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Delaware General AssemblyDelaware RegulationsMonthly Register of RegulationsSeptember 2018

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Statutory Authority: 18 Del.C. §§314, 2101 & 505; 29 Del.C. Ch. 101; 29 USC §1144(b)(6)(A)(i); and in response to 29 CFR 2510.3-5
18 DE Admin. Code 1405
Pursuant to 29 Del.C. §10119, it is necessary to repeal Regulation 1405, Filing Requirements for Multiple Employer Welfare Arrangements [Formerly Regulation 67] and replace it with new Regulation 1405, Requirements for Fully Insured Multiple Employer Welfare Arrangements and Association Health Plans.
B. The Final Rule allows small businesses to band together in an association formed primarily to offer insurance, and then offer health insurance that qualifies as a "large group plan" if the employers are in the "same trade, industry, line of business, or profession" or "have a principal place of business within a region that does not exceed the same State or the same metropolitan area (even if the metropolitan area includes more than one State)." Id. at 28,922. Such an association could attempt to offer to its members a large group health insurance plan by considering, "in the aggregate," all of the employees of the association's members, even if no member is a large employer. Id. at 28,934-35.
D. In the Final Rule, DOL made clear that States will be able to apply their insurance laws to association health plans (AHPs) that are not fully insured and to apply certain insurance laws to AHPs that are fully insured. Id. at 28,936. The Final Rule expressly states that it does not preempt state law, and it makes clear that state regulators maintain their full authority under state law to regulate their state insurance markets. DOL stated that, "[T]he final rule importantly depends on state insurance regulators for oversight and enforcement to, among other things, prevent fraud, abuse, incompetence and mismanagement, and avoid unpaid health claims." Id. at 28,960.
E. The Final Rule contains a series of effective and applicability dates. It became effective on August 20, 2018, id. at 28,912, and allows "fully insured plans to begin operating under the new rule on September 1, 2018" Id. at 28,953. In addition, "[e]xisting self-insured AHPs can begin operating under the new rule on January 1, 2019, and new self-insured AHPs can begin on April 1, 2019." Id. at 28,953.
F. DOL stated that the months-long delays in applicability of the Final Rule for self-insured AHPs would allot "additional time for the Department and State authorities to address concerns about self-insured AHPs' vulnerability to financial mismanagement and abuse." Id. at 28,953. The Final Rule noted that "[t]he Department and State authorities both need time to build and implement adequate supervision and possible infrastructure to prevent fraud and abuse," id., and, with respect to the April 1, 2019 date for new self-insured AHPs, to "provide sufficient time for the Department and the States to implement a robust supervisory infrastructure and program" Id.
G. DOL notes that the Final Rule's relaxation of legal requirements would, without safeguards, create "cause for concern about fraud," id. at 28,928, but the Final Rule lacks measures to address the likelihood of fraud and abuse that the Final Rule may cause. Accordingly, DOL acknowledges that the Final Rule "will introduce increased opportunities for mismanagement or abuse, in turn increasing oversight demands on the Department and State regulators," id. at 28,953.
IT IS SO ORDERED this 15th day of August, 2018.
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.
"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.
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.
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, 29 Del.C. Ch. 101, and 29 USC §1144(b)(6)(A)(i) and in response to 29 CFR 2510.3-5.
The following words and terms, when used in this regulation, have the following meaning unless the context clearly indicates otherwise:
"Association" means any foreign or domestic association that complies with 18 Del.C. §3506(a)(1)-(6) and provides a health benefit plan that covers the employees of at least one employer that is either domiciled in Delaware or has its principal headquarters or principal administrative office in Delaware or covers a Delaware resident of a non-Delaware employer.
"Commissioner" means the Commissioner of the Delaware Department of Insurance.
"Department" means the Delaware Department of Insurance.
"Employee welfare benefit plan" or "welfare plan" means an employee welfare benefit plan or welfare plan as defined in 29 USC §1002(1).
"Employee Retirement Income Security Act" or "ERISA" means the federal statute 29 USC Chapter 18.
"Fully Insured" means any association or MEWA health benefit plan coverage provided by a foreign or domestic insurer licensed to do business in Delaware under the provisions of 18 Del.C. Ch. 5 and in compliance with 18 Del.C. §3506 and 29 USC §1144(b)(6)(D).
"Health Benefit Plan" means a policy, contract, certificate, or agreement offered or issued by a health insurer to provide, deliver, arrange for, pay for, or reimburse any of the costs of health services, as defined in 18 Del.C. §903. The health benefit plan is issued to an association, to a trust, or to one or more trustees of a fund established, created, or maintained for the benefit of the members of one or more associations or a contract or plan issued by an association or trust or by a MEWA as defined in the Employee Retirement Income Security Act of 1974, 29 USC §1001 et seq.
"Insurer" means any insurer, health service corporation, a health maintenance organization, or a managed care organization offering health insurance as defined in 18 Del.C. §903. An insurer shall not offer a health benefit plan to an association or MEWA with covered lives in Delaware unless it possesses a certificate of authority from the Commissioner or unless the nature of its business in Delaware is such that it is exempt from this requirement under the provisions of 18 Del.C. §506.
"Intermediary" shall mean an agent, broker, 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" or "MEWA" shall mean an arrangement which is established or maintained and offers to provide health care benefits or coverage to employees of two or more employers. Except, however, this regulation does not apply to multiple employer welfare arrangements which are exempt from state regulation under ERISA.
7.1 An insurer offering a health benefit plan to an association or MEWA shall obtain rate approval from the Commissioner through the rate review process provided in 18 Del.C. Ch. 25. An insurer may use its existing group rates, without making an association or MEWA-specific rate filing, so long as its group rates have been filed with and approved by the Commissioner and meet the requirements of this Section.
8.1.5 All other insurance requirements and benefit mandates for health insurers as provided in 18 Del.C. Chs. 35 and 72, as applicable and as may be amended, any regulations promulgated pursuant thereto, and as specified by regulation by the Commissioner; and
THE {Insert the name of the ASSOCIATION OR MULTIPLE EMPLOYER WELFARE ARRANGEMENT in all capital letters} IS NOT AN INSURANCE COMPANY. FOR ADDITIONAL INFORMATION ABOUT THE {Insert the name of the ASSOCIATION OR MULTIPLE EMPLOYER WELFARE ARRANGEMENT in all capital letters} YOU SHOULD ASK QUESTIONS OF THE ADMINISTRATOR OF THE {Insert the name of the ASSOCIATION OR MULTIPLE EMPLOYER WELFARE ARRANGEMENT in all capital letters}, OR YOU MAY CONTACT THE DELAWARE DEPARTMENT OF INSURANCE AT__________."
15.1 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 or association does not qualify for an exemption under ERISA, after hearing, the MEWA or association may be found in violation of 18 Del.C. §505 and 18 Del.C. Ch. 21.
16.1 An insurer shall notify the Department by December 31st of each year of all health insurance contracts and administrative-services-only contracts it issued, renewed, or had in force at any time during the 12-month period of that calendar year, that covered an association or MEWA with members having employees or dependents in Delaware.
Last Updated: December 31 1969 19:00:00.
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