Sections 44-7601 to 44-7618 shall be known and may be cited as the Multiple Employer Welfare Arrangement Act.

(1) The Legislature finds and declares that the United States Congress recognized multiple employer welfare arrangements as vehicles for offering traditional accident and health benefit programs through the Employee Retirement Income Security Act of 1974. Multiple employer welfare arrangements may be subject to state regulatory and fiscal standards not inconsistent with the federal act if the multiple employer welfare arrangement offers health benefit plans that are not fully insured. The provisions of the Multiple Employer Welfare Arrangement Act are consistent with and authorized by the federal act, which confers upon the states authority to regulate multiple employer welfare arrangements.

(2) It is the intent of the Legislature:

(a) To promote the legitimacy and the financial integrity of health benefit plans that are not fully insured by requiring multiple employer welfare arrangements offering such plans to obtain a certificate of registration from the director;

(b) That the Multiple Employer Welfare Arrangement Act not apply to fully insured health benefit plans offered by multiple employer welfare arrangements;

(c) That the act shall be construed to mean that multiple employer welfare arrangements are not insurers for purposes of the insurance laws of this state; and

(d) That the insurance laws of this state not apply to health benefit plans offered by multiple employer welfare arrangements except as specifically set forth in the act.

For purposes of the Multiple Employer Welfare Arrangement Act:

(1) Certificate of registration means a document issued by the director authorizing a multiple employer welfare arrangement to offer a health benefit plan that is not fully insured;

(2) Covered individual means (a) an employee who is covered by a health benefit plan provided through a multiple employer welfare arrangement in which the employer is participating or (b) a self-employed individual who is covered by a health benefit plan provided through a multiple employer welfare arrangement. Covered individual includes a dependent of an employee or self-employed individual as defined under the terms of the health benefit plan;

(3) Director means the Director of Insurance;

(4) Fully insured health benefit plan means a health benefit plan which provides for health benefits, all of which are guaranteed under a contract or policy of insurance issued by an insurance company licensed to transact the business of insurance in this state;

(5) Health benefit plan means an employee welfare benefit plan to the extent that it provides any hospital, surgical, or medical expense benefits to covered individuals directly or through insurance, reimbursement, or otherwise. Health benefit plan does not include (a) accident-only, disability income, hospital confinement indemnity, dental, or credit insurance, (b) coverage issued as a supplement to liability insurance, (c) medicare or insurance provided as a supplement to medicare, (d) insurance arising from workers' compensation provisions, (e) automobile medical payment insurance, (f) any other specific limited coverage, or (g) insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in any liability insurance policy;

(6) Multiple employer welfare arrangement means a multiple employer welfare arrangement as defined by 29 U.S.C. 1002, as such section existed on January 1, 2002, if the multiple employer welfare arrangement is sponsored by an association of employers that offers a health benefit plan that is not fully insured. Such association of employers may include self-employed individuals;

(7) Participating employer means an employer or self-employed individual that participates in a multiple employer welfare arrangement; and

(8) Self-employed individual means an individual who:

(a) Has an ownership interest in a trade or business in Nebraska, regardless of whether the trade or business is incorporated or unincorporated;

(b) Earns wages or self-employment income from the trade or business; and

(c) Works at least twenty hours per week or eighty hours per month providing personal services to the trade or business or earns annual income from the trade or business in an amount that is no less than the individual's and any covered dependent's annual cost for health benefit plan coverage under the multiple employer welfare arrangement.

No multiple employer welfare arrangement may offer to a self-employed individual or to an employer that is domiciled in this state or that has its principal headquarters or principal administrative offices in this state a health benefit plan unless the health benefit plan is a fully insured health benefit plan or unless the multiple employer welfare arrangement obtains and maintains a certificate of registration pursuant to the Multiple Employer Welfare Arrangement Act.

(1) A multiple employer welfare arrangement seeking to offer a health benefit plan that is not fully insured shall apply for a certificate of registration in a form prescribed by the director. The application shall be completed and submitted to the director together with a one-thousand-dollar fee and the following:

(a) Copies of all articles, bylaws, agreements, and other documents or instruments describing the organizational structure of the applicant;

(b) Copies of all materials and documents describing the rights and obligations of participating employers and covered individuals with respect to the applicant;

(c) A copy of the trust agreement of the applicant;

(d) A copy of the unaudited financial statement required by section 44-7613;

(e) A statement showing in full detail the plan for offering a health benefit plan by the applicant;

(f) Copies of all contracts and other instruments proposed to be made, offered, or sold by the applicant to its participating employers, together with a copy of its summary plan description and the proposed advertising matter to be used in the solicitation of participating employers;

(g) A copy of the contract with the third-party administrator retained, if any, to administer the health benefit plan;

(h) A copy of the stop-loss insurance policy required by section 44-7609; and

(i) Any other reasonable information requested by the director.

