N.J. Admin. Code § 11:24-11.4

Current through Register Vol. 56, No. 24, December 18, 2024

Section 11:24-11.4 - Minimum deposits

(a) In order to obtain a certificate of authority, every HMO shall deposit with the Commissioner no less than $ 300,000, adjusted annually by the CPI beginning on July 1, 1997 in accordance with N.J.A.C. 11:2-32, Custodial Deposits.

(b) In order to maintain a certificate of authority, every HMO shall annually adjust the deposit specified in (a) above to equal 20 percent of its minimum net worth, except that such deposit shall be no less than $ 300,000 and no more than $ 1,000,000 (as the minimum and maximum amounts are adjusted by the CPI).

(c) The deposit required by (a) above, adjusted in accordance with (b) above, shall be subject to the following:

1. The deposit shall be and remain an admitted asset of the HMO for purposes of determining net worth of the HMO.

2. The Commissioner shall use the deposit for administrative costs directly attributable to the rehabilitation, conservation or liquidation of the HMO.

3. All interest and other investment income derived from the deposit made shall be paid to the HMO annually upon written request.

4. An HMO may withdraw the deposit, or any part thereof, after making a substitute deposit of cash, securities, or other instruments permissible under N.J.A.C. 11:2-32, of equal amount and value.

(d) Every HMO shall, except as (d)4iii below may apply, maintain a deposit with the Commissioner. The deposit shall be held in trust as a restricted asset to offset reserves required pursuant to N.J.A.C. 11:24-11.3(a)1. The deposit shall be made in accordance with N.J.A.C. 11:2-32 except that the HMO may request permission from the Commissioner to use a custodian other than the custodian appointed pursuant to N.J.A.C. 11:2-32.3(a). Notwithstanding the requirements of N.J.A.C. 11:2-32.3(b), the securities deposited with the custodian may be those which constitute eligible investments for life insurance companies pursuant to N.J.S.A. 17B:20-1a.

1. The required deposit amount shall be the equivalent of 50 percent of the highest calendar quarterly premium of the most recent four quarters.

i. The initial or incremental premium-based deposit due following June 21, 1999 may be payable over a two-year (two-deposit) period pursuant to a plan approved by the Commissioner. HMOs may request an additional maximum one-year extension. An extension request shall be in writing and filed with the HMO's quarterly report due March 1 of the second year of the two-year phase-in period. The Commissioner shall grant an extension if the HMO is determined to be in "hazardous financial condition" as that term is defined at N.J.A.C. 11:2-27.2.

ii. Recalculation of the deposit amount shall occur no more frequently than annually.

2. The deposit and the accumulated investment income thereof shall be and remain an admitted asset of the HMO for purposes of determining net worth of the HMO.

3. The Commissioner shall use this deposit of the HMO for costs of rehabilitation and/or liquidation of the HMO.

4. An HMO may withdraw its deposit or any part thereof, subject to the prior written approval of the Commissioner, if:

i. A substitute deposit of cash, securities or other instruments permissible under paragraph (d) above is made of equal amount and value;

ii. The fair market value of the deposit exceeds the amount required to be held on deposit determined in accordance with (d)1 above; or

iii. The required deposit amount is reduced by the Commissioner as a result of discontinuance or sale of a line of business.

5. All income from the deposit made shall be an asset of the HMO, and the HMO may withdraw the income from such deposit on an annual basis, if the deposit and accumulated investment income exceeds the amount required to be held on deposit, subject to the prior written approval of the Commissioner.

6. The HMO shall record the dedicated reserve for accounting purposes as "Assets as Restricted Cash and Other Assets."

(e) HMOs shall determine when incremental deposits are necessary (based on the most recently filed SAP annual financial report) to assure that the required amount of deposits are maintained and shall make any necessary incremental deposit annually by June 30.

N.J. Admin. Code § 11:24-11.4

Public Notice: Increase in medical component of the Consumer Price Index.
See: 29 N.J.R. 2484(a).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 30 N.J.R. 1330(a).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 31 N.J.R. 801(a).
Amended by R.1999 d.201, effective 6/21/1999.
See: 31 N.J.R. 610(a), 31 N.J.R. 1631(a).
In (b), substituted a reference to minimum net worth for a reference to net worth; and rewrote (d).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 32 N.J.R. 1259(a).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 33 N.J.R. 1145(a).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 34 N.J.R. 1556(b).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 35 N.J.R. 1596(a).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 36 N.J.R. 1836(d).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 36 N.J.R. 1089(b).
Public Notice: Department of Banking and Insurance; Division of Insurance; Office of the Commissioner: Minimum net worth requirements for Health Maintenance Organizations: increase in medical component of the Consumer Price Index.
See: 38 N.J.R. 1607(c).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 39 N.J.R. 1322(b).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 40 N.J.R. 1937(b).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 41 N.J.R. 1275(a).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 42 N.J.R. 674(c).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 43 N.J.R. 751(b).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 44 N.J.R. 599(c).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 45 N.J.R. 701(b).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 46 N.J.R. 2046(d).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 48 N.J.R. 662(a), 720(b).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 49 N.J.R. 1107(c).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 50 N.J.R. 1324(a).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 51 N.J.R. 481(b).
Public Notice: Increase in medical component of the Consumer Price Index.
See: 52 N.J.R. 1621(b).