IC 27-13-13
Chapter 13. Protection Against Insolvency; Deposit Requirements
IC 27-13-13-1 Items deposited; minimum value
Sec. 1. Except as provided in this chapter, a health maintenance
organization shall deposit with the commissioner or, at the discretion
of the commissioner, with any bank or bank and trust company or
other trustee acceptable to the commissioner through which a
custodial or controlled account is used:
(1) cash;
(2) certificates of deposit;
(3) United States government obligations acceptable to the
commissioner;
(4) any other securities acceptable to the commissioner; or
(5) a combination of items described in subdivisions (1) through
(4);
which at all times must have a value of at least five hundred thousand
dollars ($500,000). As added by P.L.26-1994, SEC.25.
IC 27-13-13-2 Deposit schedule
Sec. 2. A health maintenance organization that is in operation on
July 1, 1994, shall make:
(1) a deposit with the commissioner equal to two hundred fifty
thousand dollars ($250,000) on July 1, 1994; and
(2) an additional deposit with the commissioner equal to two
hundred fifty thousand dollars ($250,000) by December 31,
1995. As added by P.L.26-1994, SEC.25.
IC 27-13-13-3 Deposits considered admitted asset
Sec. 3. Deposits made under this chapter shall be considered an
admitted asset of the health maintenance organization in the
determination of the net worth of the organization. As added by P.L.26-1994, SEC.25.
IC 27-13-13-4 Income from deposits; replacing deposits
Sec. 4. (a) All income from deposits made under this chapter is an
asset of the organization that made the deposits.
(b) A health maintenance organization that has made a deposit
under this chapter may replace the deposit or any part of the deposit
with an equal amount and value of:
(1) cash;
(2) certificates of deposit;
(3) United States government obligations acceptable to the
commissioner;
(4) any other securities acceptable to the commissioner; or
(5) any combination of subdivisions (1) through (4).
(c) Any obligations of the United States government must be
approved by the commissioner before being deposited or substituted
under this chapter. As added by P.L.26-1994, SEC.25.
IC 27-13-13-5 Use of deposit
Sec. 5. (a) A deposit made by a health maintenance organization
under this chapter must be used:
(1) to protect the interest of the enrollees of the health
maintenance organization; and
(2) to ensure continuation of health care services to enrollees of
the health maintenance organization, if the health maintenance
organization is in supervision, rehabilitation, or liquidation.
(b) The commissioner may use the deposit for administrative costs
that are attributable to a receivership of the health maintenance
organization.
(c) If the health maintenance organization is placed in
receivership, the deposit made by the organization must be treated as
an asset of the organization subject to IC 27-9. As added by P.L.26-1994, SEC.25.
IC 27-13-13-6 Reduction or elimination of deposit requirements for foreign
corporations
Sec. 6. The commissioner may reduce or eliminate the
requirement of a deposit under this chapter for a health maintenance
organization that is a foreign corporation as defined in IC 27-1-2-3
if:
(1) the organization makes a deposit that meets the
requirements of section 1 of this chapter with the treasurer of
state, insurance commissioner, or other official body of the state
or jurisdiction in which the organization is domiciled for the
protection of all subscribers and enrollees of the health
maintenance organization; and
(2) the organization delivers to the commissioner a certificate,
duly authenticated by the appropriate state official holding the
deposit, that the requirements of this section have been met. As added by P.L.26-1994, SEC.25.
IC 27-13-13-7 Return of deposit
Sec. 7. If:
(1) a health maintenance organization ceases operation for
reasons other than:
(A) insolvency; or
(B) receivership;
(2) the organization is not a debtor in any pending bankruptcy
proceeding;
(3) the health maintenance organization submits a request in
writing to the commissioner for the return of the deposit made
by the organization; and
(4) the health maintenance organization has furnished the
commissioner with written proof that all claims liabilities of the
health maintenance organization have been paid;
the commissioner shall return all or a part of the deposit to the health
maintenance organization not more than thirty (30) days after the
commissioner receives written proof from the organization under
subdivision (4). As added by P.L.26-1994, SEC.25.
IC 27-13-13-8 Additional financial requirements
Sec. 8. (a) In addition to meeting all other financial requirements
imposed by IC 27-13-12 and this chapter, a health maintenance
organization that offers a point of service product shall maintain
either of the following:
(1) A reinsurance agreement, which must be satisfactory to the
commissioner, that cedes one hundred percent (100%) of the
liability for out-of-plan services.
(2) A ratio of the revenues of the health maintenance
organization from the point of service product to the net worth
of the organization of not more than three (3) to one (1).
(b) The reinsurance to which subsection (a)(1) refers may be used
to:
(1) directly make payments for out-of-plan services; or
(2) reinsure coverage for out-of-plan services.
