No. 31653 (New Rule): R590-246. Professional Employer Organization (PEO) License Application Rule

DAR File No.: 31653
Filed: 07/03/2008, 09:48
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of the rule is to establish a licensing process, license application forms, and other requirements the commissioner deems necessary for the regulation of professional employer organizations (PEOs).

Summary of the rule or change:

The regulation of PEOs was transferred from the Division of Occupational and Professional Licensing (DOPL) to the Insurance Department by the 2008 Legislature in H.B. 159. This rule was created to provide a licensing process and licensing applications for PEOs. (DAR NOTE: H.B. 159 (2008) is found at Chapter 318, Laws of Utah 2008, and was effective 05/05/2008.)

State statutory or constitutional authorization for this rule:

Title 31a, Chapter 40

Anticipated cost or savings to:

the state budget:

The Utah insurance Department received $150,000 of General Fund revenue to support the regulation and licensing of PEOs. The $150,000 of General Fund money was offset by a transfer of $150,000 from the Commerce Service Fund. Annual license fees are projected to exceed $150,000 per year. The $150,000 General Fund money will support two FTEs to regulate and license PEOs.

local governments:

This new rule will have no effect on local governments since the rule deals solely with the relationship between the department and its licensees.

small businesses and persons other than businesses:

Licensing fees are the same as the DOPL registration fee so PEOs will not see an increase in their licensing costs. The Insurance Department's e-commerce fee of $50 is $20 per year higher than the DOPL fee so PEOs will see this minor increase. The $20 increase in PEO licensing fees will have a minimal, if any, impact on fees charged by PEOs to their clients.

Compliance costs for affected persons:

The $20 increase in PEO licensing fees will have a minimal, if any, impact on PEOs and their customers.

Comments by the department head on the fiscal impact the rule may have on businesses:

The fiscal impact of this rule is minimal. D. Kent Michie, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Insurance
Administration
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY UT 84114-1201

Direct questions regarding this rule to:

Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

09/02/2008

This rule may become effective on:

09/09/2008

Authorized by:

Jilene Whitby, Information Specialist

RULE TEXT

R590. Insurance Administration.

R590-246. Professional Employer Organization (PEO) License Application Rule.

R590-246-1. Authority.

This rule is promulgated pursuant to the general rulemaking authority granted the insurance commissioner by Subsection 31A-2-201(3)(a) and the specific authority granted by Sections 31A-40-103 and 31A-40-302 through 31A-40-306.

 

R590-246-2. Purpose and Scope.

(1) The purpose of this rule is to establish:

(a) a licensing process;

(b) license application forms; and

(c) other requirements which the commissioner deems necessary for the regulation of professional employer organizations.

(2) This rule applies to all professional employer organization license applicants, all licensed professional employer organizations, and any unlicensed person doing the business of a professional employer organization in Utah.

R590-246-3. Definitions.

(1) The definitions in Sections 31A-1-301 and 31A-40-102 apply to this rule.

(2) "Fully insured" as used in 31A-40-208 means a health benefit plan for which 100% of the liability has been assumed by an insurance company or health maintenance organization authorized to conduct business in Utah.

(a) The health benefit plan may include a layer of financial responsibility for claims assumed by the PEO as long as the insurance company or health maintenance organization is responsible for 100% of the PEO's liability in the event of non-payment by the PEO.

(b) The covered individual must be entitled to make a claim for payment directly to the insurance company or health maintenance organization.

(c) A fully insured plan may have co-pay or deductible requirements as required by contract.

R590-246-4. Initial and Renewal Licensing Process.

(1) All professional employer organization types must comply with the appropriate statutory requirements and complete and submit the appropriate initial or renewal license application form and any supporting documents to the commissioner.

(2) The initial or renewal application form, and all attachments must be submitted electronically via:

(a) a PDF attachment to an email - the preferred method; or

(b) an electronic facsimile.

(3) A professional employer organization applicant that was registered with the Division of Professional Licensing, Utah Department of Commerce prior to May 4, 2008, will be considered as a renewing licensee by the Department and will:

(a) submit a renewal application prior to September 30, 2008; and

(b) will pay the annual renewal fee in accordance with the instructions issued with the renewal invoice.

(4) A professional employer organization applicant that was not registered with the Division of Professional Licensing, Utah Department of Commerce prior to May 4, 2008, is a new applicant and must:

(a) submit a new application;

(b) pay the license fee by check submitted to the address on the Department's webpage at www.insurance.gov. Checks not drawn on the Professional Employer Organization must be referenced to the organization.

(4) Professional employer types for initial and renewal licenses:

(a) Professional Employer Organization - Not CERTIFIED Through An Assurance Organization.

(i) Comply with the requirements in Sections 31A-40-205, 31A-40-302 and 31A-40-305.

(ii) Complete the Professional Employer Organization - Not Certified Through An Assurance Organization license application form posted on the Department's webpage at www.insurance.utah.gov.

(iii) The requirement in 31A-40-302(2)(g) will be satisfied by completing and submitting the UCAA Biographical Affidavit form posted on the Department's webpage at www.insurance.utah.gov.

(b) Professional Employer Organization - CERTIFIED Through An Assurance Organization.

(i) Comply with the requirements in Section 31A-40-303.

(ii) Complete the Professional Employer Organization - Certified Through An Assurance Organization license application form posted on the Department's webpage at www.insurance.utah.gov.

(c) Professional Employer Organization - Small Operation License.

(i) Comply with the requirements in Section 31A-40-304.

(ii) Complete the Professional Employer Organization - Small Operation License application form posted on the Department's webpage at www.insurance.utah.gov.

(d) Professional Employer Organization Group.

(i) Comply with the requirements in Section 31A-4-306.

(ii) Complete the appropriate Professional Employer Organization license application:

(A) Professional Employer Organization - Not Certified Through An Assurance Organization;

(B) Professional Employer Organization - Certified Through An Assurance Organization; or

(C) Professional Employer Organization - Small Operation License.

R590-246-5. Enforcement Date.

The commissioner will begin enforcing this rule 45 days from the rule's effective date.

R590-246-6. Severability.

If any provision of this rule or its application to any person or circumstance is, for any reason, held to be invalid, the remainder of this rule and its application to other persons and circumstances are not effected.

KEY: professional employer organization licensing

Date of Enactment or Last Substantive Amendment: 2008

Authorizing, and Implemented or Interpreted Law: 31A-2-201; 31A-40-103; 31A-40-302; 31A-40-304