19 Del. Admin. Code §§ 1401-17.0
Current through Register Vol. 27, No. 12, June 1, 2024
Section 1401-17.0 - Private plans17.1 An employer that elects to provide benefits through a private plan issued and administered by an admitted insurance carrier must ensure that the private plan being purchased has been filed with and approved by the Delaware Department of Insurance (the "DOI"). The Division will provide additional approvals that employers who "opt-out" (in whole or in part, as a hybrid plan) will need to meet in order to satisfy their obligations through a private plan. 17.1.1 Insured private plans. An employer must notify the Division through its online portal of employer's decision to opt-out of the state's public plan. Employers must indicate that they intend to purchase a DOI-approved PFML insurance plan, which may include coverage through a captive insurance plan approved by the Delaware DOI, for 1 or all of the required lines of coverage. As part of the process to provide notice to the Division of a decision to opt-out of the public plan, employers must submit proof via the online portal of the declaration page from a DOI-approved insurance plan as well as a copy of the policy.17.1.2 For employers seeking approval for 2025, the opt-out form will be available on the Division's online portal from September 1, 2024 through December 1, 2024, at which point the opt-out window will close. Failure to obtain coverage or to provide a copy of the required documents via the online portal or both will mean that employer cannot opt-out and must, instead, enroll in the public plan and remain in that until an approved private or self-insured plan, if any, is in place.17.1.3 For all subsequent years, employers may seek to opt-out of the public plan or renew the approved private plan from October 1 through December 1, to be effective January 1 of the following calendar year, subject to plan approval by DOI and submission of the required documentation noted above via the Division's online portal by December 1. Failure to do so will, by default, deny approval of the plan and trigger enrollment in the public plan, which shall remain in effect until an approved private or self-insured plan, if any, is in place.17.2 An employer shall impose no additional conditions or restrictions on the use of covered leave beyond those explicitly authorized by the Act or this regulation issued under that Act. 17.2.1 Required data. Within 30 days after the end of each quarter, employers will be required to send the Division updated weekly enrollment, wages, and hours information for each employee covered under the plan.17.2.2 This information must be provided to the Division through the Division's online portal according to the technical specifications required at the time of submission.17.3 The requirements for the private plan and internal administrative review process when a final determination is issued are subject to the appeal process consistent with the Act. That process is set forth in Section 13.0.17.4 Self-Insured plans. An employer must notify the Division through its online portal of employer's decision to opt-out of the state's public plan by providing a private plan through a form of self-insurance.17.4.1 Self-Insured groups must have at least 100 covered individuals in the plan at all times. Applicant groups with fewer than 100 covered individuals will have their applications declined. In addition, any employer seeking to self-insure must provide a surety bond.17.4.2 For 2025 only, the opt-out form will be available on the Division's online portal from September 1, 2024 through December 1, 2024, at which point the opt-out window will close. By December 1, 2024, the employer must submit via the Division's online portal, the required surety bond in addition to any other required documentation. For all subsequent years, employers may seek approval to opt-out of the public plan or seek renewal of the self-insured plan during the period of October 1 to December 1, to be effective January 1 of the following calendar year. The employer must also submit the required bond by December 1 if not already on file with the Division.17.4.3 If any self-insured employer falls below 100 employees at the time of the annual renewal, they will be decertified, will be required to enroll in the public plan immediately and remain in that plan until an approved private plan, if any, is in place. In addition, the employer must pay to the Fund, within 30 days from the date of decertification, an amount equal to the contributions that would have been due for the previous 12-months had the employer been a participant in the public plan.17.4.4 The Division may waive this requirement of a minimum of 100 employees if the employer is able to demonstrate that it has the administrative capacity to adequately manage a self-insured plan. Each quarter, all self-insured plans must send the Division updated weekly enrollment, wages, and hour information for all the employees covered under the plan. This information should be provided to the Division through the Division's online portal according to the technical specifications required at the time of the submission.17.4.5 Surety bonds. Employers