The reinsurance association is exempt from the payment of fees and taxes levied by the state or any of its political subdivisions except taxes levied on real or personal property.
Repealed or Renumbered
Repealed or Renumbered
Repealed or Renumbered
The reinsurance association is exempt from AS 44.62 (Administrative Procedure Act).
A member shall file not later than March 15 of each year in a form prescribed by the director a report of total premiums earned in the preceding calendar year and other information required by the director for health care insurance plans delivered or issued for delivery to small employers in this state.
A member of the reinsurance association is not liable for civil damages resulting from an act or omission of the member on behalf of the reinsurance association unless the member acts with gross negligence or intentional misconduct.
Article 02. SMALL EMPLOYER HEALTH CARE INSURANCE PLANS
A nonprofit incorporated legal entity to be known as the Small Employer Health Reinsurance Association is established. Membership consists of all health care insurers. All members shall maintain membership in the reinsurance association as a condition of transacting health care insurance business in the state.
The director may adopt regulations to require small employer insurers, as a condition of transacting business with small employers in this state after July 1, 1993, to reissue a health care insurance plan to a small employer who has had its health care insurance plan terminated or not renewed by the insurer after January 1, 1993. The director may prescribe the terms for the reissue of coverage that the director determines are reasonable and necessary to provide continuity of coverage to small employers.
The board shall study and report at least once every two years to the director on the effectiveness of this chapter. The report must analyze the effectiveness of the chapter in promoting rate stability, product availability, and coverage affordability. The report may contain recommendations for actions to improve the overall effectiveness, efficiency, and fairness of the small group health care insurance marketplace. The report must address whether insurers, agents, brokers, managing general agents, and third-party administrators are fairly and actively marketing or issuing health care insurance plans to small employers in fulfillment of the purposes of the chapter. The report may contain recommendations for market conduct or other regulatory standards or action. The board shall notify the legislature that the report is available.
(a) A health care insurance plan offered, issued for delivery, delivered, or renewed to small employers in this state is subject to the provisions of this chapter.
(b) [Repealed, Sec. 115 ch 81 SLA 1997].
(c) Except as provided in this subsection, for purposes of this chapter, insurers that are affiliated companies or that are eligible to file a consolidated tax return shall be treated as one insurer and a restriction or limitation imposed under this chapter shall apply as if all health care insurance plans delivered or issued for delivery to a small employer in this state by an affiliated insurer were issued by one insurer. An affiliated insurer that is a health maintenance organization having a certificate of authority under AS 21.86 may be considered to be a separate insurer for the purposes of this chapter.
(d) [Repealed, Sec. 115 ch 81 SLA 1997].
(e) The requirements of this chapter continue to apply with respect to coverage offered to a small employer until the plan anniversary following the date the employer no longer meets the definition of a 'small employer' in AS 21.54.500 .
(a) The board of directors of the reinsurance association consists of nine individuals selected by participating members, subject to approval by the director. The director shall endeavor to appoint at least six board members who are also small employer insurers. If the director is unable to appoint six board members who are also small employer insurers, the director may fill the remaining seats with any insurer. In selecting members of the board, the director shall consider, among other things, whether all types of participating members are fairly represented.
(b) To the extent possible, one board member shall represent a health maintenance organization, one board member shall represent a hospital or medical service corporation, one board member's principal health insurance business shall be in the small employer group market, and one board member's principal health insurance business shall be in the large employer group market. Members of the board may be reimbursed from the reinsurance association for expenses incurred by them as members, but may not otherwise be compensated by the reinsurance association for their services. The costs of conducting meetings of the reinsurance association and its board of directors shall be borne by the reinsurance association.
(c) A member of the board serves for a term of three years and may be reappointed to an unlimited number of terms. The term of a board member shall continue until a successor is appointed. A vacancy on the board shall be filled by participating members, subject to approval by the director. A board member may be removed by the director for cause.
