Article 50A.
Multiple Employer Welfare Arrangements.
§ 58-50A-1. Definitions.
The following definitions apply in this Article:
(1) Repealed by Session Laws 2024-57, s. 3G.1(b), effective January 1, 2025, and applicable to licenses issued under Article 50A of Chapter 58 of the General Statutes on or after that date.
(2) Employee welfare benefit plan. - The term as defined in Section 3 of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002(1), as amended.
(2a) Insured. - Employees or other individuals covered under the employee welfare benefit plan offered through a MEWA licensed in this State.
(3) Multiple employer welfare arrangement or MEWA. - The term as defined in Section 3 of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002(40(A)), as amended, that meets at least one of the following criteria:
a. At least one employer participating in the MEWA is either domiciled in this State or has its principal headquarters or principal administrative office in this State.
b. The MEWA solicits an employer for membership in the MEWA that is domiciled in this State or that has its principal headquarters or principal administrative office in this State.
(4) Repealed by Session Laws 2024-57, s. 3G.1(b), effective January 1, 2025, and applicable to licenses issued under Article 50A of Chapter 58 of the General Statutes on or after that date.
(5) Repealed by Session Laws 2024-57, s. 3G.1(b), effective January 1, 2025, and applicable to licenses issued under Article 50A of Chapter 58 of the General Statutes on or after that date.
(6) Reserved for future codification purposes.
(7) Net worth. - An amount that is calculated by subtracting the total amount of an entity's liabilities from the value of the entity's total (i) tangible assets and (ii) other investments permitted under G.S. 58-50A-50. (2019-202, s. 1; 2024-57, s. 3G.1(b).)
§ 58-50A-5. Repealed by Session Laws 2024-57, s. 3G.1(a), effective January 1, 2025.
§ 58-50A-10. Repealed by Session Law 2024-57, s. 3G.1(a), effective January 1, 2025.
§ 58-50A-15. Repealed by Session Laws 2024-57, s. 3G.1(a), effective January 1, 2025.
§ 58-50A-20. Repealed by Session Laws 2024-57, s. 3G.1(a), effective January 1, 2025.
§ 58-50A-25. Repealed by Session Laws 2024-57, s. 3G.1(a), effective January 1, 2025.
§ 58-50A-30. Repealed by Session Laws 2024-57, s. 3G.1(a), effective January 1, 2025.
§ 58-50A-35. Repealed by Session Laws 2024-57, s. 3G.1(a), effective January 1, 2025.
§ 58-50A-40. Repealed by Session Laws 2024-57, s. 3G.1(a), effective January 1, 2025.
§ 58-50A-50. Requirements for certain MEWAs; enrollment, coverage, and funding.
All of the following shall apply to an entity that is initially licensed under this Article on or after January 1, 2025:
(1) To maintain the license under this Article, the MEWA is required to maintain a minimum level of enrollment of 500 individuals who are employees belonging to two or more employers participating in the MEWA. The Commissioner is authorized to continue the licensure of a MEWA that does not meet this minimum requirement if that MEWA demonstrates to the Commissioner's satisfaction that the number of enrolled employees does not adversely affect the financial soundness of the MEWA.
(2) Benefits under the MEWA shall be available only to individuals who are (i) employees of employers participating in the MEWA and dependents of those employees or (ii) eligible for continuation of coverage of benefits under the MEWA under State or federal law.
(3) The level of coverage for healthcare benefits under the MEWA is equal to or greater than sixty percent (60%) of the actuarial value of allowed costs for the covered benefits.
(4) MEWA funds shall only be invested or maintained in one of the following:
a. Securities and other investments and assets permitted under State law for the investment of assets constituting the legal reserves of life insurance companies licensed in this State.
b. Any security or investment permitted by the Commissioner.
(5) The net worth of a MEWA shall be maintained at a minimum of five hundred thousand dollars ($500,000). (2024-57, s. 3G.1(b).)
§ 58-50A-55. Applicable provisions of this Chapter.
(a) All of the following provisions of this Chapter apply to MEWAs licensed or administered under this Article:
(1) G.S. 58-2-190, Commissioner may require certain [special] reports.
(2) G.S. 58-3-150, Forms to be approved by Commissioner.
