7 Colo. Code Regs. § 1107-5.6
Current through Register Vol. 47, No. 24, December 25, 2024
Section 7 CCR 1107-5.6 - Surety Bond Requirement for Employer Self-Insured Private Plan1. The Division will only accept a surety bond issued by a surety company authorized by the Colorado Insurance Commissioner to transact such business in Colorado.2. The bond amount must be an amount equal to one year of total premiums calculated pursuant to C.R.S. § 8-13.3-507.3. The bond amount must be based on four quarters of projected wages, as represented by: A. The previous four quarters of wages reported by the employer to the Division, in accordance with 7 CCR 1107-3 Section 3.3.2; orB. If the employer has not reported four quarters of wages to the Division, the previous four quarters of wages reported by the employer to the Colorado Unemployment Insurance Division, in accordance with 7 CCR 1101-2, Section 7.2.4; orC. If the employer has not reported wages to FAMLI or the Colorado Unemployment Insurance Division for four quarters, the previous four quarters of wages paid to its employees; orD. If none of the above is possible, a reasonable estimate of one year of projected wages supported by documentation.4. The Division may disapprove a private plan if an employer fails to provide documentation the Division deems necessary for purposes of calculating an appropriate surety bond amount. This disapproval is a determination subject to appeal pursuant to 7 CCR 1107-9.5. If an employer has reason to believe that the amount calculated pursuant to Section 5.6.3 of this rule does not accurately reflect its projection of the next year of wages, the employer must notify the Division and provide an explanation as to why, along with any supporting documentation.6. A surety bond shall be issued on a form prescribed by the Division.7. The bond must include a statement that the bonding company must give ninety (90) days' notice of its intent to terminate liability to both the principal and the Division, except that if the bonding company is terminating liability because it is issuing a replacement bond, it may do so without providing prior notice. In the event of a replacement bond, the surety company and the employer must notify the Division no later than fourteen (14) days after its effective date.8. The employer must maintain surety bond coverage for the duration of its approved self-insured private plan.9. The Division will review the bond annually to ensure that the amount corresponds with the wage projections as described in this rule. The employer must provide the Division with any documentation necessary to review the bond amount. If the Division determines that the bond amount must be increased, the employer must do so to maintain private plan approval. If the Division determines that the bond amount exceeds the projected wages as described in Section 5.6.3 of this rule, the employer may reduce the bond amount to match such projected wages.10. The Division may execute on and collect the bond amount if the employer's private plan approval is terminated, voluntarily or involuntarily, pursuant to these rules. A. The Division may execute on and collect the entire bond amount, less any funds received from the employer within 30 days after the effective date of the termination of the private plan approval or as agreed upon by the employer and the Division.B. Funds so received by the Division from the employer and/or the surety, as well as funds received by the Division pursuant to Section 5.3.6 of these rules, will be deposited into the fund, and if applicable, will be credited toward the employer's obligations under Section 5.17 of this rule, and will not be refunded pursuant to 7 CCR 1107-1, Section 1.4.8.B.45 CR 23, December 10, 2022, effective 12/30/202246 CR 23, December 10, 2023, effective 1/1/202447 CR 23, December 10, 2024, effective 1/1/2025