2015 -- S 0555

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LC002013

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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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: March 03, 2015

     Referred To: Senate Health & Human Services

     It is enacted by the General Assembly as follows:

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

DEVELOPMENTAL DISABILITIES AND HOSPITALS" is hereby amended by adding thereto

the following chapter:

CHAPTER 24.6

SELF-INSURANCE OF DEVELOPMENTAL DISABILITY AGENCIES

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

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

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

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

support services for adults with developmental disabilities in Rhode Island.

     (2) "Qualified third-party administrator" means an entity with at least five (5) years of

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

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

chapter.

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

developmental disability agencies acting as a group, to self-insure health care costs for

employees, retirees and other beneficiaries and allow a qualified third-party administrator to

administer said program.

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

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

     (1) Create a separate corporation (the "corporation") for the purpose of issuing health care

insurance to the corporation members' employees, and their dependents and their retirees and

their dependents; and

     (2) To develop and administer a sufficiently capitalized self-insured group risk

management program (product).

     (b) The corporation may have as their purposes the reduction of the risk of its members;

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

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

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

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

which shall be provided to the corporation membership.

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

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

insurance companies and multiple employer welfare arrangements, and therefore, shall not be

subject to regulation by the Rhode Island department of business regulation, or the Rhode Island

office of the health insurance commissioner.

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

filing articles of incorporation pursuant to chapter 6 of title 7 entitled "Rhode Island nonprofit

corporation act", and the articles of incorporation will be filed by an incorporating developmental

disability agency (member).  The articles of incorporation creating the corporation pursuant to the

provisions of this section may contain provisions, not inconsistent with this section, that the

incorporators (members) determine to be desirable or useful in fulfilling the purposes set forth in

this section. The corporation created pursuant to the provisions of this section will have all of the

powers of a nonprofit corporation created under chapter 6 of title 7.

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

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

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

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

the manner provided for nonprofit corporations pursuant to chapter 6 of title 7 and, upon the

corporation's dissolution, title to all financial resources and assets of the corporation shall vest in

and become the property of the members of 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

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

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

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

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

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

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

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

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

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

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

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

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

to these employees, retirees and dependents.

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

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

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

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

Island, nor a political subdivision of the state, but will be payable solely from the revenues or

assets of the fund. 

     40.1-24.6-7.  Stop-loss coverage. – (a) The corporation established pursuant to this

chapter for the purpose of providing health care costs for members' employees, retirees, and other

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

company.

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

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

participating developmental disability agencies. 

     (c) Under the specific deductible stop-loss coverage, the licensed insurance carrier will

assume liability beyond the specific deductible amount up to the limits of the policy. 

     (d) For the aggregate stop-loss coverage, the licensed insurance carrier will assume all of

the claims threshold:

     (1) Beyond one hundred and twenty percent (120%) of the expected claims for the policy

year, up to the limits of the policy, or, if unavailable; (2) Beyond a percentage rate that is

consistent with market place standards for aggregate stop-loss insurance, but not to exceed one

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hundred and twenty-five percent (125%) of expected claims for the policy year. 

     (e) In addition to stop-loss policy coverage, the corporation shall place in reserve an

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

the term of the policy or contract which shall be added to the expected claim level. The reserves

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

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

beneficiaries.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE -- SELF-INSURANCE OF DEVELOPMENTAL DISABILITY

AGENCIES

***

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

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

qualified third-party administrator to administer said program.

     This act would take effect upon passage.

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