# Title 45 — Insurance, Commissioner of

## Article 45-06 — Accident and Health Insurance

## Chapter 45-06-14 — Multiple Employer Welfare Arrangements

### § 45-06-14-01. Definitions.

1. "Board" means a multiple employer welfare arrangement's board of trustees.
2. "Bylaws" means the statements and organizational documents adopted by a multiple
employer welfare arrangement that prescribe its purpose, government, and administration.
3. "Commissioner" means the insurance commissioner.
4. "Coverage" means the right of a covered person or entity to benefits or indemnification
provided directly or indirectly by a multiple employer welfare arrangement, by virtue of the
coverage document.
5. "Coverage document" means the document specifying the characteristics and duration of
coverage provided through a multiple employer welfare arrangement. Characteristics of
coverage include the kind of loss or benefit that the multiple employer welfare arrangement
will reimburse, subject to specific exclusions, limitations, or deductibles.
6. "Days" means calendar days.
7. "Employee welfare benefit plan" means an employee welfare benefit plan as defined by 29
U.S.C. section 1002.
8. "Financial administrator" means an entity employing persons trained and experienced in
money management and investments, and possessing no less than five years' experience as
an organization in money management and investments with demonstrated competence.
9. "Fully insured" means that for the health care benefits or coverage provided or offered by or
through a multiple employer welfare arrangement:
a. An admitted insurer is directly obligated by contract to each participant to provide all of
the coverage under the plan or arrangement; and

b. The liability and responsibility of the admitted insurer to provide covered services or to
pay benefits is not contingent, and is provided directly to the individual employee,
member, or dependent.
10. "Fund year" means a multiple employer welfare arrangement's twelve-month fiscal year.
11. "Multiple employer welfare arrangement" means a multiple employer welfare arrangement as
defined by 29 U.S.C. section 1002.
12. "Premium" means the amount charged by the multiple employer welfare arrangement for
health coverage. "Premium" does not include assessments or penalties.
13. "Professional employer organization" means an arrangement, under contract or otherwise,
whereby one business or entity represents that it co-employs or leases workers to another
business or entity for an ongoing and extended, rather than a temporary or project-specific,
relationship.
14. "Runoff multiple employer welfare arrangement" means a multiple employer welfare
arrangement that no longer has authority to self-fund but that continues to exist for the
purpose of paying claims, preparing reports, and administering transactions associated with
the period when the multiple employer welfare arrangement provided coverage.
15. "Self-funded multiple employer welfare arrangement" means a multiple employer welfare
arrangement that does not provide for payment of benefits under the arrangement solely
through a policy or policies of insurance issued by one or more insurance companies with a
certificate of authority under North Dakota Century Code title 26.1.
16. "Service company" means an entity licensed under North Dakota Century Code chapter
26.1-27 as an administrator or an entity licensed under North Dakota Century Code title 26.1
as an insurance company, health maintenance organization, or nonprofit health service
corporation.
17. "Sponsoring association" means a group that sponsors or organizes a multiple employer
welfare arrangement. A multiple employer welfare arrangement may have more than one
sponsoring association.
18. "Surplus" means a multiple employer welfare arrangement's total assets minus total liabilities.
"Surplus" includes paid-in capital and retained earnings. The amount of a multiple employer
welfare arrangement's surplus is determined according to the instructions provided for a
multiple employer welfare arrangement's financial statements.
History: Effective January 1, 2007; amended effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1
### § 45-06-14-02. Purpose.

This chapter governs the formation, operation, and dissolution of a multiple employer welfare
arrangement. The provisions are intended to ensure the financial integrity and the competent and
equitable administration of the multiple employer welfare arrangement.
History: Effective January 1, 2007; amended effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1

### § 45-06-14-03. Scope.

This chapter shall apply to all multiple employer welfare arrangements which offer or maintain an
employee welfare benefit plan that is not fully insured, to or on behalf of an employer domiciled in this
state or to an employer which has its principal headquarters or principal administrative offices in this
state and to all service companies that provide services to the employee welfare benefit plan or multiple
employer welfare arrangement.
History: Effective January 1, 2007; amended effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1
### § 45-06-14-04. Bylaws.

