telephone 
 service to rural areas of the United States on a mutual, 
 cooperative, or other basis. 

    Subd. 14.    Third party administrator.  "Third party 
 administrator" means a vendor of risk management services or an 
 entity administering a self-insurance or insurance plan under 
 section 60A.23. 

    HIST: 1994 c 485 s 37 

     62H.11 Agents and brokers prohibited from assisting 
  reportable mewas prior to filing. 

    (a) No agent or broker may solicit, advertise, or market in 
 this state health benefits or coverage from, or accept an 
 application for, or place coverage for a person who resides in 
 this state with, a reportable MEWA unless the agent or broker 
 first files with the commissioner the information required under 
 section 62H.16. 

    (b) No agent or broker may solicit another agent or broker 
 to enter into an arrangement to solicit, advertise, or market 
 services, health benefits, or coverage of a reportable MEWA 
 unless the agent or broker first files with the commissioner the 
 information required under section 62H.16. 

    HIST: 1994 c 485 s 38 

     62H.12 Agents and brokers prohibited from assisting 
  employee leasing arrangements prior to filing. 

    (a) No agent or broker may solicit, advertise, or market in 
 this state the services, health benefits, or coverage of an 
 employee leasing arrangement or a person or arrangement which 
 represents itself as an employee leasing arrangement unless the 
 agent or broker first files with the commissioner the 
 information required under section 62H.16. 

    (b) No agent or broker may solicit another agent or broker 
 to enter into an arrangement to solicit, advertise, or market 
 the services, health benefits, or coverage of an employee 
 leasing arrangement unless the agent or broker first files with 
 the commissioner the information required under section 62H.16. 

    HIST: 1994 c 485 s 39 

     62H.13 Agents and brokers prohibited from assisting 
  collectively bargained arrangements prior to filing. 

    (a) No agent or broker may solicit, advertise, or market in 
 this state health benefits or coverage from, or accept an 
 application for, or place coverage for a person who resides in 
 this state with, a collectively bargained arrangement or an 
 arrangement that represents itself as a collectively bargained 
 arrangement unless the agent or broker first files with the 
 commissioner the information required under section 62H.16. 

    (b) No agent or broker may solicit another agent or broker 
 to enter into an arrangement to solicit, advertise, or market 
 the health benefits or coverage of a collectively bargained 
 arrangement unless the agent or broker first files with the 
 commissioner the information required under section 62H.16. 

    HIST: 1994 c 485 s 40 

     62H.14 Third party administrators and licensed insurers 
  prohibited from assisting reportable MEWAs prior to filing. 

    (a) No third party administrator may solicit or effect 
 coverage of, underwrite for, collect charges or premium for, or 
 adjust or settle claims of a resident of this state for, or 
 enter into any agreement to perform any of those functions for, 
 a reportable MEWA that provides coverage to residents of this 
 state unless the third party administrator first files with the 
 commissioner the information required under section 62H.16. 

    (b) No licensed insurer may solicit or effect coverage of, 
 underwrite for, collect charges or premiums for, adjust or 
 settle claims of a resident of this state for, or enter into any 
 agreement to perform any of those functions for a reportable 
 MEWA that provides coverage to residents of this state unless 
 the insurer first files with the commissioner the information 
 required under section 62H.16. 

    (c) A licensed insurer that issues or has issued any 
 insurance coverage to a reportable MEWA that covers residents of 
 this state, including, but not limited to, specific or aggregate 
 stop-loss coverage, shall file with the commissioner the 
 information required under section 62H.16 within 30 days after 
 the coverage is issued or within 30 days after the date the 
 reportable MEWA first provides coverage to a resident of this 
 state, whichever is later. 

    HIST: 1994 c 485 s 41 

     62H.15 Lack of knowledge not a defense. 

    (a) Lack of knowledge or intent to deceive with respect to 
 the organization or status of insurance coverage of a reportable 
 MEWA, employee leasing firm, or collectively bargained 
 arrangement is not a defense to a violation of sections 62H.10 
 to 62H.17. 

    (b) A filing under sections 62H.10 to 62H.17 is solely for 
 the purpose of providing information to the commissioner.  
 Sections 62H.10 to 62H.17 and a filing under those sections do 
 not authorize or license a reportable MEWA, employee leasing 
 firm, collectively bargained arrangement, or any other 
 arrangement to engage in business in this state if otherwise 
 prohibited by law. 

    HIST: 1994 c 485 s 42 

     62H.16 Information required to be filed and kept current.

    (a) An agent, broker, third party administrator, or insurer 
 required to file under sections 62H.10 to 62H.17 shall file with 
 the commissioner all of the following information on a form 
 prescribed by the commissioner: 

    (1) a copy of the organizational documents of the 
 reportable MEWA, employee leasing firm, or collectively 
 bargained arrangement, including the articles of incorporation 
 and bylaws, partnership agreement, or trust instrument; 

    (2) a copy of each insurance or reinsurance contract that 
 purports to insure or guarantee all or any portion of benefits 
 or coverage offered by the reportable MEWA, employee leasing 
 firm, or collectively bargained arrangement to a person who 
 resides in this state; 

    (3) copies of the benefit plan description and other 
 materials intended to be distributed to potential purchasers; 
 and 

    (4) the names and addresses of all persons performing or 
 expected to perform the functions of a third party administrator 
 for the reportable MEWA, employee leasing firm, or collectively 
 bargained arrangement. 

    (b) A filing under sections 62H.10 to 62H.17 is ineffective 
 and is not in compliance with those sections if it is incomplete 
 or inaccurate in a material respect. 

    (c) A person who has made a filing under sections 62H.10 to 
 62H.17 shall amend the filing within 30 days of the date the 
 person becomes aware, or exercising due diligence should have 
 become aware, of any material change to the information required 
 to be filed.  The amended filing must accurately reflect the 
 material change to the information originally filed. 

    HIST: 1994 c 485 s 43 

     62H.17 Liability for violation. 

    If an arrangement that is an unauthorized insurer fails to 
 pay a claim or loss in this state within the provisions of its 
 contract, a person who violates sections 62H.10 to 62H.17 with 
 respect to the arrangement is liable to the insured for the full 
 amount of the claim or loss in the manner provided by the 
 provisions of the insurance contract. 

    HIST: 1994 c 485 s 44