2005 Idaho Code - 41-4010 — RESERVES AND SURPLUS

                                  TITLE  41
                                  INSURANCE
                                  CHAPTER 40
                        SELF-FUNDED HEALTH CARE PLANS
    41-4010.  RESERVES AND SURPLUS. (1) A self-funded plan shall establish and
maintain in the trust fund the following reserves:
    (a)  A reserve in an amount as certified by a member of the American
    academy of actuaries as being necessary for payment of claims against the
    trust fund for benefits, including both claims reported and not yet paid
    and claims incurred but not yet reported.
    (b)  If under the plan periodic contributions of either the employer(s) or
    employees to the trust fund are payable less frequently than monthly,
    there shall be a reserve for unearned contributions as computed pro rata
    on the basis of the unexpired portion of the period for which the
    contribution has been paid.
    (2)  In any determination of the financial condition of the trust fund the
claims reserve and reserve for unearned contributions shall constitute
liabilities.
    (3)  In addition to reserves required by this section, a self-funded plan
shall establish and maintain in its trust fund surplus equal to at least
thirty percent (30%) of the unpaid claims liability of the plan. A newly
formed plan with no prior operating history shall maintain surplus of not less
than ten percent (10%) of unpaid claims liability during its first year of
operation, not less than twenty percent (20%) of unpaid claims liability
during its second year of operation and not less than thirty percent (30%) of
unpaid claims liability at all times thereafter.
    (4)  Up to one-third (1/3) of the surplus required by this section may be
funded by a clean, irrevocable letter of credit, in a form acceptable to the
director, issued in favor of the trust fund by a federally or state chartered
bank having a branch office in Idaho. Such irrevocable letter of credit cannot
be guaranteed by pledge of any of the plan assets.