§ 23-93-111 — Liquid refund reserve requirement

(a) (1) Each provider shall establish and maintain liquid refund reserves in an amount determined in accordance with this section. (2) (A) The refund reserve shall be equal to or shall exceed the actuarially determined annual refund amount as of the financial reporting date. (B) The actuarially determined annual refund amount shall be calculated upon both the actual experience of the facility and published industry norms. (C) The method which yields the greater sum shall determine the actuarially determined annual refund amount for the purposes of this section and § 23-93-106(a)(8) . (b) The provider may satisfy the liquid reserve requirement by: (1) Holding the reserve amount in an escrow account with a federally insured financial institution or institutions located and doing business in this state; (2) Purchasing a certificate of deposit from an Arkansas lending institution; (3) Investing in bonds, notes, warrants, and other evidences of indebtedness which are direct obligations of the United States of America held in the provider's name and held by the provider within the State of Arkansas; (4) Having the unqualified guaranty of an affiliated organization or individual, as evidenced by a written agreement, whose net worth as reported in its most recent financial statement audited by a certified public accountant and certified by the provider and filed with the State Insurance Department, which is equal to five (5) times the reserve amount or portion of the reserve amount to be satisfied by this method; or (5) Any combination of the foregoing. (c) When requested by the Insurance Commissioner, the provider shall furnish all of the information relating to the amount of the reserve and the method used to maintain the reserve amount.

Legislative History

Acts 1987, No. 329, § 8; 1989, No. 203, § 3.