2019 Connecticut General Statutes
Title 38a - Insurance
Chapter 700c - Health Insurance
Section 38a-569 - Connecticut Small Employer Health Reinsurance Pool.
(a)(1) There is established a nonprofit entity to be known as the “Connecticut Small Employer Health Reinsurance Pool”. All insurers issuing health insurance in this state and insurance arrangements providing health plan benefits in this state on and after July 1, 1990, shall be members of the pool.
(2) On or before July 15, 1990, the commissioner shall give notice to all insurers and insurance arrangements of the time and place for the initial organizational meeting, which shall take place by September 1, 1990. The members shall select the initial board, subject to approval by the commissioner. The board shall consist of at least five and not more than nine representatives of members. There shall be no more than two members of the board representing any one insurer or insurance arrangement. In determining voting rights at the organizational meeting, each member shall be entitled to vote in person or by proxy. The vote shall be weighted based upon net health insurance premium derived from this state in the previous calendar year. To the extent possible, at least one-third of the members of the board shall be domestic insurance companies and at least two-thirds of the members of the board shall be small employer carriers. At least one member of the board shall be a health care center and at least one member shall be a small employer carrier with less than one hundred million dollars in net small employer health insurance premium in this state. The Insurance Commissioner shall be an ex-officio member of the board. The net premium amount shall be adjusted by the board periodically for health care cost inflation. In approving selection of the board, the commissioner shall assure that all members are fairly represented. The membership of all boards subsequent to the initial board shall, to the extent possible, reflect the same distribution of representation as is described in this subdivision.
(3) If the initial board is not elected at the organizational meeting, the commissioner shall appoint the initial board within fifteen days of the organizational meeting.
(4) Within ninety days after the appointment of such initial board, the board shall submit to the commissioner a plan of operation and thereafter any amendments thereto necessary or suitable to assure the fair, reasonable and equitable administration of the pool. The commissioner shall, after notice and hearing, approve the plan of operation provided he determines it to be suitable to assure the fair, reasonable and equitable administration of the pool, and provides for the sharing of pool gains or losses on an equitable proportionate basis in accordance with the provisions of subsection (d) of this section, revision of 1958, revised to January 1, 2013. The plan of operation shall become effective upon approval in writing by the commissioner consistent with the date on which the coverage under this section shall be made available. If the board fails to submit a suitable plan of operation within one hundred eighty days after its appointment, or at any time thereafter fails to submit suitable amendments to the plan of operation, the commissioner shall, after notice and hearing, adopt and promulgate a plan of operation or amendments, as appropriate. The commissioner shall amend any plan adopted by him, as necessary, at the time a plan of operation is submitted by the board and approved by the commissioner.
(5) On and after July 10, 2015, the plan of operation shall establish procedures for: (A) Handling and accounting of assets and moneys of the pool, and for an annual fiscal reporting to the commissioner; (B) filling vacancies on the board, subject to the approval of the commissioner; (C) selecting an administrator and setting forth the powers and duties of the administrator; (D) reinsuring risks; (E) collecting assessments from all members to provide for claims reinsured by the pool and for administrative expenses incurred or estimated to be incurred during the period for which the assessment is made; and (F) any additional matters at the discretion of the board.
(6) The pool shall have the general powers and authority granted under the laws of Connecticut to insurance companies licensed to transact health insurance and, in addition thereto, the specific authority to: (A) Enter into contracts as are necessary or proper to carry out the provisions and purposes of this section, including the authority, with the approval of the commissioner, to enter into contracts with programs of 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 actions necessary or proper for recovery of any assessments for, on behalf of, or against members; (C) take such legal action as necessary to avoid the payment of improper claims against the pool; (D) define the array of health coverage products for which reinsurance will be provided, and to issue reinsurance policies, in accordance with the requirements of this section; (E) establish rules, conditions and procedures pertaining to the reinsurance of members’ risks by the pool; (F) establish appropriate rates, rate schedules, rate adjustments, rate classifications and any other actuarial functions appropriate to the operation of the pool; (G) assess members in accordance with the provisions of subsection (c) of this section, and to make advance interim assessments as may be reasonable and necessary for organizational and interim operating expenses. Any such interim assessments shall be credited as offsets against any regular assessments due following the close of the fiscal year; (H) appoint from among members appropriate legal, actuarial and other committees as necessary to provide technical assistance in the operation of the pool, policy and other contract design, and any other function within the authority of the pool; and (I) borrow money to effect the purposes of the pool. Any notes or other evidence of indebtedness of the pool not in default shall be legal investments for insurers and may be carried as admitted assets.
