...
Summary of differences between federal and state regulations
The Employee Retirement Income Security Act (ERISA) (29 U.S.C. 1144(b)(6)(A)) allows a state to apply and enforce its insurance laws with respect to Multiple Employer Welfare Arrangements (MEWA). If a MEWA solicits or provides health benefits to one or more employer domiciled in Alaska, the MEWA is subject to Alaska insurance laws, regardless of whether the MEWA is regulated under ERISA or whether the MEWA is domiciled in Alaska.
Exceptions
A person that offers or provides coverage for medical care is not subject to Alaska insurance laws, if the person files with the director a certificate, license, or other document issued by an agency of this state or a federal governmental agency that permits or qualifies the person to provide coverage for medical care. This provision applies to any plan or arrangement that another state agency or the federal government certifies or licenses to provide health care coverage and to any plan or arrangement claiming exemption from state insurance regulation because it is established or maintained:
- Under one or more collective bargaining agreements;
- By a rural electric cooperative;
- By a rural telephone cooperative association; or
- By two or more trades or businesses deemed by the U.S. Department of Labor to be a single employer plan.
To qualify for exemption, a plan or arrangement must provide to the Alaska Division of Insurance a copy of the applicable license, certificate, or other document issued by another state agency or the federal government that demonstrates that the plan or arrangement is exempt.
Alaska insurance laws that apply to a MEWA
A fully-insured MEWA
A MEWA is fully-insured if all benefits provided by the MEWA are guaranteed under insurance contracts with licensed insurance companies. A fully-insured MEWA is primarily regulated through the regulation of the licensed insurance companies that issue the insurance contracts.
A Fully-Insured MEWA Established By Two or More Employers in the Same or Related Industry.
A licensed insurance company may issue a group health insurance policy to the trustees of a fund established by two or more employers in the same or related industry. This means that a MEWA that establishes a trust and provides group health benefits to employers in the same or related industry through an insurance policy issued to the trust is not required to obtain a certificate of authority.
(Alaska Statutes §21.54.060(3))
An insurance company may issue a group health insurance policy to a substantially similar group, if approved by the director. The director has determined that a substantially similar group includes a MEWA that does not establish a trust, but rather sets up a separate non-trust account in order to purchase group health benefits for employers in the same or related industry. This means that a licensed insurance company may issue a group health insurance policy to such a MEWA and the MEWA is not required to obtain a certificate of authority. (Alaska Statutes §21.54.060(5))
A MEWA Established By Two Or More Employers Not All Of Which Are In The Same Or Related Industry.
Alaska law does not allow an insurance company to issue a group health insurance policy to a group that is not in the same or related industry. Therefore, a MEWA providing health benefits to two or more employers not all of which are in the same or related industry may not obtain insurance under Alaska Statutes 21.54.060 and must obtain a certificate of authority for a self-funded MEWA, Alaska Statutes described below.
A Self-Funded MEWA
A self-funded MEWA is any MEWA that is not fully-insured Alaska Statutes described above. A self-funded MEWA pays a portion or all of the health care benefits directly from its own assets and not exclusively through insurance policies. A MEWA is self-funded even if the MEWA purchases stop loss insurance coverage for a portion of the health care benefits it offers or provides.
Each self-funded MEWA operating in Alaska must obtain a certificate of authority under the appropriate statute:
- A self-funded MEWA under Alaska Statutes 21.85;
- An insurance company under Alaska Statutes 21.09;
- A reciprocal insurer under Alaska Statutes 21.75;
- A health maintenance organization under Alaska Statutes 21.86;
- A hospital or medical service corporation under Alaska Statutes 21.87.
The appropriate licensing statute will be determined by the structure and operation of the MEWA.
