054.00.119-6. Application Process for Self-Funded MEWAs
AR ADC 054.00.119-6Arkansas Administrative CodeEffective: December 5, 2019
Effective: December 5, 2019
Ark. Admin. Code 054.00.119-6
054.00.119-6. Application Process for Self-Funded MEWAs
(A) a current financial statement. If the multiple-employer welfare arrangement is already in business, the financial statement must include an annual balance sheet and income statement, developed on generally accepted accounting principles, for the past five years, or since the inception of the MEWA, whichever time period is shorter;
(7) a copy of the fidelity bond issued in the name of the multiple-employer welfare arrangement protecting against acts of fraud and dishonesty by its trustees, directors, officers, employees, administrator or other individuals responsible for servicing the employer welfare benefit plan. Such bond should be in an amount equal to the greater of 10% of the premiums and contributions received by the multiple-employer welfare arrangement, or 10% of the benefits paid, during the preceding calendar year, with a minimum of $10,000 and a maximum of $500,000. No additional bond will be required of a third party administrator licensed to engage in business in this state;
(A) Current or proposed operations must be outlined with information by the applicant identifying the number of employers in the group currently participating or proposed to participate in the multiple-employer welfare arrangement. The outline should also include the number of participating units. To the extent such information is available, it also should include the number of dependents covered or to be covered by the multiple-employer welfare arrangement. A specific list of the benefits being provided or to be provided must also be included.
(B) Specific information about individuals providing or to provide management services is required. The applicant should indicate whether each trustee is an owner, partner, officer, or director, and/or employee of a participating employer or is committed to participate in the multiple-employer welfare arrangement. In addition, the applicant should provide the name and address of the employer represented by each trustee and by each officer and provide the association of the trustee or officer with such employer. The applicant must list the individuals responsible for managing or handling funds or assets of the multiple-employer welfare arrangement. A biographical affidavit must be completed and filed for each trustee, or officer or director or administrator of the multiple-employer welfare arrangement.
(C) With respect to administration of the present or proposed plan, the applicant must give the names and qualifications of individuals, or the third party administrator, responsible for or to be responsible for servicing the program of the multiple-employer welfare arrangement. If a third-party administrator is to service the plan, a copy of the company's Arkansas license should be attached. In addition, a copy of the agreement between the multiple-employer welfare arrangement and the third party administrator should be submitted, signed by the administrator and trustees or directors of the multiple-employer welfare arrangement.
(D) The applicant must provide documentation that the multiple-employer welfare arrangement has provided or will provide a sufficient number of competent persons to service its program in the areas of claims adjusting and underwriting. The applicant should also describe the present or proposed plan to service billings, claims, and underwriting. The criteria for underwriting shall be actuarially justified.
(E) The applicant must provide a specific outline and description of the management's marketing efforts. The applicant should list the names of all persons directly employed or to be employed by the arrangement, who solicit participants or adjust claims, indicating the qualifications and credentials of such individuals, and whether such persons hold any license issued by the department. Any such licenses held should be specified by type.
(9) an actuarial opinion prepared by an actuary who is not an employee of the multiple-employer welfare arrangement and who is a fellow of the Society of Actuaries, a member of the American Academy of Actuaries or an enrolled actuary under the Employee Retirement Income Security Act of 1974 (29 United States Code § 1241 and § 1242). The actuarial opinion shall include the items described in subparagraphs (A)-(C) of this paragraph, as follows:
(B) the recommended amount of cash reserves the multiple-employer welfare arrangement should maintain which shall not be less than the greater of 20% of the total contributions in the preceding plan year or 20% of the total estimated contributions for the current plan year; cash reserves shall be calculated with proper actuarial regard for known claims, paid and outstanding, a history of incurred but not reported claims, claims handling expenses, unearned premium, an estimate for bad debts, a trend factor, and a margin for error; and
(10) if the multiple-employer welfare arrangement is in existence at the time of its application, annual reports meeting the substantive requirements of 29 United States Code § 1023 and § 1024 shall be filed. To the extent that such annual reporting requirements are not otherwise met by existing multiple-employer welfare arrangements in complying with other provisions of this subchapter, a filing under this paragraph must be made, and must at a minimum include the items described in subparagraphs (A)-(C) of this paragraph, as follows:
(11) documentation indicating that the multiple-employer welfare arrangement has applications from not less than two employers and will provide similar benefits for not less than 200 separate participating employees, and that the annual gross premiums of or contributions to the plan will be not less than $20,000 for a vision-benefit-only plan, $75,000 for a dental-benefits-only plan, and $200,000 for all other plans;
(12) documentation that the multiple-employer welfare arrangement possesses a written commitment, binder or policy for stop-loss insurance issued by an insurer authorized to do business in this state providing not less than 30 days notice to the Commissioner of any cancellation or non-renewal of coverage and which provides both specific and aggregate coverage with an aggregate retention of no more than 125% of the amount of expected claims for the subsequent plan year and the specific retention amount determined by the actuarial report required by paragraph (9) of this subsection; and
(13) a certification provided by the applicant and signed by the president and secretary or the trustee of the MEWA, or other such official, attesting that the multiple-employer welfare arrangement is in compliance with all applicable provisions of the Employee Retirement Income Security Act of 1974. (29 United States Code § 1001 et seq.).
Credits
Adopted Dec. 5, 2019.
Current with amendments received through February 15, 2024. Some sections may be more current, see credit for details.
Ark. Admin. Code 054.00.119-6, AR ADC 054.00.119-6
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