GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

S	1 

SENATE BILL 1412

Short Title:  MEWA Fees, Regulation.	(Public)
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Sponsors: Senator Johnson of Cabarrus.
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Referred to:  Insurance.
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May 30, 1990

A BILL TO BE ENTITLED
AN ACT TO PROVIDE FOR LICENSING FEES AND LICENSING AND REGULATION OF MULTIPLE EMPLOYER WELFARE ARRANGEMENTS (MEWAs) ON A RECEIPT-SUPPORTED BASIS AND IN ACCORDANCE WITH THE EMPLOYEE RETIREMENT INCOME SECURITY ACT AS ENACTED AND AMENDED BY CONGRESS; AND TO CHANGE THE REGISTRATION FEE AND FINANCIAL RESPONSIBILITY REQUIREMENTS FOR HEALTH PLAN ADMINISTRATORS.
The General Assembly of North Carolina enacts:
Section 1.  Article 49 of Chapter 58 of the General Statutes is amended by adding the following new sections to read:
"§ 58-49-30.  Rules for the regulation of multiple employer welfare arrangements.
(a)	As used in this section and in G.S. 58-49-35 and G.S. 58-49-40, the term ‘multiple employer welfare arrangement' or ‘MEWA' means that term as defined in Section 3 of the Employee Retirement Income Security Act of 1974, 29 U.S.C. §1002(40)(A), as amended, that meets either or both of the following criteria:
(1)	One or more of the employer members of the MEWAs either domiciled in this State or has its principal headquarters or principal administrative office in this State.
(2)	The MEWA solicits an employer that is domiciled in this State or that has its principal headquarters or principal administrative office in this State.
(b)	The Commissioner shall adopt administrative rules governing multiple employer welfare arrangements and persons that administer MEWAs, to carry out the provisions of this section and G.S. 58-49-35 and G.S. 58-49-40.  In addition to provisions that customarily apply to insurance companies under this Chapter that are deemed to be necessary by the Commissioner for the proper regulation of MEWA's and their administrators, such rules shall provide standards requiring the maintenance of specified levels of reserves and specified levels of contributions that each MEWA must meet.
"§ 58-49-35.  Certificate of authority; fees; examinations and sanctions.
(a)	Every MEWA and every administrator of a MEWA shall, within 90 days after the effective date of this section, apply for a certificate of authority from the Commissioner in order to do business in this State.  Such certificate must be renewed each year thereafter on the anniversary date of the initial certificate.
(b)	The fees imposed for such certificate shall be five hundred dollars ($500.00) for each MEWA and three hundred dollars ($300.00) for each administrator, which are due and payable upon the application for the initial certificate and each renewal.
(c)	The Commissioner may conduct an examination of any MEWA or its administrator, or both, to determine whether the MEWA or its administrator is complying with the Commissioner's rules.  The cost of the examination shall be borne by the party examined in accordance with G.S. 58-6-5(3).  If the Commissioner determines the MEWA or its administrator is not complying with the Commissioner's rules, he may order the MEWA or its administrator to comply.  The failure or refusal of a MEWA or its administrator to comply with the order of the Commissioner shall constitute grounds for the suspension,  revocation, or nonrenewal of its certificate of authority or grounds for sanctions under G.S. 58-2-70, or both.
"§ 58-49-40.  Regulatory fees and costs; funding additional staff and overhead.
(a)	It is the policy of the State of North Carolina to provide fair regulation of MEWAs in the interest of the public, as provided in this Chapter.  The cost of regulating MEWAs is a burden incident to the privilege of operating a MEWA.  Therefore, for the purpose of defraying the cost of regulating MEWAs, including the employment of additional Department staff and the necessary associated working monies, every MEWA and MEWA administrator subject to the jurisdiction of the Commissioner shall pay to the Commissioner the regulatory fee required by this section, in addition to all other fees and taxes.  The fees collected shall be used only to pay the expenses of the Department in regulating MEWAs in the interest of the public.
(b)	For the fiscal years beginning on July 1, 1990, and July 1, 1991, the regulatory fee shall be one percent (1%) of each MEWA's annual self-funded contributions.
(c)	When the Commissioner prepares his budget request for the fiscal years beginning on and after July 1, 1992, he shall propose a percentage rate for the regulatory fee.  For fiscal years beginning in an odd-numbered year, that proposed rate shall be included in the budget message the Governor submits to the General Assembly pursuant to G.S. 143-11.  For fiscal years beginning in an even-numbered year, that proposed rate  shall be included in a special budget message the Governor shall submit to the General Assembly.  The General Assembly shall set the percentage rate of the regulatory fee by law.
(d)	The percentage rate may not exceed the amount necessary to generate funds sufficient to defray the estimated cost of the Department for the upcoming fiscal year in the regulation of MEWAs, including a reasonable margin for a reserve fund.  The amount of the reserve may not exceed the estimated cost of the Department in the regulation of MEWAs for the upcoming fiscal year.  In calculating the amount of the reserve, the General Assembly shall consider all relevant factors that may affect the cost of the Department in the regulation of MEWAs or a possible unanticipated increase or decrease in self-funded contributions of MEWAs.