(2) The director shall deny a certificate of registration if the applicant does not meet the requirements of the Multiple Employer Welfare Arrangement Act. Notice of denial shall be in writing and shall set forth the basis for the denial. If the applicant submits a written request for reconsideration within thirty days after the notice was sent by the director, the director shall conduct a hearing on the denial pursuant to the Administrative Procedure Act.

A multiple employer welfare arrangement may only be established and maintained by an association of participating employers or covered individuals who are self-employed individuals. The association shall not condition membership in the association, the amounts of dues or other payments for membership, or coverage under a health benefit plan on the basis of health-status-related factors with respect to the covered individuals offered coverage under the health benefit plan. The association shall:

(1) Have been in existence and engaged in substantive activity for its members other than sponsorship of a health benefit plan for more than three years prior to application for a certificate of registration;

(2) Be composed of two or more members, all of which are in the same trade or industry; and

(3) Have, before application for a certificate of registration is made, applications for participation (a) from two or more members who are participating employers with an aggregate of two hundred or more covered individuals or (b) from at least two hundred covered individuals who are self-employed individuals.

(1) A multiple employer welfare arrangement offering a health benefit plan that is not fully insured shall establish a trust pursuant to a written trust agreement to hold all funds pertaining to the health benefit plan. The trust shall be operated by a board of trustees pursuant to the trust agreement.

(2)(a) All members of the board of trustees shall be owners, partners, officers, directors, or employees of one or more participating employers.

(b) No person may be a member of the board of trustees if such person:

(i) Is an owner, officer or employee, or a partner in, or a contract administrator, or other service provider to the health benefit plan or of any third-party administrator of the multiple employer welfare arrangement; or

(ii) Has been convicted of any felony or a Class I, II, or III misdemeanor.

The board of trustees of the multiple employer welfare arrangement as required by section 44-7607 shall:

(1) Serve as a fiduciary of the trust;

(2) Be responsible as plan administrator for all operations of the health benefit plan;

(3) Have in effect rules of operation and financial control based on an annual plan of operation, adequate to carry out the terms of the health benefit plan and to meet all requirements of the Multiple Employer Welfare Arrangement Act;

(4) Consider applications of association members for participation in the multiple employer welfare arrangement; and

(5) Hold and maintain a stop-loss insurance policy pursuant to the requirements of section 44-7609.

(1) A multiple employer welfare arrangement offering a health benefit plan that is not fully insured shall be a named insured under a stop-loss insurance policy that provides coverage in excess of the multiple employer welfare arrangement's retention of one hundred twenty-five percent of the multiple employer welfare arrangement's expected health claims costs as determined on an aggregate basis.

(2) A policy issued to satisfy the requirements of subsection (1) of this section shall:

(a) Be evidenced by a binder or policy by an insurer licensed to transact the business of insurance in this state; and

(b) Contain a provision that the coverage may not be terminated by the insurer unless the multiple employer welfare arrangement and the director receive a written notice of termination from the insurer at least thirty days before the effective date of the termination.

If the assets of, and stop-loss insurance policy issued to, a multiple employer welfare arrangement are at any time insufficient to pay claims made against a health benefit plan, discharge liabilities and obligations relating to health benefit plan claims, and maintain adequate reserves and surpluses, the board of trustees shall be authorized to assess the participating employers in an amount necessary to remedy the deficiency.

Any participating employer that voluntarily terminates its participation in the multiple employer welfare arrangement or that is involuntarily terminated by the multiple employer welfare arrangement shall remain liable subsequent to the date of termination for all contractual obligations it has entered into with the multiple employer welfare arrangement on or before the date of termination.

(1) A multiple employer welfare arrangement shall notify in writing each participating employer and each covered individual applying for coverage by the multiple employer welfare arrangement that a health benefit plan provided by the multiple employer welfare arrangement is not:

(a) Insurance;

(b) Subject to state laws and requirements that apply to health insurance offered by a licensed insurer; and

(c) Covered by the Nebraska Life and Health Insurance Guaranty Association.