1. Content. Bylaws may contain any provision that does not conflict with this chapter. Bylaws
must, at a minimum, contain the following provisions:
a. The multiple employer welfare arrangement's name, purpose, fiscal year, and initial date
of existence;
b. Definitions of key terms;
c. A statement of the powers, duties, and responsibilities assigned to the board, the service
company, the financial administrator, and reserved by the membership;
d. The number, term of office, and method of selection and replacement of the members of
the board;
e. The procedure for calling board meetings;
f. The method of periodic selection and review of the service company and financial
administrator;
g. The procedure for amending the bylaws;
h. The procedure for resolving disputes among members, which must not include
submitting disputes to the commissioner;
i. The criteria for membership in the multiple employer welfare arrangement, including
standards of financial integrity and loss experience;
j. The procedure for admitting new members to the multiple employer welfare arrangement;
k. The criteria for expelling members from the multiple employer welfare arrangement for
reasons, including nonpayment of premiums;
l. The procedure for withdrawal and expulsion of members from the multiple employer
welfare arrangement, including the minimum required period of membership;
m. A statement of the coverages to be provided by the multiple employer welfare
arrangement;
n. The procedure for including and excluding a member's participation in a particular
coverage;
o. The proposed initial premium payments by members and, if applicable, by the members'
employees;
p. The procedure for changing premium rates;

q. The procedure for levying and collecting an assessment;
r. A statement identifying those with access to multiple employer welfare arrangement
funds and the purposes for which multiple employer welfare arrangement funds may be
spent;
s. The procedure for distributing dividends, and the eligibility of past members and past
covered employees for dividends; and
t. The procedure for distributing any assets remaining upon the multiple employer welfare
arrangement's dissolution.
2. Adoption and changes. The bylaws must be adopted in writing by all initial members.
Authority to change the bylaws must reside with the membership or the board, according to
the terms of the bylaws. The multiple employer welfare arrangement must file bylaws changes
with the commissioner within thirty days after adoption.
History: Effective January 1, 2007; amended effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1
### § 45-06-14-05. Board.

1. Structure. A multiple employer welfare arrangement must have a board of trustees consisting
of at least three persons, who must be officials or employees of the members of the multiple
employer welfare arrangement or of the sponsoring association of the multiple employer
welfare arrangement. No member may have more than one representative on the board,
unless the multiple employer welfare arrangement has only two members, in which case each
member must have at least one representative on the board. No trustee may be an employee
of, or receive compensation from, the multiple employer welfare arrangement's service
company, financial administrator, or insurer. A trustee may be an employee, agent, or
representative of the sponsoring association. Trustees shall be elected by the membership or
appointed by the sponsoring association. A majority of the trustees must be employees of
members and be covered by the benefits provided by the multiple employer welfare
arrangement. One trustee shall be designated the chairperson. The board shall meet no less
than four times annually.
2. Duties. The board is responsible for operation of the multiple employer welfare arrangement.
The board may delegate some or all of its responsibilities to the chairperson or other trustees
between board meetings. All responsibilities of the multiple employer welfare arrangement not
expressly delegated by the board or this chapter are the responsibility of the board. The board
shall, at a minimum, have the following responsibilities:
a. Exercise fiduciary responsibility for the multiple employer welfare arrangement's
operation and financial condition;
b. Select, supervise, and evaluate the service company, financial administrator, accountant,
insurer, and any other contractors;
c. On the basis of the multiple employer welfare arrangement's overall financial condition,
authorize changes in premium, reserve, or investment practices and declare
assessments or dividends as appropriate;
d. Approve all reports concerning the multiple employer welfare arrangement's operations
and status and oversee filing of reports with the commissioner;

e. Monitor delinquent premiums, loss experience, and the financial condition of individual
members and authorize disciplinary action or expulsion as appropriate;
f. Accept or reject applications for membership;
g. As permitted by the bylaws, make or recommend changes to the bylaws for the
improvement of the multiple employer welfare arrangement's operation and financial
integrity; and
h. Monitor the multiple employer welfare arrangement's compliance with all statutes and
rules governing its operation.
History: Effective January 1, 2007; amended effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1
### § 45-06-14-06. Application.

