18 Del. Admin. Code § 1308-5.0

Current through Register Vol. 28, No. 5, November 1, 2024

Section 1308-5.0 - Transition for assumptions of business from another carrier

5.1

5.1.1 A small employer carrier shall not transfer or assume the entire insurance obligation and/or risk of a health benefit plan covering a small employer in this state unless:

5.1.1.1 The transaction has been approved by the Commissioner of the state of domicile of the assuming carrier;

5.1.1.2 The transaction has been approved by the Commissioner of the state of domicile of the ceding carrier; and

5.1.1.3 The transaction otherwise meet the requirements of this section.

5.1.2 A carrier domiciled in this state that proposes to assume or cede the entire insurance obligation and/or risk of one or more small employer health benefit plan from another carrier shall make a filing for approval with the Commissioner at least sixty (60) days prior to the date of the proposed assumption. The Commissioner may approve the transaction if the Commissioner finds that the transaction is in the best interests of the individuals insured under the health benefit plan to be transferred and is consistent with the purposes of 18 Del.C. Ch. 72, and this Regulation. The Commissioner shall not approve the transaction until at least thirty (30) days after the date of the filing; except that, if the ceding carrier is in hazardous financial condition, the Commissioner may approve the transaction as soon as the Commissioner deems reasonable after the filing.

5.1.3

5.1.3.1 The filing required under section 5.1.2 shall:

5.1.3.1.1 Describe the class of business (including any eligibility requirements) of the ceding carrier from which the health benefit plans will be ceded;

5.1.3.1.2 Describe whether the assuming carrier will maintain the assumed health benefit plans as a separate class of business (pursuant to section 5.3 or will incorporate them into an existing class of business (pursuant to section 5.4. If the assumed health benefit plans will be incorporated into an existing class of business, the filing shall describe the class of business of the assuming carrier into which the health benefit plans will be incorporated;

5.1.3.1.3 Describe whether the health benefit plans being assumed are currently available for purchase by small employers;

5.1.3.1.4 Describe the potential effect of the assumption (if any) on the benefits provided by the health benefit plans to be assumed;

5.1.3.1.5 Describe the potential effect of the assumption (if any) on the premiums for the health benefit plans to be assumed; and

5.1.3.1.6 Describe any other potential material effects of the assumption on the coverage provided to the small employers covered by the health benefit plans to be assumed.

5.1.3.1.7 Include any other information required by the Commissioner.

5.1.3.2 A small employer carrier required to make the filing under section 5.1.2 shall also make an informational filing with the Commissioner of each state in which there are small employer health benefit plans that would be included in the transaction. The informational filing to each state shall be made concurrently with the filing made under section 5.1.2 and shall include at least the information specified in section 5.1.3.1 for the small employer health benefit plans in that state.

5.1.4 A small employer carrier shall not transfer or assume the entire insurance obligation and/or risk of a health benefit plan covering a small employer in this state unless it complies with the following:

5.1.4.1 The carrier has provided notice to the Commissioner at least sixty (6) days prior to the date of the proposed assumption. The notice shall contain the information specified in section 5.1.3 for the health benefit plans covering small employers in this state.

5.1.4.2 If the assumption of the class of business would result in the assuming small employer carrier being out of compliance with the limitations related to premium rates contained in 18 Del.C. § 7205(a)(1), the assuming carrier shall make a filing with the Commissioner seeking suspension of the application of 18 Del.C. § 7205(a)(1).

5.1.4.3 An assuming carrier seeking suspension of the application of 18 Del.C. § 7205(a)(1) shall not complete the assumption of the class of business unless the Commissioner grants the suspension requested pursuant to section 5.1.3.2.

5.1.4.4 Unless a different period is approved by the Commissioner, a suspension of the application of 18 Del.C. § 7205(a)(1) shall, with respect to and assumed class of business, be for no more than fifteen (15) months and, with respect to each individual small employer, shall last only until the anniversary date of such employer's coverage (except that the period with respect to an individual small employer may be extended for a period of up to twelve (12) months if such small employer's anniversary date occurs within three (3) months of the date of assumption of the class of business).

