PRINTER'S NO. 340
No. 298 Session of 2007
INTRODUCED BY MUNDY, BELFANTI, BENNINGTON, CALTAGIRONE,
FAIRCHILD, FREEMAN, GEORGE, GERGELY, GOODMAN, GRUCELA,
HORNAMAN, JOSEPHS, LEVDANSKY, MELIO, PRESTON, SANTONI, SEIP,
K. SMITH, SOLOBAY, STABACK, SURRA, THOMAS, J. WHITE,
YOUNGBLOOD, GERBER AND SHIMKUS, FEBRUARY 7, 2007
REFERRED TO COMMITTEE ON INSURANCE, FEBRUARY 7, 2007
AN ACT
1 Amending Title 40 (Insurance) of the Pennsylvania Consolidated
2 Statutes, providing for required and excess reserves of
3 hospital plan corporations; and further providing for
4 required reserves.
5 The General Assembly of the Commonwealth of Pennsylvania
6 hereby enacts as follows:
7 Section 1. Title 40 of the Pennsylvania Consolidated
8 Statutes is amended by adding a section to read:
9 § 6128. Required and excess reserves of hospital plan
10 corporations.
11 (a) General rule.--A hospital plan corporation shall, at all
12 times while engaged in business, maintain reserves in such form
13 and amount as the department may determine, to insure its
14 subscribers against loss, through the failure of the corporation
15 to provide the services agreed to in its contracts.
16 (b) Excess reserves.--When a hospital plan corporation holds
17 reserves which exceed the minimum reserve levels established by
1 the department and which would enable the hospital plan
2 corporation to provide the services agreed to in its subscriber
3 contracts for an additional three months, the department shall
4 require that the hospital plan corporation use the remaining
5 reserves above that amount to reduce health insurance premiums,
6 including for the lowest priced insurance product made available
7 by the company.
8 (c) Premium reductions to occur on an annual basis.--The
9 department shall, on an annual basis occurring no later than one
10 month following the submission of the annual report required
11 under section 6125 (relating to reports and examinations),
12 require premium reductions as specified in this section. The
13 department shall provide notice in the Pennsylvania Bulletin of
14 each hospital plan corporation's premium reductions prior to the
15 effective date of the premium reductions.
16 (d) Transfers of certain assets to be calculated as
17 reserves.--Transfers of assets by a hospital plan corporation to
18 any for-profit or not-for-profit subsidiary, foundation or
19 business interest which does not directly provide health
20 insurance services related to the hospital plan corporation's
21 mission as a charitable and benevolent institution shall be
22 included in reserve calculations by the department.
23 (e) Failure to reduce premiums.--The department shall not
24 approve any premium rate increase filing or filing to reduce
25 services for subscribers by a hospital plan corporation that
26 does not use excess reserves to reduce premiums as required by
27 this section.
28 Section 2. Section 6321 of Title 40 is amended to read:
29 § 6321. Required and excess reserves of professional health
30 services corporations.
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1 (a) General rule.--A professional health service corporation
2 shall at all times while engaged in business maintain reserves,
3 in such form and amount as the department may determine, to
4 insure its subscribers against loss through the failure of the
5 corporation to provide the services agreed to in its contracts.
6 (b) Excess reserves.--When a professional health service
7 corporation holds reserves which exceed the minimum reserve
8 levels established by the department and which would enable the
9 professional health service corporation to provide the services
10 agreed to in its subscriber contracts for an additional three
11 months, the department shall require that the professional
12 health service corporation use the remaining reserves above that
13 amount to reduce health insurance premiums, including for the
14 lowest priced insurance product made available by the company.
15 (c) Premium reductions to occur on an annual basis.--The
16 department shall, on an annual basis occurring no later than one
17 month following the submission of the annual report required
18 under section 6331 (relating to reports and examinations),
19 require premium reductions as specified in this section. The
20 department shall provide notice in the Pennsylvania Bulletin of
21 each professional health service corporation's premium
22 reductions prior to the effective date of the premium
23 reductions.
24 (d) Transfers of certain assets to be calculated as
25 reserves.--Transfers of assets by a professional health service
26 corporation to any for-profit or not-for-profit subsidiary,
27 foundation or business venture which does not directly provide
28 health insurance services related to the professional health
29 service hospital plan corporation's mission as a charitable and
30 benevolent institution shall be included in reserve calculations
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1 by the department.
2 (e) Failure to reduce premiums.--The department shall not
3 approve any premium rate increase filing or filing to reduce
4 services for subscribers by a professional health service
5 corporation that does not use excess reserves to reduce premiums
6 as required by this section.
7 Section 3. This act shall take effect in 60 days.
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