Chapter 415. Rules Governing Self-Funded Multiple Employer Welfare Arrangements
14VAC5-415-10. Applicability and scope.
A. This chapter shall apply to self-funded multiple employer welfare arrangements that issue health benefit plans in Virginia, including a benefits consortium established under Chapter 55 (§ 59.1-589 et. seq.) of Title 59.1 of the Code of Virginia.
B. This chapter shall not apply to a not-for-profit benefits consortium established under § 15.2-1517.1 of the Code of Virginia, a benefits consortium established under § 6.2-952 or 23.1-106 of the Code of Virginia, a multiple employer welfare arrangement meeting the requirements of § 38.2-3420 C of the Code of Virginia, or a fully insured multiple employer welfare arrangement registered pursuant to Rules Governing Fully Insured Multiple Employer Welfare Arrangements (14VAC5-410).
C. Self-funded multiple employer welfare arrangements shall be subject to the provisions of Title 38.2 of the Code of Virginia to the extent that such provisions are applicable to self-funded multiple employer welfare arrangements in accordance with § 38.2-3420 of the Code of Virginia.
Statutory Authority
§§ 12.1-13, 38.2-223, and 38.2-3420 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 39, Issue 18, eff. May 1, 2023.
14VAC5-415-20. Definitions.
Terms found in this chapter are used as defined in § 38.2-3431 B of the Code of Virginia. The following words and terms when used in this chapter shall have the following meaning unless the context clearly indicates otherwise:
"Benefits consortium" means a trust that is a self-funded MEWA, as defined in § 38.2-3420 of the Code of Virginia, and that complies with the conditions set forth in § 59.1-590 of the Code of Virginia.
"Commission" means the State Corporation Commission.
"ERISA" means the federal Employee Retirement Income Security Act of 1974, P.L. 93-406, 88 Stat. 829, as amended.
"Fully insured" means all of the covered benefits are (i) insured on a direct basis by an insurance company licensed and in good standing to transact the business of insurance in Virginia pursuant to Title 38.2 of the Code of Virginia or (ii) arranged for or provided on a direct basis by (a) a health services plan licensed and in good standing in Virginia pursuant to Chapter 42 (§ 38.2-4200 et seq.) of Title 38.2 of the Code of Virginia; (b) a health maintenance organization licensed and in good standing in Virginia pursuant to Chapter 43 (§ 38.2-4300 et seq.) of Title 38.2 of the Code of Virginia; (c) a dental or optometric services plan licensed and in good standing in Virginia pursuant to Chapter 45 (§ 38.2-4500 et seq.) of Title 38.2 of the Code of Virginia; or (d) any combination thereof. The existence of contracts of reinsurance will not be considered in determining whether a plan is "fully insured."
"Self-funded multiple employer welfare arrangement" or "self-funded MEWA" means any multiple employer welfare arrangement that is not fully insured by a licensed insurance company. This term includes a benefit consortium established under Chapter 55 (§ 59.1-589 et seq.) of Title 59.1 of the Code of Virginia.
Statutory Authority
§§ 12.1-13, 38.2-223, and 38.2-3420 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 39, Issue 18, eff. May 1, 2023.
14VAC5-415-30. Establishment of self-funded multiple employer welfare arrangements.
A. No person shall establish or operate a self-funded multiple employer welfare arrangement in the Commonwealth without obtaining a license from the commission. Any person may apply to the commission for a license to establish and operate a self-funded MEWA in compliance with this chapter.
