Public Employers Health Benefit Act (PA 106) FAQ
- What is a "public employer pooled plan" as that term is used in P.A. 106 of 2007?
A group of public employers may join together to provide medical, optical, and/or dental benefits to its employees on a self-insured basis. Such a “pooled plan” must provide coverage to at least 250 employees. A pooled plan must accept any public employer that applies to become a member and agrees to make the required payments, remain in the pool for three years, and satisfies other reasonable provision of the pooled plan. A pooled plan does not constitute doing the business of insurance and is not subject to Michigan’s insurance laws except as provided in the Public Employees Health Benefit Act.
- Who is considered a "public employer" for the purpose of forming a pool?
Any city, village, township, county, or other political subdivision in Michigan; any intergovernmental, metropolitan, or local department, agency, or authority, or other local political subdivision; a school district, a public school academy, or an intermediate school district; or a community college or junior college. Public employer includes a public university that elects to come under the provisions of P.A. 106 of 2007.
- Do I need a license to operate as a public employer pooled plan?
Yes. In order to operate as a public employer pooled plan a business must maintain a certificate of registration from the Office of Financial and Insurance Regulation. The requirements for receiving a certificate of registration are in section 7 of P.A. 106 of 2007.
- Where can I get an application to operate as a public employer pooled plan?
Application materials can be downloaded from the Department of Insurance and Financial Services website at http://www.michigan.gov/difs
- Does a certificate of registration need to be renewed?
No. However, a public employer pooled plan is required to submit regular financial statements to the Office of Financial and Insurance Regulation. See section 9 of P.A. 106 of 2007; MCL 124.79.
- If a pooled plan has received a certificate of registration to issue medical benefits only, and later decides to offer dental or vision coverage, is the plan required to receive a new certificate of registration?
If a pooled plan wanted to add lines of business later, a supplemental application is required. The Commissioner is charged with determining, on an ongoing basis, that a pooled plan has adequate reserves. To the extent that the pool adds additional lines of business, its reserves would need to be correspondingly larger. In order to make a proper evaluation of reserves, the Commissioner would need to know exactly what types of benefits a pooled plan is offering.
- Do pooled plans have to file financial statements with the Office of Financial and Insurance Regulation?
Yes. Financial statements must be filed at the end of each fiscal quarter and annually. See section 9(1) of P.A. 106 of 2007; MCL 124.79(1)
- Do the bid solicitation requirements of Act 106 apply to all public employers or just those employers participating in a pooled plan?
Individual public employers are subject to the bid requirements if their plans are insured (i.e., not self-funded). Pooled plans are subject to the bid requirements whether their benefit plans are self-funded or insured. See section 5(2) of P.A. 106 of 2007; MCL 124.75(2).
- Under section 15(1) of PA 106 of 2007, can a public employer plan be combined with a non-public employer plan to put them over 100 employees?
No. Section 15(1) requires that 100 employees be in a single benefit plan in order to be provided with claims utilization and cost information. However, under section 15(2) the employer could receive the data for the employees in an aggregated form for all the employees.
- Who is required to compile and release claims utilization and cost data under P.A. 106 of 2007?
All medical benefit plans in Michigan are required to compile and release claims utilization and cost data. See section 15(3) of P.A. 106; MCL 124.85(3) This includes licensed insurers, health maintenance organizations, and nonprofit health or dental care corporations. In addition, public employers and combinations of public employers are required compile and release the data. See section 15(5) of P. A. 106 of 2007; MCL 124.85(3).
- What groups or businesses are entitled to receive claims utilization and cost information?
a. Public employers. Section 15(2) of P.A. 106 of 2007; MCL 124.85(2)
b. A carrier or administrator selected by an employer or employer group to provide benefits or administrative services. Section 15(5) of P.A. 106 of 2007; MCL 124.85(5)
c. The employee representative of employees covered under the medical benefit plan. Section 15(5) of P.A. 106 of 2007; MCL 124.85(5)
d. Any carrier or administrator who requests the opportunity to submit a proposal to provide benefits or administrative services for the medical benefit plan at the time of the request for bids. Section 15(6) of P.A. 106 of 2007; MCL 124.85(6)
- Does the disclosure of claims utilization and cost information violate individual privacy protections in federal law?
No. The claims utilization and cost information described in this act must be “de-identified” health information permitted under the Health Insurance Portability and Accountability Act of 1996 (HIPPA).
- Are pooled plans required to provide benefits on a self-insured basis or are they able to obtain benefits from an insurer?
Pools may obtain coverage on either a self-insured basis or by procuring coverage from one or more carriers. See sections 5(1)(b) and 5(2) of P. A. 106 of 2007; MCL 124.75(1)(b) and 124.75(2).
- Does P. A. 106 of 2007 nullify an existing collective bargaining agreement or benefit plan?
No. Contracts already in place remain in effect until their normal expiration.
- Are benefit plans created under P.A. 106 of 2007 subject to the benefit mandates found in the Insurance Code and General Insurance Laws of Michigan?
A benefit plan that is maintained on a self-insured basis is not subject to Michigan’s insurance laws. However, a self-insured pooled plan is still subject to the provisions of P.A. 106 of 2007. Benefit plans, including those created pursuant to P.A. 106 of 2007, that are underwritten by an insurer, HMO, or other entity licensed by the Office of Financial and Insurance Regulation are subject to the mandatory benefit provisions of the Insurance Code and General Insurance Laws of Michigan.
- How can I find a VEBA that might be interested in bidding on my benefit plan, as required under section 5(2) of PA 106 of 2007?
A VEBA is the creation of the federal internal revenue code. VEBAs are not regulated by state government and Michigan does not maintain a listing of such entities. A pooled plan or public employer unable to locate a VEBA can meet the requirements of section 5(2) by publishing a public notice or advertisement in a trade or general circulation publication inviting VEBAs submit bids in response to the notice.
- Can a VEBA insure or administer a public employer pooled plan?
Any individual, business or organization offering claims handling services must be licensed as a third party administrator under Michigan’s Third Party Administrator Act, MCL 550.901, et seq. Any business underwriting health benefit plans in Michigan is subject to regulation under the Insurance Code and/or General Insurance Laws of Michigan.
The answers provided are not meant to be a substitute for legal advice.