(c) To achieve the ratio referred to in subsection (a)(2), a health
maintenance organization may use reinsurance to cede part or all of
the liability for out-of-plan services. As added by P.L.26-1994, SEC.25.
IC 27-13-13-9 Deposit of cash or securities for noncovered health care
expenditures
Sec. 9. (a) As used in this section, "noncovered health care
expenditures" means the costs to a health maintenance organization
for health care services:
(1) that are the obligation of the health maintenance
organization;
(2) for which the enrollee may be liable in the event of the
health maintenance organization's insolvency; and
(3) for which:
(A) no alternative arrangements have been made that are
acceptable to the commissioner; or
(B) statutory deposits and net worth of the health
maintenance organization are determined by the
commissioner to be inadequate.
(b) If noncovered health care expenditures exceed ten percent
(10%) of total health care expenditures, a health maintenance
organization shall deposit cash or securities that are acceptable to the
commissioner with:
(1) the commissioner; or
(2) an organization or trustee approved by the commissioner
through which a custodial or controlled account is maintained.
(c) The deposit made under subsection (b) must have a fair market
value:
(1) calculated on the first day of each month; and
(2) maintained for the remainder of the month;
of not less than one hundred twenty percent (120%) of the health
maintenance organization's outstanding liability for noncovered
health care expenditures for enrollees in Indiana, including incurred
but not reported claims.
(d) The commissioner may require a health maintenance
organization to file periodic reports, including reports on liability for
noncovered health care expenditures and audit opinions, that the
commissioner considers necessary to monitor compliance with this
section. As added by P.L.203-2001, SEC.24.
IC 27-13-13
Chapter 13. Protection Against Insolvency; Deposit Requirements
IC 27-13-13-1 Items deposited; minimum value
Sec. 1. Except as provided in this chapter, a health maintenance
organization shall deposit with the commissioner or, at the discretion
of the commissioner, with any bank or bank and trust company or
other trustee acceptable to the commissioner through which a
custodial or controlled account is used:
(1) cash;
(2) certificates of deposit;
(3) United States government obligations acceptable to the
commissioner;
(4) any other securities acceptable to the commissioner; or
(5) a combination of items described in subdivisions (1) through
(4);
which at all times must have a value of at least five hundred thousand
dollars ($500,000). As added by P.L.26-1994, SEC.25.
IC 27-13-13-2 Deposit schedule
Sec. 2. A health maintenance organization that is in operation on
July 1, 1994, shall make:
(1) a deposit with the commissioner equal to two hundred fifty
thousand dollars ($250,000) on July 1, 1994; and
(2) an additional deposit with the commissioner equal to two
hundred fifty thousand dollars ($250,000) by December 31,
1995. As added by P.L.26-1994, SEC.25.
IC 27-13-13-3 Deposits considered admitted asset
Sec. 3. Deposits made under this chapter shall be considered an
admitted asset of the health maintenance organization in the
determination of the net worth of the organization. As added by P.L.26-1994, SEC.25.
IC 27-13-13-4 Income from deposits; replacing deposits
Sec. 4. (a) All income from deposits made under this chapter is an
asset of the organization that made the deposits.
(b) A health maintenance organization that has made a deposit
under this chapter may replace the deposit or any part of the deposit
with an equal amount and value of:
(1) cash;
(2) certificates of deposit;
(3) United States government obligations acceptable to the
commissioner;
(4) any other securities acceptable to the commissioner; or
(5) any combination of subdivisions (1) through (4).
(c) Any obligations of the United States government must be
approved by the commissioner before being deposited or substituted
under this chapter. As added by P.L.26-1994, SEC.25.
IC 27-13-13-5 Use of deposit
Sec. 5. (a) A deposit made by a health maintenance organization
under this chapter must be used:
(1) to protect the interest of the enrollees of the health
maintenance organization; and
(2) to ensure continuation of health care services to enrollees of
the health maintenance organization, if the health maintenance
organization is in supervision, rehabilitation, or liquidation.
(b) The commissioner may use the deposit for administrative costs
that are attributable to a receivership of the health maintenance
organization.
(c) If the health maintenance organization is placed in
receivership, the deposit made by the organization must be treated as
an asset of the organization subject to IC 27-9. As added by P.L.26-1994, SEC.25.
IC 27-13-13-6 Reduction or elimination of deposit requirements for foreign
corporations
Sec. 6. The commissioner may reduce or eliminate the
requirement of a deposit under this chapter for a health maintenance
organization that is a foreign corporation as defined in IC 27-1-2-3
if:
(1) the organization makes a deposit that meets the
requirements of section 1 of this chapter with the treasurer of
state, insurance commissioner, or other official body of the state
or jurisdiction in which the organization is domiciled for the
protection of all subscribers and enrollees of the health
maintenance organization; and
(2) the organization delivers to the commissioner a certificate,
duly authenticated by the appropriate state official holding the
deposit, that the requirements of this section have been met. As added by P.L.26-1994, SEC.25.
