2009 Iowa Code
Title 13 - Commerce
Subtitle 1 - Insurance and Related Regulation
CHAPTER 513B - SMALL GROUP HEALTH COVERAGE
513B.13 - SMALL EMPLOYER CARRIER REINSURANCE PROGRAM.

        513B.13  SMALL EMPLOYER CARRIER REINSURANCE PROGRAM.

         1.  A nonprofit corporation is established to be known as the Iowa
      small employer health reinsurance program.
         2.  A reinsuring carrier is subject to this program.
         3. a.  The program shall operate subject to the supervision
      and control of a board.  Subject to the provisions of paragraph
      "b", the board shall consist of nine members appointed by the
      commissioner, and the commissioner or the commissioner's designee,
      who shall serve as an ex officio member and as chairperson of the
      board.
         b.  In appointing the members of the board, the commissioner
      shall include representatives of small employers and small employer
      carriers and such other individuals as determined to be qualified by
      the commissioner.  At least five of the members of the board shall be
      representatives of carriers and shall be selected from individuals
      nominated by small employer carriers in this state pursuant to
      procedures and guidelines provided by rule of the commissioner.
         c.  Members shall be appointed for terms of three years.  A
      board member's term shall continue until the member's successor is
      appointed.
         d.  A vacancy in the board shall be filled by the commissioner
      for the remainder of the term.  A member of the board may be removed
      by the commissioner for cause.
         e.  During the period of time that the program is suspended
      pursuant to subsection 14, the size of the board may be reduced with
      the approval of the commissioner.
         4.  The board may submit a plan of operation to the commissioner.
      The commissioner, after notice and hearing, may approve a plan of
      operation if the commissioner determines that the plan is suitable to
      assure the fair, reasonable, and equitable administration of the
      program, and provides for the sharing of program gains and losses on
      an equitable and proportionate basis in accordance with the
      provisions of this section.  A plan of operation is effective upon
      written approval of the commissioner.
         5.  The board may submit to the commissioner any amendments to the
      plan necessary or suitable to assure the fair, reasonable, and
      equitable administration of the program.  The amendments shall be
      effective upon the written approval of the commissioner.
         6.  The plan of operation shall do all of the following:
         a.  Establish procedures for the handling and accounting of
      program assets and moneys, and for an annual fiscal reporting to the
      commissioner.
         b.  Establish procedures for selecting an administering
      carrier and setting forth the powers and duties of the administering
      carrier.
         c.  Establish procedures for reinsuring risks in accordance
      with the provisions of this section.
         d.  Establish procedures for collecting assessments from
      reinsuring carriers to fund claims and administrative expenses
      incurred or estimated to be incurred by the program.
         e.  Establish a methodology for applying the dollar thresholds
      contained in this section for carriers that pay or reimburse health
      care providers through capitation or a salary.
         f.  Provide for any additional matters necessary to implement
      and administer the program.
         7.  The same general powers and authority granted under the laws
      of this state to insurance companies and health maintenance
      organizations licensed to transact business in this state may be
      exercised by the board under the program, except the power to issue
      health insurance coverages directly to either groups or individuals.
      Additionally, the board is granted the specific authority to do all
      or any of the following:
         a.  Enter into contracts as necessary or proper to administer
      the provisions and purposes of this subchapter, including the
      authority, with the approval of the commissioner, to enter into
      contracts with similar programs in other states for the joint
      performance of common functions or with persons or other
      organizations for the performance of administrative functions.
         b.  Sue or be sued, including taking any legal action
      necessary or proper to recover any assessments and penalties for, on
      behalf of, or against the program or any reinsuring carriers.
         c.  Take any legal action necessary to avoid the payment of
      improper claims made against the program.
         d.  Define the health insurance coverages for which
      reinsurance will be provided, and issue reinsurance policies,
