Georgia-Office of Insurance Adopts Insurance Rules Affecting PEOs

Here are the highlights:

• The rules would require a person who performs activities that fall within the definition of “sell,” “solicit,” or “negotiate,” to become licensed as an insurance agent, subagent, or counselor. Additionally, the newly adopted rules would require a business entity to be licensed as an insurance agency if it employs an individual who is required to be licensed as an agent pursuant to Georgia law;
• An agent, subagent, or counselor license is not needed to serve as the master policyholder of group insurance in administering the details of such plan or “to engage in the administration or operation of a program of employee benefits …”
• The Office has defined “serving the master policyholder of group insurance” to include the following activities:
  • Creating or implementing a record keeping system to track contribution and benefit payments, to maintain participant information, and to accurately comply with government reporting requirements;
  • Acquiring evidence of coverage and plan member information booklets or materials from insurers to distribute to employees;
  • Collecting employee information to enroll employees in the group plan as necessary and transmitting such information to the insurer;
  • Deducting premiums from an employee’s wages as necessary;
  • Remitting premiums from employees to the insurer;
  • Collecting and reporting to the insurer changes regarding an employee’s family status; and
  • Administering or facilitating the termination of benefits or the extension of COBRA coverage.

Background:

The Office originally proposed a similar rule in 2017 that would have required a representative of a PEO to become licensed as an insurance agent if that person offered advice or rendered opinions as to the substantive benefits, terms, conditions or value, effect, advantages or disadvantages under any contract of insurance. At the time, NAPEO challenged the legality of the proposal as we believed it directly conflicted with Georgia Code, which allows PEOs to discuss employee benefits with prospective co-employers and their employees. NAPEO has always had concerns that the Office’s interpretation of the words “selling, soliciting, or negotiating” could lead to a negative impact on PEOs who simply discuss insurance benefits with client or potential clients. The Office subsequently proposed the current version of the rule in late 2017 and held a public hearing on the new proposal earlier this year. During the hearing, NAPEO testified and submitted written comment in opposition to the rules. To view a copy of NAPEO’s comment letter, please click here. NAPEO has made clear throughout this regulatory process that PEOs in Georgia have the legal right to discuss benefit plans with potential clients.

NAPEO introduced legislation (House Bill 333) based on its Model Act during the 2017 legislative session. That bill remains active and currently sits in the House Insurance Committee. We will continue to work to enact our legislation and educate policymakers about the PEO industry.

Contact Daniel Harris (dharris@napeo.org) for more information.