CHAPTER 15.5. SMALL EMPLOYER INSURER VOLUNTARY REINSURANCE PROGRAM
IC 27-8-15.5
Chapter 15.5. Small Employer Insurer Voluntary Reinsurance
Program
IC 27-8-15.5-1
Applicability of definitions
Sec. 1. The definitions set forth in IC 27-8-15 apply throughout
this chapter.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-2
"Board" defined
Sec. 2. As used in this chapter, "board" refers to the Indiana small
employer health reinsurance board established by section 5 of this
chapter.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-3
"Program" defined
Sec. 3. As used in this chapter, "program" refers to the program
of reinsurance established by section 6 of this chapter.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-4
"Reinsuring carrier" defined
Sec. 4. As used in this chapter, "reinsuring carrier" means a small
employer insurer that obtains reinsurance under this chapter.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-5
Establishment of board
Sec. 5. The Indiana small employer health reinsurance board is
established. The board shall supervise and control the program of
reinsurance established under this chapter.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-6
Establishment of program
Sec. 6. The Indiana small employer health reinsurance program is
established. Any small employer insurer that is doing or planning to
do business in Indiana may become a member of the program as
described in section 12 of this chapter.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-7
Members of board
Sec. 7. (a) The board consists of the commissioner or the
commissioner's designated representative, who serves as an ex
officio member of the board, and ten (10) members. The members of
the board shall be appointed by the commissioner, who shall name
a chairman of the board one (1) time every three (3) years.
(b) The members of the board appointed under subsection (a)
must include the following:
(1) One (1) representative of health maintenance organizations.
(2) One (1) representative of providers (as defined in
IC 27-13-1-28).
(3) Six (6) representatives of small employer insurers.
(4) Two (2) representatives of small employers.
(c) A member of the board is appointed for a term of three (3)
years.
(d) The term of a board member appointed under subsection (a)
continues until the board member's successor is appointed.
(e) The commissioner shall fill a vacancy in an appointive
member's position on the board.
(f) A board member may be removed by the commissioner for
cause.
(g) At least six (6) members of the board must be present for the
board to conduct official business. The affirmative vote of at least six
(6) members of the board is necessary for the board to take official
action.
(h) The board shall meet at least one (1) time each calendar
quarter at the call of the commissioner.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-8
Plan of operation; submission; approval; amendments
Sec. 8. (a) Not later than two hundred seventy (270) days after the
appointment of the initial board, the board shall submit to the
commissioner a plan of operation.
(b) The commissioner may adopt the plan of operation as a rule
under IC 4-22-2 if the commissioner determines the plan will:
(1) ensure the fair, reasonable, and equitable administration of
the program; and
(2) provide for the sharing of program gains or losses on an
equitable and a proportionate basis in accordance with this
chapter.
(c) After the adoption of a plan of operation under this section, the
board may submit to the commissioner any proposed amendments to
the plan the board considers necessary or suitable to ensure the fair,
reasonable, and equitable administration of the program. The
commissioner may adopt under IC 4-22-2 proposed amendments
submitted under this subsection as amendments to the rule adopted
under subsection (b).
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-9
Plan of operation; temporary plan
Sec. 9. (a) If the board fails to submit a suitable plan of operation
within the time allowed under section 8 of this chapter, the
commissioner shall adopt rules under IC 4-22-2 establishing a
temporary plan of operation.
(b) The commissioner shall amend or rescind under IC 4-22-2 any
temporary plan of operation adopted under this section when a plan
of operation is submitted by the board and approved by the
commissioner.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-10
Plan of operation; requirements
Sec. 10. The plan of operation submitted and adopted under
section 8 of this chapter must do the following:
(1) Establish procedures for the handling and accounting of
program assets and money.
(2) Provide for an annual fiscal report to the commissioner.
(3) Establish procedures for selecting an insurer to administer
the program.
(4) Establish the powers and duties of the administering insurer,
including:
(A) notifying all members regarding annual assessments; and
(B) collecting of assessments.
(5) Establish procedures for reinsuring risks under this chapter.
(6) Establish procedures for collecting assessments from
reinsuring carriers to fund claims and administrative expenses
that are incurred or estimated to be incurred by the program.