      pursuant to this subchapter.
         e.  Establish rules, conditions, and procedures for reinsuring
      risks under the program.
         f.  Establish and implement actuarial functions as appropriate
      for the operation of the program.
         g.  Assess reinsuring carriers in accordance with the
      provisions of subsection 11, and make advance interim assessments as
      may be reasonable and necessary for organizational and interim
      operating expenses.  Any interim assessments shall be credited as
      offsets against any regular assessments due following the close of
      the calendar year.
         h.  Appoint appropriate legal, actuarial, and other committees
      as necessary to provide technical assistance in the operation of the
      program, policy and other contract design, and any other function
      within the authority of the program.
         i.  Borrow money to effect the purposes of the program.  Any
      notes or other evidence of indebtedness of the program not in default
      are legal investments for carriers and may be carried as admitted
      assets.
         8.  A reinsuring carrier may reinsure with the program as provided
      in this section.
         a.  The program shall reinsure up to the level of coverage
      provided in either a basic health benefit plan or standard health
      benefit plan established by the board.
         b.  A small employer carrier may reinsure an entire employer
      group within sixty days of the commencement of the group's coverage
      under health insurance coverage.
         c.  A reinsuring carrier may reinsure an eligible employee or
      dependent within a period of sixty days following the commencement of
      the coverage with the small employer.  A newly eligible employee or
      dependent of a reinsured small employer may be reinsured within sixty
      days of the commencement of such person's coverage.
         d. (1)  The program shall not reimburse a reinsuring carrier
      with respect to the claims of a reinsured employee or dependent until
      the small employer carrier has incurred an initial level of claims
      for such employee or dependent of five thousand dollars in a calendar
      year for benefits covered by the program.  In addition, the
      reinsuring carrier is responsible for ten percent of the next fifty
      thousand dollars of incurred claims during a calendar year and the
      program shall reinsure the remainder.  A reinsuring carrier's
      liability under this subparagraph shall not exceed a maximum limit of
      ten thousand dollars in any one calendar year with respect to any
      reinsured individual.
         (2)  The board annually shall adjust the initial level of claims
      and the maximum limit to be retained by the small employer carrier to
      reflect increases in costs and utilization within the standard market
      for health benefit plans within the state.  The adjustment shall not
      be less than the annual change in the medical component of the
      "consumer price index for all urban consumers" of the United States
      department of labor, bureau of labor statistics, unless the board
      proposes and the commissioner approves a lower adjustment factor.
         e.  A small employer carrier may terminate reinsurance for one
      or more of the reinsured employees or dependents of a small employer
      on any plan anniversary date.
         f.  Premium rates charged for reinsurance by the program to a
      health maintenance organization that is federally qualified under 42
      U.S.C. § 300c(c)(2)(A), and is thereby subject to requirements that
      limit the amount of risk that may be ceded to the program that are
      more restrictive than those specified in paragraph "d", shall be
      reduced to reflect that portion of the risk above the amount set
      forth in paragraph "d" that may not be ceded to the program, if
      any.
         9. a.  The board, as part of the plan of operation, shall
      establish a methodology for determining premium rates to be charged
      by the program for reinsuring small employers and individuals
      pursuant to this section.  The methodology shall include a system for
      classification of small employers that reflects the types of case
      characteristics commonly used by small employer carriers in the
      state.  The methodology shall provide for the development of base
      reinsurance premium rates, which shall be multiplied by the factors
      set forth in paragraph "b" to determine the premium rates for the
      program.  The base reinsurance premium rates shall be established by
      the board, subject to the approval of the commissioner, and shall be
      set at levels which reasonably approximate gross premiums charged to
      small employers by small employer carriers for health insurance
      coverages with benefits similar to the standard health benefit plan.

