Section 0780-01-76-.04 - AUTHORITY TO ACT AS A SELF-FUNDED QUALIFIED MULTIPLE EMPLOYER WELFARE ARRANGEMENT(1) The Commissioner may not issue a certificate of authority to a self-funded qualified multiple employer welfare arrangement unless the arrangement establishes to the satisfaction of the Commissioner that: (a) Employers participating in the arrangement are members of either the same trade or professional association or a non-profit coalition for health;(b) Employers or employees participating in the arrangement exercise direct control over the arrangement; 1. Direct control exists if the employer or employees participating in the arrangement have the right to elect at least seventy-five percent (75%) of the individuals designated in the arrangement's organizational documents as having control over the operations of the arrangement and the individuals designated in the arrangement's organizational documents in fact exercise control over the operation of the arrangement;2. Use of a third-party administrator to process claims and to assist in the administration of the arrangement is not evidence of the lack of exercise of control over the operations of the arrangement;(c) The arrangement provides only allowable benefits;(d) The arrangement has adequate facilities and competent personnel, as determined by the Commissioner, to service the health benefit plan or has contracted with an administrator licensed or exempt for licensure under Title 56, Chapter 6, Part 4 to service the health benefit plan;(e) The arrangement does not solicit participation in the arrangement from the general public, except the arrangement may employ or independently contract with a licensed insurance producer who may be paid a commission or other remuneration to enroll employers in the arrangement;(f) The arrangement is not organized or maintained solely as a conduit for the collection of premiums and the forwarding of premiums to an insurance company;(g) The arrangement has deposited with the Commissioner a bond in an amount to be determined by the Commissioner, to be used for the payment of claims in the event the arrangement becomes insolvent and has submitted to the Commissioner a written plan of operation that, in the discretion of the Commissioner, ensures the financial integrity of the arrangement;(h) The arrangement is not in a hazardous financial condition;1. In determining whether an arrangement is in a hazardous financial condition, the Commissioner may consider the following:(i) The financial statements of the arrangement or any employer participating in the arrangement;(ii) Types and levels of stop-loss insurance coverage, including attachment points of the coverage;(iii) Whether a deposit is required for each employee covered under the arrangement equal to at least one month's cost of providing benefits under the arrangement;(iv) The experience of the individuals who will be involved in the management of the arrangement, including employees, independent contractors, and consultants; and(v) Other factors the Commissioner considers relevant to determining whether the arrangement is in a hazardous financial condition, including, but not limited to, those standards enumerated in Rule 0780-1-66-.03.(2) The Commissioner may require that the articles, bylaws, agreements, trusts, or other documents or instruments describing the rights and obligations of the employers, employees, and beneficiaries of the arrangement require that employers participating in the arrangement are liable for a pro rata share of all liabilities of the arrangement that are unpaid.(3) The arrangement shall maintain both specific and aggregate stop-loss insurance coverage covering one hundred percent (100%) of claims in excess of the attachment points recommended by a qualified actuary.Tenn. Comp. R. & Regs. 0780-01-76-.04
Original rule filed April 14, 2004; effective June 28, 2004.Authority: T.C.A. § 56-26-204(b).