1. Initial application. A multiple employer welfare arrangement seeking to offer an employee
welfare benefit plan that is not fully insured shall apply for a certificate of authority.
Applications must be submitted on forms prescribed by the commissioner. The appropriate
filing fee pursuant to North Dakota Century Code section 26.1-01-07 must accompany the
application. An application must be submitted no later than sixty days prior to the requested
date for authority to self-fund. An incomplete application must be returned to the applicant. An
application not returned to the applicant within fourteen days of receipt must be acted upon
within sixty days of receipt.
2. Documents which must accompany application. A multiple employer welfare arrangement
shall file all of the following with its initial application:
a. A copy of the organizational documents of the multiple employer welfare arrangement,
including the articles of incorporation and bylaws, partnership agreement, or instrument;
b. A copy of each insurance or reinsurance contract that purports to insure or guarantee
any portion of benefits or coverage offered by the multiple employer welfare
arrangement;
c. A copy of the benefit plan description and any other materials intended to be distributed
to potential members; and
d. The names and addresses of all persons performing or expected to perform the functions
of a financial administrator or service company.
3. Renewal. Authority to operate as an existing multiple employer welfare arrangement will
automatically renew annually with the filing of the multiple employer welfare arrangement's
annual report to the commissioner and the payment of the appropriate fee pursuant to North
Dakota Century Code section 26.1-01-07, subject to the multiple employer welfare
arrangement maintaining its financial ability to pay claims and expenses.
4. Merger. Two or more existing multiple employer welfare arrangements may apply to merge,
provided the merged multiple employer welfare arrangement assumes all financial and
regulatory obligations of the former multiple employer welfare arrangements. Merger
applications must be filed with the commissioner and are subject to the same requirements as
prospective new multiple employer welfare arrangements.
5. Approval or disapproval. Upon approval of an application, the commissioner shall issue a
certificate authorizing the proposed self-funded multiple employer welfare arrangement. The

initial certificate for a new multiple employer welfare arrangement is effective until revoked by
the commissioner. Approval of an application for authority to self-fund must be granted if the
proposed multiple employer welfare arrangement conforms with all requirements of this
chapter.
History: Effective January 1, 2007; amended effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1
### § 45-06-14-07. Ending self-funding, runoff period, and plan dissolution.

1. Termination. A multiple employer welfare arrangement may terminate its self-funded authority
and cease to provide coverage effective at the end of a fund year. The multiple employer
welfare arrangement must notify the commissioner within ninety days of its decision to
terminate. A multiple employer welfare arrangement may not terminate its self-funding
authority less than ninety days prior to the end of the fund year in question. The voluntary
termination of self-funding authority does not constitute multiple employer welfare
arrangement dissolution under subsection 4.
2. Revocation. The commissioner shall, by order, revoke the authority of a multiple employer
welfare arrangement to self-fund upon no less than ten days' written notice if any of the
following events occur or conditions develop, and if the commissioner determines that the
conditions are material:
a. Failure of the multiple employer welfare arrangement to comply with this chapter or with
other applicable North Dakota laws or rules or the applicable laws and rules of any other
state;
b. Failure of the multiple employer welfare arrangement to comply with any lawful order of
the commissioner or the lawful order of the commissioner of another state;
c. Commission by the multiple employer welfare arrangement of a prohibited practice as
defined by North Dakota Century Code chapter 26.1-04 or in related rules; or
d. A deterioration of the multiple employer welfare arrangement's financial integrity to the
extent that its present or future ability to meet its obligations is or will be significantly
impaired.
3. Runoff multiple employer welfare arrangement. A multiple employer welfare arrangement
must continue to exist as a runoff multiple employer welfare arrangement after its authority to
self-fund has ended, for the purpose of paying claims, preparing reports, and administering
transactions associated with the period during which the multiple employer welfare
arrangement provided coverage. A runoff multiple employer welfare arrangement must
continue to comply with this chapter and with other applicable North Dakota laws and rules.
4. Dissolution. A multiple employer welfare arrangement, including a runoff multiple employer
welfare arrangement, must apply to the commissioner for authorization to dissolve. An
application must be approved or disapproved within sixty days of receipt. Dissolution without
authorization is prohibited and void and does not absolve a multiple employer welfare
arrangement or runoff multiple employer welfare arrangement from fulfilling its continuing
obligations and does not absolve its members from assessments under subsection 3 of
section 45-06-14-14. The multiple employer welfare arrangement's assets at dissolution must
be distributed to the members and covered persons as provided in the bylaws. Authorization
to dissolve must be granted if either of the following conditions is met:
a. The multiple employer welfare arrangement demonstrates that it has no outstanding
liabilities, including incurred but not reported liabilities; or

b. The multiple employer welfare arrangement has obtained an irrevocable commitment
from a licensed insurer to pay all outstanding liabilities and to provide all related services,
including the payment of claims, preparation of reports, and the administration of
transactions associated with the period during which the multiple employer welfare
arrangement provided coverage.
History: Effective January 1, 2007; amended effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1
### § 45-06-14-08. Administration.

