Multiple Employer Welfare Arrangement

Multiple Employer Welfare Arrangement (MEWA) Exempt Registration or Full MEWA License

Regulations 36 O.S. § 633 to 650

Disclaimer: The following is an overview of the laws pertaining to the requirements for an organization to be registered as a MEWA in Oklahoma.  Refer to the OSCN webpage to research all the statues.

It is unlawful to operate, maintain or establish a MEWA unless the MEWA has a valid license issued by the Insurance Commissioner. Any MEWA operating in this state without a valid license is an unauthorized insurer.

36 O.S. § 633.  Multiple Employer Welfare Arrangement (MEWA)

As used in this act, the term “Multiple Employer Welfare Arrangement” or “MEWA” means that term as defined in Section 3 of the Employee Retirement Income Security Act of 1974, 29 U.S.C., Section 1002(40)(A), as amended, that meets either or both of the following criteria:

  • One or more of the employer members of the MEWA is either domiciled in this state or has its principal place of business or principal administrative office in this state; or
  • The MEWA solicits an employer that is domiciled in this state or that has its principal place of business or principal administrative office in this state.

Each insurer licensed to do business in this state, including any corporation organized under the provisions of Article 26 of Title 36 of the Oklahoma Statutes, that administers a MEWA shall provide the Insurance Commissioner with such information regarding the insurer’s administrative services contract or contracts with such MEWA or MEWAs that the Commissioner may reasonably require.

A MEWA shall be administered only by a licensed insurer or a licensed third-party administrator.

36 O.S. § 635.  Due Dates & Fees

36 O.S. § 634(A). MEWA License

It is unlawful to operate, maintain or establish a MEWA unless the MEWA has a valid license issued by the Insurance Commissioner. Any MEWA operating in this state without a valid license is an unauthorized insurer.

36 O.S. § 634(B). Exempt Registration

Any entity which claims to be exempt from state regulation shall provide to the Commissioner strict proof establishing such exemption. Exempt options:

  1. A MEWA that offers or provides benefits that are fully insured by an authorized insurer. Provide the insurer’s full legal name, NAIC number, policy number(s) of the plan(s) and upload a copy of the plan(s).
  2. A MEWA that is exempt from state insurance regulation in accordance with the Employee Retirement Income Security Act of 1974 (ERISA) (Public Law 93-406).
  3. Any plan that has no more than two employer members which share substantial common support other than income generated by their respective similar business classification.
  4. A plan that has no more than two employer members, which together have a combined net worth of more than Five Million Dollars ($5,000,000.00) and each of such member employers participated in the continuous sponsorship and maintenance of such MEWA for the benefit of their employees for a period of more than ten (10) years next preceding the effective date of this act.
  5. A nonprofit professional trade association pursuant to Section 501(c)(3) of the Internal Revenue Code, 26 U.S.C., Section 501(c)(3), which has maintained either a self-funded plan or a fully insured plan of coverage for the payment of expenses to or for members of the association for a period of ten (10) or more consecutive years and, if self-funded, which coverage is provided to at least five hundred covered participants.
36 O.S. § 637.  Full MEWA License  

Each MEWA shall file with the Insurance Commissioner an application for a license on a form prescribed by the Commissioner and signed under oath by officers of the association or the administrator of the MEWA. The application shall include or have attached the following:

