N.M. Admin. Code § 13.19.4.18

Current through Register Vol. 35, No. 17, September 10, 2024

Section 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.

N.M. Admin. Code § 13.19.4.18

13.19.4.18 NMAC - N, 05-01-02, Adopted by New Mexico Register, Volume XXX, Issue 16, August 27, 2019, eff. 8/27/2019, Amended by New Mexico Register, Volume XXXI, Issue 04, February 25, 2020, eff. 2/25/2020