1. Service company. A multiple employer welfare arrangement must contract with a service
company for services necessary to conduct the multiple employer welfare arrangement
day-to-day operations, except services and responsibilities reserved to the members, the
board, individual trustees, the financial administrator, the accountant, or other contractors
unless the multiple employer welfare arrangement has the staff and expertise to perform the
day-to-day operations. The service company must have expertise in and be licensed for the
coverages provided by the multiple employer welfare arrangement. Subject to the oversight of
the board, the service company shall, directly or through subcontractors, provide all services
directly related to the administration of coverage. These services include:
a. Accounting and recordkeeping;
b. Billing and collection of premiums and assessments;
c. Claims investigation, settlement, and reserving;
d. Claims payment, including claims wholly or partially subject to stop-loss insurance or
member deductibles;
e. General administration;
f. Loss control, safety programs, or both; and
g. Underwriting.
2. Financial administrator. A multiple employer welfare arrangement must contract with a
financial administrator for investment of the multiple employer welfare arrangement's assets
and other financial or accounting services. A staff member of the financial administrator may
not be an owner, officer, employee, or agent of the service company, or of a subcontractor of
the service company.
3. Recordkeeping and examination authority. A multiple employer welfare arrangement must
maintain all records necessary to verify the accuracy and completeness of all reports
submitted to the commissioner under section 45-06-14-16. The commissioner may examine
the multiple employer welfare arrangement's records in order to verify the multiple employer
welfare arrangement's compliance with this chapter and with other statutes and rules. The
provisions of North Dakota Century Code chapter 26.1-03 apply to the commissioner's
examination. All records concerning claims, reserves, financial transactions, and other matters
necessary for the multiple employer welfare arrangement's operations are the multiple
employer welfare arrangement's property and shall be retained for the current year plus the
previous five years.
History: Effective January 1, 2007; amended effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1

### § 45-06-14-09. Membership.

1. Availability. A multiple employer welfare arrangement must establish nondiscriminatory
criteria for membership. A multiple employer welfare arrangement may reject applicants or
dispel members that do not meet the multiple employer welfare arrangement's underwriting
standards.
2. Joining. A new member must be admitted according to the standards and procedures
specified in the bylaws. Membership is not effective until the applicant has signed a
membership agreement affirming its commitment to comply with the bylaws and this chapter,
including joint and several liability for the multiple employer welfare arrangement's obligations.
The membership agreement must disclose that under the rules governing the multiple
employer welfare arrangement, the board of trustees, or the commissioner, may order that an
assessment be levied against the members if necessary to maintain the multiple employer
welfare arrangement's sound financial condition.
3. Withdrawal. The membership agreement must include the procedures for withdrawing from
the multiple employer welfare arrangement. A member must notify the multiple employer
welfare arrangement of its desire to withdraw not less than thirty days before the date upon
which it desires to withdraw. If the board determines that the withdrawal would cause the
multiple employer welfare arrangement to be in violation of the minimum annual premium
requirement or would compromise the multiple employer welfare arrangement's financial
integrity, the multiple employer welfare arrangement must notify the commissioner as required
under subsection 2 of section 45-06-14-11. Withdrawal is prohibited and void unless:
a. The member has belonged to the multiple employer welfare arrangement continuously
for the period required by the bylaws, which shall provide for a minimum of one complete
fund year.
b. All outstanding premiums and assessments owed by the member have been paid.
4. Expulsion. At least annually a multiple employer welfare arrangement must review the status
and experience of each member relative to the criteria for expulsion in the bylaws. Expulsion
is subject to the procedures and requirements for voluntary withdrawal of a member, except
that:
a. A member may be expelled with outstanding premiums or assessments owing; and
b. A member may be expelled notwithstanding that the minimum term of membership has
not been satisfied.
5. Runoff multiple employer welfare arrangement membership. After revocation of a multiple
employer welfare arrangement's self-funding authority or after a multiple employer welfare
arrangement notifies the commissioner in writing of its intent to terminate the multiple
employer welfare arrangement, no member may join, leave, or be expelled from the multiple
employer welfare arrangement.
History: Effective January 1, 2007; amended effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1
### § 45-06-14-10. Coverage.