  1. A copy of any articles of incorporation, constitution and bylaws of any association.
  2. A list of the names, addresses and official capacities with the MEWA of the individuals who will be responsible for the management and conduct of the affairs of the MEWA, including all trustees, officers and directors. Such individuals shall fully disclose the extent and nature of any contracts or arrangements between them and the MEWA, including possible conflicts of interest.
  3. A copy of the articles of incorporation, bylaws or trust agreement that governs the operation of the MEWA.
  4. A copy of the policy, contract, certificate, summary plan description or other evidence of the benefits and coverages provided to covered employees, including a table of the rates charged or proposed to be charged for each form of such contract. A qualified actuary shall certify that:
    • the rates are neither inadequate, nor excessive, nor unfairly discriminatory,
    • the rates are appropriate for the classes of risks for which that have been computed, and
    • an adequate description of the rating methodology has been filed with the Commissioner and such methodology follows consistent and equitable actuarial principles.
      • For purposes of this section and Section 639of this title, a “qualified actuary” is an actuary who is a Fellow of the Society of Actuaries (FSA), a member of the American Academy of Actuaries, or an Enrolled Actuary under the Employee Retirement Income Security Act of 1974 , 29 U.S.C., Section 1001 et seq., and has experience in establishing rates for a self-insured trust and health services being provided.
  5. Any administrator retained by the MEWA must be a licensed third-party administrator. The MEWA must provide proof of a fidelity bond which shall protect against acts of fraud or dishonesty in servicing the MEWA, covering each person responsible for servicing the MEWA, in an amount equal to the greater of ten percent (10%) of the contributions received by the MEWA or ten percent (10%) of the benefits paid, during the preceding calendar year, with a minimum amount requirement of Twenty Thousand Dollars ($20,000.00) and a maximum amount requirement of Five Hundred Thousand Dollars ($500,000.00);
  6. A copy of the MEWA’s stop-loss agreement. The stop-loss insurance agreement must be issued by an insurer authorized to do business in this state and must provide both specific and aggregate coverage with an aggregate retention of no more than one hundred twenty-five percent (125%) of the expected claims for the next plan year and a specific retention amount as annually indicated in the actuarial opinion.
  7. In the initial application, a feasibility study, made by a qualified actuary with an opinion acceptable to the Commissioner, that addresses market potential, market penetration, market competition, operating expenses, gross revenues, net income, total assets and liabilities, cash flow and other items as the Commissioner requires. The study shall be for the greater of three (3) years or until the MEWA has been projected to be profitable for twelve (12) consecutive months. The study must show that the MEWA would not, at any month end of the projection period, have less than ninety percent (90%) of the reserves as required by a qualified actuary.
  8. A copy of an audited financial statement of the MEWA prepared by an independent licensed certified public accountant.
  9. A copy of every contract between the MEWA and any administrator or service company; and
  10. Such additional information as the Commissioner may reasonably require.
36 O.S. § 639. Annual Report – Full MEWA License

Every MEWA shall, within ninety (90) days after the end of each fiscal year of the MEWA, or within any such extension of time that the Insurance Commissioner for good cause grants, file a report with the Commissioner, on forms acceptable to the Commissioner and verified by the oath of a member of the board of trustees or chief executive officer of any governing association and by the administrator of the MEWA, showing its financial condition on the last day of the preceding fiscal year.

The Annual Report shall contain:
  • An audited financial statement of the MEWA prepared in accordance with generally accepted accounting principles, including its balance sheet and a statement of the operations for the preceding fiscal year certified by an independent accounting firm or independent individual holding a permit to practice certified public accounting in this state.
  • An analysis of the adequacy of reserves and contributions or premiums charged, based on a review of past and projected claims and expenses.
Actuarial Certification:

In conjunction with the annual report, the MEWA shall submit an actuarial certification prepared by a qualified independent actuary that indicates:

  1. The MEWA is actuarially sound, with the certification considering the rates, benefits, and expenses of, and any other funds available for the payment of obligations of the MEWA.
  2. The rates being charged and to be charged for contracts are actuarially adequate to the end of the period for which rates have been guaranteed.
  3. The recommended amount of cash reserves the MEWA should maintain, which shall not be less than the greater of twenty percent (20%) of the total contributions in the preceding plan year or twenty percent (20%) of the total estimated contributions for the current plan year. The cash reserves shall be calculated with proper actuarial regard for known claims, paid and outstanding, a history of incurred but not reported claims, claims handling expenses, unearned premiums, a trend factor, and a margin for error. Cash reserves required by this section shall be maintained in cash or federally guaranteed obligations of less than five-year maturity that have a fixed or recoverable principal amount or such other investments as the Commissioner may authorize by rule.
  4. Whether amounts reserved to cover the cost of health care benefits are:
    • calculated in accordance with the loss reserving standards that would be applicable to a private insurance company writing the same coverage,
    • computed in accordance with accepted loss reserving standards, including a reserve for Incurred But Not Reported Claims (IBNR), and
    • fairly stated in accordance with sound loss reserving standards.
  5. The recommended level of specific and aggregate stop-loss insurance that the MEWA should maintain and whether the MEWA is funding at the aggregate retention plus all other costs of the MEWA; and
  6. Other information relating to the performance of the MEWA that is reasonably required by the Commissioner.
Annual Report to Employers:

The MEWA shall send an annual report to all of the employers, describing the financial condition of the MEWA as of the end of the last fiscal year. The report must be sent at the same time as the filing of the annual statement of the MEWA.

The Commissioner may require a MEWA to file quarterly, within forty-five (45) days after the end of each of the remaining fiscal quarters, a financial statement on a form prescribed by the Commissioner, verified by the oath of a member of the board of trustees and an administrator of the MEWA, showing its financial condition on the last day of the preceding quarter and the statement of a qualified actuary setting forth the actuary’s opinion relating to the level of cash reserves in accordance with paragraphs 3 and 4 of subsection B of this section.

Failure to submit Annual Report:

Any MEWA that fails to file a report as required by this section is subject to Section 311 of this title; and, after notice and opportunity for hearing, the Commissioner may suspend the MEWA’s authority to enroll new insureds or to do business in this state while the failure continues.

36 O.S. § 640. Causes to Deny, Suspend, or Revoke MEWA’s License

The Insurance Commissioner shall deny, suspend or revoke a MEWA’s license if, after notice and opportunity for a hearing, the Commissioner finds that the MEWA:

  1. Is insolvent.
  2. Is using such methods and practices in the conduct of its business as to render its further transaction of business in this state hazardous or injurious to its participating employees, covered employees and dependents, or to the public.
  3. Has failed to pay any final judgment rendered against it in a court of competent jurisdiction within sixty (60) days after the judgment became final.
  4. Is or has been in violation of any material provisions of this act.
  5. Is no longer actuarially sound; or
  6. Is charging rates that are excessive, inadequate or unfairly discriminatory.

The Commissioner may deny, suspend or revoke the license of any MEWA if, after notice and opportunity for a hearing, the Commissioner determines that the MEWA:

  1. Has violated any lawful order or rule of the Commissioner or any applicable provisions of this act.
  2. Has refused to produce its accounts, records or files for examination under Sections 309.1 through 310A.3 of this title or through any of its officers has refused to give information with respect to its affairs or to perform any other legal obligation as to an examination.
  3. Utilized persons to solicit enrollments through an unlicensed agent; or
  4. Has violated any provision of the Unfair Claims Settlement Practices Act, Section 1250.1 et seq. of this title.

Whenever the financial condition of the MEWA is such that, if not modified or corrected, its continued operation would result in impairment or insolvency, in addition to any provisions in this act, the Commissioner may order the MEWA to file with the Commissioner and implement a corrective action plan designed to correct such impairment or insolvency.

If the MEWA fails to submit a plan within the time specified by the Commissioner or submits a plan that is insufficient, the Commissioner may order the MEWA to implement corrective actions as necessary to correct the MEWA’s financial condition.

The Commissioner shall, in any order suspending the authority of a MEWA to enroll new insureds, specify the period during which the suspension is to be in effect and the conditions, if any, that must be met prior to reinstatement of its authority to enroll new insureds. The order of suspension is subject to rescission or modification by further order of the Commissioner before the expiration of the suspension period. Reinstatement shall not be made unless requested in writing by the MEWA; however, the Commissioner shall not grant reinstatement if it is found that the circumstances for which suspension occurred still exist.

Multiple Employer Welfare Arrangement Forms

License Surrender Form