RDCSB171 421 3842
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
SB 171 Reengrossed 2015 Regular Session Morrish
Present law defines a self-insurance plan as any contract, plan, trust, arrangement, or other
agreement which is established or maintained to offer or provide health care services,
indemnification, or payment for health care services, or health and accident benefits to
employees of two or more employers, but which is not fully insured. Provides that these
contracts, plans, trusts, arrangements, or agreements shall be deemed "fully insured" only
if the services, indemnification, payment, or benefits are guaranteed under a contract or
policy of health insurance issued by an insurer authorized to transact business in this state.
Proposed law provides for an association-sponsored self-insured trust, defined as an active
trade or professional association which is either a tax exempt organization or a nonprofit
corporation and which: (1) provides services to its membership so that the primary function
of the trade or professional association is not the sponsorship, operation, or management of
a fund, or related employee safety program, or other related activities; (2) has for at least
10 years held regular meetings of the board and produced a newsletter; (3) is chartered and
domiciled in this state and has been in existence since 1950; and (4) is comprised of
professionals that possess licenses issued by a state authority in order to conduct the business
of the profession.
Proposed law requires an association-sponsored self-insured trust to deposit with the
commissioner of insurance a safekeeping or trust receipt from a bank or a savings and loan
association doing business in this state indicating that the self-insurer has deposited cash or
bonds issued by the national, state, or local governments of the par value of not less than the
greater of either $100,000 or 30% of the self-insurer's outstanding Louisiana-related reserve
liabilities.
Proposed law further requires an association-sponsored self-insured trust to: (1) maintain at
all times during the first year of operations unimpaired net assets of not less than $100,000;
(2) have applications from not less than two employers and plan to provide similar benefits
for not less than 100 participating employees; and (3) maintain contribution rates for
participation under the arrangement that equal or exceed a funding level established by a
report prepared by an actuarial firm.
Proposed law provides that the employers in the self-insurance plan shall be members of an
association, that each employer member participating in the association-sponsored
self-insurance plan shall sign an indemnity agreement that is also signed by representatives
of the association and the trust, and that the association sponsoring the trust shall be
responsible for unpaid claims liability of the trust. Specifies that employer members
participating in the self-insurance plan shall be in solido guarantors of liabilities of the trust
not satisfied by the association. Further provides that a board of trustees shall serve as fund
managers on behalf of participants, that they shall be plan participants, that they shall be
elected by participating employers or by association members who are plan participants, and
that they shall be bonded in an amount not less than $100,000 from a licensed surety
company. Also makes investment of plan funds subject to the same restrictions applicable
to insurers.
Proposed law provides that if an association-sponsored self-insured trust is insolvent, the
Department of Insurance (DOI) shall require that the trust file in writing within 60 days a
plan signed by the board of trustees. Defines an insolvency as the condition existing when
the trust's liabilities before member distribution payable or dividend payable are greater than
the trust's assets determined in accordance with generally accepted accounting principles as
delineated in the trust's financial statement audited by an independent certified public
accountant. Requires that the plan set forth the means by which the trust intends to eliminate
the insolvency which may include payments by the association, assessments of the members
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participating in the trust's self-insurance plan, or a combination. Requires that DOI review
the plan and notify the trust of the plan's approval or disapproval within 30 days. Gives DOI,
should a trust fail to file a plan to eliminate an insolvency or should DOI notify a trust that
such plan has been disapproved or that the trust is not properly implementing the plan,
according to the plan, these following additional powers: (1) ordering the trust to
immediately levy an assessment upon the association, the members of the trust, or both,
sufficient to eliminate the insolvency; and (2) should the trust fail or refuse to levy such
assessment, levying such assessment upon the association, the members of the trust, or both,
sufficient to eliminate the insolvency.
Proposed law provides that association-sponsored self-insured trusts are not members of
either the Louisiana Insurance Guaranty Association or the Louisiana Life and Health
Insurance Guaranty Association, nor shall either be liable for any claims or increments of
claims made against any association-sponsored self-insured trust.
Present law requires a plan to submit its proposed excess or stop-loss insurance contract to
the commissioner of insurance at least 30 days prior to the proposed self-insurance plan's
effective date and at least 30 days subsequent to any renewal date.
Proposed law requires a plan to submit its proposed excess or stop-loss insurance contract
to the commissioner at least 30 days prior to the proposed self-insurance plan's effective date
and at least 30 days prior to any subsequent renewal date.
Proposed law defines "claims liability" as the total of all incurred and unpaid claims for
allowable benefits under a self-insurance plan, including a multiple employer welfare
arrangement, that are not reimbursed or reimbursable by excess of loss insurance,
subrogation, or other sources.
Proposed law defines "net assets" as the excess of the assets of a self-insurance plan,
including a multiple employer welfare arrangement, minus the liabilities of the plan.
Provides that liabilities of a self-insurance plan include the claims liability of the plan.
Effective August 1, 2015.
(Amends R.S. 22:459(A); Adds R.S. 22:452(4) and (5) and 458.1)
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Insurance to the original
bill
1. Provides for an association-sponsored self-insured trust, allowing groups of
certain La. employers to pool liabilities for employee health care benefits by
establishing a trust through an association.
Senate Floor Amendments to engrossed bill
1. Technical amendments.
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Insurance to the
reengrossed bill:
1. Delete provisions amending present law relative to self-insured trusts in order to
make such provisions applicable to association-sponsored self-insured trusts.
Instead add proposed law, new separate provisions, specifically applicable to
association-sponsored self-insured trusts.
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