that intend to provide the mandated coverage through a self-insured plan for 1 or more of the required lines of coverage must also provide the Division a surety bond. 17.4.5.1 The surety bond shall be issued by a surety company authorized to do business in Delaware, in an amount equal to 1 year of total contributions that would have been required to be paid by the employer had they participated in the public plan.17.4.5.2 This bond shall be in the "continuous until canceled" bond on a form approved by the Division.17.4.5.3 The contribution amount shall be based on the actual wages, adjusted for inflation by the "Consumer Price Index for All Urban Consumers, Philadelphia-Camden-Wilmington Metropolitan Area" that is published by the Bureau of Labor Statistics of the United States Department of Labor, earned by the employees in the 12-month period ending on October 31 prior to the December 31 due date of the plan approval.17.4.5.4 Any change to the amount of the surety bond based on that calculation must be provided to the Division by December 1 of each year. Failure to provide the initial surety bond and documents supporting the initial bond calculation and any subsequent calculations supported by a signed statement by either a qualified actuary (having met the American Academy of Actuaries' qualification standards) or licensed Certified Public Accountant ("CPA") will result in the employer self-insured plan being terminating effective December 31 and entering the public plan as of January 1, the following year.17.4.5.5 The State of Delaware shall be named as the obligee of the surety bond and the employer shall be named the principal.17.4.5.6 The State of Delaware is the only entity that has standing to pursue a claim against the bond if the employer fails to meet its obligations under these provisions.17.4.5.7 The bond shall include a statement that the bonding company must give 90 days' notice of its intent to terminate liability to the employer/principal and the Division, except that if a bonding company is terminating liability because it is issuing a replacement bond, it may do so without providing prior notice. In the event of a replacement bond, the surety company and the employer must notify the Division no later than 10 days after its effective date.17.4.5.8 The employer must maintain surety bond coverage for the plan approval period granted by the Division. The Division will review the bond annually, in connection with the employer's annual opt-out renewal, to ensure that the amount of the bond corresponds with the wage requirements described in this regulation. Employers must apply to renew their approval no later than December 1 of each year. At that time, the employer must provide the Division with any documentation necessary to review the bond amount. If the Division determines the bond amount must increase, the employer must do so to renew its self-insured plan approval. If the Division determines that the bond amount exceeds the actual wage calculation set forth above, then the employer may reduce the bond amount to correspond to the actual wages.17.4.5.9 In addition to the bond review documents, the employer will provide the Division with any changes to the plan's Schedule of Benefits and report the current number of covered individuals under employer's self-insured plan. If the plan no longer "meets or exceeds" the provisions of the Act or if there are less than 100 eligible employees covered under the plan, the self-insured plan will not be allowed to renew for the next calendar year. Upon decertification of a self-insured plan, an employer must pay to the Fund, within 30 days from the date of decertification, an amount equal to the contributions that would have been due for the previous year had the employer been a participant in the public plan. The employer is then required to join the public plan beginning January 1 and remain in that plan until an approved private plan, if any, is in place.17.4.5.10 The Division may execute on and collect the bond amount if the employer's self-insured plan approval is terminated, decertified, or withdrawn, voluntarily or involuntarily and the employer fails to pay, within the subsequent 30 day period, an amount equal to the contributions that would have been due for the previous year had the employer been a participant in the public plan. Upon execution, the amount to be collected by the Division will be the entire bond amount, less any funds received from the employer within the 30 day period after the effective date of the termination of the self-insured plan approval. Funds so received by the Division from the employer or surety or both will be deposited into the Fund and, if applicable, will be credited toward the employer's contribution obligation per this section.17.4.6 Self-insured plan design. For any line of coverage that the employer provides under a self-insured plan, the terms and conditions of the plan must at least meet the requirements provided in the Act. 17.4.6.1 Beginning with the opening of the Division's online portal system on September 1, 2024, for self-insured plans not applying for grandfathering, the employer must provide a copy of the self-insured