(3) G.S. 58-7-21, Credit allowed a domestic ceding insurer.
(4) G.S. 58-7-26, Asset or reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of G.S. 58-7-21.
(5) G.S. 58-7-30, Insolvent ceding insurer.
(6) G.S. 58-7-46, Notification to Commissioner for president or chief executive officer changes.
(7) G.S. 58-7-73, Dissolution[s] of insurers.
(8) Article 12 of this Chapter, Risk-Based Capital Requirements.
(9) Part 1 of Article 53 of this Chapter, Continuation.
(b) This section shall neither serve as an exhaustive list of, nor shall it be construed to limit the applicability of, provisions of this Chapter that apply to MEWAs licensed or administered under this Article. If any provision of this Chapter or any other law applies to MEWAs licensed or administered under this Article but is not included in this section, then that provision or law shall have continued force and effect. (2024-57, s. 3G.1(b).)
§ 58-50A-60. Multiple employer welfare arrangements; administrators.
(a) Repealed by Session Laws 2019-202, s. 3(a), effective October 1, 2019, and applicable to contracts entered into, amended, or renewed on or after January 1, 2020.
(b) Each insurer licensed to do business in this State that administers a MEWA shall, at the request of the Commissioner, provide the Commissioner with information regarding the insurer's administrative services contract or contracts with the MEWA or MEWAs that the Commissioner requires. No unlicensed insurer shall administer any MEWA. (1989 (Reg. Sess., 1990), c. 1055, s. 1; 1991, c. 611, s. 3; 2019-202, ss. 2(a), 3(a); 2020-69, s. 3(e); 2024-57, s. 3G.1(b).)
§ 58-50A-65. Multiple employer welfare arrangements; license required; penalty.
(a) It is unlawful to operate, maintain, or establish a MEWA unless the MEWA has a valid license issued by the Commissioner. Any MEWA operating in this State without a valid license is an unauthorized insurer.
(b) This section, G.S. 58-50A-60, and G.S. 58-50A-70 through G.S. 58-50A-95 do not apply to a MEWA that offers or provides benefits that are fully insured by an authorized insurer or to a MEWA that is exempt from state insurance regulation in accordance with the Employee Retirement Income Security Act of 1974, Public Law Number 43-406. (1991, c. 611, s. 1; 2019-202, ss. 2(b), 8; 2024-57, s. 3G.1(b).)
§ 58-50A-70. Qualifications for licensure.
(a) To meet the requirements for issuance of a license under this Article and to maintain that license, a MEWA must meet all of the following criteria:
(1) The MEWA is a nonprofit organization or administered by a nonprofit organization.
(2) One of the following applies to the MEWA:
a. The MEWA is established or administered by a trade association, industry association, or professional association of employers or professionals that meets all of the following criteria:
1. The association has a constitution or bylaws.
2. The association was organized and has been maintained in good faith for a continuous period of three years for purposes other than that of obtaining or providing insurance.
b. Repealed by Session Laws 2024-57, s. 3G.1(b), effective January 1, 2025, and applicable to licenses issued under Article 50A of Chapter 58 of the General Statutes on or after that date.
c. The MEWA is established or administered by a statewide chamber of commerce or a statewide business league that meets all of the following criteria:
1. The chamber of commerce or business league has a constitution or bylaws.
2. The chamber of commerce or business league was organized and has been maintained in good faith for a continuous period of five years for purposes other than that of obtaining or providing insurance.
3. The chamber of commerce or business league is exempt from taxation by the Internal Revenue Service under section 501(c)(6) of the Internal Revenue Code.
(3) The MEWA is operated pursuant to a trust agreement by a board of trustees that has complete fiscal control over the MEWA and that is responsible for all operations of the MEWA. Except as provided in this subdivision, the trustees are required to be owners, partners, officers, directors, or employees of one or more employers participating in the MEWA. With the Commissioner's approval, an individual who is not an owner, partner, officer, director, or employee of one or more employers participating in the MEWA may serve as a trustee if that individual possesses the expertise required for the service as a trustee. A trustee shall not be an owner, officer, or employee of the administrator or service company of the MEWA. The trustees have the authority to approve applications of members for participation in the MEWA and to contract with an authorized administrator or service company to administer the operations of the MEWA.