(7) Establish a methodology for applying the dollar thresholds
contained in this chapter in the case of small employer insurers
that pay or reimburse health care providers through capitation
or salary.
(8) Provide for any additional matters necessary for the
implementation and administration of the program.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-11
Powers of board
Sec. 11. (a) The board, in supervising and controlling the
program, has the general powers and authority granted under IC 27
to insurance companies and health maintenance organizations
authorized to transact business in Indiana, except the power to issue
health insurance plans directly to groups or individuals.
(b) In addition to exercising the powers conferred by subsection
(a), the board may do the following:
(1) Enter into contracts that are necessary or proper to carry out
the provisions and purposes of this chapter, including, with the
approval of the commissioner, contracts with:
(A) similar programs of other states for the joint
performance of common functions; or
(B) persons or other organizations for the performance of
administrative functions.
(2) Sue or be sued, including taking any legal action necessary
or proper to recover assessments and penalties for, on behalf of,
or against the program or any reinsuring insurer.
(3) Take any legal action necessary to avoid the payment of
improper claims against the program.
(4) Define the health insurance plans for which reinsurance is
provided.
(5) Issue reinsurance policies under this chapter.
(6) Establish rules, conditions, and procedures for reinsuring
risks under the program.
(7) Establish actuarial functions as appropriate for the operation
of the program.
(8) Impose assessments on reinsuring carriers under this
chapter, and make advance interim assessments that are
reasonable and necessary for organizational and interim
operating expenses.
(9) Appoint appropriate legal, actuarial, and other committees
as necessary to provide technical assistance in the operation of
the program, policy, and other contract design, and any other
function within the authority of the program.
(c) Any interim assessments imposed under subsection (b)(8) shall
be credited as offsets against any regular assessments due from
reinsuring carriers after the close of the fiscal year.
(d) Any notes or other evidence of indebtedness of the program
that are not in default:
(1) are legal investments for small employer insurers; and
(2) may be carried by small employer insurers as admitted
assets.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-12
Election to become member of program
Sec. 12. (a) A small employer insurer may elect to become a
member of the program by filing a written intention to participate
with the commissioner not later than sixty (60) days after the:
(1) board submits a plan of operation to the commissioner and
the commissioner adopts the plan under section 8 of this
chapter; or
(2) commissioner establishes a temporary plan of operation for
the program under section 9 of this chapter;
whichever occurs first.
(b) A small employer insurer that fails to become a member of the
program under subsection (a) may only become a member by filing
a written intention with the commissioner to participate in the
program:
(1) three (3) years; or
(2) at the end of any three (3) year interval;
after the program begins under subsection (a)(1) or (a)(2).
(c) Notwithstanding subsections (a) and (b), the commissioner
may permit a small employer insurer to become a member of the
program at other times for reasons based on financial solvency.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-13
Maximum level of coverage; other limits on coverage
Sec. 13. (a) The board may establish a maximum level of
coverage up to which the program will reinsure a health insurance
plan and beyond which the program will not reinsure a health
insurance plan.
(b) A member of the program must allow any employer insured by
the member to maintain the same health insurance plan and may
reinsure only that part of the health insurance plan that is consistent
with the program established by the board.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-14
Time requirements for reinsurance
Sec. 14. (a) A small employer insurer may reinsure an entire small
employer group not later than sixty (60) days after the
commencement of the coverage of the small employer group under
a health insurance plan.
