11 NCAC 22 .0107. TRUST SUBMITTAL AND PLAN OF OPERATION

(a)  In order to sponsor and maintain a trust pursuant to G.S. 58-89A-106, a PEO shall submit to the Commissioner a plan of operation as well as the following information:

(1)           Copy of the plan administrator's North Carolina TPA license.

(2)           Copy of the current contract between the PEO employee benefit plan trust and the administrator.

(3)           Description of the marketing plan for the PEO's services and a list of PEO employees who solicit client employers for the PEO.

(4)           A list of all client employers contracted with the PEO, including a list of all insured employees who are not assigned by the PEO.

(5)           A copy of each optional plan of benefits summary plan description and evidence of the coverage and benefits offered by the trust.

(6)           The schedule of the premium rates or the base rates and factors that will be used to calculate the premiums for each trust.

(7)           Actuarial certifications to meet each of the following requirements:

(A)          Actuarial soundness of the trust as required by G.S. 58-89A-106(a)(11);

(B)          Adequacy of rates charged as provided in 11 NCAC 22 .0116 and 22 .0117.

(C)          Provisions made for incurred but not reported claims as provided in 11 NCAC 22 .0116 and 22 .0117.

(8)           Report on Financial Condition of the trust, including:

(A)          The Annual Statement of Condition and Affairs Exhibit;

(B)          The Accident and Health Exhibit;

(C)          The General Expense Exhibit;

(D)          The Development of Incurred Losses Exhibit;

(E)           Audited Financial Statements as outlined in Paragraph (b) of this Rule.

(9)           A copy of the stop-loss insurance agreement covering the trust along with a summary of the description of the agreement that explains the nature of the coverage and net retention limits.

(10)         A power of attorney, as required by G.S. 58-16-5(10).

(b)  After the initial submittal required by this Rule, every PEO shall, within 150 days after the end of each of the trust's fiscal years or within any such extension of time that the Commissioner grants, file a plan of operation, along with all information required by Paragraph (a) of this Rule, with the Commissioner, on forms prescribed by the Commissioner and verified by the oath of a member of the PEO's board of directors and by an administrative executive appointed by the board, showing the trust's financial condition on the last day of the preceding fiscal year.  The plan shall contain an audited financial statement of the trust prepared in accordance with United States Generally Accepted Accounting Principles, including its balance sheet and a statement of the operations for the preceding fiscal year certified by an independent certified public accountant.  The plan shall also include an analysis of the adequacy of reserves and contributions or premiums charged, based on a review of past and projected claims and expenses, pursuant to this Chapter.

(c)  In addition to the information called for and furnished in connection with the plan of operation, the Commissioner may request information that summarizes paid and incurred expenses and contributions or premiums received, as well as evidence that the trust is actuarially sound.  That information and evidence shall be furnished by the PEO not later than 30 days after the request, unless the Commissioner grants an extension.

(d)  Annually the PEO shall submit an actuarial certification prepared by an independent qualified actuary that indicates:

(1)           The trust is actuarially sound, considering the rates, benefits, and expenses of, and any other funds available for the payment of obligations of, the trust;

(2)           The rates being charged and to be charged for the trust are actuarially adequate to the end of the period for which rates have been guaranteed to the covered persons;

(3)           Incurred but not reported claims and claims reported but not fully paid have been adequately provided for.

(e)  For the first year, beginning with October 1, 2009, the Commissioner may require the PEO to file quarterly, within 45 days after the end of each of its fiscal quarters, an unaudited financial statement on a form provided by the Commissioner, verified by the oath of a member of the PEO's board of directors and an administrative executive appointed by the board, showing the trust's financial condition on the last day of the preceding quarter.

(f)  Any PEO or its employee benefit plan trust that fails to file a plan of operation and other information as required by this Rule is subject to G.S. 58‑2‑70; and after notice and opportunity for hearing, the Commissioner may suspend the PEO's authority to enroll new insured's or to do business in this State while the failure continues.  Nothing in this subsection prohibits a PEO from continuing to operate a trust while the documentation required under this Rule is under review by the Department as long as the PEO operates the plan in accordance with this Chapter and G.S. 58-89A-106.

(g) A request for an extension of time to file the annual plan of operation and other information required by this Rule must be made in writing and filed with the Life & Health Division no later than 15 days before the due date of the plan.  Any request for extension received less than 15 days before the due date of the plan shall be denied except in instances of death or disability of key personnel or destruction of records by fire or natural disaster declared a major disaster by the President of the United States under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121, et. seq., as amended or a proclaimed disaster by the Governor of the State where the trust offices are located.

(h)  All exhibits referenced in this Rule shall be in the format as provided by the Commissioner, and exhibit forms may be obtained from the Life & Health Division. 

(i)  Every submittal made pursuant to this Rule shall contain a certification that any changes to the information required by this Rule shall be reported to the Commissioner.

(j)  Any change in the information required by this Chapter or by G.S. 58-89A-106 or by G.S. 58-89A-107 shall be reported to the Commissioner within 10 business days after the change.

 

History Note:        Authority G.S. 58‑2‑40; 58‑89A‑15; 58-89A-105; 58‑89A-106;

Eff. April 1, 2010.