230 R.I. Code R. 230-RICR-20-15-1.11

Current through December 3, 2024

Section 230-RICR-20-15-1.11 - Surplus Distributions and Deficits

A. Any monies for a coverage year in excess of the amount necessary to fulfill all of the group self-insurer's obligations for that year shall be considered surplus that may be declared refundable to members by the trustees at any time. The amount of such declaration shall be a liability of the group self-insurer at the time of the declaration. A distribution of such surplus monies may not be made by the group self-insurer until the date of payment has been agreed to by the trustees, proper notification has been provided to the Department in accordance with § 1.11(C) of this Part, and the requirements of this Section are otherwise complied with.

B. A group self-insurer may notify the Department of its intention to make a distribution when surplus exists for a given coverage year. However, in no event shall a distribution take place less than twenty-four (24) months after the end of the coverage year, or if a deficit exists for any coverage year that has not been adequately addressed in accordance with § 1.11(D) of this Part. The amount of the distribution must be within the following guidelines:

1. The amount of the initial distribution may not exceed forty percent (40%) of the recalculated surplus for the coverage year from which the distribution is to be made.

2. Additional distributions may be made annually thereafter in accordance with the following schedule:

a. Second year (36 months after the end of the coverage year); up to thirty-three percent (33%) of the remaining recalculated surplus amount.

b. Third year (48 months after the end of the coverage year); up to fifty percent (50%) of the remaining recalculated surplus amount.

c. Fourth year and ensuing years (60 months after the end of the coverage year); up to one hundred percent (100%) of the remaining recalculated surplus amount, but only if all claims for that coverage year are closed.

C. A notification by a group self-insurer to the Department of its intent to distribute any surplus shall be made in writing at least sixty (60) days prior to each desired distribution date. Such notice shall be supported by the following:

1. A supplemental schedule detailing by each coverage year the total surplus position of the group self-insurer, as of the most recent fiscal year-end, both before and after the desired distribution in substantially the same form as included in a bulletin issued for that purpose and available on the Department's website;

2. An attestation by the group self-insurer's Certified Public Accountant of the information in the schedule and an opinion that the pre-distribution surplus for each coverage year is fairly stated;

3. A current year-ending balance sheet for the group self-insurer;

4. A case incurred loss report by coverage year as of the most recent month-end;

5. A copy of the board of trustees' resolution authorizing the amount and payment date of the distribution; and

6. A letter from the group self-insurer stating that such distribution will not impair the financial condition of the group self-insurer.

D. In the event of a surplus deficit for a group self-insurer in any coverage year, the surplus deficit shall be immediately made up from any of the following:

1. unencumbered surplus from any coverage year other than the current year;

2. assessment of the membership for the coverage year in which the deficit exists, if ordered by the trustees or the Department; or

3. by such alternative method as the Department may order or approve.

E. The Department shall be notified in writing of any surplus deficit within fifteen (15) days after it becomes known by the board of trustees or the group self-insurer's administrator, and this notification shall include a plan to resolve the deficit.

F. Distributions other than those made under the guidelines of this Section will be considered extraordinary, and may only be permitted after a written request, submitted with actuarial support, is approved by the Department. Prior to approving the payment of any extraordinary distribution, the Department shall request and review any information deemed appropriate, and shall determine that such distribution will not impair the group self-insurer's ability to meet all obligations.

230 R.I. Code R. 230-RICR-20-15-1.11