Attorney General's Opinion

Attorney General, Richard Blumenthal

July 25, 2007

The Honorable Nancy Wyman


State of Connecticut

55 Elm Street

Hartford, CT  06106

Dear Ms. Wyman:

This letter is in response to your request for a formal legal opinion as to whether, pursuant to Conn. Gen. Stat. § 5-259, municipalities may purchase risk-pooled, self-funded health insurance through the Municipal Employees Health Insurance Plan (“MEHIP”) without being considered a multiple employer welfare arrangement and an unauthorized insurer.

We understand from your letter and discussions with your staff that you contemplate establishing a voluntary, risk-pooled, self-funded health plan for municipal employers and employees. Under the plan, municipalities would pay premiums to fund the payment of claims, create a reserve fund, and cover the cost of administrative service contracts with insurance carriers. Your office would set the premium rates, establish the reserve fund, negotiate the administrative service contracts, hire a third party administrator to collect premiums and track claims, and establish, staff, and advise a health care cost containment committee to assist in managing the program. Participation in the program would be voluntary.

You state in your letter that the Connecticut Insurance Department has expressed concern, both in testimony before the Legislature and in a memorandum to your office, that (1) grouping municipalities for the purpose of purchasing insurance through a self-funded pool would make the municipalities an unauthorized insurance company with which licensed insurance companies would not be permitted to do business; and (2) the plan would be considered an unlicensed self-funded multiple employer welfare plan, which is not permitted in Connecticut. You question whether Conn. Gen. Stat. § 5-259(i) provides you with specific authority to create the risk-pooled, self-funded plan that you propose. We conclude that it does.

Pursuant to Conn. Gen. Stat. § 5-259(a), the Comptroller has long been responsible for arranging and procuring group hospitalization and medical and surgical insurance plans for state employees. In 1996, in an effort to enable municipalities to offer more affordable health insurance to their employees, the Legislature expanded the Comptroller’s authority under § 5-259 to permit her to arrange health insurance coverage for municipal employees as well as state employees. See 1996 Conn. Pub. Acts No. 96-234; currently codified at Conn. Gen. Stat. § 5-259(i). Subsequent amendments to § 5-259 have further expanded the Comptroller’s authority to permit her to arrange health insurance coverage for other groups, including nonprofit corporations, community action agencies, and small employers. See 2001 Conn. Pub. Acts No. 01-30; 2003 Conn. Pub. Acts No. 03-149.

Subsection (i) of § 5-259 permits the Comptroller to arrange for health coverage for municipal employees in either of two ways. The first way is to offer coverage through the same group health insurance plans that she arranges and procures for state employees pursuant to Conn. Gen. Stat. § 5-259(a). At the present time, such coverage is offered on a fully insured basis and is governed by the terms of the current collective bargaining agreement between the State and the coalition of state employee unions known as the State Employees’ Bargaining Agent Coalition.

Alternatively, the Comptroller may offer plans for municipal employees that are different from the plans that are offered to state employees pursuant to Conn. Gen. Stat § 5-259(a). Specifically, section 5-259(i) states that:

The Comptroller may arrange and procure for the employees and eligible individuals under this subsection health benefit plans that vary from the plan or plans procured under subsection (a) of this section. Notwithstanding any provision of part V of chapter 700c, the coverage provided under this subsection may be offered on either a fully underwritten or risk-pooled basis at the discretion of the Comptroller.

Conn. Gen. Stat. § 5-259(i)(emphasis added). By explicitly authorizing the Comptroller to offer plans for municipal employees that differ from the state employee plans, and to offer them on a “risk-pooled basis,” this language permits the Comptroller to offer plans in which the participating municipalities share risk and self-insure, rather than purchase insurance. In other words, this language permits the Comptroller to offer precisely the type of plan that she is currently proposing.

Notwithstanding the Comptroller’s explicit statutory authority to offer self-insured, risk-pooled plans to municipal employers, you note that the State’s Insurance Commissioner has stated that multiple employer welfare arrangements (“MEWAs”), in which multiple unrelated employers pool their risks and self-insure in order to provide health benefits for their employees, are illegal under Connecticut’s insurance laws. See Connecticut Insurance Bulletin HC-43, Multiple Employer Welfare Arrangements (July 25, 1990).

Although it is true that as a general rule MEWAs must comply with state insurance laws, in the present case the Legislature, by enacting Conn. Gen. Stat. § 5-259(i), has adopted a specific provision granting the Comptroller the explicit authority to offer health benefits to specific groups, including municipal employees, on a risk-pooled basis. It is a “well-settled principle of statutory construction that specific terms covering a given subject matter will prevail over general language of another statute which might otherwise prove controlling.” Board of Education v. State Board of Education, 278 Conn. 326, 338 (2006)(internal brackets and ellipsis omitted). Applying this principle to the present case compels the conclusion that the specific language of Conn. Gen. Stat. § 5-259(i) prevails over the more general provisions of the State’s insurance laws.

Furthermore, given the State’s extensive involvement in establishing and overseeing the operation of the proposed plan, it would make no sense to conclude that the plan is nonetheless subject to the State’s insurance laws. In particular, the State, through the Comptroller, will be responsible for setting the premiums that the participating municipalities must pay, establishing a reserve fund, selecting the insurance companies that will administer the program and negotiating administrative service contracts with those insurers, hiring a third party administrator to collect premiums and track claims, and establishing, staffing, and advising a health care cost containment committee to assist with matters such as disease management and future requests for proposals. In short, the State will control and oversee virtually all aspects of the plan’s design, implementation and operation. Under the circumstances, any risk of underfunding or fraud that would otherwise be addressed by the State’s insurance laws can be addressed directly by the Comptroller. Accordingly, we conclude that the proposed plan is authorized by Conn. Gen. Stat. § 5-259(i) and is not subject to the State’s insurance laws.


Very truly yours,



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