Alaska Statutes Sec. 21.85.030 - Qualifications for a Certificate of Authority

(a) The director may not issue a certificate of authority to a self-funded multiple employer welfare arrangement unless the arrangement establishes to the satisfaction of the director that

(1) employers participating in the arrangement are members of a bona fide association or group of two or more businesses in the same or a closely related trade, profession, or industry that provide support, services, or supplies primarily to that trade, profession, or industry;

(2) employers or employees participating in the arrangement exercise direct control over the arrangement; as described in this paragraph,

(A) subject to (B) of this paragraph, direct control exists if the employers or employees participating in the arrangement have the right to elect at least 75 percent of the individuals designated in the arrangement's organizational documents as having control over the operations of the arrangement and the individuals designated in the arrangement's organizational documents in fact exercise control over the operation of the arrangement;

(B) use of a third-party administrator to process claims and to assist in the administration of the arrangement is not evidence of the lack of exercise of control over the operations of the arrangement;

(3) the arrangement is a nonprofit organization;

(4) the arrangement provides only allowable benefits, except the arrangement may also provide

(A) life or disability insurance coverage to its participants if the life or disability insurance coverage is provided under contracts with other insurers that comply with this title; or

(B) limited short-term disability insurance coverage, if approved by the director;

(5) the arrangement has adequate facilities and competent personnel, as determined by the director, to service the health benefit plan or has contracted with a third-party administrator licensed under AS 21.27 to service the health benefit plan;

(6) the arrangement provides allowable benefits to not less than two employers and not less than 75 employees;

(7) the arrangement does not solicit participation in the arrangement from the general public, except the arrangement may employ or independently contract with a licensed insurance producer who may be paid a commission or other remuneration to enroll employers in the arrangement;

(8) the arrangement is not organized or maintained solely as a conduit for the collection of premiums and the forwarding of premiums to an insurance company, except that the arrangement may act as a conduit for the collection and forwarding of premiums for life insurance coverage under (4) of this subsection;

(9) the arrangement

(A) has deposited $200,000 with the director to be used for the payment of claims in the event the arrangement becomes insolvent and has submitted to the director a written plan of operation that, in the discretion of the director, ensures the financial integrity of the arrangement; and

(B) is able to remain financially solvent; the director may consider the following in determining the ability of the arrangement to remain financially solvent:

(i) pro forma financial statements;

(ii) types and levels of stop-loss insurance coverage, including attachment points of the coverage;

(iii) whether a deposit is required for each employee covered under the arrangement equal to at least one month's cost of providing benefits under the arrangement;

(iv) the experience of the individuals who will be involved in the management of the arrangement, including employees, independent contractors, and consultants; and

(v) other factors the director considers relevant to determining the ability of the arrangement to remain financially solvent.

(b) The director may require that the articles, bylaws, agreements, trusts, or other documents or instruments describing the rights and obligations of the employers, employees, and beneficiaries of the arrangement require that employers participating in the arrangement are liable for a pro rata share of all liabilities of the arrangement that are unpaid.

(c) The arrangement shall maintain stop-loss insurance coverage covering 100 percent of claims in excess of the attachment point recommended by a qualified actuary.

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Last modified: November 15, 2016