(a) The reinsurance association shall submit to the director a plan of operation and amendments necessary or suitable to assure the fair, reasonable, and equitable administration of the reinsurance association. The director may, after notice and hearing, approve the plan of operation if the director determines it to be suitable to assure the fair, reasonable, and equitable administration of the program on a proportionate basis under the provisions of this section and it does not shift program costs to other insured persons or the state. The plan of operation and amendments become effective upon approval in writing by the director.
(b) All members of the reinsurance association shall comply with the plan of operation.
(c) The plan of operation must establish procedures for
(1) handling and accounting of program assets and money of the reinsurance association and for an annual fiscal report to the director;
(2) reinsuring risks under the provisions of this section;
(3) collecting assessments from all members to provide for claims reinsured by the reinsurance association and for administrative expenses incurred or estimated to be incurred by the reinsurance association;
(4) selection of an administering insurer and establishing the administering insurer's powers and duties;
(5) effectuating a methodology for applying the dollar thresholds contained in this section for insurers that pay or reimburse health care providers by capitation or salary; and
(6) provisions necessary or proper for the execution of the powers and duties of the reinsurance association.
(a) The health care insurance plan committee is established in the reinsurance association. The committee is composed of seven members selected by the director as follows:
(1) three members who are representatives of participating insurers;
(2) one member who represents small employers;
(3) one member who represents employees of small employers;
(4) one member who represents health care providers; and
(5) one member who represents agents or brokers.
(b) The committee shall recommend benefit levels, cost sharing levels, exclusions and limitations for the basic and standard health care insurance plan offered under AS 21.56.140 . The committee shall also design a basic health care insurance plan and a standard health care insurance plan that contain benefit and cost sharing levels that are consistent with the basic method of operation and the benefit plans of health maintenance organizations, including restrictions imposed by federal law. The plans recommended by the committee may include the following cost containment features:
(1) utilization review of health care services, including review of the medical necessity of hospital and physician services;
(2) case management;
(3) selective contracting with hospitals, physicians, and other health care providers;
(4) reasonable benefit differentials applicable to providers that participate or do not participate in arrangements using restricted network provisions; and
(5) other managed care provisions.
The reinsurance association may
(1) exercise the powers granted to insurers under the laws of the state, except that the reinsurance association may not issue insurance;
(2) sue or be sued;
(3) enter into contracts with insurers, similar reinsurance associations in other states, or with other persons for the performance of administrative functions;
(4) establish administrative and accounting procedures for the operation of the reinsurance association;
(5) take legal action as necessary to avoid the payment of improper claims against the reinsurance association;
(6) define the array of health coverage products for which reinsurance will be provided and issue reinsurance policies;
(7) establish rules, conditions, and procedures pertaining to the reinsurance of members' risks by the reinsurance association;
(8) establish actuarial functions appropriate to the operation of the reinsurance association;
(9) assess members under the provisions of this chapter and make advance interim assessments as may be reasonable and necessary for organizational and interim operating expenses; interim assessments shall be credited as offsets against regular assessments due following the close of the calendar year;
(10) appoint appropriate legal, actuarial, and other committees as are necessary to provide technical assistance in the operation of the reinsurance association, design of a policy or contract, or to assist in other functions of the reinsurance association;
(11) borrow money to accomplish the purposes of the reinsurance association; notes or other evidence of indebtedness of the reinsurance association that are not in default are investments for insurers and may be carried as admitted assets.
(a) A small employer insurer may not, directly or indirectly, enter into a contract, agreement, or arrangement with an insurance producer, a managing general agent, or a third-party administrator that provides for or results in the compensation paid to an insurance producer for the sale of a health care insurance plan to vary based on the health status, claims experience, industry, occupation, size, or geographic location of the small employer. This subsection does not apply to a compensation arrangement that provides compensation to an insurance producer, a managing general agent, or a third-party administrator on the basis of a percentage of premium that does not vary based on the health status, claims experience, industry, occupation, size, or geographic location of the small employer.
(b) A small employer insurer shall provide reasonable compensation, as provided under the plan of operation of the program, to an insurance producer, a managing general agent, or a third-party administrator, if any, for the sale of a basic or standard health care insurance plan.