(b) Any member whose health insurance plan is subject to section 38a-567 may reinsure with the pool coverage of an eligible employee of a small employer or any dependent of such an employee.
(c) (1) Following the close of each fiscal year, the administrator shall determine the net premiums, the pool expenses of administration and the incurred losses for the year, taking into account investment income and other appropriate gains and losses. For purposes of this section, health insurance premiums earned by insurance arrangements shall be established by adding paid health losses and administrative expenses of the insurance arrangement. Health insurance premiums and benefits paid by a member 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. For purposes of this subsection, “net premiums” means health insurance premiums, less administrative expense allowances.
(2) Any net loss for the year shall be recouped by assessments of members.
(A) Assessments shall first be apportioned by the board among all members in proportion to their respective shares of the total health insurance premiums earned in this state from health insurance plans and insurance arrangements covering small employers during the calendar year coinciding with or ending during the fiscal year of the pool, or on any other equitable basis reflecting coverage of small employers as may be provided in the plan of operations. An assessment shall be made pursuant to this subparagraph against a health care center, that is approved by the Secretary of Health and Human Services as a health maintenance organization pursuant to 42 USC 300e et seq., subject to an assessment adjustment formula adopted by the board and approved by the commissioner for such health care centers that recognizes the restrictions imposed on such health care centers by federal law. Such adjustment formula shall be adopted by the board and approved by the commissioner prior to the first anniversary of the pool’s operation.
(B) If such net loss is not recouped before assessments totaling five per cent of such premiums from plans and arrangements covering small employers have been collected, additional assessments shall be apportioned by the board among all members in proportion to their respective shares of the total health insurance premiums earned in this state from other individual and group plans and arrangements, exclusive of any individual Medicare supplement policies as defined in section 38a-495 during such calendar year.
(C) Notwithstanding the provisions of this subdivision, the assessments to any one member under subparagraph (A) or (B) of this subdivision shall not exceed forty per cent of the total assessment under each subparagraph for the first fiscal year of the pool’s operation and fifty per cent of the total assessment under each subparagraph for the second fiscal year. Any amounts abated pursuant to this subparagraph shall be assessed against the other members in a manner consistent with the basis for assessments set forth in this subdivision.
(3) If assessments exceed actual losses and administrative expenses of the pool, the excess shall be held at interest and used by the board to offset future losses or to reduce pool premiums. As used in this subsection, “future losses” includes reserves for incurred but not reported claims.
(4) Each member’s proportion of participation in the pool shall be determined annually by the board based on annual statements and other reports deemed necessary by the board and filed by the member with it. Insurance arrangements shall report to the board claims payments made and administrative expenses incurred in this state on an annual basis on a form prescribed by the commissioner.
(5) Provision shall be made in the plan of operation for the imposition of an interest penalty for late payment of assessments.
(6) The board may defer, in whole or in part, the assessment of a health care center if, in the opinion of the board: (A) Payment of the assessment would endanger the ability of the health care center to fulfill its contractual obligations, or (B) in accordance with standards included in the plan of operation, the health care center has written, and reinsured in their entirety, a disproportionate number of special health care plans. In the event an assessment against a health care center is deferred in whole or in part, the amount by which such assessment is deferred may be assessed against the other members in a manner consistent with the basis for assessments set forth in this subsection. The health care center receiving such deferment shall remain liable to the pool for the amount deferred. The board may attach appropriate conditions to any such deferment.
