Q-1. Does the recent U.S. Department of Labor Association Health Plan Rule, 83 FR 28912, (AHP Rule) preempt Maine’s regulation of associations or multiple employer welfare arrangements (MEWAs)?
A. No. The AHP Rule has no impact on, and does not preempt in any way, state regulation of insurance coverage issued to or by associations or MEWAs, or to individuals therein. Also, note that although a federally recognized AHP is exempt from the small group and individual rating requirements of federal law, applicable state law rating rules are not preempted. Self-insured MEWAs licensed[RAW1] in Maine must community-rate their small employers, must provide all small group mandated benefits (which at this point means the EHBs), and may not underwrite on the basis of health risk or claims experience. Small group community rating and guaranteed issue requirements also apply to health insurance sold to small employers through[RAW2] fully-insured MEWAs.
Q-2. What is a “MEWA”?
A. The basic definition is very broad: “an employee welfare benefit plan or any other arrangement that is established or maintained for the purpose of offering or providing health benefits to the employees of 2 or more employers or to their beneficiaries.” For this purpose, employers under common ownership or control are considered a single employer, but the client companies of an employee leasing company (PEO) are considered multiple employers. However, the term is often used more narrowly to refer specifically to “self-insured” MEWAs, that is, arrangements where the benefits are financed and provided directly by the MEWA itself rather than by an insurance company.
Q-3. Does the Bureau of Insurance (BOI) regulate MEWAs[RAW3] ?
A. Yes. Self-insured MEWAs must be licensed under Chapter 81 of the Maine Insurance Code (24‑A M.R.S. §§ 6601–6616). BOI does not directly regulate fully-insured MEWAs, but it regulates all insurance coverage sold through fully-insured MEWAs, and it also regulates any stop-loss insurance purchased by a self-insured MEWA.
Q-4. Is an AHP considered a MEWA under the Employee Retirement Income Security Act (ERISA)?
A. Yes. The AHP Rule expressly states that an AHP is a type of MEWA.
Q-5. May an AHP sponsor fully-insured coverage to its members in Maine?
A. Only under certain specified circumstances. For a group or association of employers to sponsor a group health plan [RAW4] in Maine, the group or association must meet specific requirements to be a recognized group under the Insurance Law. For example, 24-A M.R.S. § 2805-A[RAW5] require that an association be in active existence for at least two years and be formed in good faith for purposes other than obtaining insurance coverage for its members. In addition, the insurance coverage issued to the association is subject to BOI approval and oversight.
Q-6. May an AHP offer large group coverage to its individual and small employer members if the AHP has over 50 members?
A. No. AHP coverage issued to small employers in Maine is exempt from federal small group rating requirements but not from Maine’s small group rating requirements. 24-A M.R.S. § 2808-B requires that any coverage issued to an association or group of employers must be rated based on its underlying member employers, and not based on the size of the association. Individuals must receive individual coverage, small employers must receive small group coverage, and large employers must receive large group coverage. This requirement is often referred to as the “look through” provision.
However, beginning in 2020, [RAW6] the superintendent may authorize a carrier to establish a separate community rate for an AHP as long as membership or eligibility for participation is not conditional on health status, claims experience or other risk selection criteria and all small group health plans offered by the carrier through the AHP meet additional requirements set forth in 24-A M.R.S. § 2808-B (E)
Q-7. Must coverage issued to an association that includes individual members and/or small employer members offer the Essential Health Benefits (EHB) package?
A. Yes. Insurance Law requires every association group policy delivered or issued for delivery in Maine that provides hospital, medical or surgical coverage and is not a grandfathered health plan to provide coverage for the EHB package pursuant to 42 U.S.C. § 18022(a) for its individual and small employer members. The EHB package includes essential health benefits, annual out of pocket maximums for cost-sharing, and actuarial value requirements (i.e., metal levels). A grandfathered health plan means coverage provided by an issuer in which an individual or group was enrolled in on March 23, 2010 for as long as the coverage maintains its grandfathered status as defined in 42 U.S.C. § 18011(e).
Q-8. Must insurance coverage issued to an association comply with all consumer protections in the ACA and the Insurance Law?
A. Yes. Insurance coverage sold to an association must comply with all consumer protections including state mandated benefits, rating requirements, external appeal requirements, non-discrimination provisions, prohibitions on pre-existing condition exclusions, and no lifetime limits or annual benefit limits.
Q-9. May an AHP offer self-funded coverage to its members in Maine?
A. Yes, under certain circumstances. An AHP that offers self-funded coverage to its members in Maine would be deemed to be doing the business of insurance in Maine and must become licensed in accordance with the Insurance Law. Self-funded AHPs that meet the requirements of the State of Maine MEWA laws may apply to be licensed as MEWAs rather than as insurance companies. For these self-funded associations, the MEWA laws provide the applicable requirements for solvency, premium rate review, state benefit mandates and consumer protections. Refer to 24-A M.R.S. Ch. 81 (§§ 6601–6616)
Q-10. Are out-of-state associations offering coverage to members in Maine subject to Maine regulation?
A. Yes. The AHP Rule does not preempt state jurisdiction over insurance coverage issued to state residents or insurance policies or certificates delivered or issued for delivery in a state. Therefore, the AHP Rule does not affect how BOI regulates out-of-state association coverage. BOI will continue to enforce Maine’s Insurance Law and consumer protections such as state mandated benefits, rating requirements, external appeal requirements, non-discrimination provisions, prohibitions on pre-existing condition exclusions, and no lifetime limits or annual benefit limits. Refer to 24-A M.R.S. § 2412(1-A) (filing and approval requirements for carriers offering coverage to Maine employers through out-of-state AHPs)
Q-11. Could persons who solicit, negotiate or sell unlicensed out-of-state association coverage be subject to enforcement action by BOI?
A. Yes. Any person who solicits, negotiates or effectuates any coverage on behalf of an unlicensed or unauthorized self-funded association would be in violation of Insurance Law and would be subject to BOI administrative action and penalties, including an order to cease and desist from such activities.
Q-12. Are licensed brokers and agents responsible for ensuring that the coverage sold through self-funded AHPs complies with the Insurance Law?
A. Yes. BOI may find that any licensed insurance agent or broker that engages in behavior that is contrary to the Insurance Law is untrustworthy or incompetent and BOI may suspend or revoke all licenses issued to such licensee pursuant to 24-A M.R.S. § 1420 and/or impose monetary penalties pursuant to Insurance Law.
Q-13. Where can I find references to Maine statutes involving AHPs?
A.
1. Non-Fully-Insured AHPs: Our MEWA licensing law, 24-A M.R.S. Ch. 81 (§§ 6601–6616), and the other Insurance Code Requirements that Chapter 81 incorporates by reference.
2. Fully-Insured AHPs – Permissible Group Policyholders: 24-A M.R.S. §§ 2805-A (association groups), 2806 (trustee groups), 2808 (other groups)
3. Fully-Insured AHPs – “Look-Through” Community Rating: 24-A M.R.S. §§ 2808-B(1)(D) & (H) (making the small-group rating law applicable to a small-employer subgroup of a larger group, and defining “subgroup”)
3. Fully-Insured AHPs – Master Policy Sitused Out of State: 24-A M.R.S. § 2412(1-A) (filing and approval requirements for carriers offering coverage to Maine employers through out-of-state AHPs)
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