(c) A small employer insurer, an insurance producer, a managing general agent, or a third-party administrator may not induce or otherwise encourage a small employer to separate or otherwise exclude an employee from health coverage or benefits provided in connection with the employee's employment.
(d) A small employer insurer may only deny an application for coverage from a small employer in writing, and the writing must state the reasons for the denial.
(e) The director may establish by regulation additional standards to provide for the fair marketing of health care insurance plans to small employers in this state.
(f) A person who enters into a contract, agreement, or other arrangement with a small employer insurer to provide administrative, marketing, or other services related to the offering of health care insurance plans to small employers in this state is subject to this section as if it were a small employer insurer.
(g) A violation of this section by a person is an unfair trade practice for purposes of AS 21.36.
(a) A small employer insurer offering health care insurance through a network plan is not required to offer or renew coverage or accept applications under AS 21.56.140 (a) if
(1) the small employer does not have eligible employees or dependents who live, work, or reside in the service area for the network plan; or
(2) the small employer insurer demonstrates to the director that the small employer insurer
(A) will not have the capacity to deliver services adequately to eligible employees or dependents of additional groups because of the small employer insurer's obligation to existing group contract holders and covered employees or dependents; and
(B) applies this subsection uniformly without regard to the claims experience of the employers and their employees and dependents or to a health status factor relating to the employees and dependents.
(b) A small employer insurer offering health care insurance is not required to offer or accept applications under AS 21.56.140 (a) if
(1) the small employer insurer is only maintaining in-force business and has ceased enrolling new employer groups on or before January 1, 1993; or
(2) the certificate of authority or bylaws of an insurer does not permit the insurer to issue coverage on a marketwide basis; however, an insurer described in this paragraph shall comply with AS 21.56.140 regarding small employers that meet the requirements of the insurer's certificate of authority or bylaws.
(c) A small employer insurer who denies health care insurance coverage in a service area under (a) of this section may not offer coverage in the small employer market within that service area for a period of 180 days after the date the coverage is denied.
(d) If a small employer insurer demonstrates or the director determines under AS 21.09.175 that a small employer insurer does not have the financial reserves necessary to underwrite additional coverage, the small employer insurer may not offer or renew health care insurance coverage in the small employer group market. The small employer insurer may not reenter the small employer group market until the director has determined that the insurer has sufficient financial reserves to underwrite additional coverage.
(a) Except as provided under AS 21.56.160 , a small employer insurer shall, as a condition of transacting business in this state with small employers, offer to small employers all health care insurance plans the small employer insurer actively markets to small employers in this state, including a basic health care insurance plan and a standard health care insurance plan.
(b) A small employer insurer shall issue a health care insurance plan to a small employer that applies for a plan and shall accept for enrollment under the health care insurance coverage all eligible employees and their dependents who apply for enrollment during the period in which the employee first becomes eligible to enroll under the terms of the plan. A small employer insurer may not place a restriction on an eligible employee or dependent with respect to being a participant or beneficiary that is inconsistent with AS 21.54.100 .
(c) A small employer insurer may not increase a requirement for minimum employee participation or for minimum employer contribution applicable to a small employer at any time after the small employer has been accepted for coverage, except that a small employer insurer may vary application of minimum participation and employer contribution requirements by the size of the small employer group. In applying minimum employee participation requirements, a small employer insurer may not consider employees or dependents who have existing creditable coverage in determining whether the minimum employee participation level is met.
(d) If a small employer insurer offers coverage to a small employer, the small employer insurer shall offer coverage to all of the eligible employees of the small employer and their dependents. A small employer insurer may not offer coverage to only certain individuals in a small employer group or to only part of the group, except in the case of late enrollees as provided in AS 21.54.110 (d). For purposes of complying with this subsection,
(1) a small employer insurer may issue a health care insurance plan that covers only those employees that the small employer selects to be covered under its plan, except that the small employer insurer shall initially offer a plan to the small employer that covers all eligible employees as defined in AS 21.56.250 and their dependents;
(2) a small employer insurer, producer, or any other representative of the small employer insurer may not directly or indirectly influence a small employer in selecting which employees will be covered under the small employer's health care insurance plan based on the factors concerning unfair discrimination listed in AS 21.54.100 ; and
(3) a small employer insurer shall apply the minimum employee participation and minimum employer contribution requirements to those employees that the small employer selects to be covered under the small employer's health care insurance plan.
