Section R. 500.823 - Excess loss policy provisions; minimum requirementsRule 3. Excess loss policies issued to a MEWA in this state for the purposes of section 7040(1)(c) of the code shall be in compliance with all of the following requirements:
(a) All specific excess loss policies shall provide for the insurer to indemnify the MEWA for all losses in excess of a specified amount per covered person, per year, for all medical, surgical, hospital care, accident, disability, or death benefits the MEWA offers.(b) The specific excess loss insurance policy may be in the form of incurred basis stop-loss insurance or paid basis stop-loss insurance. Plans using paid basis stop-loss insurance shall provide for the liability in excess of the specified amount of losses incurred while the paid basis stop-loss insurance was in force, but paid after its termination or nonrenewal. The reporting period under paid basis insurance shall be not less than 3 months after the MEWA year conclusion. An expense will be considered to be incurred by the policyholder at the time service has been rendered or the service to which it relates is provided. Incurred losses include both reported and unreported losses. "Paid losses" means the total amount of money actually paid for benefits for which eligible employees and dependents who are covered under the employee benefit plan become entitled under the plan.(c) Required excess loss insurance policies shall be noncancelable for a minimum of 1 year for any cause except nonpayment of premium, for which the MEWA shall be given a minimum grace period of 31 days.(d) The insurer shall have neither the right nor obligation under the excess loss policy to directly pay any covered person or provider of professional services or supplies for any benefit which the policyholder has agreed to provide under the terms of the employee benefit plan. The insurer's sole liability shall be to the policyholder, subject to the terms, conditions, and limitations of the agreement.Mich. Admin. Code R. 500.823