NAC695C.137. Health maintenance organization: Reserves.

     1. After the first year of operation, as a protection against insolvency, each health maintenance organization shall retain as reserves an amount equal to twice its actual average monthly uncovered expenditures for the previous year of operation or $500,000, whichever is greater.

     2. A health maintenance organization may not reduce the reserves for protection against insolvency unless it notifies the Commissioner in writing and receives his or her written approval of the reduction. Any unauthorized reduction in this reserve creates a presumption that the health maintenance organization is in an unsound financial condition.

     3. All reserves maintained by a health maintenance organization pursuant to this section:

     (a) Must be deposited in a trust account in a bank chartered by this State or a bank that is a member of the Federal Reserve System and has been approved by the Commissioner. All income earned by the account belongs to the health maintenance organization and may be credited and paid to the health maintenance organization and used for its operations.

     (b) Are in addition to those reserves established by the health maintenance organization according to good business and accounting practices for incurred but not reported claims and other similar claims.

     (Added to NAC by Comm’r of Insurance, eff. 6-11-86; A by R148-99 & R194-99, 1-27-2000)