28 CA ADC § 1300.77


      28 CCR s 1300.77

      Cal. Admin. Code tit. 28, s 1300.77


      CALIFORNIA CODE OF REGULATIONS
      TITLE 28. MANAGED HEALTH CARE
      DIVISION 1. THE DEPARTMENT OF MANAGED HEALTH CARE
      CHAPTER 2. HEALTH CARE SERVICE PLANS
      ARTICLE 9. FINANCIAL RESPONSIBILITY
      RISK-BEARING ORGANIZATIONS
      This database is current through 06/09/06, Register 2006, No. 23.

      s 1300.77. Reimbursements.

      (a) "Adequate insurance" for reimbursement for the purposes of subdivision 
      (a)(2) of Section 1377 of the Act means a performance bond or insurance 
      policy issued by an insurer licensed by the California Insurance Director, 
      in an amount equal to at least the amount of cash, or cash equivalents, 
      required to be maintained pursuant to subdivision (a)(1) of Section 1377 
      of the Act. The bond or insurance policy shall be payable to a corporate 
      trustee for the benefit of noncontracting providers, subscribers and 
      enrollees whose claims are unpaid upon the plan ceasing to do business 
      because of insolvency or upon the plan being adjudged bankrupt.

      (b) For the purposes of subdivision (a) of Section 1377 of the Act, 
      "equivalents" to cash include only the following, provided that the 
      investment in any one issuer of securities (other than securities issued 
      or fully guaranteed or insured by the United States Government or any 
      agency thereof) does not exceed 5% of the amount required pursuant to such 
      subdivision:

      (1) Shares listed on the New York Stock Exchange, the American Stock 
      Exchange, the Pacific Stock Exchange or the O.T.C. Margin List, which 
      shall be valued at 90 percent of their market value.

      (2) Securities issued or guaranteed by the United States Government or any 
      agency thereof, which shall be valued at the percentages of their market 
      value specified below:


       (A) less than 3 years to maturity                               100%
       (B) 3 or more years to maturity                                 98%
       (3) Obligations of any state or political subdivision or
       instrumentality thereof which are rated A or better by
       Moody's Investors Service or A or better by Standard & Poor's,
       which shall be valued at the percentages of their market value
       specified below:
       (A) less than 5 years to maturity                               98%
       (B) 5 or more years to maturity                                 95%

       
      (4) Certificates of deposit or other evidence of deposit in, or acceptance 
      of, a bank insured by the F.D.I.C. or certificates of deposit or share 
      accounts of a savings and loan association insured by the F.S.L.I.C., 
      which shall be valued at their book value.

      (5) Promissory notes or other evidences of indebtedness having a maturity 
      date within nine months of issuance, exclusive of days of grace, or any 
      renewal thereof which is likewise limited, and which are rated P2 or 
      better by Moody's Investors Service and A2 or better by Standard & Poor's, 
      which shall be valued at their market value.

      (6) Nonconvertible debt securities having a fixed maturity which are rated 
      A or better by Moody's Investors Service or A or better by Standard & 
      Poor's, which shall be valued at the percentages of their market value 
      specified below:

      (A) less than 2 years to maturity -100%

      (B) 2 years but less than 5 years to maturity -98%

      (C) 5 or more years to maturity -95%.

      (c) The Director may waive the "haircut" requirements set forth in 
      subsection (b) subject to the condition that the plan establish and 
      maintain a securities valuation reserve fund consisting of cash or 
      equivalents in an amount not less than 10 percent of the total amount of 
      "cash and equivalents" required under Section 1377 which is not otherwise 
      maintained in cash, or such other amount as the Director may require.


      


      Note: Authority cited: Section 1344, Health and Safety Code. Reference: 
      Section 1377, Health and Safety Code. 


       HISTORY 
         
      1. Amendment of subsection (b) filed 6-2-78; effective thirtieth day
      thereafter (Register 78, No. 22).

      2. New subsection (c) filed 12-8-82; effective thirtieth day thereafter 
      (Register 82, No. 50).

      3. Amendment filed 7-21-86; effective thirtieth day thereafter (Register 
      86, 
      No. 30).

      4. Change without regulatory effect amending subsection (c) filed 
7-18-2000
      pursuant to section 100, title 1, California Code of Regulations (Register
      2000, No. 29).
      28 CA ADC s 1300.77

      END OF DOCUMENT

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