State Codes and Statutes
Statutes > Connecticut > Title38a > Chap700c > Sec38a-556Sec. 38a-556. (Formerly Sec. 38-376). Health Reinsurance Association. Classes of risk. Audits. Insurance Commissioner's powers. Qualification as an acceptable alternative mechanism. There is hereby created a nonprofit legal entity to be known as the Health Reinsurance Association. All insurers, health care centers and self-insurers doing business in the state, as a condition to their authority to transact the applicable kinds of health insurance defined in section 38a-551, shall be members of the association. The association shall perform its functions under a plan of operation established and approved under subdivision (a) of this section, and shall exercise its powers through a board of directors established under this section.
(a) (1) The board of directors of the association shall be made up of nine individuals selected by participating members, subject to approval by the commissioner, two of whom shall be appointed by the commissioner on or before July 1, 1993, to represent health care centers. To select the initial board of directors, and to initially organize the association, the commissioner shall give notice to all members of the time and place of the organizational meeting. In determining voting rights at the organizational meeting each member shall be entitled to vote in person or proxy. The vote shall be a weighted vote based upon the net health insurance premium derived from this state in the previous calendar year. If the board of directors is not selected within sixty days after notice of the organizational meeting, the commissioner may appoint the initial board. In approving or selecting members of the board, the commissioner may consider, among other things, whether all members are fairly represented. Members of the board may be reimbursed from the moneys of the association for expenses incurred by them as members, but shall not otherwise be compensated by the association for their services. (2) The board shall submit to the commissioner a plan of operation for the association necessary or suitable to assure the fair, reasonable and equitable administration of the association. The plan of operation shall become effective upon approval in writing by the commissioner consistent with the date on which the coverage under sections 38a-505, 38a-546 and 38a-551 to 38a-559, inclusive, must be made available. The commissioner shall, after notice and hearing, approve the plan of operation provided such plan is determined to be suitable to assure the fair, reasonable and equitable administration of the association, and provides for the sharing of association gains or losses on an equitable proportionate basis. If the board fails to submit a suitable plan of operation within one hundred eighty days after its appointment, or if at any time thereafter the board fails to submit suitable amendments to the plan, the commissioner shall, after notice and hearing, adopt and promulgate such reasonable rules as are necessary or advisable to effectuate the provisions of this section. Such rules shall continue in force until modified by the commissioner or superseded by a plan submitted by the board and approved by the commissioner. The plan of operation shall, in addition to requirements enumerated in sections 38a-505, 38a-546 and 38a-551 to 38a-559, inclusive: (A) Establish procedures for the handling and accounting of assets and moneys of the association; (B) establish regular times and places for meetings of the board of directors; (C) establish procedures for records to be kept of all financial transactions, and for the annual fiscal reporting to the commissioner; (D) establish procedures whereby selections for the board of directors shall be made and submitted to the commissioner; (E) establish procedures to amend, subject to the approval of the commissioner, the plan of operations; (F) establish procedures for the selection of an administering carrier and set forth the powers and duties of the administering carrier; (G) contain additional provisions necessary or proper for the execution of the powers and duties of the association; (H) establish procedures for the advertisement on behalf of all participating carriers of the general availability of the comprehensive coverage under sections 38a-505, 38a-546 and 38a-551 to 38a-559, inclusive; (I) contain additional provisions necessary for the association to qualify as an acceptable alternative mechanism in accordance with Section 2744 of the Public Health Service Act, as set forth in the Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191); and (J) contain additional provisions necessary for the association to qualify as acceptable coverage in accordance with the Pension Benefit Guaranty Corporation and Trade Adjustment Assistance programs of the Trade Act of 2002 (P.L. 107-210). The commissioner may adopt regulations in accordance with the provisions of chapter 54 to establish criteria for the association to qualify as an acceptable alternative mechanism.