(4) Coverage under the MEWA is not offered or advertised to the public generally.
(5) Operation of the MEWA is conducted in accordance with sound actuarial principles.
(b) Each insured shall be issued a policy, contract, certificate, summary plan description, or other evidence of the benefits and coverages provided under the MEWA plan. The evidence of benefits and coverages provided shall contain, in boldface print in a conspicuous location, the following statement: "THE BENEFITS AND COVERAGES DESCRIBED HEREIN ARE PROVIDED THROUGH A TRUST FUND ESTABLISHED BY A [name of MEWA]. EXCESS INSURANCE IS PROVIDED BY A LICENSED INSURANCE COMPANY TO COVER HIGH AMOUNT MEDICAL CLAIMS. THE TRUST FUND IS NOT SUBJECT TO ANY INSURANCE GUARANTY ASSOCIATION, ALTHOUGH THE TRUST FUND IS MONITORED BY THE NORTH CAROLINA DEPARTMENT OF INSURANCE. OTHER RELATED FINANCIAL INFORMATION IS AVAILABLE FROM YOUR EMPLOYER OR FROM THE [name of MEWA]." If applicable, the same documents shall contain, in boldface print in a conspicuous location, the following statement: "PARTICIPATING EMPLOYERS WILL BE RESPONSIBLE FOR FUNDING ALL CLAIMS INCURRED BY EMPLOYEES COVERED UNDER THE TRUST." Any statement required by this subsection is not required on identification cards issued to insureds.
(c) Each MEWA shall maintain excess insurance written by an insurer authorized to do business in this State with a retention level determined in accordance with sound actuarial principles. The excess insurance contracts must be filed with the Commissioner and contain notification provisions requiring at least 60 days' notice to the Commissioner from the insurer issuing the coverage prior to the termination or modification of the excess insurance coverage. The Commissioner may adopt rules prescribing the net retentions levels for MEWAs in accordance with the number of risks insured.
(d) Each MEWA shall establish and maintain appropriate loss reserves determined in accordance with sound actuarial principles.
(e) The Commissioner shall not grant or continue a license under this Article if the Commissioner makes any of the following determinations:
(1) A trustee, manager, or administrator of a MEWA is incompetent, untrustworthy, or so lacking in insurance expertise as to make the operations of the MEWA hazardous to the potential and existing insureds.
(2) A trustee, manager, or administrator of a MEWA has been found guilty of or has pled guilty or no contest to a felony, a crime involving moral turpitude, or a crime punishable by imprisonment of one year or more under the law of any state or country, whether or not a judgment or conviction has been entered.
(3) A trustee, manager, or administrator of a MEWA has had any type of insurance license revoked in this or any other state.
(4) To the detriment of the employers participating in the MEWA, insureds, creditors, or the public, the operations of the MEWA are characterized by the improper manipulation of assets, accounts, or excess insurance or by bad faith.
(f) All contracts between a MEWA and an administrator or service company shall be filed with the Commissioner. Any changes to these contracts shall be filed with the Commissioner in advance of their implementation.
(g) Failure to maintain compliance with the eligibility requirements established by this section is a ground for denial, suspension, or revocation of the license under this Article. (1991, c. 611, s. 1; 2019-202, ss. 2(c), 3(b); 2024-57, s. 3G.1(b).)
§ 58-50A-75. Certain words prohibited in name of MEWA.
No licensed MEWA shall use in its name, contracts, literature, advertising in any medium, or any other printed matter the words "insurance", "casualty", "surety", "mutual", or any other words descriptive of the insurance business or deceptively similar to the name or description of any insurer doing business in this State. (1991, c. 611, s. 1; 2019-202, s. 2(d).)
§ 58-50A-80. Filing of application.
Applicants for a license under this Article shall file with the Commissioner an application for a license on a form prescribed by the Commissioner and signed under oath by officers of the entity requesting the licensure. The application shall include or have attached all of the following:
(1) A copy of the articles of incorporation, constitution, and bylaws of the applicant entity.