plan's schedule of benefits, terms, and conditions to the Division for its review and approval. The last day to submit this information and the required surety bond is December 1, 2024 for the initial benefit period beginning January 1, 2026.17.4.6.2 The Division must either approve or decline the employer's application for self-insurance by December 31, 2024.17.4.6.3 If the Division does not approve the employer's application for self-insurance, the employer must instead comply with the requirements of the Act.17.4.6.4 For all subsequent years, employers seeking to self-insure must submit all of the required information to the Division no later than December 1 of the year prior to the start of the plan on the following January 1.17.4.6.5 The Division will accept a sworn self-certification or attestation listing specific, detailed components of the plan design, signed by the employer, as initial proof that the plan design meets or exceeds the public plan requirements.17.4.6.5.1 At its discretion, the Division will verify the attestation by comparing the submitted plan documents to the requirements of the Act.17.4.6.5.2 If, at any time, the Division finds that the employer's self-insured plan does not meet or exceed the requirements of the Act, the Division shall have the power to immediately decertify the employer's self-insured plan, triggering the payment of contributions to the Fund by employer within 30 days from the date of decertification, an amount equal to the contributions that would have been due for the previous year had the employer been a participant in the public plan.17.4.6.5.3 If the employer fails to make the required payment, the Division shall execute and collect on the employer's surety bond.17.4.6.5.4 The employer will also be immediately added to the public plan with no lapse in coverage for the employers or employees and will remain on the public plan until an approved private voluntary plan, if any, is in place.17.4.6.6 Any proposed substantive changes to any of the provisions of an approved self-insured plan must be approved by the Division in writing and must be equal or exceed the requirements of the public plan. The Division will review any requested change within 30 days from the receipt of the request via the Division's online portal. Changes to the plan can only go into effect at the beginning of each calendar year unless the Division approves a different effective date.17.4.7 Self-insured plan claims fund. The Division reserves the right to audit the financials of any employer applying to administer a self-insured plan to verify that it has the financial ability to pay all expected claims. Employers with a self-insured private plan must have the financial ability to pay at least 6 maximum dollar claims per 100 employees per year, and each employer with a self-insured plan must prefund a claims reserve account in a separate dedicated bank account with at least 1/2 of that amount held in reserve to pay future claims. An employer must provide proof of the appropriately funded bank account as part of the opt-out process. This requirement does not apply to self-insured plans that have been approved under the grandfathering provisions of the Act.17.4.8 Audits and claim review of self-insured plans. Employees and designated assistants shall be able to avail themselves of the claims review process as set forth in the Act. 17.4.8.1 The Division has the right to audit any and all claims or enrollment decisions made by the employer in any self-insured plan. The employer must make available to the Division any requested documentation, file, or system regarding any issue in connection with an audit of the self-insured plan within 24 hours of the Division's written request.17.4.8.2 Self-insured plans that are found, either through the claims review or auditing process, to have an excessive number of mis-adjudicated claims, either due to error or arising from a purposeful attempt to deny claims for reasons including punitive, discriminatory, or financial, will be referred by the Division to the Delaware Attorney General for, at the Department of Justice's discretion, civil or criminal prosecution or both.17.5 Grandfathering plans. 17.5.1 Private paid time off benefit plans that employers had in place before May 10, 2022, the enactment date of the Act, and that are deemed by the Division to be comparable to the state's public plan, will be allowed to continue until December 31, 2029, 5 years from the start of contributions being collected under PFML. Employer paid time off benefit plans that are deemed comparable will qualify regardless of the risk transference provisions including any of the following arrangements: 17.5.1.1 Private insurance contracts through an admitted carrier including captives;17.5.1.2 Self-insured plans regardless of whether they are backed by a surety bond; or17.5.1.3 "Employee handbook plans" which continue paying an employee's wages in the same manner as it had been paying prior to the leave, while the employee is on a period of leave, that is defined by the contractual relationship between employer and the employee, usually as described in an employee handbook.17.5.2 Grandfathering application. To