(b) The association shall have the general powers and authority granted under the laws of this state to carriers to transact the kinds of insurance defined under section 38a-551, and in addition thereto, the specific authority to: (1) Enter into contracts necessary or proper to carry out the provisions and purposes of sections 38a-505, 38a-546 and 38a-551 to 38a-559, inclusive; (2) sue or be sued, including taking any legal actions necessary or proper for recovery of any assessments for, on behalf of, or against participating members; (3) take such legal action as necessary to avoid the payment of improper claims against the association or the coverage provided by or through the association; (4) establish, with respect to health insurance provided by or on behalf of the association, appropriate rates, scales of rates, rate classifications and rating adjustments, such rates not to be unreasonable in relation to the coverage provided and the operational expenses of the association; (5) administer any type of reinsurance program, for or on behalf of participating members; (6) pool risks among participating members; (7) issue policies of insurance on an indemnity or provision of service basis providing the coverage required by sections 38a-505, 38a-546 and 38a-551 to 38a-559, inclusive, in its own name or on behalf of participating members; (8) administer separate pools, separate accounts or other plans as deemed appropriate for separate members or groups of members; (9) operate and administer any combination of plans, pools, reinsurance arrangements or other mechanisms as deemed appropriate to best accomplish the fair and equitable operation of the association; (10) set limits on the amounts of reinsurance which may be ceded to the association by its members; (11) appoint from among participating members appropriate legal, actuarial and other committees as necessary to provide technical assistance in the operation of the association, policy and other contract design, and any other function within the authority of the association; and (12) apply for and accept grants, gifts and bequests of funds from other states, federal and interstate agencies and independent authorities, private firms, individuals and foundations for the purpose of carrying out its responsibilities. Any such funds received shall be deposited in the General Fund and shall be credited to a separate nonlapsing account within the General Fund for the Health Reinsurance Association and may be used by the Health Reinsurance Association in the performance of its duties.
(c) Every member shall participate in the association in accordance with the provisions of this subdivision. (1) A participating member shall determine the particular risks it elects to have written by or through the association. A member shall designate which of the following classes of risks it shall underwrite in the state, from which classes of risk it may elect to reinsure selected risks: (A) Individual, excluding group conversion; and (B) individual, including group conversion. (2) No member shall be permitted to select out individual lives from an employer group to be insured by or through the association. Members electing to administer risks which are insured by or through the association shall comply with the benefit determination guidelines and the accounting procedures established by the association. A risk insured by or through the association cannot be withdrawn by the participating member except in accordance with the rules established by the association. (3) Rates for coverage issued by or through the association shall not be excessive, inadequate or unfairly discriminatory. Separate scales of premium rates based on age shall apply, but rates shall not be adjusted for area variations in provider costs. Premium rates shall take into consideration the substantial extra morbidity and administrative expenses for association risks, reimbursement or reasonable expenses incurred for the writing of association risks and the level of rates charged by insurers for groups of ten lives, provided incurred losses which result from provision of coverage in accordance with section 38a-537 shall not be considered. In no event shall the rate for a given classification or group be less than one hundred twenty-five per cent or more than one hundred fifty per cent of the average rate charged for that classification with similar characteristics under a policy covering ten lives. All rates shall be promulgated by the association through an actuarial committee consisting of five persons who are members of the American Academy of Actuaries, shall be filed with the commissioner and may be disapproved within sixty days from the filing thereof if excessive, inadequate or unfairly discriminatory.
(d) (1) Following the close of each fiscal year, the administering carrier shall determine the net premiums, reinsurance premiums less administrative expense allowance, the expense of administration pertaining to the reinsurance operations of the association and the incurred losses for the year. Any net loss shall be assessed to all participating members in proportion to their respective shares of the total health insurance premiums earned in this state during the calendar year, or with paid losses in the year, coinciding with or ending during the fiscal year of the association or on any other equitable basis as may be provided in the plan of operations. For self-insured members of the association, health insurance premiums earned shall be established by dividing the amount of paid health losses for the applicable period by eighty-five per cent. Net gains, if any, shall be held at interest to offset future losses or allocated to reduce future premiums. (2) Any net loss to the association represented by the excess of its actual expenses of administering policies issued by the association over the applicable expense allowance shall be separately assessed to those participating members who do not elect to administer their plans. All assessments shall be on an equitable formula established by the board. (3) The association shall conduct periodic audits to assure the general accuracy of the financial data submitted to the association and the association shall have an annual audit of its operations by an independent certified public accountant. The annual audit shall be filed with the commissioner for his review and the association shall be subject to the provisions of section 38a-14. (4) For the fiscal year ending December 31, 1993, and the first quarter of the fiscal year ending December 31, 1994, the administering carrier shall not include health care centers in assessing any net losses to participating members.
