§ 27-13-34-16 — "Net worth" and "uncovered expense" defined; computation of net worth; minimum net worth

Indiana § 27-13-34-16

• Jurisdiction: Indiana
• Title 27: INSURANCE
• Art. 13: HEALTH MAINTENANCE ORGANIZATIONS
• Ch. 34: Limited Service Health Maintenance Organizations

Text

(a) As used in this section, "net worth"
means the excess of total assets over total liabilities, excluding
liabilities that have been subordinated in a manner acceptable to the
commissioner.
(b) For the purposes of computing net worth, the total assets must
be reduced by the value assigned to the following intangible assets:
(1) Goodwill.
(2) Going concern value.
(3) Organizational expense.
(4) Start-up costs.
(5) Long term prepayments of deferred charges.
(6) Nonreturnable deposits.
(7) Obligations of officers, directors, owners, or affiliates, except
short term obligations of affiliates for goods or services that:
(A) arise in the normal course of business;
(B) are payable on the same terms as equivalent transactions
with nonaffiliates; and
(C) are not past due.
(c) As used in this section, "uncovered expense" means the cost of
health care services:
(1) that are the obligation of a limited service health maintenance
organization;
(2) for which an enrollee may be liable in the event of the
insolvency of the organization; and
(3) for which alternative arrangements acceptable to the
commissioner have not been made to cover the costs.
(d) For purposes of the definition of "uncovered expense" set forth
in subsection (c), costs incurred by a provider who has agreed in
writing not to bill enrollees, except for permissible supplemental
charges, shall be considered a covered expense.
(e) Each limited service health maintenance organization must, at
all times, have and maintain net worth equal to the greater of:
(1) fifty thousand dollars ($50,000); or
(2) two and one-half percent (2.5%) of the annual gross
subscription income of the organization, up to a maximum of two
hundred fifty thousand dollars ($250,000).
(f) A limited service health maintenance organization shall maintain
as a claim or loss reserve, in cash or obligations of the United States
government, assets sufficient to discharge all liabilities on all
uncovered expenses arising under policies issued.
(g) The commissioner may adopt rules under IC 4-22-2 to further
define whether and to what extent the assets of a limited service health
maintenance organization may be considered to be admitted assets for
the purposes of complying with the requirements of this chapter.

Legislative History

As added by P.L.26-1994, SEC.25.