Ch. Ins 8 NoteNote: Sections Ins 8.20 to 8.32 were created as emergency rules effective October, 1, 1991. Sections Ins 8.40 to 8.56 were created as emergency rules effective February 12, 1992. Ins 8.11Ins 8.11 County and school district self-insured employee health care benefits: excess or stop-loss insurance requirements. Ins 8.11(1)(1) Purpose. This section interprets ss. 59.52 (11) (c) and 120.13 (2) (c), Stats., for the purpose of prescribing detailed requirements for excess or stop-loss insurance for self-insured employee health care benefit plans provided by counties or school districts. Ins 8.11(2)(2) Scope. This section applies to any county or school district that alone or together with one or more counties or one or more school districts provides employee health care benefits on a self-insured basis to less than 1,000 covered employees. Ins 8.11(3)(a)(a) “Aggregate claims” means total actual claim amounts incurred under the employee health care benefit plan during a benefit period. Ins 8.11(3)(b)(b) “Aggregate deductible” means the aggregate amount of liability specified in the excess or stop-loss insurance contract at or below which the county or school district remains liable for payments for eligible claims. Ins 8.11(3)(c)(c) “Benefit period” means a twelve-month accounting or reporting period of the employee health care benefit plan. Ins 8.11(3)(d)(d) “Coinsurance” means a fixed percentage of each claim established in the employee health care benefit plan which the county or school district is obligated to pay for each person covered in the plan. Ins 8.11(3)(e)(e) “Covered employees” means employees participating in an employee health care benefit plan. Ins 8.11(3)(f)(f) “Employees eligible to participate” means employees who are eligible to be covered employees under the terms of the employee health care benefit plan. Ins 8.11(3)(g)(g) “Employee health care benefit plan” means a self-insured plan established by one county or school district or jointly by 2 or more counties or 2 or more school districts to provide health care benefits to employees eligible to participate in the plan. Ins 8.11(3)(h)(h) “Expected claims” means the most accurate actuarial estimate of aggregate claims during a benefit period. Ins 8.11(3)(i)(i) “Incurred” means to have provided or furnished a service or item to an employee or dependent covered under an employee health care benefit plan for which a charge for a covered expense is made. Ins 8.11(3)(j)(j) “Maximums” means the largest total amount of claims per person established by the employee health care benefit plan which the county or school district is obligated to pay. Ins 8.11(3)(k)(k) “Paid basis” means the application of a claim payment to the aggregate deductible for the benefit period in which the payment is actually made, regardless of when the claim is incurred. Ins 8.11(3)(L)(L) “Quota share reinsurance” means insurance purchased for the employee health care benefit plan which pays the plan a predetermined fixed percentage of each claim. Ins 8.11(4)(4) Excess or stop-loss insurance requirements. Ins 8.11(4)(a)(a) Excess or stop-loss insurance required by s. 120.13 (2) (c), Stats., shall provide coverage for all claims incurred during the term of the policy or contract at a level at which an actuary has certified that the probability that aggregate claims will exceed 125% of expected claims is less than 5%. Ins 8.11(4)(b)(b) Each employee health care benefit plan shall be covered by one excess or stop-loss insurance policy that satisfies par. (a), regardless of the number of counties or school districts participating in the plan. Ins 8.11(4)(c)(c) Notwithstanding par. (a), a county or school district that self-insures employee health benefits under a plan in which an actuary has certified that the probability that aggregate claims will exceed 125% of expected claims is less than one-half percent need not purchase excess or stop-loss insurance. Ins 8.11(5)(5) Excess or stop-loss insurance provided on a paid basis. Ins 8.11(5)(b)(b) Upon termination for any reason of an excess or stop-loss insurance policy that provides coverage on a paid basis, the policy shall apply all claims incurred but not paid prior to the termination of the policy to the aggregate deductible of the benefit period in which the service or item was provided or furnished to an employee or dependent under the self-insured employee health care benefit plan. Ins 8.11(6)(a)(a) Every county or school district with a plan that is subject to s. 120.13 (2) (c), Stats., shall file with the commissioner of insurance within 30 days after the effective date of the self-insured employee health care benefit plan, every 3 years thereafter and whenever a material change occurs to the plan, an actuarial certification that includes information on: Ins 8.11(6)(a)1.1. The number of employees eligible to participate in the plan and the number of covered employees in the plan. Ins 8.11(6)(a)2.2. A description of the plan’s coverage including but not limited to an outline of benefits provided, deductibles, coinsurance, maximums and quota share reinsurance, if any. Ins 8.11(6)(a)3.3. A statement that the plan satisfies the excess or stop-loss insurance requirements specified in sub. (4). Ins 8.11(6)(a)4.4. Except for a county or school district with a plan subject to s. 641.08, Stats., a copy of the excess or stop-loss insurance contract and of the plan for self-insuring. Ins 8.11 NoteNote: A county or school district with a plan subject to ch. 641, Stats., must already file this information with the commissioner.