1. Coverage. A multiple employer welfare arrangement must provide coverage as authorized by
the board.

2. Uniform underwriting. A multiple employer welfare arrangement must offer its coverages
subject to the same underwriting standards to all members and, if applicable, to all members'
employees.
3. Continuing responsibility. Notwithstanding cancellation or termination of coverage to a
particular member, ceasing to offer a particular coverage, or termination or revocation of
authority to self-fund, a multiple employer welfare arrangement retains indefinitely all
responsibilities to members and other covered persons associated with the period while
coverage was in force. This responsibility ceases only after a multiple employer welfare
arrangement dissolves under subsection 4 of section 45-06-14-07.
History: Effective January 1, 2007; amended effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1
### § 45-06-14-11. Premiums, cashflow, and dividends.

1. Minimum annual premium. A multiple employer welfare arrangement must have and
maintain an annual premium volume of no less than three hundred thousand dollars. A
multiple employer welfare arrangement or prospective multiple employer welfare arrangement
may apply to the commissioner for a reduction of the minimum annual premium requirement,
stating the amount of reduction and the reasons supporting the request. The commissioner
must act on the application within sixty days after receipt. The multiple employer welfare
arrangement must demonstrate that the lesser premium volume would not compromise its
financial integrity and stability.
2. Monitoring premium volume. A multiple employer welfare arrangement must monitor its
premium volume. If annual premium is more than three hundred thousand dollars but less
than four hundred thousand dollars, or less than one hundred thirty-three percent of the
amount approved pursuant to subsection 1, the multiple employer welfare arrangement must
notify the commissioner at monthly intervals of the then-current annualized premium volume,
until the annualized volume exceeds four hundred thousand dollars. "Annualized premium
volume" means the gross premiums written for the previous twelve months. If premium
decreases to an annualized volume of less than three hundred thousand dollars, or a lesser
amount if approved pursuant to subsection 1, the multiple employer welfare arrangement must
notify the commissioner:
a. Of its intent to end its self-funding authority; or
b. Of its proposal for restoring compliance with subsection 1. If the proposal is unlikely, in
the commissioner's judgment, to restore compliance with subsection 1 within ninety days,
or if after ninety days the multiple employer welfare arrangement continues to be out of
compliance, the commissioner may revoke the multiple employer welfare arrangement's
self-funding authority.
3. Surplus or stop-loss advancement. To maintain its financial integrity, a multiple employer
welfare arrangement must either:
a. Establish and maintain a surplus consisting of funds contributed by members and the
multiple employer welfare arrangement's retained earnings sufficient to pay claims as
they occur; or
b. Negotiate a stop-loss insurance policy requiring the insurer to advance funds to the
multiple employer welfare arrangement if the multiple employer welfare arrangement's
policy limits have been or are likely to be exceeded. The funds may be considered an
advance against the insurer's potential liability for the policy period.

4. New multiple employer welfare arrangement deposit premium. As a condition for
authorization to self-fund, a prospective multiple employer welfare arrangement must submit
evidence that an initial premium payment has been made.
a. The initial premium payment must be no less than ten percent of the combined initial
members' first-year premium. If the initial payment is less than one hundred percent of
the initial members' first-year premium, the remainder of the initial members' first-year
premium must be paid in six or more equal installments at equal intervals throughout the
year.
b. A prospective multiple employer welfare arrangement may apply to the commissioner for
reduction of the initial premium deposit requirement, stating the payment schedule
requested and the reasons supporting the request. The commissioner may approve the
applications within sixty days after receipt if the multiple employer welfare arrangement
has demonstrated that the proposed payment schedule would not compromise its ability
to pay large claims promptly during its first year of operation. The commissioner may
consider arrangements the multiple employer welfare arrangement has made under
subsection 3 in evaluating the application.
5. Premium payments. A multiple employer welfare arrangement must promptly take
appropriate action to collect premiums, assessments, or penalties that are past due.
Collection costs are the obligation of the delinquent member.
6. Dividend procedures. A multiple employer welfare arrangement may declare and pay a
dividend or distribution from its surplus only if:
a. The dividend will not impair the multiple employer welfare arrangement's surplus; and
b. The multiple employer welfare arrangement does not have an outstanding loan or an
outstanding advancement from a stop-loss carrier.
History: Effective January 1, 2007; amended effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1
### § 45-06-14-12. Reserves.