(b) A small employer insurer may reinsure coverage of an eligible
employee or the dependent of an eligible employee under a health
insurance plan issued to a small employer not later than sixty (60)
days after the coverage of the eligible employee or dependent of the
eligible employee commences.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-15
Reimbursement of reinsuring carriers
Sec. 15. The program may not reimburse a reinsuring carrier with
respect to the claims of a reinsured employee or dependent until the
reinsuring carrier has incurred an initial level of claims for the
employee or dependent of five thousand dollars ($5,000) in a
calendar year for benefits covered by the program. In addition, the
reinsuring carrier is responsible for ten percent (10%) of the next
fifty thousand dollars ($50,000) of benefit payments during a
calendar year, and the program shall reinsure the remainder. The
liability of a reinsuring carrier under this section may not exceed ten
thousand dollars ($10,000) in any calendar year with respect to any
reinsured individual.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-16
Adjustments in initial level of claims and maximum limit to be
retained
Sec. 16. The board may annually adjust the initial level of claims
and the maximum limit to be retained by a reinsuring carrier to
reflect increases in costs and utilization within the standard market
for health insurance plans in Indiana. The adjustment may not be
lower than the annual change in the medical component of the
"Consumer Price Index for All Urban Consumers" of the Bureau of
Labor Statistics of the United States Department of Labor unless the
board proposes and the commissioner approves a lower adjustment
factor.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-17
Termination of reinsurance
Sec. 17. A small employer insurer that issues a health insurance
plan to a small employer and obtains reinsurance for the health
insurance plan under this chapter may terminate the reinsurance for
one (1) or more of the reinsured employees or dependents of the
small employer:
(1) on any anniversary of the health insurance plan; or
(2) when the reinsured employee leaves the employment of the
small employer.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-18
Reduction of premium rates for reinsurance of federally qualified
HMOs
Sec. 18. Premium rates charged under this chapter for reinsurance
to a health maintenance organization that is federally qualified under
42 U.S.C. 300e et seq., and as such is subject to limits on the amount
of risk that may be ceded to the program that are more restrictive
than those set forth in section 15 of this chapter, must be reduced to
reflect the part of the risk, if any, that may not be ceded to the
program due to the more restrictive limits.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-19
Managed care and claims handling techniques
Sec. 19. A reinsuring carrier shall apply all managed care and
claims handling techniques, including:
(1) utilization review;
(2) individual case management;
(3) preferred provider provisions; and
(4) other managed care provisions or methods of operation;
consistently with respect to reinsured and nonreinsured business.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-20
Methodology for determining premium rates
Sec. 20. (a) The board, as part of the plan of operation adopted
under section 8 of this chapter, shall establish a methodology for
determining premium rates to be charged by the program for
reinsuring small employers and individuals under this chapter.
(b) The methodology established under this section must include
a system for classification of small employers that reflects the types
of case characteristics commonly used by small employer insurers in
Indiana.
(c) The methodology established under this section must provide
for the development of base reinsurance premium rates. The base
reinsurance premium rates are multiplied by the factors set forth in
section 21 of this chapter to determine the premium rates for the
program.
(d) The base reinsurance premium rates referred to in subsection
(c) shall be established by the board, subject to the approval of the
commissioner.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-21
Multiplication factors for premium rates
Sec. 21. (a) Premiums charged by the program for reinsurance are
as follows:
(1) An entire small employer group may be reinsured for a rate
that is one hundred fifty percent (150%) of the base reinsurance
premium rate for the group that is developed under section
20(c) of this chapter.
(2) An eligible employee or the dependent of an eligible
employee may be reinsured for a rate that is five hundred
percent (500%) of the base reinsurance premium rate for the
individual established under this section.
(b) The board shall periodically review the methodology
established under section 20 of this chapter, including the system of
classification and any rating factors, to ensure that it reasonably
reflects the claims experience of the program. The board may
propose changes in the methodology. The changes proposed by the
board take effect upon approval by the commissioner.
(c) The board may consider adjustments to the premium rates
charged for reinsurance under the program to reflect the use of
effective cost containment and managed care arrangements.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-22
Premium rates for health insurance plans to comply with
IC 27-8-15
Sec. 22. If a health insurance plan issued to a small employer is
entirely or partially reinsured under the program, the premium
charged to the small employer for any rating period for the coverage
issued must meet the requirements relating to premium rates set forth
in IC 27-8-15.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-23
Determination and report of net loss
Sec. 23. (a) Before March 1 of each year, the board shall
determine and report to the commissioner the program'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.
(b) Any net loss for the year shall be recouped by assessments of
reinsuring carriers.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-24
Determination of assessments against reinsuring carriers
Sec. 24. (a) The board, as part of the plan of operation adopted
under section 8 of this chapter, shall establish a formula by which to
impose assessments against reinsuring carriers.