(2) A list of the names, addresses, and official capacities with the MEWA of the individuals who will be responsible for the management and conduct of the affairs of the MEWA, including all trustees, officers, and directors. These individuals shall fully disclose the extent and nature of any contracts or arrangements between them and the MEWA, including possible conflicts of interest.
(3) A copy of the articles of incorporation, bylaws, or trust agreement that governs the operation of the MEWA.
(4) A copy of the policy, contract, certificate, summary plan description, or other evidence of the benefits and coverages provided to covered employees, including a table of the rates charged or proposed to be charged for each form of the contract. An actuary who is a member of the American Academy of Actuaries or the Society of Actuaries and has experience in establishing rates for a self-insured trust and health services being provided, shall certify all of the following:
a. The rates are neither inadequate, nor excessive, nor unfairly discriminatory.
b. The rates are appropriate for the classes of risks for which they have been computed.
c. An adequate description of the rating methodology has been filed with the Commissioner and that methodology follows consistent and equitable actuarial principles.
(5) A copy of a fidelity bond, in an amount determined by rules adopted by the Commissioner, issued in the name of the MEWA and covering any individuals managing or handling the funds or assets of the MEWA. In no case may the bond be less than fifty thousand dollars ($50,000) or more than five hundred thousand dollars ($500,000).
(6) A copy of the MEWA's excess insurance agreement.
(7) A feasibility study, made by an independent qualified actuary and an independent certified public accountant with an opinion acceptable to the Commissioner, that addresses market potential, market penetration, market competition, operating expenses, gross revenues, net income, total assets and liabilities, cash flow, and other items as the Commissioner requires. The study shall be for the greater of three years or until the MEWA has been projected to be profitable for 12 consecutive months. The study shall be required to show that the MEWA would not, at any month end of the projection period, have less than the reserves required by G.S. 58-50A-70(d).
(8) A copy of an audited financial statement of the MEWA reflecting the minimum statutory reserve required by G.S. 58-50A-70(d).
(9) Evidence satisfactory to the Commissioner showing that the MEWA will be operated in accordance with sound actuarial principles. The Commissioner shall not approve the MEWA unless it is determined that the MEWA is designed to provide sufficient revenues to pay current and future liabilities, as determined in accordance with sound actuarial principles.
(10) A copy of every contract between the MEWA and any administrator or service company.
(11) Any additional information as the Commissioner may require. (1991, c. 611, s. 1; 2019-202, ss. 2(e), 8; 2024-57, s. 3G.1(b).)
§ 58-50A-85. Examinations; deposits; solvency regulation.
(a) The provisions of Articles 2, 5, and 30 of this Chapter regarding examinations, deposits, and supervision and receivership respectively apply to MEWAs licensed under this Article.
(b) Repealed by Session Laws 2024-57, s. 3G.1(b), effective January 1, 2025, and applicable to licenses issued under Article 50A of Chapter 58 of the General Statutes on or after that date.
(c) Article 62 of this Chapter and Article 8B of Chapter 105 of the General Statutes do not apply to MEWAs licensed under this Article. (1991, c. 611, s. 1; 2019-202, s. 2(f); 2024-57, s. 3G.1(b).)
§ 58-50A-90. Annual reports; actuarial certifications; quarterly reports.
(a) Annually, a MEWA shall file a report with the Commissioner that meets all of the following requirements:
(1) The report is due no later than 150 days after the end of the fiscal year applicable to the operation of the MEWA. The Commissioner may, with good cause, grant an extension of this deadline.
(2) The report shall be submitted on forms prescribed by the Commissioner and verified by the oath of a member of the board of trustees and by an administrative executive appointed by the board.
(3) The report shall indicate the financial condition of the MEWA on the last day of the preceding fiscal year.
(4) The report shall contain an audited financial statement of the MEWA prepared in accordance with statutory accounting principles, including its balance sheet and a statement of the operations for the preceding fiscal year certified by an independent certified public accountant.
(5) The report shall include an analysis of the adequacy of reserves and contributions or premiums charged, based on a review of past and projected claims and expenses related to the operation of the MEWA.