(2) The notice required by subsection (1) of this section shall, in ten-point or greater type, disclose that the multiple employer welfare arrangement is authorized under state law to assess participating employers for claims under the health benefit plan in addition to other remedies the multiple employer welfare arrangement may take if the multiple employer welfare arrangement is unable to pay claims.

(3) If the multiple employer welfare arrangement provides coverage to covered individuals who are self-employed individuals, the multiple employer welfare arrangement shall include a statement in the summary plan description and any claim or appeal denial notice that self-employed covered individuals may contact the Director of Insurance. Such statement shall include the mailing address and telephone number for the Department of Insurance.

(1) On an annual basis and within ninety days after the last day of the fiscal year of a multiple employer welfare arrangement, each multiple employer welfare arrangement holding a certificate of registration shall file with the director a financial statement, attested to by at least two members of the board of trustees, one of whom shall be the chairperson or president of the board of trustees, and accompanied by a fee of two hundred dollars. The director shall review the financial statement and shall require additional filings as the director finds reasonably necessary to assure the legitimacy and the financial integrity of the multiple employer welfare arrangement.

(2) On an annual basis and within ninety days after the last day of the fiscal year of a multiple employer welfare arrangement, a statement from a qualified actuary that the rates charged and reserves, both (a) incurred and (b) incurred but not reported, regarding sufficiency to pay claims and associated expenses for the health benefit plan shall be obtained and given to the director. The actuarial statement shall include a confirmation that the stop-loss insurance policy required by section 44-7609 is in force. The actuarial statement shall meet the requirements of any rules or regulations which shall be adopted and promulgated by the director.

(3) On an annual basis and within ninety days after the last day of the fiscal year of a multiple employer welfare arrangement, each multiple employer welfare arrangement holding a certificate of registration shall file with the director a certificate of compliance signed by at least two members of the board of trustees, one of whom shall be the chairperson or president of the board of trustees, certifying that the multiple employer welfare arrangement, to the best of their knowledge, information, and belief, has been conducted in accordance with applicable provisions of Nebraska law and rules and regulations relating to multiple employer welfare arrangements.

(1) After notice and a hearing conducted pursuant to the Administrative Procedure Act, the director may suspend or revoke a certificate of registration or may impose an administrative fine not to exceed one thousand dollars per violation, or any combination of actions, if the director finds the multiple employer welfare arrangement:

(a) Fails to maintain the stop-loss insurance policy as required by section 44-7609;

(b) Engages in financial practices that make further transaction of business in this state hazardous or injurious to its participating employers, covered individuals, or the public;

(c) Within fifteen business days, fails to respond or request a reasonable amount of additional time to respond in which time a response is made, to an inquiry of the director;

(d) Fails for an unreasonable period to pay any final judgment rendered against it in this state on any contractual obligation;

(e) Conducts business fraudulently or has not met its contractual obligations in good faith;

(f) Made, published, disseminated, circulated, or placed before the public or caused, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public in a newspaper, magazine, or other publication or in the form of a notice, circular, pamphlet, letter, or poster or over any radio or television station, or in any other way, an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the health benefit plan or with respect to any insurer in the conduct of his or her business which is untrue, deceptive, or misleading; or

(g) Violates any provision of the Multiple Employer Welfare Arrangement Act or section 44-106 or 44-114.

(2) Instead of or in addition to the penalties set forth in subsection (1) of this section, the director may issue a cease and desist order to a multiple employer welfare arrangement if such multiple employer welfare arrangement engages in any of the activities set forth in subsection (1) of this section.

The director may adopt and promulgate rules and regulations to carry out the Multiple Employer Welfare Arrangement Act.

(1) The offering of a health benefit plan by any multiple employer welfare arrangement shall not be deemed transacting business as an insurer, association, or exchange, except as specifically set forth in the Multiple Employer Welfare Arrangement Act. The insurance laws of this state do not apply to health benefit plans offered by multiple employer welfare arrangements except as specifically set forth in the act.

(2) Nothing in the act shall be construed to include an insolvent multiple employer welfare arrangement within the provisions of the Nebraska Insurers Supervision, Rehabilitation, and Liquidation Act.

(1) Except as provided in subsection (2) of this section, the Multiple Employer Welfare Arrangement Act shall apply to multiple employer welfare arrangements offering health benefit plans on or after July 20, 2002.

(2) The Multiple Employer Welfare Arrangement Act shall apply to multiple employer welfare arrangements providing health care coverage to self-employed individuals on or after January 1, 2020.