(e)	If the Department experiences a revenue shortfall, the Commissioner shall implement a temporary regulatory fee surcharge to avert the deficiency that would otherwise occur.  In no event may the total percentage rate of the regulatory fee plus any surcharge established by the Commissioner exceed one percent of annual self-funded contributions of MEWAs.
(f)	The regulatory fee imposed under this section is due and payable to the Commissioner on or before the 15th day of the second month following the end of each quarter. Every MEWA and administrator subject to the regulatory fee shall, on or before the date the fee is due for each quarter, prepare and render a report on a form prescribed by the Commissioner. The report shall state the MEWA's total self-funded contributions for the preceding quarter and shall be accompanied by any supporting documentation that the Commissioner may by rule require. Receipts shall be reported on an accrual basis.
(g)	A special fund is created in the office of the State Treasurer, to be known as the Department of Insurance MEWA Fund. The fees collected pursuant to this section shall be deposited in the Fund. The Fund shall be placed in an interest bearing account and any interest or other income derived from the Fund shall be credited to the Fund. Moneys in the Fund shall only be spent pursuant to appropriation by the General Assembly. The Fund shall be subject to the  provisions of the Executive Budget Act; except that no unexpended surplus of the Fund shall revert to the General Fund. All funds credited to the Fund shall be used only to pay the expenses of the Department in regulating MEWAs in the interest of the public as provided by this Chapter."
Sec. 2.  G.S. 58-50-40(a) reads as rewritten:
"(a)	As used in this section and in G.S. 58-50-45, the term ‘group health insurance' means: (1) any policy described in G.S. 58-51-75, 58-51-80, or 58-51-90; (2) any group insurance certificate or group subscriber contract issued by a hospital service corporation pursuant to Articles 65 and 66 of this Chapter; or (3) any health care plan provided or arranged by a health maintenance organization pursuant to Article 67 of this Chapter; or (4) any multiple employer welfare arrangement as defined in G.S. 58-49-30(a). As used in this section and in G.S. 58-50-45, the term ‘insurance fiduciary' means any person, employer, principal, agent, trustee, or third party administrator, who is responsible for the payment of group health or group life insurance premiums.  As used in this section and in G.S. 58-50-45, ‘premiums' includes contributions to a multiple employer welfare arrangement."
Sec. 3.  G.S. 58-50-45(b) reads as rewritten:
"(b)	The notice required by subsection (a) of this section shall be printed in 10 point type and shall read as follows:
‘UNDER NORTH CAROLINA GENERAL STATUTE SECTION 58-50-40, NO PERSON, EMPLOYER, PRINCIPAL, AGENT, TRUSTEE, OR THIRD PARTY ADMINISTRATOR, WHO IS RESPONSIBLE FOR THE PAYMENT OF GROUP HEALTH OR LIFE INSURANCE OR HEALTH CARE PLAN PREMIUMS, FOR WHICH PAYMENT WAGES OR OTHER FUNDS ARE WITHHELD FROM THE PERSONS INSURED, SHALL: (1)	CAUSE THE CANCELLATION OR NONRENEWAL OF GROUP HEALTH OR LIFE INSURANCE, HOSPITAL, MEDICAL, OR DENTAL SERVICE PLAN, MULTIPLE EMPLOYER WELFARE ARRANGEMENT, OR HEALTH CARE PLAN COVERAGES AND THE CONSEQUENTIAL LOSS OF THE COVERAGES OF THE PERSONS INSURED, BY WILLFULLY FAILING TO PAY SUCH PREMIUMS IN ACCORDANCE WITH THE TERMS OF THE INSURANCE OR PLAN CONTRACT, AND (2) WILLFULLY FAIL TO DELIVER, AT LEAST 30 DAYS PRIOR TO THE TERMINATION OF SUCH COVERAGES, TO EACH NAMED INSURED A WRITTEN NOTICE OF THE PERSON'S INTENTION TO STOP PAYMENT OF PREMIUMS. THIS WRITTEN NOTICE MUST ALSO CONTAIN A NOTICE TO THE NAMED INSUREDS OF THEIR RIGHTS TO HEALTH INSURANCE CONVERSION POLICIES UNDER ARTICLE 53 OF GENERAL STATUTES CHAPTER 58 AND THEIR RIGHTS UNDER THE FEDERAL CONSOLIDATED OMNIBUS BUDGET RECONCILIATION (COBRA). VIOLATION OF THIS LAW IS A FELONY IF THE INSURANCE IS, IN WHOLE OR IN PART, PAID FOR OUT OF WAGES WITHHELD OR OTHER FUNDS COLLECTED FROM THE PERSONS INSURED. ANY PERSON VIOLATING THIS LAW IS ALSO SUBJECT TO A COURT ORDER REQUIRING THE PERSON TO COMPENSATE PERSONS INSURED FOR EXPENSES OR LOSSES INCURRED AS A RESULT OF THE TERMINATION OF THE INSURANCE.'“
Sec. 4.  G.S. 58-56-60(b) reads as rewritten:
"(b)	Each application for the issuance or renewal of a certificate shall be accompanied by a filing fee of one hundred dollars ($100.00) and evidence of maintenance of a bond, errors and omissions liability insurance, or both, of a type and in an amount to be determined by rules adopted by the Commissioner.  The fee prescribed by this subsection applies only to administrators who do not administer multiple employer welfare arrangements, as defined in G.S. 58-49-30(a)."
Sec. 5.  In the event any provision of this act is held to be invalid by any court of competent jurisdiction, the court's holding as to that provision shall not affect the validity or operation of other provisions of this act; and to that end the provisions of this act are severable.
Sec. 6.  This act is effective upon ratification.