17B:26A-15. Procedures for equitable sharing of losses; conditions; filing statement

4. The plan shall establish procedures for the equitable sharing of any losses incurred by the contracting carrier providing coverage under the plan pursuant to subsection a. of section 3 of this act as follows:

a. By March 1, 1996 and following the close of each calendar year thereafter, on a date established by the commissioner:

(1) (a) every carrier and health maintenance organization issuing health benefits plans or health maintenance organization subscriber contracts in this State shall file with the commissioner its net earned premium in the preceding calendar year ending December 31; and

(b) the contracting carrier issuing Medicare supplement insurance policies or contracts under the plan established pursuant to subsection a. of section 3 of this act shall file with the commissioner its net earned premium on those policies or contracts and the claims paid and the administrative expenses attributable to those policies or contracts in the preceding calendar year ending December 31; and

(2) No later than March 1, 1996 and following the close of each calendar year thereafter, on a date established by the commissioner, a contracting carrier issuing Medicare supplement insurance policies or contracts pursuant to subsection a. of section 3 of this act shall file with the commissioner a statement of any net loss on those policies or contracts in the calendar year ending December 31, along with any supporting information required by the commissioner. For purposes of this subsection, a loss shall occur if the claims paid and reasonable administrative expenses for Medicare supplement insurance policies or contracts issued to individuals under 50 years of age pursuant to subsection a. of section 3 of this act exceed the net earned premium and any investment income thereon.

b. (1) Every carrier and health maintenance organization authorized to provide health benefits plans or health maintenance organization subscriber contracts in this State shall be liable for an assessment to reimburse the contracting carrier issuing Medicare supplement insurance contracts or policies pursuant to subsection a. of section 3 of this act for any net loss incurred by the contracting carrier in the previous year, unless the carrier or health maintenance organization has received an exemption from the commissioner pursuant to paragraph (3) of this subsection.

(2) The assessment of each carrier and health maintenance organization shall be in the proportion that the net earned premium of the carrier or health maintenance organization for all health benefits plans or health maintenance organization subscriber contracts issued or renewed in the calendar year preceding the assessment bears to the net earned premium of all carriers and health maintenance organizations for all health benefits plans or health maintenance organization subscriber contracts issued or renewed in the calendar year preceding the assessment and shall be carried out in a form and manner to be determined by the commissioner.

(3) A carrier or health maintenance organization that is financially impaired may seek from the commissioner an exemption or a deferment in whole or in part from any assessment issued by the commissioner. The commissioner may exempt a carrier or health maintenance organization from an assessment or defer, in whole or in part, the assessment of a carrier or health maintenance organization if, in the opinion of the commissioner, the payment of the assessment would endanger the ability of the carrier or health maintenance organization to fulfill its contractual obligations. If an assessment against a carrier or health maintenance organization is deferred in whole or in part or if the carrier or health maintenance organization is exempt from the assessment, the amount by which the assessment is deferred or the amount that a carrier or health maintenance organization is exempted from paying may be assessed against the other carriers and health maintenance organizations in a manner consistent with the basis for assessment set forth in this section.

c. Payment of an assessment made under this section shall be a condition of issuing health benefits plans and health maintenance organization subscriber contracts in the State for a carrier or health maintenance organization. Failure to pay the assessment shall be grounds for forfeiture of a carrier's or health maintenance organization's authorization to issue health benefits plans and health maintenance organization subscriber contracts in the State, as well as any other penalties permitted by law.

d. Notwithstanding the provisions of this section to the contrary, no carrier or health maintenance organization shall be liable for an assessment to reimburse the contracting carrier pursuant to this section in an amount which exceeds 35% of the net loss of the contracting carrier. To the extent that this limitation results in any unreimbursed loss to the contracting carrier, the unreimbursed loss shall be distributed among all carriers and health maintenance organizations: (1) which owe assessments pursuant to subsection a. of this section; (2) whose assessments do not exceed 35% of the net loss of the contracting carrier; and (3) who have not received an exemption pursuant to paragraph (3) of subsection b. of this section.

L.1995,c.229,s.4.