B. Each application for a license shall be verified by an officer or authorized representative of the applicant, shall be in a form prescribed by the commission, and shall set forth or be accompanied by the following:
1. A copy of any basic organizational documents of the applicant, including the articles of incorporation, articles of association, trust agreement, or other applicable documents, and all amendments to those documents;
2. A copy of the bylaws, rules and regulations, or any similar document regulating the conduct of the internal affairs of the applicant;
3. The names, addresses, and official positions, and biographical information on forms acceptable to the commission of each member of the governing body and any person with authority to manage or establish policy;
4. Financial statements showing the applicant's assets, liabilities, and sources of financial support and a copy of the applicant's most recent audited financial statement completed no more than one year prior to the date of application;
5. A complete description of the plan of operation, including (i) the method of marketing the plan, (ii) a statement regarding the sources of working capital as well as any other sources of funding, and (iii) a description of any insurance, reinsurance, or alternative coverage arrangements proposed, including specific, aggregate, and terminal excess insurance or stop loss insurance;
6. A financial feasibility plan that includes (i) detailed enrollment projections; (ii) the methodology for determining premium rates to be charged during at least the first three years of operations and extending one year beyond the anticipated break-even point certified by an actuary; and (iii) a projection, along with material assumptions, of balance sheets, cash flow statements showing capital expenditures, and purchase and sale of investments and income statements on a quarterly basis for at least three years and extending one year beyond the anticipated break-even point;
7. The names, addresses, and qualifications of persons responsible for the conduct of the applicant's affairs, including any third-party administrators;
8. The names, addresses, and qualifications of persons who will solicit, negotiate, procure, or effect applications for coverage with the self-funded MEWA;
9. Copies of (i) policies providing specific, aggregate, and terminal excess insurance; (ii) fiduciary liability insurance; (iii) the bond that satisfies the requirements of ERISA; and (iv) guarantees or standby letters of credit;
10. A copy of the self-funded MEWA's Form M-1, Report for Multiple Employer Welfare Arrangements, for the applicable plan year;
11. A signed attestation confirming that:
a. The self-funded MEWA makes available health plans or health benefit plans that meet the requirements for health benefit plans set forth in § 38.2-3420 B 3 of the Code of Virginia;
b. The sponsoring association is a nonstock corporation formed under the Virginia Nonstock Corporation Act (§ 13.1-801 et seq. of the Code of Virginia) that has been formed and maintained in good faith for purposes other than obtaining or providing health benefits;
c. The sponsoring association does not condition membership in the association on any factor relating to the health status of an individual, including an employee of an employer member of the sponsoring association or a dependent of such an employee;
d. The sponsoring association makes any health benefit plan available to all members regardless of any factor relating to the health status of such members or individuals eligible for coverage through another member;
e. The sponsoring association does not make any health benefit plan available to any person who is not a participating employee of the association or member of the association;
f. The sponsoring association operates as a nonprofit entity under § 501(c)(5) or (c)(6) of the Internal Revenue Code;
g. The sponsoring association has been in active existence for at least five years; and
h. The guarantees or standby letters of credit comply with § 59.1-590 B 7 of the Code of Virginia; and
12. Any other information the commission may require.
Statutory Authority
§§ 12.1-13, 38.2-223, and 38.2-3420 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 39, Issue 18, eff. May 1, 2023.
14VAC5-415-40. Issuance of license; fee; minimum net worth; impairment.
A. The commission shall issue a license to a self-funded MEWA after the receipt of a complete application and payment of a $500 nonrefundable application fee if the commission is satisfied that the following conditions are met:
1. The persons responsible for the conduct of the affairs of the applicant are competent, trustworthy, and reputable;
2. The self-funded MEWA is financially responsible and may reasonably be expected to meet its obligations to members and prospective members. In making this determination, the commission may consider:
a. The financial soundness of the health benefit plan's arrangements for health care services;
b. The adequacy of working capital;
c. Any agreement with an insurer, a health services plan, a government, or any other organization for insuring the payment of the cost of health care services or the provision for automatic applicability of an alternative coverage if the health care plan is discontinued;
d. The deposit of acceptable securities in an amount satisfactory to the commission, submitted in accordance with § 38.2-1045 of the Code of Virginia as a guarantee to the self-funded MEWA's liabilities to its members and creditors;
e. The applicant's net worth, which shall include minimum net worth in an amount at least equal to $4 million; and
f. A financial statement of the self-funded MEWA on the form required by 14VAC5-415-50; and
3. If applicable, the self-funded MEWA is in compliance with the requirements of § 59.1-590 B 5 through B 10 of the Code of Virginia.
B. A licensed self-funded MEWA shall have and maintain at all times the minimum net worth described in subdivision A 2 e of this section. If the commission finds that the minimum net worth of a self-funded MEWA is impaired, the commission shall issue an order requiring the self-funded MEWA to eliminate the impairment within a period not exceeding 90 days. The commission may, by order served upon the self-funded MEWA, prohibit the self-funded MEWA from issuing any new contracts while the impairment exists. If, at the expiration of the designated period, the self-funded MEWA has not satisfied the commission that the impairment has been eliminated, an order for the rehabilitation or liquidation of the self-funded MEWA may be entered.
