SELF-FUNDED HEALTH CARE PLANS
41-4010. Reserves and surplus. (1) The trustee of a self-funded plan shall establish and maintain in the trust fund the following reserves:
(a) A reserve in an amount as certified by a qualified actuary as being necessary for payment of claims liability. The reserve shall be reasonably adjusted on a quarterly basis in an amount as determined by a qualified actuary or other qualified person if authorized by the director.
(b) If, under the plan, periodic contributions to the trust fund have been paid in advance or are payable less frequently than monthly, there shall be a reserve for unearned contributions as computed pro rata on the basis of the unexpired portion of the period for which the contribution has been paid.
(c) If future claims payments plus future costs of operation are greater than future contributions plus current reserves, there shall be a reserve in an amount equal to future claims payments plus future costs of operation, less future contributions, less current reserves.
(2) In any determination of the financial condition of the trust fund, the claims reserve, reserve for unearned contributions and contribution deficiency reserve shall constitute liabilities.
(3)(a) In addition to reserves required by this section, a self-funded plan shall establish and maintain in its trust fund surplus equal to at least:
(i) The equivalence of three (3) months of contributions for the current plan year; or
(ii) One hundred ten percent (110%) of the difference between the total dollar aggregate stop-loss attachment point plus costs of operation and the total dollar expected contributions for the current plan year.
(b) Paragraph (a) of this subsection notwithstanding, a public postsecondary educational institution shall instead be required to establish and maintain in its trust fund surplus an amount equal to at least thirty percent (30%) of the unpaid claims liability of the plan.
(c) Upon request of a self-funded plan, the director may annually waive the surplus requirement provided in paragraph (a) or (b) of this subsection if:
(i) The plan or trust carries insurance providing aggregate coverage and specific coverage;
(ii) The plan, in its first year of operation, receives periodic contributions, at minimum on a monthly basis, at an amount at least equal to the point at which the insurance providing aggregate coverage must cover at least one hundred percent (100%) of the plan’s liability, as certified by a qualified actuary; and
(iii) In its second and each subsequent year of operation, the plan:
1. Continues to provide stop-loss coverage as described in subparagraph (i) of this paragraph; or
2. Is funded, at minimum on a monthly basis, at an amount equal to at least one hundred percent (100%) of the self-funded plan’s liability, less any surplus as defined in section 41-4002, Idaho Code, from previous years.
The director may also waive any or all requirements provided in subparagraphs (i) through (iii) of this paragraph, provided that the plan maintains reserves and surplus, as defined in section 41-4002, Idaho Code, of at least the amount certified annually by a qualified actuary as sufficient without aggregate coverage.
(4) A surplus note that has been approved by the director in a form and as defined in section 41-2841, Idaho Code, may be used to fund surplus and shall not be accounted as a liability.
(5) Up to one-third (1/3) of the surplus required by this section may be funded by a clean, irrevocable letter of credit, in a form acceptable to the director, issued in favor of the trust fund by a federally or state-chartered bank having a branch office in Idaho. Such irrevocable letter of credit cannot be guaranteed by pledge of any of the plan assets. The funding cannot be in the form of prepaid contributions or other loan or associated with an offsetting liability.
(6) A newly formed plan with no prior operating history shall meet the minimum surplus requirements no later than twelve (12) months after the date of initial operation. The director may extend for a reasonable period not to exceed twelve (12) additional months, provided that the plan is meeting all other provisions of this chapter. For plans registered with the department and in existence on the effective date of this law, such plans shall have twenty-four (24) months from the effective date of this law in which to increase their surplus level to comply with the requirements of subsection (3) of this section.
(7) The trust fund shall maintain the minimum surplus requirements at all times throughout the year.
[41-4010, added 1974, ch. 248, sec. 10, p. 1624; am. 2006, ch. 414, sec. 9, p. 1264; am. 2013, ch. 181, sec. 10, p. 427; am. 2015, ch. 49, sec. 2, p. 109; am. 2017, ch. 179, sec. 1, p. 410; am. 2019, ch. 306, sec. 3, p. 917.]