§ 89.473. Ascertaining the legitimacy of the underlying plan.
(a) Legitimacy of underlying plan. Insurance companies writing stop-loss coverage shall exercise due diligence in ascertaining the legitimacy of the underlying plan before issuing coverage. This includes ensuring that:
(1) The underlying plan is a legitimate self-funded plan and not a self-insured or partially insured multiple employer welfare arrangement.
(2) The plan is not structured in a manner that is prohibited by this subsection.
(b) Pooling of risk prohibited.
(1) An underlying plan that aggregates multiple employers’ funds into an account, trust or other funding vehicle shall be capable of demonstrating that there is no pooling of risk between employers in any manner, including one or more of the following:
(i) Paying one employer’s claims from another employer or multiple employers’ contributions or premiums.
(ii) Aggregating two or more employers’ claims to trigger stop-loss coverage.
(2) In any case, an entity that commingles multiple employers’ funds into one account will be subject to scrutiny by the Department and shall be able to demonstrate that each participating employer’s claims and contributions are severable.
Source The provisions of this § 89.473 adopted September 25, 1992, effective September 26, 1992, 22 Pa.B. 4785.
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