C. A self-funded MEWA must comply with the requirements of Chapter 55 (§ 38.2-5500 et seq.) of Title 38.2 of the Code of Virginia.
D. A self-funded MEWA must (i) operate any health benefit plans in accordance with the fiduciary duties defined in ERISA and (ii) have the power to make and collect special assessments against members, and if any assessment is not timely paid, to enforce collection of such assessment. Each member of a self-funded MEWA shall be liable for that member's allocated share of the liabilities of the self-funded MEWA.
E. A self-funded MEWA must purchase and maintain policies of specific, aggregate, and terminal excess insurance with retention levels determined in accordance with sound actuarial principles from insurers licensed to transact the business of insurance in the Commonwealth. If a self-funded MEWA replaces, modifies, or otherwise changes coverage for specific, aggregate, or terminal excess insurance, the self-funded MEWA must notify the commission at least 30 days prior to the effective date of any such change in coverage.
F. The commission may refuse to issue a license to any self-funded MEWA and may suspend or revoke the license to any licensee pursuant to Article 6 (§ 38.2-1040 et seq.) of Chapter 10 of Title 38.2 of the Code of Virginia.
G. Each self-funded MEWA licensed under this section shall renew its license with the commission annually by July 1 pursuant to § 38.2-1025 of the Code of Virginia. The renewal license shall not be issued until the self-funded MEWA has paid all fees and charges imposed on it and has complied with all other requirements of law.
Statutory Authority
§§ 12.1-13, 38.2-223, and 38.2-3420 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 39, Issue 18, eff. May 1, 2023.
14VAC5-415-50. Annual statement, additional reports, and examinations.
A. Each self-funded MEWA shall file an annual statement as provided in § 38.2-1300 of the Code of Virginia with the commission annually by March 1. The statement shall be verified by at least two principal officers and shall cover the preceding calendar year.
B. In addition to the annual statement, the commission may require a licensed self-funded MEWA to file additional reports as provided in §§ 38.2-1301 and 38.2-1301.1 of the Code of Virginia, exhibits, or statements considered necessary to secure complete information concerning the condition, solvency, experience, transactions, or affairs of the self-funded MEWA. The commission shall establish deadlines for filing these additional reports, exhibits, or statements and may require verification by any officers of the self-funded MEWA designated by the commission.
C. The commission shall examine the affairs of each self-funded MEWA and its members as provided for in § 38.2-1317 of the Code of Virginia as often as the Bureau of Insurance deems necessary. The self-funded MEWA may be required to pay to the commission the expenses incurred by it in making an examination authorized under this section.
Statutory Authority
§§ 12.1-13, 38.2-223, and 38.2-3420 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 39, Issue 18, eff. May 1, 2023.
14VAC5-415-60. Investments.
A self-funded MEWA must comply with Chapter 14 (§ 38.2-1400 et seq.) of Title 38.2 of the Code of Virginia. In doing so, a self-funded MEWA may only invest in any Category 1 investment. A self-funded MEWA may petition the commission for permission to invest in any other investment allowed under the provisions of Chapter 14 prior to making such investment.
Statutory Authority
§§ 12.1-13, 38.2-223, and 38.2-3420 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 39, Issue 18, eff. May 1, 2023.
14VAC5-415-70. Protection against insolvency.
Each self-funded MEWA shall deposit and maintain acceptable securities with the State Treasurer in amounts prescribed by § 38.2-1045 of the Code of Virginia. The deposit shall be held as a special fund in trust, as a guarantee to the self-funded MEWA's liabilities to its members and creditors. The securities shall be deposited pursuant to a system of book-entry evidencing ownership interests of the securities with transfers of ownership interests effected on the records of a depository and its participants pursuant to rules and procedures established by the depository. Upon a determination of insolvency or action by the commission pursuant to Chapter 15 (§ 38.2-1500 et seq.) of Title 38.2 of the Code of Virginia, the deposit shall be an asset subject to the provisions of Chapter 15 and shall be used to protect the interests of the self-funded MEWA's enrollees and to ensure continuation of covered services to enrollees.
Statutory Authority
§§ 12.1-13, 38.2-223, and 38.2-3420 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 39, Issue 18, eff. May 1, 2023.