(b) In addition to the information submitted in the annual report required in subsection (a) of this section, if reasonable grounds exist, the Commissioner may request information that summarizes paid and incurred expenses and contributions or premiums received; and may request evidence satisfactory to the Commissioner that the MEWA is actuarially sound. That information and evidence shall be furnished by the MEWA not later than 30 days after the request, unless the Commissioner, for good cause, grants an extension.
(c) Annually, in conjunction with the annual report required in subsection (a) of this section, the MEWA shall submit an actuarial certification prepared by an independent qualified actuary that indicates all of the following:
(1) The MEWA is actuarially sound. The certification of actuarial soundness shall consider the rates, benefits, and expenses of, and any other funds available for the payment of obligations of, the MEWA.
(2) The rates being charged and to be charged for contracts are actuarially adequate to the end of the period for which rates have been guaranteed.
(3) Incurred but not reported claims and claims reported but not fully paid have been adequately provided for.
(4) Any other information relating to the performance of the MEWA that is required by the Commissioner.
(d) If reasonable grounds exist, the Commissioner may require a MEWA to file quarterly, within 45 days after the end of each of its fiscal quarters, an unaudited financial statement on a form prescribed by the Commissioner, verified by the oath of a member of the board of trustees and an administrative executive appointed by the board, showing its financial condition on the last day of the preceding quarter.
(e) Any MEWA that fails to file a report as required by this section is subject to G.S. 58-2-70; and after notice and opportunity for hearing, the Commissioner may suspend the MEWA's authority to enroll new insureds or to do business in this State while the failure continues. (1991, c. 611, s. 1; 2019-202, s. 2(g); 2024-57, s. 3G.1(b).)
§ 58-50A-95. Denial, suspension, or revocation of license.
(a) The Commissioner shall deny, suspend, or revoke the license of any MEWA or any entity administering a MEWA if the Commissioner finds that any of the following apply:
(1) The MEWA is insolvent.
(2) Methods and practices used in the conduct of its business render its further transaction of business in this State hazardous or injurious to its participating employers, covered employees and dependents, or to the public.
(3) The MEWA or entity administering the MEWA failed to pay any final judgment rendered against it in a court of competent jurisdiction within 60 days after the judgment became final.
(4) The MEWA or the entity administering the MEWA is or has been in violation of or threatens to violate any provision of this Article.
(5) The MEWA is no longer actuarially sound.
(6) Rates charged for coverage under the MEWA are excessive, inadequate, or unfairly discriminatory.
(b) The Commissioner may deny, suspend, or revoke the license of any MEWA or any entity administering a MEWA if the Commissioner determines that any of the following apply:
(1) The MEWA or the entity administering the MEWA violated any lawful order or rule of the Commissioner; or any applicable provision of this Article; or
(2) The MEWA or the entity administering the MEWA has refused to produce its accounts, records, or files for examination under G.S. 58-50A-85 or through any of its officers has refused to give information with respect to its affairs or to perform any other legal obligation as to an examination.
(c) Whenever the financial condition of the MEWA is such that, if not modified or corrected, its continued operation would result in impairment or insolvency, in addition to any provisions in Article 30 of this Chapter, the Commissioner may order the MEWA to file with the Commissioner and implement a corrective action plan designed to do one or more of the following:
(1) Reduce the total amount of present potential liability for benefits by reinsurance or other means.
(2) Reduce the volume of new business being accepted.
(3) Reduce the expenses of the MEWA by specified methods.
(4) Suspend or limit the writing of new business for a period of time.
If the MEWA fails to submit a plan within the time specified by the Commissioner or submits a plan that is insufficient to correct the MEWA's financial condition, the Commissioner may order the MEWA to implement one or more of the corrective actions listed in this subsection.
(d) The Commissioner shall, in the order suspending the authority of a MEWA to enroll new insureds, specify the period during which the suspension is to be in effect and the conditions, if any, that must be met prior to reinstatement of its authority to enroll new insureds. The order of suspension is subject to rescission or modification by further order of the Commissioner before the expiration of the suspension period. Reinstatement shall not be made unless requested by the MEWA. The Commissioner shall not grant reinstatement if it is found that the circumstances for which suspension occurred still exist. (1991, c. 611, s. 1; 2019-202, ss. 2(h), 8; 2024-57, s. 3G.1(b).)