The Washington Insurance Commissioner (OIC) has proposed new rules to codify current procedures for filing large group health plans for bona fide associations. Under current requirements, the agency provides instructions for filing association health plans qualifying as a single large group plan under ERISA rather than rules governing these filings. The OIC requires that insurance carriers file an exhibit entitled “Evidence as an Employer” that includes:
- A copy of the association bylaws; and
- A copy of the trust agreement or other organizational document which shows the purpose of the association and who governs the association; and
- A statement of the association’s history; and
- A copy of the occupational categories/industry classifications comprising the employers in the association; and
- An advisory opinion from the Federal Department of Labor demonstrating that the group is qualified to purchase association coverage;
- In the absence of a Federal Department of Labor opinion, an opinion from an attorney explaining how and why the association qualifies as a true employer under 29 U.S.C. § 1002(5) of the Employee Retirement Income Security Act (ERISA) of 1974.
Last year, the OIC intended to adopt rules outlining procedures for bona fide associations filings under existing Department of Labor (DOL) standards and for associations qualifying under the newer, liberalized DOL regulations that took effect in August of 2018. The DOL regulations were challenged by several states and a federal district court invalidated the regulations. Consequently, the OIC’s rules addressing bona fide association plan filings were allowed to expire. Now, the OIC has proposed rules that address carrier filings for only the bona fide association plans qualifying under the older DOL standards.
Although the OIC’s proposed rules largely mirrors its current filing instructions, the rules will require all bona fide associations to obtain new legal opinions as to the status of the association plan as qualifying under ERISA as a single, large employer plan. The rules outline the contents of the required “Evidence of as an Employer” exhibit including an expanded description of the contents of the required legal opinion.
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WAC 284-43-8110 Requirements for Pathway 1 Association Health Plan form filings related to the bona fide status of Pathway 1 Associations.
(1) Carriers must file a group heal the plan, other than a small group health plan, rate and form filing as provided in RCW 48.43.733. The form filing for an association health plan submitted by a carrier must include documents related to “Evidence as an Employer.”
The documents must include, at a minimum:
(a) The member-governed group or association’s bylaws, or other comparable controlling documents if no bylaws exist;
(b) A trust agreement or other organizational document that shows the purpose of the member-governed group or association and who governs the member-governed group or association;
(c) A statement of the member-governed group or association’s history;
(d) An advisory opinion from the Department, if available, demonstrating that the member-governed group or association is qualified to purchase association health plan coverage; and
(e) If a Department advisory opinion is not available or if changes have been made to the documents related to “Evidence as an Employer” such that the Department advisory opinion no longer accurately reflects the composition, organization or structure of the member-governed group or association with respect to the factors included in (e) (ii) of this subsection, an opinion from an attorney attesting to the fact that the member-governed group or association qualifies as an employer under 29 U.S.C. Sec. 1002 (5).
The attorney attestation must explain how and why the member-governed group or association meets each of the criteria below, based upon the facts and circumstances of the member-governed group’s or association’s governance and operations during the twelve months immediately preceding submission of the form filing, with explicit references to relevant language drawn from the member-governed group or association’s bylaws, trust agreement, or other organizational document:
(i) The member-governed group or association has been formed for some purpose other than the provision of health coverage or other employee benefits;
(ii) The employer members of the member-governed group or association are in the same trade, industry, line of business or profession. A list of the occupational categories/industrial classifications of the employers eligible to participate in the member-governed group or association must be submitted with the attestation, along with a description of the following:
(A) How employer members are solicited;
(B) Eligibility criteria to participate in the member-governed group or association;
(C) Employer members who are currently participating in the member-governed group or association;
(D) The process by which the member-governed group or association was formed;
(E) The purpose for the formation of the member-governed group or association;
(F) Preexisting relationships of any of the employer members of the member-governed group or association;
(G) The powers, rights, and privileges of employer members that exist by reason of their status as employers;
(H) The functions and activities of the member-governed group or association are controlled by its employer members, and the member governed group’s or association’s employer members that participate in the group heal the plan control the plan. Control must be present both in form and substance.
… the attorney attestation identified in subsection (1)(e) of this section shall be filed as a supporting document with the carrier’s form filing, in accordance with the following:
(a) Attorney attestations in compliance with subsection (1)(e) of this section must be filed for Plan Year 2020 and every five years thereafter, regardless of whether any changes have been made to the association or member-governed group’s composition, organization, or structure that would change the conclusion in the attorney attestation;
(b) For the interceding four filing years, the attestation may be prepared by an officer of the carrier in lieu of an attorney, so long as:
(i) No changes have been made to the documents previously submitted as “Evidence as an Employer” that would impact the analysis in subsection (1) (e) of this section; and
(ii) Such attestation represents a good faith effort by the carrier to ensure that the association or member-governed group meets the requirements of subsection (1) of this section.
(c) Attorney attestations in compliance with subsection (1)(e) of this section must be filed each plan year that a member-governed group or association changes issuers and a benefit plan is issued by a new issuer.
If an attorney attestation in compliance with subsection (1)(e) of this section was filed within the last five years, the issuer may refile the same attorney attestation, provided there has been no change to the association or member-governed group’s composition, organization, or structure that would change the conclusion in the attorney attestation.
(5) An attorney attestation under this section must be specific to the member-governed group or association and need not be specific to the issuer offering the health plan to the member-governed group or association.
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According to OIC staff presentations of these proposed rules, an attorney letter must be signed by an identifiable attorney (rather than in the name of a law firm) and the opinion must correlate legal requirements to actual association processes and standards.
I guess OIC will no longer accept short letters from attorneys stating an association is bona fide because “I say so.”
