§ 1376 Financial Responsibility Rules

Key Takeaways

•Health plans must follow rules to make sure they have enough money to pay for their services and protect people who use them.
•Plans might need to have a minimum amount of money saved, limits on how much they can borrow, and special ways to handle their money.
•Plans may need to have insurance and special bonds (like a promise to pay) up to $50,000 to protect people if something goes wrong.
•If a plan gets money or loans from the government, it can count that as extra money to meet the rules.

Example

A health plan company collects money from people for their health insurance but spends it all on fancy offices instead of saving it for medical bills.

This law says the company must follow rules to keep enough money saved and have special protections (like a bond) so people don’t lose their insurance money. If they don’t, they can get in big trouble.

(a) No plan shall conduct any activity regulated by this chapter in contravention of such rules and regulations as the director may prescribe as necessary or appropriate in the public interest or for the protection of plans, subscribers, and enrollees to provide safeguards with respect to the financial responsibility of plans. Such rules and regulations may require a minimum capital or net worth, limitations on indebtedness, procedures for the handling of funds or assets, including segregation of funds, assets and net worth, the maintenance of appropriate insurance and a fidelity bond and the maintenance of a surety bond in an amount not exceeding fifty thousand dollars ($50,000). (b) The surety bond referred to in subdivision (a) shall be conditioned upon compliance by the licensee with the provisions of this chapter and the rules and regulations adopted pursuant to this chapter and orders issued under this chapter. Every surety bond shall provide that no suit may be maintained to enforce any liability thereon unless brought within two years after the act upon which such suit is based. (c) For purposes of computing any minimum capital requirement which may be prescribed by the rules and regulations of the director under subdivision (a), any operating cost assistance or direct loan made to a plan by the United States Department of Health and Human Services pursuant to Public Law 93-222, as amended, may be treated as a subordinated loan, notwithstanding any express terms thereof to the contrary. (d) Each solicitor and solicitor firm shall handle funds received for the account of plans, subscribers, or groups in accordance with such rules as the director may adopt pursuant to this subdivision. (e) The director may, by regulation, designate requirements of this section or regulations adopted pursuant to this section, from which public entities and political subdivisions of the state shall be exempt. (Amended by Stats. 1999, Ch. 525, Sec. 123. Effective January 1, 2000. Operative July 1, 2000, or sooner, by Sec. 214 of Ch. 525.)

Key Takeaways

•Health plans must follow rules to make sure they have enough money to pay for their services and protect people who use them.
•Plans might need to have a minimum amount of money saved, limits on how much they can borrow, and special ways to handle their money.
•Plans may need to have insurance and special bonds (like a promise to pay) up to $50,000 to protect people if something goes wrong.
•If a plan gets money or loans from the government, it can count that as extra money to meet the rules.

Example

A health plan company collects money from people for their health insurance but spends it all on fancy offices instead of saving it for medical bills.

Key Takeaways

Example

Key Terms

References

§ 1376 Financial Responsibility Rules

Key Takeaways

Example

Key Terms

References

Key Takeaways

Example

Key Terms

Related Statutes

References

Key Takeaways

Example

Key Terms

Related Statutes

References