qualify for the 5 year grandfathering period for existing plans, employers must apply through the Division's online portal by the January 1, 2024 deadline. The online portal will open for grandfathering requests on October 1, 2023. If an employer does not apply by January 1, 2024 through the portal, grandfathering an existing plan shall no longer be an option. If the employer's application is declined, the employer will be subjected to the normal requirements of the Act. If the employer's application is approved, the employer and the employees will not be subject to the normal provisions of the Act until December 31, 2029.17.5.3 Definition of a comparable plan. For an employer's paid time off benefit plan to be considered in existence as of May 10, 2022, the employer must submit a sworn affidavit via the Division's online portal stating that the plan was in writing and had been available to all of the employer's employees on May 10, 2022. The employer's paid time off benefit plan may qualify even if does not provide all 4 lines of coverage included in the state's public plan, as long as the plan provides comparable coverage on 1 or more of the lines of coverage. Only that line of coverage that is comparable will be grandfathered. Each application must include a copy of the employer's paid time off benefit plan for consideration by the Division.17.5.4 To be considered "comparable," the employees covered under the existing plan must not be required to contribute more to the employer's existing plan than is required under the public plan. All employer paid time off benefit plans that offer benefits that equal or exceed the state's public plan in 3 specific components of the plan design will qualify under the grandfathering provision of the Act. An employer's paid time off benefit plan will be considered "comparable" if the plan's 3 main plan components (benefit percent, maximum benefit, and benefit duration) are within 10% of the equivalent state plan components. 17.5.4.1 Benefit percent: Unless the Act states otherwise, this benefit percent provides for 80% of the employee's wages, 10% less than 80% is 72%.17.5.4.2 Maximum benefit: Unless the Act states otherwise, it provides for a maximum weekly benefit of $900 and 10% less than $900 is $810.17.5.4.3 Benefit duration: For parental leave, the public plan allows up to 12 weeks of leave. If an employer's paid time off benefit plan allows 10.8 or more weeks (or up to 54 days) of parental leave, then it will be considered comparable. For all other types of leave, the public plan allows for 6 weeks of leave. If the employer's paid time off benefit plan allows for all employees to receive up to 5.4 weeks, or 27 days, of leave or more, then it will be considered comparable.17.5.5 An employer's paid time off benefit plan must be within 10% of all 3 of these plan components for the employer's grandfathering application to be accepted by the Division. If the application is not accepted, the employer must enroll in the state's public plan and remain in that plan until an approved private or self-insured plan, if any, is in place.17.5.6 In addition, for an employer's existing paternal leave plan to be comparable to the public plan for the paternal leave line of coverage, an employer's paid time off benefit plan must: 17.5.6.1 Provide coverage for birth, adoption, and fostering of a child; and17.5.6.2 Offer these benefits regardless of the parent's sex or gender or marital status.17.5.7 Any grandfathered plan cannot be altered unless the change improves the benefit offered to employees and is approved by the Division.17.6 Short term disability plans. Employers with short term disability ("STD") plans that meet the 10% test are eligible to be grandfathered.17.6.1 Once a plan is approved, all of the provisions of that plan continue as prior to May 10, 2022, including any applicable elimination period.17.6.2 Due to the number of STD plans in force in the State of Delaware prior to the enactment of the Act and the number of which may be successfully grandfathered by employers, there is a significant potential for them to adversely impact the solvency of the Fund. The Division will undertake an analysis of the impact of STD plan grandfathering on the future solvency of the Fund based upon the actual experience of the medical leave line of coverage in each of the initial years of the program. If the grandfathered STD plans are determined to be a threat to the solvency of the Fund, the grandfathered status will be terminated earlier than normally provided by the Act.17.7 Notice and appeal process. 17.7.1 If the Division terminates, decertifies, or withdraws approval of an employer's private plan, the Division will notify the employer, with an effective date 15 days after the date of the notice. Prior to the effective date, the employer may file appeal this decision, on an appeal form found on the Division's online portal to the Board. The decision of the Board is final unless appealed to the Superior Court within 30 days.17.7.2 The employer is required to provide notice as set forth in the Act to all employees affected by any changes in the plan.19 Del. Admin. Code §§ 1401-17.0
27 DE Reg. 52 (7/1/2023) (Final)