Section 4204-A - Surplus requirements1.Initial minimum surplus. To qualify for authority as a health maintenance organization, an organization shall have an initial minimum surplus of $1,500,000. [1989, c. 842, §14(NEW).]
2.Surplus maintained. Except as provided in this section, every health maintenance organization must maintain a minimum surplus equal to the greater of: A. One million dollars; [1989, c. 842, §14(NEW).]B. Two percent of the first $150,000,000 of annual premium revenues as reported in the most recent annual financial statement filed with the superintendent by the health maintenance organization, plus 1% of annual premium in excess of $150,000,000; [2017, c. 169, Pt. A, §10(AMD).]C. An amount equal to the sum of 3 months' uncovered health care expenditures as reported in the most recent annual financial statement filed with the superintendent by the health maintenance organization; [2017, c. 169, Pt. A, §10(AMD).]D. An amount equal to 8% of the health maintenance organization's annual health care expenditures, except those paid on a capitated basis, as reported in the most recent annual financial statement filed with the superintendent by the health maintenance organization; or [2017, c. 169, Pt. A, §10(AMD).]E. An amount equal to the company action level risk-based capital as defined in chapter 79. [2001, c. 88, §5(NEW).] [2017, c. 169, Pt. A, §10(AMD).]
2-A.Additional surplus. A health maintenance organization that otherwise possesses surplus funds as required under this section shall also maintain surplus in a reasonable amount as determined by the superintendent in relation to indemnity risks assumed through the issuance of a point-of-service product, net of any applicable reinsurance. [1991, c. 709, §4(NEW).]
3.Exceptions. A health maintenance organization licensed before the effective date of this section must maintain a minimum surplus of:A. Forty percent of the amount required by subsection 2 until December 31, 1991; [1989, c. 842, §14(NEW).]B. Sixty percent of the amount required by subsection 2 until December 31, 1992; [1989, c. 842, §14(NEW).]C. Eighty percent of the amount required by subsection 2 until December 31, 1993; and [1989, c. 842, §14(NEW).]D. One hundred percent of the amount required by subsection 2 until December 31, 1994. [1989, c. 842, §14(NEW).] [1989, c. 842, §14(NEW).]
4.Subordinated debt. Any health maintenance organization that issues a subordinated debt instrument shall structure the debt as follows.A. In determining surplus, debt may not be considered fully subordinated unless the subordination clause is in a form approved by the superintendent. Any interest obligation relating to the repayment of any subordinated debt must be similarly subordinated. [1989, c. 842, §14(NEW).]B. Any debt incurred by a note that meets the requirements of this section, and is otherwise acceptable to the superintendent, may not be considered a liability and must be recorded as equity. [1989, c. 842, §14(NEW).] [1989, c. 842, §14(NEW).]
Amended by 2017, c. 169,§ A-10, eff. 11/1/2017.1989, c. 842, § 14 (NEW) . 1991, c. 709, § 4 (AMD) . 2001, c. 88, §§3-5 (AMD) .