§ 4309 — Limitation on expenses

§ 4309. Limitation on expenses. (a) No corporation subject to the\nprovisions of this article shall, during any one year, disburse more\nthan the percentages hereafter prescribed of the aggregate amount of the\npremiums received during such year as expenditures for expenses, which,\nfor the purposes of this article, shall include all expenses paid or\nincurred by the corporation which do not constitute benefit payments\nmade to or on behalf of persons covered under contracts issued by such\ncorporations:\n (1) For hospital service corporations: fifteen per centum reduced by\none per centum for each five million dollars or fraction thereof above\none million dollars of premiums received to ten per centum.\n (2) All other corporations: twenty per centum reduced by one per\ncentum for each five million dollars or fraction thereof above one\nmillion dollars of premiums received to fifteen per centum except that\nfor any corporation which derives more than fifty per centum of its\npremiums received from the sale of contracts which provide hospital\nservice benefits: seventeen and one-half per centum reduced by one per\ncentum for each five million dollars or fraction thereof above one\nmillion dollars of premiums received to twelve and one-half per centum.\n (3) Upon written application, the superintendent may waive the\nlimitations in paragraph one or two of this subsection for any\ncorporation which has not attained the level of enrollment which it\nneeds to attain a break-even position. The break-even position is\nattained when the amount of annual losses and expenses incurred by the\ncorporation is equal to the amount of premiums earned during this\nperiod. Such corporation shall be subject to such limitations in the\ncalendar year following the year in which it attains a break-even\nposition.\n (b) If any such corporation shall in any calendar year make or incur\nexpenses as hereinabove defined in excess of its expense limit the\nsuperintendent may, upon written application of such corporation and a\nshowing that such corporation has taken steps in accordance with a plan\nsubmitted by the corporation and approved by the superintendent which\nwill enable it to comply with the provisions of this section during the\nnext calendar year, suspend the expense limit for such corporation for\nthe calendar year in which the excess was incurred but the\nsuperintendent shall not suspend the expense limit for any such\ncorporation for more than two calendar years in succession.\n