Administrative Code

Virginia Administrative Code
6/30/2022

Part II. Rights and Duties of the Department

1VAC55-20-130. Develop health benefits program.

A. The department shall develop a health benefits program which shall be flexible in its form and content so as to accommodate a structure which permits the creation of multiple accident and health plans. The department, however, may offer a single health insurance plan if it determines that that is the most effective use of plan resources. The department has full authority to make changes in plan terms including, but not limited to, benefits and contributions, or to change underwriters and administrators as it deems appropriate.

B. The department shall supplement these regulations by providing administrative guidance through the Health Insurance Manual, Local Administrative Manual, Flexible Benefits Administrative Manual, memoranda, and other communications.

Statutory Authority

§§ 2.2-1204 and 2.2-2818 of the Code of Virginia.

Historical Notes

Derived from VR525-01-02 § 2.1, eff. November 21, 1990; amended, Virginia Register Volume 20, Issue 20, eff. July 16, 2004.

1VAC55-20-140. Underwriting.

At the department's discretion, the program may either be created and maintained on a self-funded basis or procured from an insurance company licensed to do business in the Commonwealth of Virginia, or a combination of both. In addition, the department is authorized to contract with any third party providers for any and all services which may be necessary to design, administer, communicate or fund the health benefits program.

Statutory Authority

§§ 2.1-20.1 and 2.1-20.1:02 of the Code of Virginia.

Historical Notes

Derived from VR525-01-02 § 2.2, eff. November 21, 1990.

1VAC55-20-150. Employer application.

The department shall develop a form on which local employers may apply for participation in the health benefits program and make available such form to local employers joining such program. The department will advise local employers on questions pertaining to the application. Among other items the department may deem necessary, the application may include:

1. Information regarding the political subdivision such as the governing body, individuals or offices responsible to provide, receive and remit information to the department and the method by which information can or will be transmitted.

2. Information regarding the total number of employees and those employees currently covered, those who will immediately become eligible, and those whose participation is anticipated. This information can include but is not limited to demographic data such as the age and sex of employees, geographic location of residence and employment, dependent status, and information concerning employment responsibilities.

3. Information regarding past premiums, claims and enrollment experience, contribution history, financial arrangements with prior underwriters and the types of plans or benefits provided being offered within the five years prior to making the application.

Statutory Authority

§§ 2.1-20.1 and 2.1-20.1:02 of the Code of Virginia.

Historical Notes

Derived from VR525-01-02 § 2.3, eff. November 21, 1990.

1VAC55-20-160. Establishing contribution rates and accounting for contributions and claims.

A. The department shall establish one or more pools for establishing contribution rates and for accounting for claims and contributions for state employees and participating local employers. The plan for local employers shall be rated separately from the plan established for state employees. There are hereby authorized pools based on geographic and demographic characteristics and employment relationships. Such pools may include but shall not be limited to:

1. Active state employees, including retirees under age 65 and not eligible for Medicare;

2. Active local employees (excluding separately rated employees of public school systems);

3. Active employees of public school systems;

4. Retired state employees over age 65 and retired state employees eligible for Medicare;

5. Retired local employees (excluding separately rated employees of public school systems);

6. Retired employees of public school systems; and

7. Active employees whose employer does not sponsor a health insurance plan.

Participating employers shall make applicable contributions to the employee health insurance fund.

B. Such contributions may take into account the characteristics of the group, such as the demographics of employees, inclusive of age, sex, and dependent status of the employees of an employer; the geographic location of the employer or employees; claims experience of the employer; and the pool of the employers (for example, see subdivisions A 1 through 6 of this section). Additionally, any such contributions may further be determined by spreading large losses, as determined by the department, across pools. Further, the department reserves the right to recognize, in its sole discretion, the claims experience of groups of sufficient size, regardless of their pool, where future claim levels can be predicted with an acceptable degree of credibility. The application of this rule by the department shall be exercised in a uniform and consistent manner.

C. The contribution rate in the aggregate will be composed of two factors; first, the current contribution and second, the amortization of experience adjustments. The current contributions will reflect the anticipated incurred claims and administrative expenses for the period; an experience adjustment will reflect gains and losses determined in accordance with an actuarial estimate. An experience adjustment will be part of the contributions for the succeeding year; however, the department may authorize the amortization of the experience adjustment for a period not to exceed three years.

D. The department will notify a terminating local employer of any adverse experience adjustment within six-calendar months of the end of the plan year in which the local employer terminates participation in the program. Further the department reserves the right to modify the amount of the experience adjustment applicable to a terminating local employer for a period not to exceed 12 months from the end of the plan year in which such termination occurred. The experience adjustment shall be payable by the local employer in 12 equal monthly installments beginning 30 days after the date of notification by the department. In the event that a terminating local employer requests in writing an extension beyond a period of 12 months, the department may approve an extension up to 36 months provided the local employer agrees to pay interest at the statutory rate on any extended payments.

Statutory Authority

§ 2.2-2818 of the Code of Virginia.

