2012 -- S 2878

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LC02311

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO INSURANCE -- SELF-INSURANCE OF DEVELOPMENTAL DISABILITY

AGENCIES

     Introduced By: Senator Roger Picard

     Date Introduced: April 12, 2012

     Referred To: Senate Health & Human Services

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 40.1 of the General Laws entitled "BEHAVIORAL HEALTHCARE,

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DEVELOPMENTAL DISABILITIES AND HOSPITALS" is hereby amended by adding thereto

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the following chapter:

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     CHAPTER 24.6

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SELF-INSURANCE OF DEVELOPMENTAL DISABILITY AGENCIES

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     40.1-24.6-1. Definitions. --  As used in this chapter:

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     (1) “Developmental disability agency” means any organization that has been established

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and licensed by the department of behavioral healthcare, developmental disabilities and hospitals

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for the purpose of providing either employment, vocational supports, residential and/or day

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support services for adults with developmental disabilities in  Rhode Island.

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     (2) “Competent third-party administrator” means an entity with at least five (5) years of

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experience creating and operating health benefit plans that maintain sufficiently capitalized self

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insurance funds of similar characteristics of the fund being authorized in accordance with this

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chapter.

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     40.1-24.6-2. Purpose. -- The purpose of this chapter is to authorize operators of

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developmental disability agencies acting as a group, to self-insure healthcare costs for employees,

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retirees and other beneficiaries and allow a competent third-party administrator to administer said

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program.

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     40.1-24.6-3. Authorization to Self-insure; Establishment of fund. -- (a) Operators of

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two (2) or more developmental disability agencies are hereby authorized and empowered to: (1)

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Create a separate corporation (the "corporation") for the purpose of issuing healthcare insurance

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to the corporation members’ employees, and their dependents and their retirees and their

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dependents; and (2) Developing and administering a sufficiently capitalized self-insured group

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risk management program (product).

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     (b) The corporation, in addition, may have as their purposes reducing the risk of its

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members; distributing, sharing, and pooling risks; acquiring excess loss insurance; and processing

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and defending claims against the members of the corporation. Any contributions made to the

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corporation for the purpose of distributing, sharing, or pooling risks shall be made on an

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actuarially sound basis, and the corporation shall have an audit performed annually, copies of

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which shall be provided to the corporation membership.

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     (c) The corporation shall not be considered an insurance company and shall not be

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subject to the provisions of the laws or regulations of the state of Rhode Island regulating

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insurance companies and multiple employer welfare arrangements, and therefore shall in no way

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be regulated by the Rhode Island department of business regulation or the Rhode Island office of

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the health insurance commissioner.

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     (d) The corporation created pursuant to the provisions of this section will be created by

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filing articles of incorporation pursuant to chapter 6 of title 7 entitled “Rhode Island Nonprofit

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Corporation Act” and the articles of incorporation will be filed by an incorporating

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developmental disability agency (“member”).  The articles of incorporation creating the

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corporation pursuant to the provisions of this section may contain provisions, not inconsistent

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with this section, that the incorporators (“members”) determine to be desirable or useful in

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fulfilling the purposes set forth in this section. The corporation created pursuant to the provisions

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of this section will have the powers of a nonprofit corporation created under chapter 6 of title 7

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entitled “Rhode Island Nonprofit Corporation Act.” 

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     (e) Whenever the governing board of the corporation created pursuant to the provisions

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of this chapter determines that the purposes for which the corporation was created have been

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substantially fulfilled and all bonds, notes, or other obligations of the corporation have been fully

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paid or adequate provision has been made for their payment, the corporation may be dissolved in

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the manner provided for nonprofit corporations pursuant to chapter 6 of title 7 entitled “Rhode

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Island Nonprofit Corporation Act” and, upon the corporation’s dissolution, title to all financial

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resources and assets of the corporation shall vest in and become the property of the members of

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the corporation in proportions that are provided for in the corporation's articles of incorporation.

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     40.1-24.6-4. Obligations of participating entities. -- Operators of developmental

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disability agencies intending to participate in the corporation shall enter into contractual

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agreement with one another which shall, among other provisions, describe and define each

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member’s obligations relative to funding, length of commitment, liabilities and participation in

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the program. Such an agreement shall also define and delineate the terms upon which an operator

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may disaffiliate from the corporation and agreement. Said agreements shall also include

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provisions that require members to be jointly and severally liable for losses of the self insurance

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fund and shall include the mechanism for distributing such losses. The State of Rhode Island shall

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in no way be liable for losses of the self-insurance fund.

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     40.1-24.6-5. Establishment of fund. -- A fund may be established to insure the health

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costs of the corporation members’ employees, their covered dependents, and the retirees and their

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covered dependents, not otherwise insured, to the extent determined by the corporation’s articles

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of incorporation. Efforts shall be made to establish uniformity among health benefit plans issued

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to these employees, retirees and dependents.

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      40.1-24.6-6. Payment to and from fund. -- (a) The moneys in the fund shall be used as

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nonlapsing, revolving financial resources for carrying out the provisions of this chapter.

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     (b) The financial notes and obligations issued by the corporation pursuant to the

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provisions of this chapter will not be deemed to constitute a debt or liability of the State of Rhode

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Island or political subdivision of the state but will be payable solely from the revenues or assets

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of the fund. 

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     40.1-24.6-7.  Stop-loss coverage. -- The corporation established pursuant to this

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chapter for the purpose of providing health care costs for members’ employees, retirees,

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and other beneficiaries shall participate in a group stop-loss policy provided by a licensed

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insurance company.

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     This group stop-loss policy coverage shall include a specific deductible stop loss

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policy and aggregate stop-loss coverage both of which will apply to the corporation’s

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participating developmental disability agencies.  Under the specific deductible stop-loss

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coverage, the licensed insurance carrier will assume liability beyond the specific

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deductible amount up to the limits of the policy.  For the aggregate stop-loss coverage, the

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licensed insurance carrier will assume all of the claims threshold: (1) Beyond one hundred

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and twenty percent (120%) of the expected claims for the policy year, up to the limits of

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the policy, or, if unavailable; (2) Beyond a percentage rate that is consistent with market

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place standards for aggregate stop-loss insurance, but not to exceed one hundred and

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twenty-five percent (125%) of expected claims for the policy year.  In addition to stop-

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loss policy coverage, the corporation shall place in reserve an appropriate amount of

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money to cover the estimated cost of claims incurred, but unpaid, during the term of the

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policy or contract which shall be added to the expected claim level. These reserves for

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unpaid claims shall be in addition to monies reserved to cover the claims paid during the

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term of the policy or contract for payment of health care costs for the employees, retirees, and

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other beneficiaries.

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     SECTION 2. This act shall take effect upon passage.

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LC02311

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO INSURANCE -- SELF-INSURANCE OF DEVELOPMENTAL DISABILITY

AGENCIES

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     This act would authorize operators of developmental disability agencies acting as a

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group, to self-insure healthcare costs for employees, retirees and other beneficiaries, and allow a

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competent third-party administrator to administer said program.

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     This act would take effect upon passage.

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LC02311

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