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Alaska Statutes.

Title 21. Insurance

Chapter 56. Small Employer Health Insurance

Section 50. Health Care Reinsurance.

AS 21.56.050. Health Care Reinsurance.

(a) A member may reinsure health care coverage of an eligible employee of a small employer or a dependent of an eligible employee of a small employer with the reinsurance association only under the following provisions:

(1) regarding a small employer basic or standard health care insurance plan, the reinsurance association shall reinsure the level of coverage provided;

(2) regarding a health care plan other than a small employer health care insurance plan, the reinsurance association shall reinsure the level of coverage provided up to, but not exceeding, the level of coverage provided in a small employer basic or standard health benefit plan;

(3) a small employer insurer may reinsure an entire employer group within 60 days of the commencement of the group's coverage under a health care insurance plan;

(4) a small employer insurer may reinsure an eligible employee or dependent within a period of 60 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 60 days of the commencement of coverage;

(5) the reinsurance association may not reimburse a reinsuring insurer regarding the claims of a reinsured employee or dependent until the insurer has paid an initial level of claims for the employee or dependent of $5,000 in a calendar year for benefits covered by the reinsurance association;

(6) a small employer insurer may terminate reinsurance for one or more of the reinsured employees or dependents of a small employer on any plan anniversary.

(b) Premium rates charged for coverage reinsured by the reinsurance association shall be established as required under (e) of this section and adjusted as follows:

(1) for whole group small employer reinsurance coverage, 1.5 multiplied by the base premium rate established by the reinsurance association for eligible employees, and dependents of eligible employees, of a small employer all of whose health insurance coverage is reinsured with the reinsurance association;

(2) for eligible employee or dependent health reinsurance coverage, 5.0 multiplied by the base premium rate established by the reinsurance association.

(c) If a health care insurance plan coverage for a small employer is entirely or partially reinsured with the reinsurance association, the premium charged to the small employer for a rating period for the coverage issued under this section shall meet the premium rate requirements established under AS 21.56.120 .

(d) On or before March 1 of each year, the board shall determine and report to the director the reinsurance association's 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. A net loss for the year shall be recovered by assessments collected from reinsuring insurers. The board shall establish, as part of the plan of operation, a formula by which to make assessments against reinsuring insurers. The assessment formula must be based on each reinsuring insurer's share of the total premiums earned in the preceding calendar year from health care insurance plans delivered or issued for delivery to small employers in this state by reinsuring carriers and each reinsuring insurer's share of the premiums earned in the preceding calendar year from newly issued health care insurance plans delivered or issued for delivery during the calendar year to small employers in this state by reinsuring insurers. In determining an assessment, if any, that is collected from a member, the following provisions apply:

(1) the formula established under this subsection may not result in a reinsuring insurer having an assessment share that is less than 50 percent or more than 150 percent of an amount that is based on the proportion of the reinsuring insurer's total premiums earned in the preceding calendar year from health care insurance plans delivered or issued for delivery to small employers in this state by reinsuring insurers to total premiums earned in the preceding calendar year from health care insurance plans delivered or issued for delivery to small employers in this state by all reinsuring carriers;

(2) the board may, with approval of the director, change the assessment formula established under this section from time to time, as appropriate; the board may provide for the shares of the assessment base attributable to premiums from all health care insurance plans and to premiums from newly issued health care insurance plans to vary during a transition period;

(3) subject to the approval of the director, the board shall make an adjustment to the assessment formula for reinsuring carriers that are approved health maintenance organizations that are federally qualified under 42 U.S.C. 300e, to the extent, if any, that restrictions are imposed on those organizations that are not imposed on other small employer insurers;

(4) annually before March 1, the board shall determine and file with the director an estimate of the assessments needed to fund losses incurred by the reinsurance association in the previous calendar year;

(5) if the board determines that the assessments needed to fund the losses incurred by the reinsurance association in the previous calendar year will exceed five percent of total premiums earned in the previous year from health care insurance plans delivered or issued for delivery to small employers in this state by reinsuring insurers, 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 director within 90 days following the end of the calendar year in which the losses were incurred; the evaluation must 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 a report with the director within 90 days following the end of the applicable calendar year, the director may evaluate the operations of the program and implement amendments to the plan of operation the director determines necessary to reduce future losses and assessments;

(6) if assessments exceed net losses of the reinsurance association, the excess shall be held in an interest bearing account and used by the board to offset future losses or to reduce reinsurance association premiums; in this paragraph, "future losses" include a reserve for incurred but not reported claims;

(7) the board shall annually determine a member's proportion of participation in the reinsurance association based on annual statements and other reports determined necessary by the board and filed by the member with the board; an insurer shall report to the board a claim payment made and administrative expense incurred in this state on a semi-annual basis on a form prescribed by the director;

(8) the plan of operation must include a provision for the imposition of an interest penalty for late payment of assessments;

(9) a member may request a deferment from the director, in whole or in part, from an assessment issued by the board; the director may defer, in whole or in part, the assessment of a member if, in the opinion of the director payment of the assessment would endanger the ability of the member to fulfill the member's contractual obligations;

(10) in the event an assessment against a member is deferred in whole or in part, the amount by which the assessment is deferred may be assessed against the other members in a manner consistent with the basis for assessments set out in this subsection; the member receiving a deferment shall remain liable to the reinsurance association for the amount deferred; the director may attach conditions to a deferment; a member receiving a deferment may not reinsure an individual or group as provided under this section until the assessment is paid.

(e) 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 under this section. The methodology must include a system for classification of small employers that reflects the types of case characteristics commonly used by small employer insurers in the state. The methodology must provide for the development of base reinsurance premium rates that shall be multiplied by the factors set out in (b) of this section to determine the premium rates for the reinsurance association. The base reinsurance premium rates shall be established by the board, subject to the approval of the director, and shall be set at levels that reasonably approximate gross premiums charged to small employers by small employer insurers for health care insurance plans with benefits similar to the standard health care insurance plan. The board shall review the methodology established under this subsection to ensure that the methodology reasonably reflects the claims experience of the program. Changes to the methodology may be proposed by the board and are subject to approval by the director. In this subsection, "gross premiums" means the premium charged for insurance before reducing the premium for a dividend or rate credit.

Note to HTML Version:

This version of the Alaska Statutes is current through December, 2004. The Alaska Statutes were automatically converted to HTML from a plain text format. Every effort has been made to ensure their accuracy, but this can not be guaranteed. If it is critical that the precise terms of the Alaska Statutes be known, it is recommended that more formal sources be consulted. For statutes adopted after the effective date of these statutes, see, Alaska State Legislature If any errors are found, please e-mail Touch N' Go systems at E-mail. We hope you find this information useful.

Last modified 9/3/2005