A multiple employer welfare arrangement must establish reserves for all incurred losses, both
reported and unreported, and for unearned premiums. To the extent that the amount of a loss is
uncertain, the reserve must be set conservatively and adjusted as new information becomes available.
Accounting for reserves must be as required by the financial statement forms and instructions under
subsection 2 of section 45-06-14-16.
History: Effective January 1, 2007; amended effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1
### § 45-06-14-13. Stop-loss insurance.

1. Purchase. A multiple employer welfare arrangement may purchase stop-loss insurance to
cover a portion of its losses. If a stop-loss insurance policy is terminated or modified causing a
violation of subsection 2, or otherwise compromising the multiple employer welfare
arrangement's financial integrity, the multiple employer welfare arrangement must notify the
commissioner prior to the termination or modification. The multiple employer welfare
arrangement must inform the commissioner of corrective action that will be taken to maintain
the multiple employer welfare arrangement's financial integrity.

2. Required stop-loss coverage. A multiple employer welfare arrangement may not retain
liability on any one incident of more than ten percent of its annual premium volume during the
most recent fund year, plus twenty percent of its surplus. A multiple employer welfare
arrangement with less than one year's experience must use the multiple employer welfare
arrangement's estimated premium volume during the first full fund year. The multiple employer
welfare arrangement must purchase stop-loss insurance for liability exposure. The stop-loss
carrier must be licensed to do business in North Dakota.
3. Return of liability. Liability transferred to an insurer under subsection 2 may not be directly or
indirectly returned to a multiple employer welfare arrangement or a member.
History: Effective January 1, 2007; amended effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1
### § 45-06-14-14. Deficit and assessments.

1. Each current member of a multiple employer welfare arrangement is jointly and severally liable
for all liabilities and expenses of the multiple employer welfare arrangement. Each past
member is jointly and severally liable for all liabilities and expenses of the multiple employer
welfare arrangement for three complete fund years after leaving the multiple employer welfare
arrangement. After the period of continuing liability, a past member is no longer jointly and
severally liable for the multiple employer welfare arrangement's liabilities and expenses,
except as provided in subsection 2.
2. Runoff liability. If a multiple employer welfare arrangement's self-funding authority is ended
under subsection 1 or 2 of section 45-06-14-07, members and past members continue to be
jointly and severally liable for the multiple employer welfare arrangement's liabilities and
expenses until final multiple employer welfare arrangements dissolution, as follows:
a. All members at the termination of self-funding authority are jointly and severally liable for
all multiple employer welfare arrangement liabilities and expenses until the multiple
employer welfare arrangement is dissolved; and
b. All past members that were jointly and severally liable under subsection 1 at the time
self-funding authority is ended continue to be jointly and severally liable until the multiple
employer welfare arrangement is dissolved.
3. Deficits. If at any time a multiple employer welfare arrangement's total liabilities exceed its
total assets, the board must restore a positive surplus and must do so within ninety days. A
deficit may be corrected using one or more of the types of assessments set forth below. A
multiple employer welfare arrangement may elect to assess some but not all jointly and
severally liable members and past members. The method of assessment may not arbitrarily
exclude members or past members, or impose arbitrary amounts in relation to the amounts
imposed on other members and past members. The bylaws may identify methods of
assessment. If the board fails to do so when required, the commissioner must order an
assessment to correct a deficit using the procedure described in subdivision a.
a. All jointly and severally liable members and past members may be assessed
proportionately to their share of the total premiums paid and owed during the assessment
base period. The assessment base period at the time of a multiple employer welfare
arrangement's self-funding authority ending under subsection 1 or 2 of section
arrangement dissolution. The assessment base period includes all completed quarters of
the current fund year and the most recent three complete fund years.

