HF3571

Purpose

This bill changes local-government health coverage rules to allow certain entities to self-insure their employee health benefits, including long-term disability, but excluding life insurance. It updates certification and governance requirements and adds new protections related to employee representatives and the dissolution of self-insurance funds.

Who can self-insure (and when)

• Eligible entities: statutory or home rule charter cities, counties, school districts, watershed districts, or instrumentalities with more than 100 employees.
• What self-insurance covers: health benefits for employees, including long-term disability. Life insurance benefits are not included.
• Certification and approval: self-insurance plans must provide all benefits required by law, be certified under section 62E.05, and be filed and certified by the Department of Commerce before they are issued or delivered.

Joint self-insurance

• Two or more eligible entities with >100 employees can form a joint self-insurance plan for health benefits (including long-term disability, but not life insurance).
• Requirements: subject to the same standards as individual self-insurers and to section 62L.045; pools established by service cooperatives under section 123A.21 can qualify, but individual school-district members in such pools aren’t treated as self-insured for certain other purposes.
• Rules: the Commissioner of Commerce may adopt rules to set standards and guidelines for operating and administering self-insurance pools.

Relationship with employee representatives

• Exclusive representatives (unions) must be notified and consulted before a self-insured plan is adopted for employees they represent. Notification is 10 days in writing, and approval must come from the exclusive representative that represents the largest number of employees to be included.
• Dissolution notice and approval: before dissolving a self-insurance trust fund or dedicated insurance fund, the employer must provide 30 days’ written notice to each exclusive representative and to current health-benefit recipients and obtain approval from the exclusive representative with the largest number of employees included. All assets must be audited before closure, and any remaining assets must be dedicated to health insurance benefits for current recipients. This does not apply to joint self-insurance trusts or pools.

Redistribution and enrollment options

• When dissolving a self-insurance trust or pool, assets or liabilities must be distributed to members according to the trust or pool agreement (if applicable).
• Optional enrollment at own expense: an entity with a self-insurance plan may, upon request by the exclusive representative, allow employees represented by that exclusive representative to enroll in the health-benefit plan at their own expense.

Significant changes to existing law

• Expands self-insurance authority to more local-government entities (notably watershed districts and other units with >100 employees).
• Introduces formal joint self-insurance arrangements across multiple entities with the same threshold.
• Adds procedural protections related to exclusive representatives (notification, consent, and dissolution processes).
• Allows exclusive-representative employees to enroll in the plan on a voluntary, self-pay basis.
• Establishes or reinforces certification and regulatory oversight by the Department of Commerce and related statutes (e.g., 62E.05, 62L.045, 179A.12, 123A.21).

Potential impacts to note

• Local governments gain more flexibility to manage health benefits and long-term disability coverage through self-insurance.
• Greater involvement of unions or exclusive representatives in planning and dissolving self-insurance arrangements.
• Possible administrative and oversight requirements to certify plans and govern pools.
• Dissolution procedures ensure that existing beneficiaries retain benefits and that resources are used for health coverage.

Relevant Terms self-insure; self-insurance; health benefits; long-term disability; employee life benefits; exclusive representative; notification; Department of Commerce; certification; 62E.05; 62L.045; 179A.12; service cooperatives; 123A.21; joint self-insurance trust; pools; dissolution; assets; liabilities; enrollment at own expense.