         b.  Premiums for the program shall be as follows:
         (1)  An entire small employer group may be reinsured for a rate
      that is one and one-half times the base reinsurance premium rate for
      the group established pursuant to this subsection.
         (2)  An eligible employee or dependent may be reinsured for a rate
      that is five times the base reinsurance premium rate for the
      individual established pursuant to this subsection.
         c.  The board periodically shall review the methodology
      established under paragraph "a", including the system of
      classification and any rating factors, to assure that it reasonably
      reflects the claims experience of the program.  The board may propose
      changes to the methodology which shall be subject to the approval of
      the commissioner.
         10.  If health insurance coverage for a small employer is entirely
      or partially reinsured with the program, the premium charged to the
      small employer for any rating period for the coverage issued shall
      meet the requirements relating to premium rates set forth in section
      513B.4.
         11. a.  Prior to March 1 of each year, the board shall
      determine and report to the commissioner the program net loss for the
      previous calendar year, including administrative expenses and
      incurred losses for the year, taking into account investment income
      and other appropriate gains and losses.
         b.  Any net loss for the year shall be recouped by assessments
      of reinsuring carriers.
         (1)  The board shall establish, as part of the plan of operation,
      a formula by which to make assessments against reinsuring carriers.
      The assessment formula shall be based on both of the following:
         (a)  Each reinsuring carrier's share of the total premiums earned
      in the preceding calendar year from health insurance coverages
      delivered or issued for delivery to small employers in this state by
      reinsuring carriers.
         (b)  Each reinsuring carrier's share of the premiums earned in the
      preceding calendar year from newly issued health insurance coverages
      delivered or issued for delivery during such calendar year to small
      employers in this state by reinsuring carriers.
         (2)  The formula established pursuant to subparagraph (1) shall
      not result in any reinsuring carrier having an assessment share that
      is less than fifty percent nor more than one hundred fifty percent of
      an amount which is based on the proportion of the reinsuring
      carrier's total premiums earned in the preceding calendar year from
      health insurance coverages delivered or issued for delivery to small
      employers in this state by reinsuring carriers to total premiums
      earned in the preceding calendar year from health insurance coverages
      delivered or issued for delivery to small employers in this state by
      all reinsuring carriers.
         (3)  The board, with approval of the commissioner, may change the
      assessment formula established pursuant to subparagraph (1) from time
      to time as appropriate.  The board may provide for the shares of the
      assessment base attributable to premiums from all health insurance
      coverages and to premiums from newly issued health insurance
      coverages to vary during a transition period.
         (4)  Subject to the approval of the commissioner, the board shall
      make an adjustment to the assessment formula for reinsuring carriers
      that are approved health maintenance organizations which are
      federally qualified under 42 U.S.C. § 300 et seq., to the extent, if
      any, that restrictions are placed on them that are not imposed on
      other small employer carriers.
         (5)  Premiums and benefits paid by a reinsuring carrier that are
      less than an amount determined by the board to justify the cost of
      collection shall not be considered for purposes of determining
      assessments.
         c. (1)  Prior to March 1 of each year, the board shall
      determine and file with the commissioner an estimate of the
      assessments needed to fund the losses incurred by the program in the
      previous calendar year.
         (2)  If the board determines that the assessments needed to fund
      the losses incurred by the program in the previous calendar year will
      exceed the amount specified in subparagraph (3), the board shall
      evaluate the operation of the program and report its findings,
      including any recommendations for changes to the plan of operation,
      to the commissioner within ninety days following the end of the
      calendar year in which the losses were incurred.  The evaluation
      shall include:  an estimate of future assessments, the administrative
      costs of the program, the appropriateness of the premiums charged,
      and the level of insurer retention under the program and the costs of
      coverage for small employers.  If the board fails to file the report
      with the commissioner within ninety days following the end of the
      applicable calendar year, the commissioner may evaluate the
      operations of the program and implement such amendments to the plan
      of operation the commissioner deems necessary to reduce future losses
      and assessments.
         (3)  For any calendar year, the amount specified in this
      subparagraph is five percent of total premiums earned in the previous
      year from health insurance coverages delivered or issued for delivery
      to small employers in this state by reinsuring carriers.
         (4)  If assessments in each of two consecutive calendar years
      exceed by ten percent the amount specified in subparagraph (3), the
      commissioner may relieve carriers from any or all of the regulations
      of this subchapter or take such other actions as the commissioner
      deems equitable and necessary to spread the risk of loss and assure
      portability of coverages and continuity of benefits so as to reduce
      assessments to ten percent or less of that amount specified in
      subparagraph (3).
         d.  If assessments exceed net losses of the program, the
      excess shall be held in an interest-bearing account and used by the
      board to offset future losses or to reduce program premiums.  As used
      in this paragraph, "future losses" includes reserves for incurred
      but not reported claims.
         e.  Each reinsuring carrier's proportion of the assessment
      shall be determined annually by the board based on annual statements
      and other reports deemed necessary by the board and filed by the
      reinsuring carriers with the board.
         f.  The plan of operation shall provide for the imposition of
      an interest penalty for late payment of assessments.
         g.  A reinsuring carrier may seek from the commissioner a
      deferment from all or part of an assessment imposed by the board.
      The commissioner may defer all or part of the assessment of a
      reinsuring carrier if the commissioner determines that the payment of
      the assessment would place the reinsuring carrier in a financially
      impaired condition.  If all or part of an assessment against a
      reinsuring carrier is deferred, the amount deferred shall be assessed
      against the other participating carriers in a manner consistent with
      the basis for assessment set forth in this subsection.  The
      reinsuring carrier receiving such deferment shall remain liable to
      the program for the amount deferred and shall be prohibited from
      reinsuring any individuals or groups in the program until such time
      as it pays such assessments.
         12.  The participation in the program as reinsuring carriers, the
      establishment of rates, forms, or procedures, or any other joint or
      collective action required by this subchapter shall not be the basis
      of any legal action, criminal or civil liability, or penalty against
      the program or any of its reinsuring carriers either jointly or
      separately.
         13.  The program is exempt from any and all state or local taxes.

         14.  The board of the Iowa small employer health reinsurance
      program, on an ongoing basis, shall review the program and make
      recommendations as to the continued cost effectiveness of the program
      to the commissioner, which recommendations may include proposed
      modifications or suspension of operation of the program.  In making
      such a review, the board shall consider such factors as the
      population reinsured by the program, the premiums and assessments
      paid to the program, the number and percentage of carriers electing
      to utilize the program, health care reform measures implemented in
      the state, as well as other factors deemed relevant by the board.
      The commissioner, upon finding that the program is not cost
      effective, may make modifications to the program or suspend the
      operation of the program by rule.  

         92 Acts, ch 1167, § 14; 93 Acts, ch 80, § 11, 12; 97 Acts, ch 103,
      §26--32; 99 Acts, ch 165, §8; 2001 Acts, ch 69, §18--22, 39; 2005
      Acts, ch 70, §9
         Referred to in § 513B.2, 513B.4, 513B.11, 513B.12