On Aug. 1, 2018, the Vermont Dept. of Financial Regulation (DFR) published a new rule to protect Vermont consumers and promote the stability of Vermont’s health insurance markets, to the extent permitted under federal law. The rule applies only to fully insured MEWAs (self-insured and partially self-insured are exempt) and dictates the licensure, solvency, reserve requirements and rating requirements.
The new rule states that an association or MEWA must obtain a license with the department to offer a fully insured health benefit plan to an employer that is either domiciled in Vermont or has its principal headquarters or principal administrative office in Vermont. The law details what’s required for an application for license and that it expires 366 days after it is issued.
According to the rule, a fully insured association or MEWA must have a minimum surplus that is not less than (i) $250,000 (if insurer directly bills the consumer) or (ii) $500,000 (if the association bills its members and then remits the payments to the insurer), subject to the commissioner requiring additional surplus funds based on the coverages and exposures involved. The association and MEWA must also obtain a surety bond sufficient to cover 20 percent of its annual premium for Vermont members. According to DFS, the new rule applies to both in-state and out-of-state associations.
According to the rule, to meet the membership requirements, employer members of an association MEWA must meet Vermont’s commonality-of-interest test. To do that, the employers must be in the same trade, industry, line of business or profession, OR each employer must have their principal place of business in the State of Vermont. In addition, an association or MEWA doing business in Vermont may not restrict membership to employers located within a particular geographic region of Vermont and must accept employers with a principal place of business located in any part of Vermont.
Importantly, the rule requires association MEWA plans to comply with many of the ACA requirements, including those relating to essential health benefits, cost-sharing limits, lifetime and annual dollar limits, the 60 percent actuarial value requirements, pediatric dental and vision coverage, and prohibitions on pre-existing condition exclusions. Such plans must comply with Vermont’s insurance coverage requirements as well.
Finally, on rating, the association or MEWA may be rated based on collective group experience of its members, provided that each certificate holder and dependent is charged the same community rate. In addition, certain risk classifications are prohibited in rating employees and dependents, including demographic (age and gender rating), geographic area, health status, industry, medical underwriting and screening, experience, tier (except tiers related to family structure) or durational ratings.
Employers should work with outside counsel to better understand all of the factors that could potentially play into an association or MEWA plan.
Emergency Rule I-2018-01-E »