BILL NUMBER: AB 1465	CHAPTERED  09/03/99

	CHAPTER   317
	FILED WITH SECRETARY OF STATE   SEPTEMBER 3, 1999
	APPROVED BY GOVERNOR   SEPTEMBER 2, 1999
	PASSED THE SENATE   AUGUST 23, 1999
	PASSED THE ASSEMBLY   JUNE 4, 1999
	AMENDED IN ASSEMBLY   JUNE 1, 1999
	AMENDED IN ASSEMBLY   MAY 20, 1999
	AMENDED IN ASSEMBLY   MAY 19, 1999
	AMENDED IN ASSEMBLY   MAY 3, 1999
	AMENDED IN ASSEMBLY   APRIL 26, 1999

INTRODUCED BY   Assembly Member Machado

                        FEBRUARY 26, 1999

   An act to amend Sections 742.31 and 742.44 of, and to add Section
742.435 to, the Insurance Code, relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1465, Machado.  Multiple employer welfare arrangements:  filing
requirements.
   Existing law governing the business of insurance provides for the
certification by the Insurance Commissioner of self-funded or
partially self-funded multiple employer welfare arrangements.  In
general, multiple employer welfare arrangements permit employer
members of trade associations to create trust funds for the purpose
of offering and providing health care benefits to their employees.
Existing law requires each of these arrangements to file with the
commissioner an audited financial statement and an actuarial opinion,
within 4 months and 15 days after the end of each fiscal year.
Existing law provides for the repeal of these provisions dealing with
multiple employer welfare arrangements on January 1, 2001.
   This bill would instead require that the filing of an audited
financial statement and an actuarial opinion be made no later than
May 15th of each calendar year or 4 months and 15 days after the end
of each fiscal year not on a calendar year basis.  This bill would
also extend from January 1, 2001, to January 1, 2004, the general
repealer of these provisions dealing with multiple employer welfare
arrangements, and would require the Department of Insurance, in
consultation with the Department of Corporations, to conduct an
evaluation of multiple employer welfare arrangements and report to
the Legislature and the Governor by January 1, 2002.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 742.31 of the Insurance Code is amended to
read:
   742.31.  Each self-funded or partially self-funded multiple
employer welfare arrangement transacting business in the state shall
file all of the following with the commissioner:
   (a) No later than May 15th of each calendar year or four months
and 15 days after the end of each fiscal year not on a calendar year
basis, financial statements audited by a certified public accountant,
and an actuarial opinion rendered by a qualified actuary.  The
opinion shall be based on standards adopted from time to time by the
Actuarial Standards Board and on any additional standards that the
commissioner may, by regulation, prescribe.  For the purposes of this
section, "qualified actuary" means a member in good standing of the
American Academy of Actuaries who meets the requirements set forth in
regulations of the commissioner.  The qualified actuary shall be
liable for damages to any person caused by his or her negligence or
other tortious conduct.
   (b) Within 60 days after the end of each fiscal quarter, unaudited
financial statements, affirmed by an appropriate officer or agent of
the multiple employer welfare arrangement.
   (c) Within 60 days after the end of each fiscal quarter, a report
certifying that the multiple employer welfare arrangement maintains
cash or liquid assets in a claim reserve account sufficient to meet
its contractual obligations and that it maintains a policy of
aggregate and specific stop loss insurance.
  SEC. 2.  Section 742.435 is added to the Insurance Code, to read:
   742.435.  The Department of Insurance, in consultation with the
Department of Corporations, shall conduct an evaluation of multiple
employer welfare arrangements and report to the  Legislature and the
Governor by January 1,  2002.  The evaluation shall include, but not
be limited to, the effectiveness of multiple employer welfare
arrangements in providing participants with options for affordable
health care coverage, and the effect of multiple employer welfare
arrangements on persons or entities purchasing health care coverage
who are not multiple employer welfare arrangement participants.
  SEC. 3.  Section 742.44 of the Insurance Code is amended to read:
   742.44.  This article shall remain in effect until January 1,
2004, and as of that date is repealed, unless a later enacted statute
that is enacted before that date deletes or extends that date.