IC 27-13-13-7 Return of deposit
Sec. 7. If:
(1) a health maintenance organization ceases operation for
reasons other than:
(A) insolvency; or
(B) receivership;
(2) the organization is not a debtor in any pending bankruptcy
proceeding;
(3) the health maintenance organization submits a request in
writing to the commissioner for the return of the deposit made
by the organization; and
(4) the health maintenance organization has furnished the
commissioner with written proof that all claims liabilities of the
health maintenance organization have been paid;
the commissioner shall return all or a part of the deposit to the health
maintenance organization not more than thirty (30) days after the
commissioner receives written proof from the organization under
subdivision (4). As added by P.L.26-1994, SEC.25.
IC 27-13-13-8 Additional financial requirements
Sec. 8. (a) In addition to meeting all other financial requirements
imposed by IC 27-13-12 and this chapter, a health maintenance
organization that offers a point of service product shall maintain
either of the following:
(1) A reinsurance agreement, which must be satisfactory to the
commissioner, that cedes one hundred percent (100%) of the
liability for out-of-plan services.
(2) A ratio of the revenues of the health maintenance
organization from the point of service product to the net worth
of the organization of not more than three (3) to one (1).
(b) The reinsurance to which subsection (a)(1) refers may be used
to:
(1) directly make payments for out-of-plan services; or
(2) reinsure coverage for out-of-plan services.
(c) To achieve the ratio referred to in subsection (a)(2), a health
maintenance organization may use reinsurance to cede part or all of
the liability for out-of-plan services. As added by P.L.26-1994, SEC.25.
IC 27-13-13-9 Deposit of cash or securities for noncovered health care
expenditures
Sec. 9. (a) As used in this section, "noncovered health care
expenditures" means the costs to a health maintenance organization
for health care services:
(1) that are the obligation of the health maintenance
organization;
(2) for which the enrollee may be liable in the event of the
health maintenance organization's insolvency; and
(3) for which:
(A) no alternative arrangements have been made that are
acceptable to the commissioner; or
(B) statutory deposits and net worth of the health
maintenance organization are determined by the
commissioner to be inadequate.
(b) If noncovered health care expenditures exceed ten percent
(10%) of total health care expenditures, a health maintenance
organization shall deposit cash or securities that are acceptable to the
commissioner with:
(1) the commissioner; or
(2) an organization or trustee approved by the commissioner
through which a custodial or controlled account is maintained.
(c) The deposit made under subsection (b) must have a fair market
value:
(1) calculated on the first day of each month; and
(2) maintained for the remainder of the month;
of not less than one hundred twenty percent (120%) of the health
maintenance organization's outstanding liability for noncovered
health care expenditures for enrollees in Indiana, including incurred
but not reported claims.
(d) The commissioner may require a health maintenance
organization to file periodic reports, including reports on liability for
noncovered health care expenditures and audit opinions, that the
commissioner considers necessary to monitor compliance with this
section. As added by P.L.203-2001, SEC.24.
IC 27-13-13
Chapter 13. Protection Against Insolvency; Deposit Requirements
IC 27-13-13-1 Items deposited; minimum value
Sec. 1. Except as provided in this chapter, a health maintenance
organization shall deposit with the commissioner or, at the discretion
of the commissioner, with any bank or bank and trust company or
other trustee acceptable to the commissioner through which a
custodial or controlled account is used:
(1) cash;
(2) certificates of deposit;
(3) United States government obligations acceptable to the
commissioner;
(4) any other securities acceptable to the commissioner; or
(5) a combination of items described in subdivisions (1) through
(4);
which at all times must have a value of at least five hundred thousand
dollars ($500,000). As added by P.L.26-1994, SEC.25.
IC 27-13-13-2 Deposit schedule
Sec. 2. A health maintenance organization that is in operation on
July 1, 1994, shall make:
(1) a deposit with the commissioner equal to two hundred fifty
thousand dollars ($250,000) on July 1, 1994; and
(2) an additional deposit with the commissioner equal to two
hundred fifty thousand dollars ($250,000) by December 31,
1995. As added by P.L.26-1994, SEC.25.
IC 27-13-13-3 Deposits considered admitted asset
Sec. 3. Deposits made under this chapter shall be considered an
admitted asset of the health maintenance organization in the
determination of the net worth of the organization. As added by P.L.26-1994, SEC.25.
IC 27-13-13-4 Income from deposits; replacing deposits
Sec. 4. (a) All income from deposits made under this chapter is an
asset of the organization that made the deposits.