Ins 8.11(6)(b)(b) The actuarial certification required in par. (a) may be filed by an actuary employed by the excess or stop-loss insurer or by an actuary independent of the excess or stop-loss insurer. Ins 8.11(6)(c)(c) Two or more counties or 2 or more school districts that jointly establish an employee health care benefit plan shall designate the individual who will file the actuarial certification required in par. (a). Only one actuarial certification shall be filed for the plan. Ins 8.11 NoteNote: The commissioner of insurance will utilize the following tables to evaluate actuarial certifications for accuracy and compliance with this section. The following example illustrates the application of the tables. This example only gives a basic description of how to use the following tables. It may be necessary to extrapolate or interpolate from the information given in the tables in order to apply the tables to a particular plan. An actuary or other qualified person should be consulted to be certain that a plan meets the requirements of sub. (4). Also note that no table provides a description of dental or vision plan benefits. Under sub. (4) (c), many dental or vision plans may not need to purchase stop-loss insurance.
Ins 8.11 NoteExample
Ins 8.11 NoteAssume a school district has a self-insured employee health care benefit plan that covers 250 employees and family members. The plan offers individual specific stop-loss of $25,000 and provides benefits with a $500.00 deductible per person, 80% coinsurance and $1,000.00 out-of-pocket limit per person.
Ins 8.11 NoteThe plan’s stop-loss coverage and benefit package are the same as that used in Table 7. Therefore, use Table 7 for determining whether the plan meets the requirements in sub. (4).
Ins 8.11 NoteIn Table 7, use the 125 percent of mean line. Since sub. (4) (a) deals with “125% of expected claims,” refer to the 125% of mean line when using any of the tables.
Ins 8.11 NoteTo determine whether the probability that aggregate claims will exceed 125% of expected claims is less than 5%, subtract the decimal numbers shown in the tables from the number “1”. For example, for a plan offering the benefits described in Table 7 and having 25 employees, the probability that aggregate claims will exceed 125% of expected claims is 28% (1 minus .72= .28). It is 26% for 50 employees (1 minus .74), 23% for 100 employees (1 minus .77), etc.
Ins 8.11 NoteIn this example, the plan covers 250 employees. Table 7 shows that at 250 employees, the probability that aggregate claims will exceed 125% of expected claims is 18% (1 minus .82).
Ins 8.11 NoteIn order to comply with the rule, this probability must be less than 5%. In this example, the probability is 18%. Therefore, the school district or county must purchase aggregate stop-loss insurance at a level sufficient to bring this probability down to less than 5%. Stop-loss insurance is sold at various levels, including a level at which the probability that aggregate claims will exceed 125% of expected claims is less than 5%. At a minimum, the school district or county should purchase stop-loss insurance at this level.