(e) The small employer insurer shall apply this section uniformly to all small employers without regard to the claims experience of the small employers and their employees and dependents or a health status factor of an employee or dependent.
(f) A small employer insurer may not, directly or indirectly, encourage or direct small employers to refrain from filing an application for coverage with a small employer insurer or to seek coverage from another insurer because of a health status factor, the claims experience, the industry, the occupation, the size, or the geographic location of the small employer.
(g) Except as provided in AS 21.54.110 , a small employer insurer may not, by a rider or amendment applicable to a specific individual, restrict or exclude coverage or benefits by type of illness, treatment, medical condition, or service otherwise covered by the plan.
(h) This section does not apply to health care insurance plans offered by a small employer insurer if the insurer makes the health care insurance plans available in the small employer market only through a bona fide association.
In this chapter,
(1) 'actuarial certification' means a written statement by a member of the American Academy of Actuaries or another individual acceptable to the director indicating that, based on the person's examination, including a review of the appropriate records, actuarial assumptions, and methods used by the insurer in establishing premium rates for applicable health insurance plans, a small employer insurer is in compliance with the provisions of AS 21.56.120 ;
(2) 'affiliated' means a person who directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with a specified person;
(3) 'base premium rate' means the lowest premium rate charged or that could have been charged under the rating system by the small employer insurer to small employers with similar case characteristics for health care insurance plans with the same or similar coverage;
(4) 'basic health care insurance plan' means a lower cost plan offered under AS 21.56.140 ;
(5) 'beneficiary' has the meaning given in AS 21.54.500 ;
(6) 'board' means the board of directors of the Small Employer Health Reinsurance Association;
(7) 'bona fide association' has the meaning given in AS 21.54.500 ;
(8) 'case characteristics' means demographic or other objective characteristics of a small employer that are considered by the small employer insurer in the determination of premium rates for the small employer, except that claim experience, health status, and duration of coverage may not be case characteristics for the purposes of this chapter;
(9) 'committee' means the health benefit plan committee established in AS 21.56.060 ;
(10) 'eligible employee' means an employee who works on a full-time basis, with a normal work week of 30 or more hours; 'eligible employee' includes a sole proprietor, a partner of a partnership, or an independent contractor if the sole proprietor, partner, or contractor is included as an employee under a health care insurance plan of a small employer, but does not include an employee who works on a part-time, temporary, or substitute basis;
(11) 'employee' has the meaning given in AS 21.54.500 ;
(12) 'group market' has the meaning given in AS 21.54.500 ;
(13) 'health care insurance plan' has the meaning given in AS 21.54.500;
(14) 'health care insurer' has the meaning given in AS 21.54.500 ;
(15) 'health status factor' has the meaning given in AS 21.54.500 ;
(16) 'index rate' means, for small employers with similar case characteristics and plan designs as determined by the insurer for a rating period, the arithmetic average of the applicable base premium rate and the corresponding highest premium rate;
(17) 'large employer' has the meaning given in AS 21.54.500 ;
(18) 'late enrollee' has the meaning given in AS 21.54.500 ;
(19) 'member' means a health care insurer;
(20) 'network plan' has the meaning given in AS 21.54.500 ;
(21) 'new business premium rate' means the lowest premium rate charged or offered, or that could have been charged or offered, by the small employer insurer to small employers with similar case characteristics for newly issued health care insurance plans with the same or similar coverage;
(22) 'plan of operation' means the plan of operation of the reinsurance association adopted by the board under AS 21.56.040 ;
(23) 'rating period' means the calendar period for which premium rates established by a small employer insurer are assumed to be in effect;
(24) 'reinsurance association' means the Small Employer Health Reinsurance Association created in AS 21.56.010 ;
(25) 'reinsuring insurer' means a small employer insurer participating in the reinsurance association created in AS 21.56.010 ;
(26) 'small employer' has the meaning given in AS 21.54.500 ;
(27) 'small employer insurer' means a health care insurer offering, issuing for delivery, delivering, or renewing health care insurance to small employers in the state;
(28) 'standard health care insurance plan' means a health care insurance plan offered under AS 21.56.140 that includes more comprehensive benefits than under a basic health care insurance plan.
(a) A premium rate for a health care insurance plan subject to this chapter is subject to the following provisions:
(1) the premium rate charged or offered during a rating period to small employers with similar case characteristics as determined by the insurer for the same or similar coverage may not vary from the applicable index rate by more than 35 percent of the applicable index rate;
(2) regarding a health care insurance plan issued before July 1, 1993, if premium rates charged or offered for the same or similar coverage under a health care insurance plan covering a small employer with similar case characteristics as determined by the insurer exceeds the applicable index rate by more than 35 percent, an increase in premium rates for a new rating period may not exceed the sum of
(A) a percentage change in the base premium rate measured from the first day of the prior rating period to the first day of the new rating period; plus
(B) adjustments due to changes in case characteristics or plan design of the small employer, as determined by the insurer;
(3) the percentage increase in the premium rate charged to a small employer for a new rating period may not exceed the sum of the following:
(A) the percentage change in the new business premium rate measured from the first day of the prior rating period to the first day of the new rating period; in the case of a health benefit plan into which the small employer insurer is no longer enrolling new small employers, the small employer insurer shall use the percentage change in the base premium rate, provided that the change does not exceed, on a percentage basis, the change in the new business premium rate for the most similar health care insurance plan into which the small employer insurer is actively enrolling new small employers;
(B) any adjustment, not to exceed 15 percent annually and adjusted pro rata for rating periods of less than one year, due to the claim experience, health status, or duration of coverage of the employees or dependents of the small employer as determined from the small employer insurer's rate manual; and
(C) any adjustment due to change in coverage or change in the case characteristics of the small employer, as determined from the small employer insurer's rate manual;
(4) adjustments in rates for claim experience, health status, and duration of coverage may not be charged to individual employees or dependents; any adjustment must be applied uniformly to the rates charged for all employees and dependents of the small employer;
(5) a premium rate for a health care insurance plan shall comply with the requirements of this section notwithstanding an assessment paid or payable by small employer insurers under AS 21.56.050 (d);
(6) a small employer insurer may use industry as a case characteristic in establishing premium rates, provided that the rate factor associated with an industry classification may not vary by more than 15 percent from the arithmetic average of the highest and lowest rate factors associated with all industry classifications;
(7) a small employer insurer shall
(A) apply rating factors, including case characteristics, consistently with respect to all small employers; rating factors must produce premiums for identical groups that differ only by amounts attributable to plan design and do not reflect differences due to the nature of the groups assumed to select particular health care insurance plans; and
(B) treat all health care insurance plans issued or renewed in the same calendar month as having the same rating period;
(8) for the purposes of this subsection, a health care insurance plan that contains a restricted provider network may not be considered similar coverage to a health care insurance plan that does not use a restricted provider network if the restriction of benefits to network providers results in substantial differences in claim costs;
(9) a small employer insurer may not use case characteristics, other than age, sex, industry, geographic area, family composition, and group size without prior approval of the director.
(b) In connection with the offering for sale of a health care insurance plan to a small employer, a small employer insurer shall, as part of its solicitation and sales materials, disclose in a manner understandable by the average small employer and sufficient to reasonably inform small employers of their rights and obligations under the health care insurance plan
(1) the extent that premium rates for a specified small employer are established or adjusted based upon the actual or expected variation in claims costs or actual or expected variation in health status of the employees of the small employer and their dependents; and
(2) the provisions of the health care insurance plan
(A) concerning the small employer insurer's right to change premium rates and factors that affect changes in premium rates;
(B) relating to renewability of policies and contracts;
(C) relating to any preexisting condition provision; and
(D) concerning the benefits and premiums available under all health care insurance plans for which the small employer qualifies.
(c) A small employer insurer shall
(1) maintain at its principal place of business a complete and detailed description of its rating practices and renewal underwriting practices, including information and documentation that demonstrate that its rating methods and practices are based upon commonly accepted actuarial assumptions and are in accordance with sound actuarial principles;
(2) file with the director annually, on or before March 15, an actuarial certification certifying that the insurer is in compliance with this chapter and AS 21.54.100 - 21.54.500 and that the rating methods of the small employer insurer are actuarially sound; the certification shall be in a form and manner, and must contain information, as specified by the director; a copy of the certification shall be retained by the small employer insurer at its principal place of business;
(3) make the information and documentation described in (1) of this subsection available to the director upon request; the information is confidential and not subject to disclosure, except
(A) as agreed to by the small employer insurer;
(B) as ordered by a court of competent jurisdiction; or
(C) the director may use the information or other discovered information in a judicial or administrative proceeding.
(d) The director may adopt regulations to implement the provisions of this section and to ensure that rating practices used by small employer insurers are consistent with the purposes of this chapter, including ensuring that differences in rates charged for health care insurance plans by small employer insurers are reasonable and reflect objective differences in plan design, not including differences due to the nature of the groups assumed to select particular health care insurance plans.
(e) In determining the premium rates for a small employer covered under an association health insurance policy authorized under AS 21.54.060(7), a small employer insurer may not use the claims experience of the small employer while the employer was covered under another health insurance policy and may use only that underwriting information obtained through the insurer's normal application process for new small employer groups that are not written under the association plan.
(a) A member may reinsure health care coverage of an eligible employee of a small employer or a dependent of an eligible employee of a small employer with the reinsurance association only under the following provisions:
(1) regarding a small employer basic or standard health care insurance plan, the reinsurance association shall reinsure the level of coverage provided;
(2) regarding a health care plan other than a small employer health care insurance plan, the reinsurance association shall reinsure the level of coverage provided up to, but not exceeding, the level of coverage provided in a small employer basic or standard health benefit plan;
(3) a small employer insurer may reinsure an entire employer group within 60 days of the commencement of the group's coverage under a health care insurance plan;
(4) a small employer insurer may reinsure an eligible employee or dependent within a period of 60 days following the commencement of the coverage with the small employer; a newly eligible employee or dependent of a reinsured small employer may be reinsured within 60 days of the commencement of coverage;
(5) the reinsurance association may not reimburse a reinsuring insurer regarding the claims of a reinsured employee or dependent until the insurer has paid an initial level of claims for the employee or dependent of $5,000 in a calendar year for benefits covered by the reinsurance association;
(6) a small employer insurer may terminate reinsurance for one or more of the reinsured employees or dependents of a small employer on any plan anniversary.
(b) Premium rates charged for coverage reinsured by the reinsurance association shall be established as required under (e) of this section and adjusted as follows:
(1) for whole group small employer reinsurance coverage, 1.5 multiplied by the base premium rate established by the reinsurance association for eligible employees, and dependents of eligible employees, of a small employer all of whose health insurance coverage is reinsured with the reinsurance association;
(2) for eligible employee or dependent health reinsurance coverage, 5.0 multiplied by the base premium rate established by the reinsurance association.
(c) If a health care insurance plan coverage for a small employer is entirely or partially reinsured with the reinsurance association, the premium charged to the small employer for a rating period for the coverage issued under this section shall meet the premium rate requirements established under AS 21.56.120 .