b. Jointly and severally liable members and past members may be assessed, whereby
members and past members are assessed in proportion to the member's loss experience
over the assessment base period if provided for in the bylaws.
c. Jointly and severally liable members and past members may be assessed, whereby
current members pay more than past members if provided for in the bylaws.
d. Jointly and severally liable members and past members may be assessed whereby
members belonging to the multiple employer welfare arrangement in poor loss years are
assessed more than members belonging to the multiple employer welfare arrangement in
better loss years if provided for in the bylaws.
e. Jointly and severally liable members and past members may be assessed according to
any formula stated in the bylaws, including combinations of subdivisions a to d, if the
formula is consistent with the provisions of this section.
4. Assessment to increase surplus. The board may assess current members in order to increase
the surplus. The assessment may be made at any time in the discretion of the board to
improve the multiple employer welfare arrangement's financial strength. The assessment may
be calculated using any reasonable procedure consistent with the multiple employer welfare
arrangement's bylaws.
History: Effective January 1, 2007; amended effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1
### § 45-06-14-15. Financial integrity.

1. Fidelity bond. All contractors and individuals who handle multiple employer welfare
arrangement funds or who will have access to multiple employer welfare arrangement funds,
including board members, must be covered by a fidelity bond providing standard fidelity
coverage, including coverage against dishonesty, theft, forgery, alteration, misplacement, or
mysterious and unexplainable disappearance. The amount of coverage for each occurrence
must be at least three hundred thousand dollars. The multiple employer welfare arrangement
must purchase a fidelity bond covering the required contractors and individuals, or submit
separate proof of coverage for all required contractors and individuals not covered under the
plan's bond.
2. Integrity of assets. A multiple employer welfare arrangement's assets may not be:
a. Commingled with the assets of any member;
b. Loaned to anyone for any purpose or used as security for a loan, except as permitted
under subsection 5 for investments;
c. Employed for any purpose other than for the purposes stated in the bylaws and in
compliance with this chapter and related statutes; or
d. Considered the property or right of any member or covered person, except:
(1) For benefits under the coverage documents;
(2) For dividends declared in accordance with subsection 5 of section 45-06-14-11; and
(3) For a portion of the assets remaining after the plan's dissolution, in accordance with
subsection 4 of section 45-06-14-07.

3. Sources and uses of funds. A multiple employer welfare arrangement may expend funds for
payment of losses and expenses and for other costs similar to those incurred by insurers
under conventional insurance policies in North Dakota. Except as provided in subdivision b of
subsection 3 of section 45-06-14-11, a multiple employer welfare arrangement may not borrow
money or issue debt instruments. A multiple employer welfare arrangement may bring legal
suits to collect delinquent debts. A multiple employer welfare arrangement may not obtain
funds through subrogation of the rights of covered persons. A multiple employer welfare
arrangement may receive funds only from:
a. Its members as premiums, assessments, or penalties;
b. Its insurers or indemnitors pursuant to insurance or indemnification agreements;
c. Dividends, interest, or the proceeds of sale of investments;
d. Refunds of excess payments;
e. Coordination of benefits with other insurance or group self-insurance coverages; or
f. Collection of money owed to the multiple employer welfare arrangement.
4. Separate accounts. A multiple employer welfare arrangement may establish separate
accounts for the payment of claims or certain types of expenses. These accounts must be
used only by the service company, its authorized subcontractors, or the financial administrator,
as appropriate to the account's purpose. The amount in a special account may not exceed an
amount reasonably sufficient to pay the claims or expenses for which it is established.
5. Investments. A multiple employer welfare arrangement's investments are subject to North
Dakota Century Code chapter 26.1-05, as regards both permitted and prohibited investments,
maturities, and depositories. In addition, a multiple employer welfare arrangement may not
invest in securities or debt of a member, or a member's parent, subsidiary, or affiliate, or any
person or entity under contract with the multiple employer welfare arrangement.
6. Monitoring financial condition. The board must monitor the multiple employer welfare
arrangement's revenues, expenses, and losses and evaluate its current and expected
financial condition. The board must maintain the multiple employer welfare arrangement's
sound financial condition at all times. The board may adjust premium rates, underwriting
standards, dividend rates, expulsion standards, and invoke other powers granted in this
chapter and the bylaws. If the commissioner determines that the board's actions are
inadequate to maintain the multiple employer welfare arrangement's sound financial condition,
the commissioner may order an increase in the premium rates, revoke the multiple employer
welfare arrangement's self-funding authority, order that an assessment be levied against the
members, or take other appropriate action.
History: Effective January 1, 2007; amended effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1
### § 45-06-14-16. Reporting.