Ins 8.11(7)(7) Actuary qualifications. The actuarial certification specified in sub. (6) shall be signed by an actuary who satisfies the requirements of s. Ins 6.12. Ins 8.11 HistoryHistory: Cr. Register, April, 1988, No. 388, eff. 5-1-88; correction in (1) made under s. 13.93 (2m) (b) 7., Stats., Register October 2002 No. 562. Ins 8.20Ins 8.20 Purpose. This subchapter interprets and implements ch. 633, Stats. Ins 8.20 HistoryHistory: Cr. Register, April, 1992, No. 436, eff. 5-1-92. Ins 8.22Ins 8.22 Definitions. In this subchapter: Ins 8.22(2)(2) “Commissioner” means the commissioner of insurance. Ins 8.22(4)(4) “Office” means the office of the commissioner. Ins 8.22 HistoryHistory: Cr. Register, April, 1992, No. 436, eff. 5-1-92. Ins 8.24(1)(1) Each of the following is exempt from ch. 633, Stats., and this subchapter for the portion of its business subject to regulation under the specified sections: Ins 8.24(1)(a)(a) An administrator of one or more self-insured, partially insured or divided insurance worker’s compensation plans subject to s. DWD 80.60 or 80.61. Ins 8.24(2)(2) An administrator that is partially exempt under sub. (1) (a) or (b) is subject to ch. 633, Stats., and this subchapter for any portion of its business that is outside the scope of the exemption. Ins 8.24 HistoryHistory: Cr. Register, April, 1992, No. 436, eff. 5-1-92; correction in (1) (a) made under s. 13.93 (2m) (b) 7., Stats., Register, June, 1997, No. 498. Ins 8.26(1)(1) Application. A person applying for a new or renewal license as an administrator shall submit an application to the office in the form prescribed by the office. With the application, the person shall submit all of the following: Ins 8.26(1)(b)(b) With a renewal application, proof that the bond continues to meet the requirements of s. Ins 8.28, if the amount required for the bond has changed. Ins 8.26(1)(c)(c) A financial statement for the administrator’s most recently completed fiscal year, prepared according to generally accepted accounting principles. The financial statement shall report the administrator’s assets, liabilities and net worth, the results of operations and the changes in net worth for the fiscal year on the accrual basis. Ins 8.26(1)(d)(d) A statement as to whether the administrator does any of the following: Ins 8.26(1)(d)1.1. Collects premiums or employee contributions on behalf of any principal. Ins 8.26(1)(e)(e) All of the following information about the administrator, if an individual, or about each officer, director, partner or other individual having comparable responsibilities in the organization, if a corporation or partnership: Ins 8.26(1)(e)1.1. Whether the individual has been fined or reprimanded or has been the subject of a consent decree in any state by any agency that regulates the business of administrators, insurance, real estate, securities or financial institutions. Ins 8.26(1)(e)2.2. Whether the individual has had a license to solicit insurance, real estate or securities or to act as an administrator refused, suspended, denied or revoked in any state. Ins 8.26(1)(e)3.3. Whether the individual has been convicted of a felony or misdemeanor, other than a misdemeanor related to the use of a motor vehicle or the violation of a fish and game regulation. Ins 8.26(1)(e)4.4. If the individual has ever been employed by an administrator or insurance company, or in the business of real estate, securities or financial institutions, whether his or her employment has been terminated or nonrenewed because of allegations of misconduct or wrongdoing. Ins 8.26(1)(f)(f) If the administrator is an individual, his or her insurance intermediary agent’s license number and social security number and a statement that he or she intends to act as an administrator in good faith and in compliance with all applicable laws of this state and rules and orders of the commissioner. Ins 8.26(1)(g)(g) If the administrator is a corporation or partnership, its federal identification number, the state and year of its incorporation or year of its formation and a statement that it intends to act as an administrator in good faith and in compliance with all applicable laws of this state and rules and orders of the commissioner and that it has designated or will designate an individual with direct responsibility for each plan it administers. Ins 8.26(1)(h)(h) If the administrator is an individual who is not a resident of this state or a corporation or partnership that is not organized under the laws of this state, a statement that the administrator agrees to be subject to the jurisdiction of the commissioner and the courts of this state with respect to all matters pertaining to activities as an administrator and to accept service of process as provided under ss. 601.72 and 601.73, Stats. Ins 8.26(2)(2) Renewal application deadline. An administrator shall submit a renewal application on or before August 1 of each year. Ins 8.26(3)(3) Application review. The office shall review and approve or disapprove each complete application within 60 days after its receipt. Ins 8.26 NoteNote: The application form, which includes a sample performance bond format, OCI 30-001, may be obtained from the Office of the Commissioner of Insurance, P.O. Box 7872, Madison, Wisconsin 53707-7872.
Ins 8.26 HistoryHistory: Cr. Register, April, 1992, No. 436, eff. 5-1-92. Ins 8.28Ins 8.28 Performance bond requirements. Ins 8.28(1)(1) A performance bond required under s. 633.14 (1) (b) or (2) (b), Stats., shall be continuous in form, shall be issued by an insurer authorized to do a surety business in this state and shall be in favor of the commissioner and payable to any resident of this state who is the beneficiary of an employee benefit plan administered by the administrator and to any such employee benefit plan on behalf of the residents of this state who are its beneficiaries in the event of injury caused by a failure of the administrator to fulfill its responsibilities as an administrator. Ins 8.28(2)(2) If the administrator collects premiums or employee contributions on behalf of any principal, or commingles funds belonging to more than one principal, the performance bond shall be in the greater of the following amounts:
