1405 Filing Requirements for Multiple Employer Welfare Arrangements [Formerly Regulation 67]
1.1 The purpose of this regulation is to aid the Department of Insurance in enforcing provisions of the Delaware Insurance Code relating to the unauthorized transaction of insurance. The Department has become aware of a number of unlicensed and illegal multiple employer welfare arrangements marketing group policies in Delaware. These entitles sell group health care coverage to employers. Employers operating small businesses have been particularly targeted. Because of rate increases imposed by licensed companies, or adverse experience in their group, many small employers have been attracted by the purported low cost coverage offered by these entities.
1.2 Some of these entities represent to their agents and applicants that they are exempt from state insurance regulation either because they are subject to the Federal Retirement Insurance Security Act ("ERISA") or because they hold a policy issued outside the state. Exemption from Delaware Insurance Department regulation is available under those circumstances if certain legal standards are met. This regulation is to ensure that only those entities which meet those legal standards by the Delaware Insurance Department are permitted to operate in Delaware.
2.1 This regulation is issued pursuant to the authority vested in the Commissioner under 18 Del.C. §314, 18 Del.C. §2101, 18 Del.C. §505 and 29 Del.C. Ch. 101.
3.1 As used in this regulation the following words and terms shall have the following meaning unless the context clearly indicates otherwise:
"Intermediary" shall mean an agent, brother, or other person who negotiates, solicits, or effectuates an agreement or contract to provide health care and/or medical coverage or benefits for any employer or employee in the state.
"Multiple Employer Welfare Arrangement" shall mean an arrangement which is established or maintained or offers to provide health care benefits or coverage to employees of two of more employers. Except, however, this regulation does not apply to multiple employer welfare arrangements which are exempt from state regulation under ERISA or which offers or provides benefits which are fully insured.
3.2 Those plans exempt form state regulation under ERISA are as follows:
3.2.1 The arrangement provides benefits or coverage under or pursuant to a collective bargaining agreement; or
3.2.2 The arrangement provides health care benefits or coverage solely to employees of governmental units; or
3.2.3 The arrangement is established and maintained by a rural electric cooperative; or
3.2.4 The arrangement provides benefits or coverage to a single employer.
4.1 Thirty days after the adoption of this regulation, no multiple employee welfare arrangement ("MEWA") or association or any intermediary in this state may solicit, advertise, or market in this state or accept an application for, or place coverage for any employer unless prior to solicitation, advertising, marketing, acceptance of the application, or placing the coverage:
4.1.1 The multiple employer welfare benefit plan files with the Insurance Commissioner the information required under section 5.0; or
4.1.2 The intermediary files the information required under section 5.0.
4.2 If subsequent to a filing under sections 4.1.1 or 4.1.2 changes occur so that the information contained in the filing is no longer accurate, the multiple employee welfare arrangement ("MEWA") plan or intermediary with made the filing shall within fifteen days of the date the change is effective make a filing under section 5.0 with the correct information.
5.0 Filing Requirements
5.1 A MEWA or an intermediary required to file information under this regulation shall file a properly completed form prescribed by the Commissioner and shall attach:
5.1.1 A copy of any policy or contract describing benefits offered by the MEWA;
5.1.2 A copy of the organizational documents of the MEWA including the articles of incorporation, by-laws or trust instrument;
5.1.3 A statement that the benefits or coverage are fully insured or a description of the extent to which they are not fully insured;
5.1.4 A copy of any documentation regarding status as an ERISA preemption group; and
5.1.5 The name of the insurer, if any, which insures the MEWA.
5.2 It shall be the responsibility of any intermediary to ascertain that the MEWA represented has complied with this section. No intermediary or MEWA shall solicit any resident of this state to make application or effectuate coverage under a MEWA unless the MEWA has been registered with the Delaware Insurance Department or the MEWA is fully insured by an insurer licensed to do business in Delaware.
6.1 Notwithstanding any other provision of law, and except as provided herein, any MEWA which provides coverage in this state for medical, surgical, chiropractic, physical therapy, speech pathology, audiology, professional mental health, dental, hospital, or optometric expense, whether such coverage is by direct payment, reimbursement, or otherwise, shall be presumed to be subject to the jurisdiction of the department unless the MEWA shows that while providing such services it is exempt from State jurisdiction as a result of federal preemption.
6.2 A MEWA may show that it is subject to the jurisdiction of the federal government by providing to the commissioner the appropriate certificate of license issued by the other governmental agency which permits or qualifies it to provide those services for which it is licensed or certified.
6.3 Any MEWA which is unable to show that it is subject to the jurisdiction of another state or the federal government, shall submit to an examination by the Commissioner to determine whether the organization and solvency of such MEWA is in compliance with the applicable provisions of Delaware law.
6.4 Any MEWA which is unable to show that it is subject to the jurisdiction of another state or the federal government shall be subject to all appropriate provisions of this regulation regarding the conduct of its business.
6.5 Any intermediary licensed by the Department who solicits, markets, advertises or administers health care coverage in this state for any MEWA, and where such coverage does not meet all pertinent requirements specified in this regulation and which is not provided or completely underwritten, insured, or otherwise fully covered by an admitted life or disability insurer, hospital service plan, health maintenance organization, or health service plan, shall advise and disclose to any purchaser, prospective purchaser, covered person or entity, all financial and operational information relative to the content and scope and, specifically, as to the lack of insurance or other coverage. Notwithstanding the above, an intermediary must comply with the filing requirements contained in section 5.0 of this regulation.
7.1 A violation of this regulation shall be considered an unfair and deceptive trade practice under 18 Del.C. §2304. Failure to file the information required in this regulation shall be prima facie evidence of a deceptive practice which endangers the legitimate interest of customers and public. If the MEWA does not qualify for an exemption under ERISA, after hearing, the MEWA or intermediary may be found in violation of 18 Del.C. §505 and 18 Del.C. Ch. 21 of the Delaware Insurance Code in accordance with 18 Del.C. §334 of the Delaware Insurance Code.