41-4010 RESERVES AND SURPLUS.
INSURANCE
CHAPTER 40
SELF-FUNDED HEALTH CARE PLANS
41-4010. Reserves and surplus. (1) A self-funded plan shall establish and maintain in the trust fund the following reserves:
(a) A reserve in an amount as certified by a member of the American academy of actuaries as being necessary for payment of claims against the trust fund for benefits, including both claims reported and not yet paid and claims incurred but not yet reported.
(b) If under the plan periodic contributions of either the employer(s) or employees to the trust fund are payable less frequently than monthly, there shall be a reserve for unearned contributions as computed pro rata on the basis of the unexpired portion of the period for which the contribution has been paid.
(2) In any determination of the financial condition of the trust fund the claims reserve and reserve for unearned contributions shall constitute liabilities.
(3) In addition to reserves required by this section, a self-funded plan shall establish and maintain in its trust fund surplus equal to at least thirty percent (30%) of the unpaid claims liability of the plan. A newly formed plan with no prior operating history shall maintain surplus of not less than ten percent (10%) of unpaid claims liability during its first year of operation, not less than twenty percent (20%) of unpaid claims liability during its second year of operation and not less than thirty percent (30%) of unpaid claims liability at all times thereafter.
(4) Up to one-third (1/3) of the surplus required by this section may be funded by a clean, irrevocable letter of credit, in a form acceptable to the director, issued in favor of the trust fund by a federally or state chartered bank having a branch office in Idaho. Such irrevocable letter of credit cannot be guaranteed by pledge of any of the plan assets.