A self-funded MEWA is qualified for a certificate of authority under Alaska Statutes 21.85 if the MEWA meets the provisions of Alaska Statutes 21.85.030 and complies with all of Alaska Statutes 21.85. Among the provisions of Alaska Statutes 21.85.030, the MEWA must be structured, so that
- The MEWA provides health benefits to only employers that are members of a bona fide association or group of two or more businesses in the same or closely related trade, profession, or industry;
- The participating employees or employers have direct control over the MEWA;
- The MEWA is a nonprofit organization;
- The MEWA provides only medical care benefits, except the MEWA can provide life insurance through a licensed insurance company in compliance with Alaska Statutes, Title 21;
- The MEWA has adequate facilities and competent personnel to service the health benefit plan or has contracted with a licensed third-party administrator to service the health benefit plan;
- The MEWA provides medical benefits to not less than two employers and not less than 75 employees;
- The MEWA does not solicit participation from the general public; and
- The MEWA maintains stop loss insurance coverage covering 100 percent of claims in excess of an attachment point recommended by a qualified actuary. (Alaska Statutes 21.85)
If the structure of the self-funded MEWA does not comply with the qualifications under Alaska Statutes 21.85, the self-funded MEWA must be licensed under another chapter of the Alaska insurance code (Alaska Statutes 21). Please note that a self-funded MEWA that provides benefits to employers not all of which are in the same or closely-related trade, profession, or industry may not obtain a certificate of authority Alaska Statutes a self-funded MEWA under Alaska Statutes 21.85. (Alaska Statutes 21.09, 21.75, 21.86, 21.87)
An entity that performs the functions of a third-party administrator for a self-funded MEWA must obtain registration Alaska Statutes a third-party administrator unless the entity qualifies for and obtains an exemption from registration. A producer (agent or broker) who acts on the behalf of a MEWA must be appropriately licensed by the division. (Alaska Statutes 21.27)
Of course, all licensees, whether a fully-insured MEWA, self-funded MEWA, third-party administrator, or producer must comply with all applicable provisions of our insurance code. (Alaska Statutes, Title 21 — Insurance)
Applying For the Applicable Certificate of Authority, Registration, or License
A MEWA or Insurance Company
To obtain a certificate of authority Alaska Statutes a self-funded MEWA, an insurance company, a reciprocal insurer, a health maintenance organization, or a hospital or medical service corporation, the entity must file the appropriate application with the division.
A Third-Party Administrator
To obtain registration Alaska Statutes a third-party administrator (TPA), the entity must file a TPA registration application with the division. TPA applications are available from the division. These applications for TPA registration may also be obtained by contacting the division at (907) 465-2515 or faxing a request for an application to (907) 465-2816. If the entity believes it qualifies for an exemption from TPA registration, it must file Form 08-243, with the division.
Consequences for Failure of a Self-Funded MEWA to Obtain a Certificate of Authority
A self-funded MEWA that fails to obtain the required a certificate of authority may be subject to criminal prosecution and monetary penalties, including a penalty of not more than $10,000 for the first offense and not more than $100,000 for each succeeding violation. Those violations, for which greater penalties are not provided, are subject to a civil penalty of not more than $2,500. (Alaska Statutes §21.33.065)
Renewability of Coverage
A health benefit plan that is a multiple employer welfare arrangement may not deny an employer whose employees are covered under the plan continued access to the same or a different plan according to the terms of the plan, except:
- For nonpayment of contributions;
- For fraud or other intentional misrepresentation of material fact by the employer;
- For noncompliance with material plan provisions;
- Where the plan is ceasing to offer any coverage in a geographic area;
- For a health benefit plan that offers benefits through a network plan if
- There is no longer an individual enrolled through the employer who lives, resides, or works in the service area of the network plan; and
- The multiple employer welfare arrangement applies this paragraph without regard to the claims experience of the employer or a health status factor in relation to an individual or an individual's dependent; and
- For failure to meet the terms of an applicable collective bargaining agreement to renew a collective bargaining or other agreement requiring or authorizing contributions to the plan or to employ employees covered by a collective bargaining agreement. (Alaska Statutes §21.54.140)
State
Contact
Regulations
Alaska Stat. §21.03.021, Application of title
Alaska Stat., Ch. 21.09, Authorization of insurers and general requirements
Alaska Stat., Ch. 21.27, Producers, agents, administrators, brokers, adjusters, and managers
Alaska Stat. §21.33.065, Penalties
Alaska Stat. §21.54.060, Group health insurance defined.
Alaska Stat. §21.54.140, Renewability of coverage for a multiple employer welfare arrangement.
Alaska Stat., Ch. 21.75, Reciprocal and cooperative insurers
Alaska Stat., Ch. 21.85, Regulation of Multiple Employer Welfare Arrangements
Alaska Stat., Ch. 21.86, Health maintenance organizations
Alaska Stat., Ch. 21.87, Hospital and medical service corporations
Alaska Stat. §21.97.020, General penalty