20-3-366. Qualifying district health insurance trusts -- qualifications -- definitions -- rulemaking. (1) The first district health insurance trust that is qualified by the state auditor under this section must be provided the insurance trust incentive payment under 20-3-369 to stabilize health insurance costs and capitalize an operating reserve for the school district members of the trust. The state auditor may qualify only the first district health insurance trust meeting the criteria of this section.

(2) A district health insurance trust seeking qualification from the state auditor under subsection (3) shall apply to the state auditor demonstrating that the district health insurance trust:

(a) has been created on or after July 1, 2023, by a multidistrict agreement pursuant to 20-3-363 or by an interlocal cooperative agreement among participating school districts pursuant to the provisions of Title 20, chapter 9, part 7. The terms of the agreement must include the state auditor or the auditor's designee as an ex officio nonvoting member of the trust's governing board.

(b) has a binding contractual agreement among at least 150 districts employing a minimum of 12,000 employees to participate in and obtain health insurance for its employees through the trust. The calculation of these thresholds may include:

(i) only the number of employees that are contracted to participate in and obtain health insurance through the trust by each participating district; and

(ii) school districts and their employees with current renewal cycles other than a school fiscal year provided that the districts and employees are purchasing insurance through the trust not later than the earlier of the day after the date of the expiration of their previous policy or January 1 in the first year of the trust's operation.

(c) equally allocates the shared risk of assessments among all members of the trust;

(d) determines plan design, contribution rates, and a contribution tier structure in consultation with a certified actuary;

(e) has adopted a required limit on administrative costs of not more than 12% of total costs in the formative documents of the trust. An initial commitment included in the application for qualification is legally binding on the trust in its operations.

(f) maintains full control over claims data for medical and pharmacy benefits and makes the data available to member districts on request in compliance with the Health Insurance Portability and Accountability Act of 1996, 42 USC 1320d, et seq.;

(g) provides, either directly or through a third-party administrator, estimates of costs for employees' anticipated medical treatments and procedures and estimates of required cost sharing by members;

(h) has formed as an agreement between school districts undertaken to separately or jointly indemnify one another by way of a pooling, joint retention, deductible, or self-insurance plan as described in and subject to 33-1-102(9);

(i) prohibits any preexisting health benefits trust or district from imposing its liabilities on the trust that were incurred prior to joining the trust; and

(j) adopts contribution rates as recommended by its contracted actuary to pay all claims and maintain plan reserves at or above minimum levels of risk-based capital recommended by its actuary. The trust shall prepare and submit to the state auditor a report of its financials in a form and containing information as required by the state auditor by rule.

(3) Nothing in this section may be construed to require a district to obtain insurance through the trust in whole or in part. A district may provide insurance through the trust for some groups and through other means for other groups, provided that at least 12,000 employees must be covered under the trust to qualify for the incentives under 20-3-369. Any group of a district obtaining insurance through the trust is subject to the same requirements applicable to districts regarding the minimum duration of participation, conditions for withdrawal, and delay of return to the trust under 20-3-367.

(4) A district health insurance trust qualified by the state auditor may, at its option, contract services with a third-party administrator for services needed by the trust, including but not limited to enrollment, claims processing, wellness plans, and access to financial arrangements with providers through provider network agreements via a contract.

(5) The state auditor shall adopt rules necessary to implement 20-3-366 through 20-3-370. The rules must address minimum reserves and reporting requirements for the trust. The state auditor may order the dissolution of the trust if the trust fails to comply with the provisions of 20-3-366 through 20-3-370 or the rules adopted by the state auditor.

(6) For the purposes of 20-3-366 through 20-3-370, the following definitions apply:

(a) "Administrative costs" means the overall costs of operating a district health insurance trust except for:

(i) the cost of providing health care to members, including wellness plans to improve and promote health and fitness;

(ii) additions to reserves as recommended by the district health insurance trust's actuary under subsection (2); and

(iii) the cost of excess insurance or reinsurance for high-cost claims within the trust with plan design and deductible levels as recommended by the trust's actuary.

(b) "District" means a public school district as provided in 20-6-101 and 20-6-701 and any cooperative formed pursuant to 20-7-451 through 20-7-457.

(c) "District health insurance trust" or "trust" means an arrangement, plan, interlocal agreement, or multidistrict agreement complying with the requirements of this section that jointly provides disability insurance as defined in 33-1-207 to the officers, elected officials, or employees of districts through a member-governed, self-funded program.

(d) "Employee" means an individual employed by a district in any capacity, including but not limited to an employee meeting the definition in 2-18-601 and a teacher or principal as defined in 20-1-101 who is regularly scheduled to work at least 20 hours or more a week during the academic year.

(e) "Member" means any employee and the employee's qualified dependents who are obtaining health insurance coverage under the trust by virtue of their status as a dependent of the employee.