(d) (1) The participation in the pool as members, the establishment of rates, forms or procedures or any other joint or collective action required by this section shall not be the basis of any legal action, criminal or civil liability or penalty against the pool or any of its members.
(2) Any person or member made a party to any action, suit or proceeding because the person or member served on the board or on a committee or was an officer or employee of the pool shall be held harmless and be indemnified by the program against all liability and costs, including the amounts of judgments, settlements, fines or penalties, and expenses and reasonable attorney’s fees incurred in connection with the action, suit or proceeding. The indemnification shall not be provided on any matter in which the person or member is finally adjudged in the action, suit or proceeding to have committed a breach of duty involving gross negligence, dishonesty, wilful misfeasance or reckless disregard of the responsibilities of office. Costs and expenses of the indemnification shall be prorated and paid for by all members. The Insurance Commissioner may retain actuarial consultants necessary to carry out said commissioner’s responsibilities pursuant to this section or section 38a-564, 38a-566 or 38a-567, and such expenses shall be paid by the pool established in this section.
(P.A. 90-134, S. 20, 28; P.A. 91-201, S. 1, 8; P.A. 92-125, S. 4, 5; P.A. 93-137, S. 5, 6; 93-345, S. 5; P.A. 05-238, S. 6; P.A. 10-5, S. 35; P.A. 15-247, S. 21; P.A. 17-15, S. 73.)
History: P.A. 91-201 amended Subsec. (a) to clarify the requirement that the reinsurance pool board’s composition ensure fair representation, to require the board to determine whether reinsurance coverage can be deferred and to give approval to enter into contracts with programs of other states for the performance of common functions, amended Subsec. (b) to provide for an annual deductible of $5,000 on reinsurance per covered individual, to give the board discretion to determine when insurance coverage can be reinsured and to allow for reinsuring newborn infants, amended Subsecs. (c) and (d) to establish a more uniform reinsurance premium rate system, repealed Subsec. (e) re reinsurance premium and relettered (f) as (e) and (g) as (f) and made technical changes; P.A. 92-125 amended Subsec. (b) to permit use of the actuarial equivalent of small employer benefit plans in calculating reimbursement amount for reinsurance; P.A. 93-137 amended Subsec. (b)(2) to specify when reinsurance is allowed and added new Subsec. (b)(6) disallowing reinsurance for two or more small employers when such coverage is discontinued or replaced by a group policy of another carrier unless the coverage was reinsured by a previous carrier, effective June 11, 1993; P.A. 93-345 deleted Subsec. (b)(4) re determination by the board whether reinsurance can be deferred; P.A. 05-238 amended Subsec. (b) to exempt coverage for employees or dependents whose premium rates are not subject to Sec. 38a-567 and make technical changes, effective July 8, 2005; P.A. 10-5 made technical changes in Subsecs. (a)(5), (e)(1) and (f)(2), effective May 5, 2010; P.A. 15-247 amended Subsec. (a) by adding “, revision of 1958, revised to January 1, 2013” in Subdiv. (4), adding “On and after July 10, 2015,” and making a technical change in Subdiv. (5), and making a conforming change in Subdiv. (6), amended Subsec. (b) by adding “whose health insurance plan is subject to section 38a-567”, deleting provisions re reinsurance exclusion and reinsurance coverage requirements, and making a technical change, deleted former Subsecs. (c) and (d) re premium rates charged for reinsurance, redesignated existing Subsec. (e) as Subsec. (c) and amended same by making technical changes in Subdiv. (2)(A), redesignated existing Subsec. (f) as Subsec. (d) and amended same by making technical changes in Subdiv. (1) and replacing reference to Secs. 38a-564 to 38a-572 with reference to this section and Secs. 38a-564, 38a-566 and 38a-567 in Subdiv. (2), effective July 10, 2015; P.A. 17-15 made a technical change in Subsec. (d)(2).