Historical Notes

Derived from VR525-01-02 § 2.4, eff. November 21, 1990; amended, Virginia Register Volume 20, Issue 20, eff. July 16, 2004; Volume 30, Issue 14, eff. April 24, 2014.

1VAC55-20-170. Information to local employers.

The department will provide guidance and support to local administrators in the adoption, implementation and administration of the health benefits program.

The department shall furnish local employers with any and all information necessary for any reports the local employer is required to file with any federal or state agency as well as any information necessary for meeting the qualification or nondiscrimination rules under the Internal Revenue Code which may be applicable to such plans.

Statutory Authority

§§ 2.1-20.1 and 2.1-20.1:02 of the Code of Virginia.

Historical Notes

Derived from VR525-01-02 § 2.5, eff. November 21, 1990.

1VAC55-20-180. Information to local employees.

The department shall inform local employees when their coverage terminates by reason of nonpayment of premiums for the local employee group by the local employer. The form of the first notice shall be a notice in a newspaper of general circulation in the locality of the local employer. Such notice shall be prospective with respect to the date of termination. The form of the second notice shall be a letter to each contract holder at the contract holder's address of record.

Statutory Authority

§§ 2.1-20.1 and 2.1-20.1:02 of the Code of Virginia.

Historical Notes

Derived from VR525-01-02 § 2.6, eff. November 21, 1990.

1VAC55-20-190. Confidentiality.

The department will not disclose identifiable individual health data without the consent of the individual being provided coverage. The department may rely on the representations of any parent or guardian regarding such parent's or guardian's consent to the release of information regarding a child of such parent or any other person to which such guardianship shall apply. Data may be compiled into statistical reports provided that the identity of individual persons is not ascertainable by the reader or disclosed by the department.

Statutory Authority

§§ 2.1-20.1 and 2.1-20.1:02 of the Code of Virginia.

Historical Notes

Derived from VR525-01-02 § 2.7, eff. November 21, 1990.

1VAC55-20-200. Reports.

The department, on an annual basis, shall provide a report to the General Assembly. Such report shall discuss the overall objectives of the health benefits program, including enrollment, income and expense, participation by local employers and additional matters of general concern.

Statutory Authority

§§ 2.1-20.1 and 2.1-20.1:02 of the Code of Virginia.

Historical Notes

Derived from VR525-01-02 § 2.8, eff. November 21, 1990.

1VAC55-20-210. Oversight.

The department has the responsibility and authority to maintain the health benefits program and take any action it deems necessary to maintain the financial and administrative integrity of the program.

A. The department shall review local administration, including state agency administration of the health benefits program to determine compliance with this chapter, law, and administrative directives. Deficiencies shall be reported to the governing body or agency administrator, who shall take prompt action to remedy the noted deficiencies. To this end, the department shall provide guidance to responsible parties regarding their duties and responsibilities in the administration of the program. Failure to correct noted deficiencies may result in the unilateral termination of participation (in the case of a local employer) in the health benefits program, or a revocation of the agency's administrative responsibility for the health benefits program (in the case of a state agency) and the imposition of a special employer contribution on the state agency to pay for the cost of direct administration of the program by the department. The cost of direct administration shall be determined by the department.

B. The department may exclude from coverage any person who is not eligible for coverage notwithstanding the participation of the state agency or local employer in the health benefits program or the payment of contributions or the previous payment of claims on behalf of such person.

If a person is determined to be ineligible for coverage, claims paid by the program during this period of ineligibility shall be recouped by the program from providers of care and from the ineligible employee to the extent practicable as determined by the department.

Employer contributions on behalf of ineligible persons shall not be returned to the participating employer in as much as the employer agrees by participating in the health benefits program that the amount of such contributions constitute liquidated damages for enrolling ineligible employees and/or their dependents. Employee contributions will not be refunded, and the membership level and contributions rate will be maintained, at the level they had been prior to the removal of the ineligible dependent, until such time as the employee makes a membership change due to a consistent qualifying midyear event, or during open enrollment.

C. The department may exclude from coverage for a period of three years any employee (and dependent) who is found by the department to have enrolled in the health benefits program through fraud, deceit, or misrepresentation of a dependent who is not eligible for the program. A signed enrollment form or equivalent enrollment action shall be deemed prima facie evidence of misrepresentation.

D. The department may refuse, notwithstanding any agreement or assignment from a participant or third party, to make a payment on behalf of a participant for covered services to a provider of care who has been determined by the department to be abusing or defrauding the program. A pattern of billing for services not rendered, misrepresenting the complexity or length of the procedures or services actually rendered, or similar abuses shall compel the department to make such a determination. For the purposes of this section, a "pattern" constitutes a number of instances over a period of at least three months which are so similar as to suggest that the abuse is present in 5.0% or more of the services or procedures billed.

Statutory Authority

§§ 2.2-1204 and 2.2-2818 of the Code of Virginia.

Historical Notes

Derived from VR525-01-02 § 2.9, eff. November 21, 1990; amended, Virginia Register Volume 20, Issue 20, eff. July 16, 2004.

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