5.2

5.2.1 Except as provided in section 5.1.2, a small employer carrier shall not cede or assume the entire insurance obligation and/or risk for a small employer health benefit plan unless the transaction includes the ceding to the assuming carrier of the entire class of business which includes such health benefit plan.

5.2.2 A small employer carrier may cede less than an entire class of business to an assuming carrier if:

5.2.2.1 One or more small employers in such class have exercised their right under contract or state law to reject (either directly or by implication) the ceding of their health benefit plans to another carrier. In such instance, the transaction shall include each health benefit plan in the class of business except those health benefit plans for which a small employer has rejected the proposed cession; or

5.2.2.2 After a written request from the transferring carrier, the Commissioner determines that the transfer of less than the entire class of business is in the best interests of the small employers insured in such class of business.

5.3 Except as provided in section 5.4, a small employer carrier that assumes one or more health benefit plans from another carrier shall maintain such health benefit plans as a separate class of business.

5.4 A small employer carrier that assumes one or more health benefit plans from another carrier may exceed the limitation contained in 18 Del.C. § 7204(b) (relating to the maximum number of classes of business a carrier may establish) due solely to such assumption for up to a period of fifteen (15) months after the date of the assumption, provided that the carrier complies with the following provisions:

5.4.1 Upon assumption of the health benefit plans, such health benefit plans shall be maintained as a separate class of business. During the fifteen (15) month period following the assumption, each of the assumed small employer health benefit plans shall be transferred by the assuming small employer carrier into a single class of business operated by the assuming small employer carrier. The assuming small employer carrier shall select the class of business into which the assumed health benefit plans will be transferred in a manner such that the transfer results in the least possible change to the benefits and rating method of the assumed health benefit plans.

5.4.2 The transfers authorized in section 5.4.1 shall occur with respect to each small employer on the anniversary date of the employer's coverage, except that the period may be extended for a period that is no greater than twelve (12) months for small employers whose anniversary dates occur within three (3) months of the date of assumption of the class of business.

5.4.3 A small employer carrier making a transfer pursuant to section 5.4.1 may alter the benefits of the assumed health benefit plans to conform to the benefits currently offered by the carrier in the class of business into which the health benefits plans have been transferred.

5.4.4 The premium rate for an assumed small employer health benefit plan shall not be modified by the assuming small employer carrier until the health benefit plan is transferred pursuant to section 5.4.1. Upon such transfer, the assuming small employer carrier shall calculate a new premium rate for the health benefit plan from the rate manual established for the class of business into which the health benefit plan is transferred. In making such calculation, the risk load applied to the health benefit plan shall be no higher than the risk load applicable to such health benefit plan prior to the assumption.

5.5 During the fifteen (15) month period provided in this subsection, the transfer of small employer health benefit plans from the assumed class of business in accordance with this subsection shall not be considered a violation of the first sentence of 18 Del.C. § 7204(e).

5.6 An assuming carrier may not apply eligibility requirements (including minimum participation and contribution requirements) with respect to an assumed health benefit plan (or with respect to any health benefit plan subsequently offered to a small employer covered by such an assumed health benefit plan) that are more stringent than the requirements applicable to such health benefit plan prior to the assumption.

5.7 The Commissioner may approve a longer period of transition upon application of a small employer carrier. The application shall be made within sixty (60) days after the date of assumption of the class of business and shall clearly state the justification for a longer transition period.

5.8 Nothing in this Section or in 18 Del.C. Ch. 72 is intended to:

5.8.1 Reduce or diminish any legal or contractual obligation or requirement, including any obligation provided in 18 Del.C. Ch. 9, Reinsurance, of the ceding or assuming carrier related to the transaction;

5.8.2 Authorize a carrier that is not admitted to transact the business of insurance in this state to offer or insure health benefit plans in this state; or

5.8.3 Reduce or diminish the protections related to an assumption reinsurance transaction provided in 18 Del.C. Ch. 9, or otherwise provided by law.

18 Del. Admin. Code § 1308-5.0