(d) On or before March 1 of each year, the board shall determine and report to the director the reinsurance association's net loss for the previous calendar year, including administrative expenses and incurred losses for the year, taking into account investment income and other appropriate gains and losses. A net loss for the year shall be recovered by assessments collected from reinsuring insurers. The board shall establish, as part of the plan of operation, a formula by which to make assessments against reinsuring insurers. The assessment formula must be based on each reinsuring insurer's share of the total premiums earned in the preceding calendar year from health care insurance plans delivered or issued for delivery to small employers in this state by reinsuring carriers and each reinsuring insurer's share of the premiums earned in the preceding calendar year from newly issued health care insurance plans delivered or issued for delivery during the calendar year to small employers in this state by reinsuring insurers. In determining an assessment, if any, that is collected from a member, the following provisions apply:
(1) the formula established under this subsection may not result in a reinsuring insurer having an assessment share that is less than 50 percent or more than 150 percent of an amount that is based on the proportion of the reinsuring insurer's total premiums earned in the preceding calendar year from health care insurance plans delivered or issued for delivery to small employers in this state by reinsuring insurers to total premiums earned in the preceding calendar year from health care insurance plans delivered or issued for delivery to small employers in this state by all reinsuring carriers;
(2) the board may, with approval of the director, change the assessment formula established under this section from time to time, as appropriate; the board may provide for the shares of the assessment base attributable to premiums from all health care insurance plans and to premiums from newly issued health care insurance plans to vary during a transition period;
(3) subject to the approval of the director, the board shall make an adjustment to the assessment formula for reinsuring carriers that are approved health maintenance organizations that are federally qualified under 42 U.S.C. 300e, to the extent, if any, that restrictions are imposed on those organizations that are not imposed on other small employer insurers;
(4) annually before March 1, the board shall determine and file with the director an estimate of the assessments needed to fund losses incurred by the reinsurance association in the previous calendar year;
(5) if the board determines that the assessments needed to fund the losses incurred by the reinsurance association in the previous calendar year will exceed five percent of total premiums earned in the previous year from health care insurance plans delivered or issued for delivery to small employers in this state by reinsuring insurers, the board shall evaluate the operation of the program and report its findings, including any recommendations for changes to the plan of operation, to the director within 90 days following the end of the calendar year in which the losses were incurred; the evaluation must include an estimate of future assessments, the administrative costs of the program, the appropriateness of the premiums charged, and the level of insurer retention under the program and the costs of coverage for small employers; if the board fails to file a report with the director within 90 days following the end of the applicable calendar year, the director may evaluate the operations of the program and implement amendments to the plan of operation the director determines necessary to reduce future losses and assessments;
(6) if assessments exceed net losses of the reinsurance association, the excess shall be held in an interest bearing account and used by the board to offset future losses or to reduce reinsurance association premiums; in this paragraph, 'future losses' include a reserve for incurred but not reported claims;
(7) the board shall annually determine a member's proportion of participation in the reinsurance association based on annual statements and other reports determined necessary by the board and filed by the member with the board; an insurer shall report to the board a claim payment made and administrative expense incurred in this state on a semi-annual basis on a form prescribed by the director;
(8) the plan of operation must include a provision for the imposition of an interest penalty for late payment of assessments;
(9) a member may request a deferment from the director, in whole or in part, from an assessment issued by the board; the director may defer, in whole or in part, the assessment of a member if, in the opinion of the director payment of the assessment would endanger the ability of the member to fulfill the member's contractual obligations;
(10) in the event an assessment against a member is deferred in whole or in part, the amount by which the assessment is deferred may be assessed against the other members in a manner consistent with the basis for assessments set out in this subsection; the member receiving a deferment shall remain liable to the reinsurance association for the amount deferred; the director may attach conditions to a deferment; a member receiving a deferment may not reinsure an individual or group as provided under this section until the assessment is paid.
(e) The board, as part of the plan of operation, shall establish a methodology for determining premium rates to be charged by the program for reinsuring small employers and individuals under this section. The methodology must include a system for classification of small employers that reflects the types of case characteristics commonly used by small employer insurers in the state. The methodology must provide for the development of base reinsurance premium rates that shall be multiplied by the factors set out in (b) of this section to determine the premium rates for the reinsurance association. The base reinsurance premium rates shall be established by the board, subject to the approval of the director, and shall be set at levels that reasonably approximate gross premiums charged to small employers by small employer insurers for health care insurance plans with benefits similar to the standard health care insurance plan. The board shall review the methodology established under this subsection to ensure that the methodology reasonably reflects the claims experience of the program. Changes to the methodology may be proposed by the board and are subject to approval by the director. In this subsection, 'gross premiums' means the premium charged for insurance before reducing the premium for a dividend or rate credit.
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