§ 38-41-50 — Excess stop-loss coverage required.

A multiple employer self-insured health plan shall include aggregate excess stop-loss coverage and individual excess stop-loss coverage provided by an insurer licensed, approved, or eligible by the State. A MEWA shall maintain excess insurance coverage written by an insurer that the Department of Insurance considers approved or eligible to do business in this State. This coverage must have a net retention level determined in accordance with sound actuarial principles approved by the director or his designee, and based on the number of risks insured by the MEWA. The MEWA must file the policy contract providing this coverage with the director or his designee. The terms of this policy contract must require that before the insurer may cancel or modify the terms of this policy contract, the insurer must give notice of the pending cancellation or modification of terms to the director at least thirty days before the cancellation or modification may occur. Aggregate excess stop-loss coverage shall include provisions to cover incurred, unpaid claim liability in the event of plan termination. The excess or stop-loss insurer shall bear the risk of coverage for any member of the pool that becomes insolvent with outstanding contributions due. The limits required for an excess stop-loss policy shall be determined by the director or his designee in accordance with sound actuarial principles, so that the probability of incurred claims exceeding the participating employers' fund and the aggregate limit of the excess or stop-loss coverage is de minimus. A plan shall submit its proposed excess or stop-loss insurance contract to the director or his designee at least thirty days prior to the proposed contract's effective date and at least thirty days prior to any renewal date. The director or his designee shall review the contract to determine whether it meets the standards established by this chapter and respond within a thirty-day period. In reviewing an excess stop-loss agreement for approval, the director or his designee will closely scrutinize the agreement to determine whether the levels of individual and aggregate risk retained by the plan will put the plan in an unsound condition or will render its proceedings hazardous to the public or to persons covered under the plan. Any excess or stop-loss insurance contract must be noncancelable for a minimum term of two years. In addition, the plan shall have a participating employer's fund in an amount at least equal to the point at which the excess or stop-loss insurer shall assume a one hundred percent share of additional liability. The amount required for the employer's fund must be determined in accordance with sound actuarial principles and approved by the director or his designee and based upon the number of risks insured by the plan. This employer's fund must be funded via cash or cash equivalent securities.

Legislative History

HISTORY: Former 1976 Code SECTION 38-65-30 [1985 Act No. 137, SECTION 3] recodified as SECTION 38-41-50 by 1987 Act No. 155, SECTION 1; 1993 Act No. 181, SECTION 654; 2012 Act No. 137, SECTION 9, eff April 2, 2012; 2013 Act No. 88, SECTION 2, eff June 13, 2013.