Current through August 26, 2024
The following are the minimum financial requirements for
compliance with this section unless a different amount is ordered by the
commissioner:
(1) CAPITAL. Unless
otherwise ordered by the commissioner the minimum capital or permanent surplus
of:
(a) A health maintenance organization
insurer first licensed or organized on or after July 1, 1989, is
$750,000;
(b) A health maintenance
organization insurer first licensed or organized prior to July 1, 1989, is
$200,000;
(c) The minimum capital
or permanent surplus requirement for an insurer licensed to write only limited
service health organization business shall be not less than $75,000. The
commissioner may accept the deposit or letter of credit under sub. (3) to
satisfy the minimum capital or permanent surplus requirement under this par.
(c), if the insurer licensed to write only limited service health organization
business demonstrates to the satisfaction of the commissioner that it does not
retain any risk of financial loss because all risk of loss has been transferred
to providers through provider agreements.
(d) Any other insurer writing health
maintenance organization or limited service health organization business, is
the amount of capital or required surplus required under the statutes governing
the organization of the insurer.
(2) COMPULSORY SURPLUS.
(a) An insurer, including an insurer
organized under ch. 613, Stats., writing health maintenance organization or
limited service health organization business, except for a health maintenance
organization insurer or an insurer licensed to write only limited service
health organization business, is subject to s.
Ins 51.80.
(b)
A health maintenance organization insurer shall maintain a compulsory surplus
as follows, or a greater amount required by order of the commissioner: the
greater of $750,000 or an amount equal to the sum of:
1. 10% of premiums earned in the previous 12
months for policies that include coverages that are considered other insurance
business under s.
609.03(3) (a) 3, Stats., plus;
2. 3% of other premiums earned in the
previous 12 months except that if the percentage of the liabilities of the
health maintenance organization insurer that are covered liabilities is less
than 90%, 6% of other premiums earned in the previous 12 months.
(c) Each insurer licensed to write
only limited service health organization business shall maintain a compulsory
surplus to provide security against contingencies that affect its financial
position but which are not fully covered by provider contracts, insolvency
insurance, reinsurance, or other forms of financial guarantees. The compulsory
surplus shall be the greater of 3% of the premiums earned by the limited
service health organization in the previous 12 months, or $75,000.
(d) The commissioner may accept a deposit of
securities or letter of credit with the same terms and conditions as required
under sub. (3) to satisfy the compulsory surplus requirement if the limited
service health organization demonstrates to the satisfaction of the
commissioner that it does not retain any risk of financial loss because all
risk of loss has been transferred to providers through provider agreements. The
commissioner may, by order, require a higher or lower compulsory surplus or may
establish additional factors for determining the amount of compulsory surplus
required for a particular limited service health organization.
(3) DEPOSIT OR LETTER OF CREDIT.
Each limited service health organization shall maintain either a deposit of
securities with the state treasurer or an acceptable letter of credit on file
with the commissioner's office. The amount of the deposit or letter of credit
shall be not less than $75,000 for limited service health organizations. The
letter of credit shall be payable to the commissioner whenever rehabilitation
or liquidation proceedings are initiated against the limited service health
organization.
(4) RISKS. Risks and
factors the commissioner may consider in determining whether to require greater
compulsory surplus by order include, but are not limited to, those described
under s.
623.11(1) (a) and (b), Stats., and the extent to which the
insurer effectively transfers risk to providers. A health maintenance
organization insurer may transfer risk through any mechanism including, but not
limited to, those provided under s.
Ins 9.05(4).
(5) SECURITY SURPLUS.
(a) An insurer, including an insurer
organized under ch. 613, Stats., writing health maintenance organization
insurance or limited service health organization business, except for a health
maintenance organization insurer or an insurer licensed to write only limited
service health organization business, is subject to s.
Ins 51.80.
(b)
Health maintenance organization insurers and insurers licensed to write only
limited service health organization business should maintain a security surplus
to provide an ample margin of safety and clearly assure a sound operation. The
security surplus of a health maintenance organization insurer shall be the
greater of:
1. Compulsory surplus plus 40%
reduced by 1% for each $33 million of premium in excess of $10 million earned
in the previous 12 months; or
2.
110% of its compulsory surplus.
(c) The security surplus of an insurer
licensed to write only limited service health organization business shall be
not less than 110% of compulsory surplus.
(6) INSOLVENCY PROTECTION FOR POLICYHOLDERS.
(a) Each health maintenance organization
insurer is required to either maintain compulsory surplus as required for other
insurers under s.
Ins 51.80 or to demonstrate that in the event of
insolvency all of the following shall be met:
1. Enrollees hospitalized on the date of
insolvency will be covered until discharged.
2. Enrollees will be entitled to similar,
alternate coverage that does not contain any medical underwriting or
pre-existing limitation requirements.
(b) Each insurer licensed to write only
limited service health organization business that provides hospital benefits
shall demonstrate that, in the event of an insolvency, enrollees hospitalized
at the time of an insolvency will be covered until discharged.