14VAC5-415-80. Financial and solvency requirements.
A. The financial and solvency requirements applicable to self-funded MEWAs granted a license under this chapter, insofar as they are not inconsistent with this chapter, include Articles 3 (§ 38.2-1017 et seq.), 4 (§ 38.2-1019 et seq.), 5 (§ 38.2-1024 et seq.), 6 (§ 38.2-1040 et seq.), and 7 (§ 38.2-1045 et seq.) of Chapter 10; Articles 1 (§ 38.2-1300 et seq.), 2 (§ 38.2-1306.2 et seq.), 3 (§ 38.2-1311 et seq.), 3.1 (§ 38.2-1316.1 et seq.), and 4 (§ 38.2-1317 et seq.) and §§ 38.2-1322 through 38.2-1332 and §§ 38.2-1333 through 38.2-1334.2:3 of Article 5 of Chapter 13; Articles 1 (§ 38.2-1400 et seq.), 2 (§ 38.2-1412 et seq.), and 4 (§ 38.2-1446 et seq.) of Chapter 14; Chapter 15 (§ 38.2-1500 et seq.); and Chapter 55 (§ 38.2-5500 et seq.) of Title 38.2 of the Code of Virginia.
B. For purposes of applying this section, "insurer" when used in a section of the Code of Virginia cited in subsection A of this section shall be construed to mean and include "self-funded MEWA" unless the section cited clearly applies to self-funded MEWAs without such construction.
Statutory Authority
§§ 12.1-13, 38.2-223, and 38.2-3420 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 39, Issue 18, eff. May 1, 2023.
14VAC5-415-90. Disclosure.
A. A self-funded MEWA shall provide meaningful disclosure to its members and to its members' participating and prospective participating employees regarding the medical, prescription drug, dental, and vision benefits provided to participating employees of the sponsoring association or its members and to the dependents of those employees through the health benefit plans offered by the self-funded MEWA.
B. A self-funded MEWA subject to Chapter 55 (§ 59.1-589 et seq.) of Title 59.1 of the Code of Virginia shall comply with the requirements of § 59.1-591 C of the Code of Virginia.
C. All other self-funded MEWAs shall include on health benefits plans, as applicable, the substance of the information required by § 59.1-591 C of the Code of Virginia.
Statutory Authority
§§ 12.1-13, 38.2-223, and 38.2-3420 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 39, Issue 18, eff. May 1, 2023.
14VAC5-415-100. Acts of other persons.
A self-funded MEWA is responsible for the acts of all persons who solicit, negotiate, procure, or effect applications for coverage with the self-funded MEWA.
Statutory Authority
§§ 12.1-13, 38.2-223, and 38.2-3420 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 39, Issue 18, eff. May 1, 2023.
14VAC5-415-110. Violations.
Any violation of this chapter shall be punished as provided for in § 38.2-218 of the Code of Virginia and any applicable law of the Commonwealth. The provisions of §§ 38.2-219 through 38.2-222 of the Code of Virginia shall also apply to a self-funded MEWA that fails to comply with the provisions set forth in this chapter.
Statutory Authority
§§ 12.1-13, 38.2-223, and 38.2-3420 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 39, Issue 18, eff. May 1, 2023.
14VAC5-415-120. Service of process.
Suits, actions, and proceedings may be begun against a self-funded MEWA offering or providing coverage in the Commonwealth by serving process on any trustee, director, officer, or agent of the self-funded MEWA, or if none can be found, on the Clerk of the Commission. If a benefits consortium offers or provides coverage in this Commonwealth without obtaining a license as required by this chapter, it shall be deemed to have thereby appointed the Clerk of the Commission its attorney for service of process. Service of process shall be made as provided for in Article 1 (§ 38.2-800 et seq.) of Chapter 8 of Title 38.2 of the Code of Virginia.
Statutory Authority
§§ 12.1-13, 38.2-223, and 38.2-3420 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 39, Issue 18, eff. May 1, 2023.
14VAC5-415-130. Severability.
If any provision of this chapter or the application to any person or circumstance is for any reason held to be invalid, the remainder of the chapter and the application of the provision to other persons or circumstances shall not be affected.
Statutory Authority
§§ 12.1-13, 38.2-223, and 38.2-3420 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 39, Issue 18, eff. May 1, 2023.
Forms (14VAC5-415)