(b) The assessment formula established under subsection (a) must
result in assessments apportioned by the board among all small
employer insurers participating in the program in proportion to:
(1) the small employer insurers' respective shares of the total
premiums;
(2) the net of reinsurance premiums paid for coverage under the
program earned from health insurance plans covering small
employers that are issued by participating small employer
insurers during the calendar year coinciding with or ending
during the fiscal year of the program; or
(3) any other equitable basis reflecting coverage of small
employers as may be provided in the plan of operation.
(c) Health insurance plan premiums and benefits paid by a
reinsuring carrier 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.
(d) An assessment determined under this section may not exceed
one percent (1%) of total net premiums annually. If an excess is
actuarially projected, the commissioner may take any action
necessary to lower the assessment to the maximum level of one
percent (1%) of total net premiums.
(e) The board, with the approval of the commissioner, may change
the assessment formula established under this section from time to
time as appropriate.
(f) Subject to the approval of the commissioner, the board shall
make an adjustment to the assessment formula for reinsuring carriers
that are approved health maintenance organizations and federally
qualified under 42 U.S.C. 300e et seq., to the extent that restrictions
are placed on them that are not imposed on other small employer
insurers.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-25
Estimates of assessments needed to fund losses
Sec. 25. (a) Before March 1 of each year the board shall
determine and file with the commissioner an estimate of the
assessments needed to fund the losses incurred by the program in the
previous calendar year.
(b) If the board determines that the assessments needed to fund
the losses incurred by the program in the previous calendar year will
exceed two percent (2%) of total premiums earned in the previous
calendar year from health insurance plans delivered or issued for
delivery to small employers by reinsuring carriers, the board shall
evaluate the operation of the program and report the board's findings,
including any recommendations for changes in the plan of operation
adopted under section 8 of this chapter, to the commissioner not
more than ninety (90) days after the end of the calendar year in
which the losses were incurred. The evaluation must:
(1) include an estimate of future assessments; and
(2) consider the:
(A) administrative costs of the program;
(B) appropriateness of the premiums charged;
(C) level of insurer retention under the program; and
(D) costs of coverage for small employers.
(c) If the board fails to file a report with the commissioner under
subsection (b) not later than ninety (90) days after the end of the
calendar year, the commissioner may:
(1) evaluate the operation of the program; and
(2) implement the amendments to the plan of operation adopted
under section 8 of this chapter that the commissioner considers
necessary to reduce future losses and assessments.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-26
Use of excess assessments
Sec. 26. If assessments paid by reinsuring carriers under this
chapter exceed the net losses of the program, the excess is held at
interest and used by the board to:
(1) offset future losses, including reserves for incurred but not
reported claims; or
(2) reduce program premiums.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-27
Determination of reinsuring carrier's proportion of assessments
Sec. 27. (a) The board shall annually determine each reinsuring
carrier's proportion of the assessment for reinsurance under this
chapter based on annual statements and other reports considered
necessary by the board and filed with the board by the reinsuring
carriers.
(b) The plan of operation adopted under section 8 of this chapter
must provide for the imposition of an interest penalty on reinsuring
carriers for late payment of assessments.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-28
Deferments from assessments
Sec. 28. (a) A reinsuring carrier may seek from the commissioner
a deferment from all or part of an assessment imposed by the board.
The commissioner may defer all or part of the assessment of a
reinsuring carrier if the commissioner determines that the payment
of the assessment would place the reinsuring carrier in a financially
impaired condition.
(b) If all or part of an assessment against a reinsuring carrier is
deferred under subsection (a), the amount deferred is assessed
against the other reinsuring carriers in a manner consistent with the
basis for assessment under this chapter.
(c) A reinsuring carrier that receives a deferment under this
section:
(1) remains liable to the program for the amount deferred; and
(2) may not reinsure an individual or a group with the program
until the reinsuring carrier pays the assessment.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-29
Participation not to be basis for legal action, liability, or penalty
Sec. 29. The participation of small employer insurers in the
program as reinsuring carriers, the establishment of rates, forms, or
procedures under this chapter, or any other joint or collective action
required by this chapter may not be the basis of any legal action,
criminal or civil liability, or penalty against the program or any of the
program's reinsuring carriers, either jointly or separately.
As added by P.L.193-1996, SEC.1.
IC 27-8-15.5-30
Tax exemption
Sec. 30. The program is exempt from all taxes imposed by the
state.
As added by P.L.193-1996, SEC.1.