(b) A health maintenance organization that has made a deposit
under this chapter may replace the deposit or any part of the deposit
with an equal amount and value of:
(1) cash;
(2) certificates of deposit;
(3) United States government obligations acceptable to the
commissioner;
(4) any other securities acceptable to the commissioner; or
(5) any combination of subdivisions (1) through (4).
(c) Any obligations of the United States government must be
approved by the commissioner before being deposited or substituted
under this chapter. As added by P.L.26-1994, SEC.25.
IC 27-13-13-5 Use of deposit
Sec. 5. (a) A deposit made by a health maintenance organization
under this chapter must be used:
(1) to protect the interest of the enrollees of the health
maintenance organization; and
(2) to ensure continuation of health care services to enrollees of
the health maintenance organization, if the health maintenance
organization is in supervision, rehabilitation, or liquidation.
(b) The commissioner may use the deposit for administrative costs
that are attributable to a receivership of the health maintenance
organization.
(c) If the health maintenance organization is placed in
receivership, the deposit made by the organization must be treated as
an asset of the organization subject to IC 27-9. As added by P.L.26-1994, SEC.25.
IC 27-13-13-6 Reduction or elimination of deposit requirements for foreign
corporations
Sec. 6. The commissioner may reduce or eliminate the
requirement of a deposit under this chapter for a health maintenance
organization that is a foreign corporation as defined in IC 27-1-2-3
if:
(1) the organization makes a deposit that meets the
requirements of section 1 of this chapter with the treasurer of
state, insurance commissioner, or other official body of the state
or jurisdiction in which the organization is domiciled for the
protection of all subscribers and enrollees of the health
maintenance organization; and
(2) the organization delivers to the commissioner a certificate,
duly authenticated by the appropriate state official holding the
deposit, that the requirements of this section have been met. As added by P.L.26-1994, SEC.25.
IC 27-13-13-7 Return of deposit
Sec. 7. If:
(1) a health maintenance organization ceases operation for
reasons other than:
(A) insolvency; or
(B) receivership;
(2) the organization is not a debtor in any pending bankruptcy
proceeding;
(3) the health maintenance organization submits a request in
writing to the commissioner for the return of the deposit made
by the organization; and
(4) the health maintenance organization has furnished the
commissioner with written proof that all claims liabilities of the
health maintenance organization have been paid;
the commissioner shall return all or a part of the deposit to the health
maintenance organization not more than thirty (30) days after the
commissioner receives written proof from the organization under
subdivision (4). As added by P.L.26-1994, SEC.25.
IC 27-13-13-8 Additional financial requirements
Sec. 8. (a) In addition to meeting all other financial requirements
imposed by IC 27-13-12 and this chapter, a health maintenance
organization that offers a point of service product shall maintain
either of the following:
(1) A reinsurance agreement, which must be satisfactory to the
commissioner, that cedes one hundred percent (100%) of the
liability for out-of-plan services.
(2) A ratio of the revenues of the health maintenance
organization from the point of service product to the net worth
of the organization of not more than three (3) to one (1).
(b) The reinsurance to which subsection (a)(1) refers may be used
to:
(1) directly make payments for out-of-plan services; or
(2) reinsure coverage for out-of-plan services.
(c) To achieve the ratio referred to in subsection (a)(2), a health
maintenance organization may use reinsurance to cede part or all of
the liability for out-of-plan services. As added by P.L.26-1994, SEC.25.
IC 27-13-13-9 Deposit of cash or securities for noncovered health care
expenditures
Sec. 9. (a) As used in this section, "noncovered health care
expenditures" means the costs to a health maintenance organization
for health care services:
(1) that are the obligation of the health maintenance
organization;
(2) for which the enrollee may be liable in the event of the
health maintenance organization's insolvency; and
(3) for which:
(A) no alternative arrangements have been made that are
acceptable to the commissioner; or
(B) statutory deposits and net worth of the health
maintenance organization are determined by the
commissioner to be inadequate.
(b) If noncovered health care expenditures exceed ten percent
(10%) of total health care expenditures, a health maintenance
organization shall deposit cash or securities that are acceptable to the
commissioner with:
(1) the commissioner; or
(2) an organization or trustee approved by the commissioner
through which a custodial or controlled account is maintained.
(c) The deposit made under subsection (b) must have a fair market
value:
(1) calculated on the first day of each month; and
(2) maintained for the remainder of the month;
of not less than one hundred twenty percent (120%) of the health
maintenance organization's outstanding liability for noncovered
health care expenditures for enrollees in Indiana, including incurred
but not reported claims.
(d) The commissioner may require a health maintenance
organization to file periodic reports, including reports on liability for
noncovered health care expenditures and audit opinions, that the
commissioner considers necessary to monitor compliance with this
section. As added by P.L.203-2001, SEC.24.
