SF3841

Purpose

This bill makes technical updates and date adjustments to Minnesota’s premium security plan, a state-based reinsurance program. It clarifies how the program is run, how funds are collected and paid out, and how a one-time funding assessment and a new tax credit would work to support the program.

Key Provisions

• Administration and funding

  • The Minnesota premium security plan is administered by Minnesota’s reinsurance entity (the association).
  • The association can apply for federal funding for the plan.
  • All funds received or appropriated for the plan are deposited into the premium security plan account.
  • The association must notify legislative leaders within ten days of receiving any federal funds.
  • The association must collect or access data from eligible health carriers needed to determine reinsurance payments.
  • There are explicit prohibitions on using funds for staff retreats, promotional giveaways, excessive executive pay, or lobbying for changes in law or regulation.
  • For each benefit year, the association must notify eligible health carriers of the reinsurance payments by June 30 of the following year.
  • The association must provide quarterly calculations of total reinsurance payment requests to each carrier.
  • All applicable reinsurance payments must be disbursed to eligible carriers by August 15 of the year after the benefit year (for the 2027 benefit year, payments must be made by September 30, 2027’s year).

• One-time 2028 assessment on group health carriers

  • A onetime assessment is imposed in 2028 on group health carriers operating under the Minnesota premium security plan for benefit year 2027.
  • The association must estimate each carrier’s share by May 1, 2028, and notify carriers of the amount by late June to late July 2028.
  • The assessment amount is determined in consultation with the commissioner and is based on each carrier’s share of total premiums for group health plans written in Minnesota for benefit year 2027; the amount must be approved by the commissioner.
  • The total assessed amount must cover the funding needs of the plan as specified by statute and must be allocated proportionally across group health plans.
  • Carriers must pay the assessment by late August 2028 (dates may range from August 1 to August 29, 2028), using a method set by the commissioner.
  • Carriers may apply to defer all or part of the assessment if paying it would place them in a financially impaired condition; deferral requests must be submitted by May 15, 2028, and decisions issued by June 15, 2028.
  • If a deferral is approved, the deferred amount must be reported and incorporated into future assessments, and the carrier cannot receive reinsurance payments until the deferred amount is paid.
  • If the assessment amount exceeds or is less than what is needed, the association must require additional payments or issue refunds; accuracy of the assessment must be determined by a specified date (text shows two possible dates, around spring 2029).

• Reinsurance tax credit

  • Beginning with tax years after December 31, 2028, taxpayers can claim a credit against the premiums tax equal to the amount of the 62E.23 assessment paid in the immediately preceding calendar year.
  • If the credit exceeds the tax liability, the excess is refunded to the insurance company taxpayer, with funds appropriated for refunds.
  • The credit does not affect state aid calculations for fire or police aid.
  • The commissioner of commerce must annually provide the tax authorities with a list of assessments paid under 62E.23 by March 1 of the following year.

Significant Changes from Current Law

• Introduces a one-time 2028 assessment on group health carriers to fund the premium security plan.
• Establishes a new premium tax credit starting after 2028 to help offset the 62E.23 assessments.
• Tightens governance and data reporting requirements for administering the plan.
• Specifies timing for reinsurance payments and adds deferral options for financially distressed carriers.

Practical Effects

• Carriers will face a new 2028 funding obligation, with potential deferral options and a timing framework for payments.
• Carriers may receive tax credits beginning after 2028 to offset these assessments.
• Funding and administration of the Minnesota premium security plan are more tightly defined, with clearer timelines and reporting requirements.

Terminology and Concepts to Note

• Minnesota premium security plan (state-based reinsurance program)
• Reinsurance payments
• The association (Minnesota’s reinsurance entity)
• Eligible health carrier / group health carrier
• Benefit year
• Premium security plan account (62E.25)
• Federal funding
• Data requirements (subdivision 5, paragraph c)
• Commissioner (of commerce)
• Deferral of assessments
• Reinsurance credit / premiums tax credit
• 62E.23 assessment

Relevant Terms Minnesota premium security plan; reinsurance; association; eligible health carrier; group health carrier; benefit year; reinsurance payments; premium security plan account; 62E.25; federal funding; data requirements; commissioner; deferral; premiums tax credit; premiums tax; 62E.23; December 31, 2028; 2027 benefit year; 2028 assessment; financial impairment; refunds.