1. Financial statements. A multiple employer welfare arrangement must prepare annual
financial statements containing a balance sheet; a statement of revenues, expenses, and
surplus; a statement of changes in financial position; and a schedule of investments. The
statements must be prepared on forms and according to instructions prescribed by the
commissioner. The financial statements must be filed with the commissioner no later than one
hundred eighty days after the end of the multiple employer welfare arrangement's fund year.
For multiple employer welfare arrangements with annual premiums greater than two million

dollars, the financial statements must be audited by an independent certified public
accountant, and the auditor's report must be submitted no later than one hundred eighty days
after the end of the multiple employer welfare arrangement's fund year.
2. Quarterly reports. If the commissioner determines that a multiple employer welfare
arrangement's financial integrity is such that the multiple employer welfare arrangement's
ability to meet obligations promptly and in full will be significantly impaired, the commissioner
may require that the multiple employer welfare arrangement file quarterly reports with the
commissioner no later than thirty days after the end of the first, second, and third quarters of
each fund year. The commissioner may remove the requirement to file quarterly reports when
the multiple employer welfare arrangement's financial integrity is restored. A quarterly report
must contain statements of the multiple employer welfare arrangement's:
a. Current total cash on hand and on deposit, and total investment;
b. Current total reserve for unearned and advance premiums, and total reserve for
outstanding losses reported and unreported;
c. Dividends declared and dividends paid during the quarter;
d. Gross premiums written during the quarter;
e. Losses paid during the quarter;
f. Current total members; and
g. Any other information that the commissioner requests.
3. Extraordinary audits. As necessary, the commissioner may require a multiple employer
welfare arrangement to investigate the accuracy of one or more entries on its financial
statements or quarterly reports and to report its findings. The commissioner may require that a
multiple employer welfare arrangement hire a qualified actuary, claims specialist, auditor, or
other specialist as appropriate to the type of entry being investigated. If warranted by the
investigation's findings, the commissioner may require changes in the multiple employer
welfare arrangement's reserving, accounting, or recordkeeping practices. The audits are in
addition to the commissioner's rights to examine self-funded multiple employer welfare
arrangements directly, as applicable to insurance companies under North Dakota Century
Code chapter 26.1-03.
4. Penalty. The financial statements required under subsection 1 is considered to be a multiple
employer welfare arrangement's annual statement. This filing and other filings required by this
chapter and related statutes are subject to North Dakota Century Code chapter 26.1-03, as
applicable to licensed insurance companies for comparable filings.
History: Effective January 1, 2007; amended effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1
### § 45-06-14-17. Trade practices.

Multiple employer welfare arrangements are subject to the provisions of the unfair trade practices
act found at North Dakota Century Code section 26.1-04-03.
History: Effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-04-03, 26.1-07.1

### § 45-06-14-18. Disclosure.

Each policy issued by a self-funded multiple employer welfare arrangement must contain, in at
least ten-point type on the front page and the declaration page, the following notice:
This policy is issued by a self-funded multiple employer welfare arrangement. A self-funded
multiple employer welfare arrangement may not be subject to all of the insurance laws and
regulations of your state. State insurance insolvency guaranty funds are not available for a
self-funded multiple employer welfare arrangement.
History: Effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1
### § 45-06-14-19. Sanctions.

The commissioner may sanction a multiple employer welfare arrangement or suspend or revoke
any certificate of authority issued to a multiple employer welfare arrangement upon any of the following
grounds:
1. Failure to comply with any provision of these rules or any applicable provision of the North
Dakota Century Code;
2. Failure to comply with any lawful order of the commissioner of North Dakota or of any other
state;
3. Committing an unfair or deceptive act or practice;
4. Deterioration of financial condition adversely affecting the multiple employer welfare
arrangement's ability to pay claims;
5. A finding that the application or any necessary forms that have been filed with the
commissioner contain fraudulent information or omissions; or
6. A finding that the multiple employer welfare arrangement or its service company or financial
administrator has misappropriated, converted, illegally withheld, or refused to pay over upon
proper demand any moneys that belong to a member, a participant, or a person otherwise
entitled thereto and that have been entrusted to the multiple employer welfare arrangement or
its service company or financial administrator in its fiduciary capacity.
History: Effective April 1, 2017.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-01-07.4, 26.1-07.1