(e) All policy forms issued by or through the association shall conform in substance to prototype forms developed by the association, shall in all other respects conform to the requirements of sections 38a-505, 38a-546 and 38a-551 to 38a-559, inclusive, and shall be approved by the commissioner. The commissioner may disapprove any such form if it contains a provision or provisions which are unfair or deceptive or which encourage misrepresentation of the policy.
(f) Unless otherwise permitted by the plan of operation, the association shall not issue, reissue or continue in force comprehensive health care plan coverage with respect to any person who is already covered under an individual or group comprehensive health care plan, or who is sixty-five years of age or older and eligible for Medicare or who is not a resident of this state. Coverage provided to a HIPAA or health care tax credit eligible individual may be terminated to the extent permitted by HIPAA or the Trade Act of 2002, respectively.
(g) Benefits payable under a comprehensive health care plan insured by or reinsured through the association shall be paid net of all other health insurance benefits paid or payable through any other source, and net of all health insurance coverages provided by or pursuant to any other state or federal law including Title XVIII of the Social Security Act, Medicare, but excluding Medicaid.
(h) There shall be no liability on the part of and no cause of action of any nature shall arise against any carrier or its agents or its employees, the Health Reinsurance Association or its agents or its employees or the residual market mechanism established under the provisions of section 38a-557 or its agents or its employees, or the commissioner or his representatives for any action taken by them in the performance of their duties under sections 38a-505, 38a-546 and 38a-551 to 38a-559, inclusive. This provision shall not apply to the obligations of a carrier, a self-insurer, the Health Reinsurance Association or the residual market mechanism for payment of benefits provided under a comprehensive health care plan.
(P.A. 75-616, S. 6, 12; P.A. 82-159, S. 2; P.A. 86-106, S. 4; P.A. 90-134, S. 25, 28; P.A. 93-338, S. 3; June 18 Sp. Sess. P.A. 97-8, S. 69, 70, 88; June 30 Sp. Sess. P.A. 03-6, S. 68; P.A. 04-10, S. 10, 11; 04-257, S. 63.)
History: P.A. 82-159 amended Subsec. (c) exempting losses resulting from retroactive coverage under Sec. 38-262c from consideration in determining premium rates; P.A. 86-106 amended Subsec. (f) to provide that no coverage shall be provided any individual who is both eligible for Medicare and 65 years of age or older; P.A. 90-134 removed language in Subsec. (c) re groups of between 3 and 25 employees or members; Sec. 38-376 transferred to Sec. 38a-556 in 1991; P.A. 93-338 expanded the scope of the Health Reinsurance Association to include "health care centers", increased membership of the board of directors of the Health Reinsurance Association from seven to nine, adding two representatives of health care centers and added new Subsec. (d)(4) excluding health care centers in assessing net losses for the fiscal year ending December 31, 1993, and the first quarter of the fiscal year ending December 31, 1994; June 18 Sp. Sess. P.A. 97-8 added Subsec. (a)(I) re provisions necessary for the association to qualify as an acceptable alternative mechanism and amended Subsec. (f) re termination of coverage for a HIPAA eligible individual, effective July 1, 1997; June 30 Sp. Sess. P.A. 03-6 made a technical change, added Subsec. (a)(2)(J) re inclusion of provisions necessary for association to qualify as acceptable coverage in accordance with the Pension Benefit Guaranty Corporation and Trade Adjustment Assistance programs of the Trade Act of 2002, added Subsec. (b)(12) re application for and acceptance of grants for carrying out responsibilities and amended Subsec. (f) to include termination of coverage to health care tax credit eligible individuals and add reference to the Trade Act of 2002, effective August 20, 2003; P.A. 04-10 added "as" in Subsec. (b)(3) and substituted "substance" for "substances" in Subsec. (e); P.A. 04-257 made technical changes in Subsec. (c), effective June 14, 2004.
